Asset Purchase Agreement

Asset Purchase Agreement Between Cyprus Creek Land Resources, Llc and Armstrong Coal Company, Inc.

Exhibit 10.45

ASSET PURCHASE AGREEMENT

BETWEEN

CYPRUS CREEK LAND RESOURCES, LLC

AND

ARMSTRONG COAL COMPANY, INC.

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made the 29th day of December, 2011, by and between CYPRUS CREEK LAND RESOURCES, LLC, a Delaware limited liability company (“Cyprus Creek” and/or “Seller” herein) and ARMSTRONG COAL COMPANY, INC., a Delaware corporation (“Armstrong Coal” and/or “Buyer” herein), both collectively the “Parties” herein.

RECITALS:

WHEREAS, Seller is the owner of certain real property rights and interests in coal properties located in Muhlenberg County, Kentucky (hereinafter called “Seller’s Owned Coal”); and certain leased coal lands (hereinafter the “Seller’s Leased Coal”) (hereinafter collectively referred to as the “Assets” and/or “Property”); and

WHEREAS, Seller desires to sell, lease and sublease to Buyer and Buyer desires to purchase, accept and receive from Seller certain interests and estates in the Assets as specifically described herein, based on the covenants and agreements set forth herein.

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

Capitalized terms (including the foregoing recitals and the exhibits, and schedules attached hereto, incorporated herein by reference and made a part hereof) shall have the meaning defined herein. In addition, as used herein, the following terms shall have the following meanings:

Affiliate. The term “Affiliate” means: (i) any Person which, directly or indirectly, is in control of, is controlled by or is under common control with a party for whom an affiliate is being determined; or (ii) any Person who is a director or officer (or comparable position) of any Person described in clause (i) above or of the party for whom an affiliate is being determined.

Control. The term “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person, whether through the ownership of equity interests, by contract or otherwise and either alone or in conjunction with others.

12/27/11

Muhlenberg Co., Ky.

 

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Conveyancing Documents. The term “Conveyancing Documents” means the Cyprus #9 Deed, Rogers #9 Sublease, Cyprus Creek & Duncan #9 Lease and Sublease, Cyprus Creek #9 Lease, and Overriding Royalty Agreement, collectively and/or singularly in any manner.

Cyprus #9 Deed. The term “Cyprus #9 Deed” means the Seller’s Corporation Special Warranty Deed to Buyer conveying Seller’s Owned Coal, specifically comprised of Seller’s right title and interest in and to the #9 seam of coal only underlying tracts 199 and 209 as more specifically described in the Cyprus #9 Deed, subject to all terms, conditions, covenants and contained therein, from Cyprus Creek to Armstrong Coal, substantially in the same form attached hereto as Exhibit A.

Closing. The term “Closing’ shall mean the date on which this Agreement shall be executed, and the sale of Assets closed given on the date selected by the Parties, but, in no event later than close of business Thursday, December 29, 2011, at the offices of Armstrong Coal located in St. Louis, Missouri.

Person. The term “Person” means any individual, limited liability company, limited liability partnership, partnership, corporation, trust or other person or entity.

Rogers #9 Sublease. The term “Rogers #9 Sublease” means the Seller’s sublease of certain leased #9 coal reserves to Buyer, substantially in the same form attached hereto as Exhibit C and the Short Form Memorandum thereof in the same form attached hereto as Exhibit D.

Rogers Consent to #9 Sublease. The term “Rogers Consent to #9 Sublease” means the consent of the Rogers family to the Rogers #9 Sublease of certain Rogers Leased #9 Coal to Buyer, substantially in the same form attached hereto as Exhibit E.

Rogers Agreement Relating to Additional Earned Royalty. The term “Rogers Additional Royalty Agreement” means the agreement with the Rogers family for an additional one percent (1%) earned royalty for all Rogers Leased #9 Coal mined and sold, substantially in the same form attached hereto as Exhibit P.

Cyprus Creek & Duncan #9 Lease and Sublease. The term “Cyprus Creek & Duncan #9 Lease and Sublease” means the Seller’s lease and sublease of certain owned and leased #9 coal reserves to Buyer, substantially in the same form attached hereto as Exhibit F and the Short Form Memorandum thereof in the same form attached hereto as Exhibit G.

Cyprus Creek #9 Lease. The term “Cyprus Creek #9 Lease” means the Seller’s lease of certain owned #9 coal reserves to Buyer, substantially in the same form attached hereto as Exhibit I and the Short Form Memorandum thereof in the same form attached hereto as Exhibit J.

Rogers Leased #9 Coal. The term “Rogers Leased #9 Coal” means Seller’s leasehold interests in and to those certain #9 coal tracts leased from the Rogers, as described in the Rogers #9 Sublease.

 

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Duncan Leased #9 Coal. The term “Duncan Leased #9 Coal” means Seller’s leasehold interests in and to those certain #9 coal tracts leased from Duncan, as described in the Cyprus Creek & Duncan #9 Lease and Sublease.

Duncan Consent to Partial #9 Sublease. The term “Duncan Consent to #9 Sublease” means the Duncan family consent to Seller’s sublease of certain Duncan Leased #9 Coal to Buyer, substantially in the same form attached hereto Exhibit H.

“Survant” or “Company”. The terms “Survant” and/or “Company” shall mean the Delaware limited liability company being formed and created by Cyprus Creek and Armstrong Coal pursuant to the Formation and Transfer Agreement attached hereto as Exhibit Q.

Operating Agreement. The term “Operating Agreement” shall mean Survant’s and the Company’s Operating Agreement attached hereto as Exhibit R.

Management Agreement. The term “Management Agreement” shall mean that certain agreement attached hereto as Exhibit S.

Mortgage. The term “Mortgage” shall mean that certain Fee and Leasehold Mortgage, Security Agreement, Assignment of Rents and Lease and As-Extracted Collateral, Fixture Filing, and Financing Statement attached hereto as Exhibit M.

Note. The term “Note” shall mean that certain Negotiable Promissory Note, in the principle amount of $4,435,495.83, together with interest as provided by the terms thereof, due and payable in full on June 30, 2012, attached hereto as Exhibit B.

Sales Representation Agreement. The term “Sales Representation Agreement” shall mean that certain agreement attached hereto as Exhibit T.

Formation and Transfer Agreement. The term “Formation and Transfer Agreement” shall mean that certain agreement attached hereto as Exhibit Q.

Overriding Royalty Agreement. The term “Overriding Royalty Agreement” shall mean that certain agreement attached hereto as Exhibit K and the Short Form thereof attached hereto as Exhibit L.

No Mining Boundary. The term “No Mining Boundary” shall have the same meanings set forth in the Cyprus #9 Deed and Rogers #9 Sublease.

UCC-1 Financing Statement (as-extracted collateral) shall have the same meaning as set forth in the UCC-1 and UCC-1Ad forms attached hereto as Exhibit N.

 

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ARTICLE 2

SALE AND CONSIDERATION

Seller agrees to sell, lease and sublease to Buyer, and Buyer agrees to purchase, accept and receive the Property as follows:

 

  (a) Seller’s Owned Coal.

 

  a. Fee Conveyance — All of Seller’s right, title and interest in and to the #9 coal reserves described in the Cyprus #9 Deed, subject to the terms and conditions contained therein and in the Overriding Royalty Agreement, reserving and excepting all oil and gas and other minerals and the mining and mineral rights and privileges related thereto;

 

  b. Lease of Partial Interest Owned Tracts — All of Sellers right, title and interest in and to the #9 coal reserves described in the Cyprus Creek & Duncan #9 Lease and Sublease, subject to the terms and conditions contained therein and in the Overriding Royalty Agreement, reserving and excepting all oil and gas and other minerals and the mining and mineral rights and privileges related thereto; and

 

  c. Lease of Owned Tracts- All of Seller’s Sellers right, title and interest in and to the #9 coal reserves described in the Cyprus Creek #9 Lease, subject to the terms and conditions contained therein and in the Overriding Royalty Agreement, reserving and excepting all oil and gas and other minerals and the mining and mineral rights and privileges related thereto.

 

  (b) Seller’s Leased Coal.

 

  a. Rogers Leased #9 Coal- All of Seller’s right, title and interest in and to the Rogers Leased #9 Coal reserves described in the Rogers #9 Sublease, subject to the terms and conditions contained therein and in the Overriding Royalty Agreement, reserving and excepting all oil and gas and other minerals and the mining and mineral rights and privileges related thereto; and

 

  b. Duncan Leased #9 Coal- All of Seller’s right, title and interest in and to the Duncan Leased #9 Coal reserves described in the Cyprus Creek & Duncan #9 Lease and Sublease, subject to the terms and conditions contained therein and in the Overriding Royalty Agreement, reserving and excepting all oil and gas and other minerals and the mining and mineral rights and privileges related thereto.

All of the foregoing are subject to the Exceptions and Reservations set forth below and to the exceptions and reservations and footnotes contained in the Conveyancing Documents and the exhibits thereto.

 

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  (c) Sale “As Is”. The sale of Assets is “as is, where is, with all faults or defects” without any express or implied warranty or representation by Seller as to, or any responsibility or liability of any type whatsoever of Seller (or, Affiliates, related entities or owners or employees of Seller) as to, the nature, condition, the presence or absence of any defect, workmanship, design, maintenance, repair, mining, construction or safety of the Assets except as otherwise set forth in this Agreement; and terms and conditions of sale are that Seller shall have no liability to Buyer with respect to any of the foregoing or any other liability which Buyer assumes pursuant to Article 4; and Seller shall have no liability to Buyer for loss or damage to coal reserves based in whole or in part upon an assertion that Seller has mined or developed a plan of mining in an improper, imprudent or unworkmanlike manner.

 

  (d) Title; Seller’s Owned Coal and Seller’s Leased Coal. Sellers do not warrant the title to Seller’s Owned Coal or Seller’s Leased Coal generally. Seller does specially warrant title to Seller’s Owned Coal as provided in the Cyprus #9 Deed, and the other real property described in the Cyprus Creek and Duncan #9 Lease and Sublease, the Cyprus Creek #9 Lease and the Rogers #9 Sublease. Other than as provided in the Cyprus #9 Deed, Cyprus Creek and Duncan #9 Lease and Sublease, the Cyprus Creek #9 Lease and the Rogers #9 Sublease , Seller shall have no liability to Buyer for any impairment of or interference with Buyer’s rights by persons claiming title interests in derogation to that of Seller. Buyer acknowledges that Seller has furnished to Buyer copies of all title information in its possession and readily available to it, including copies of abstracts of title, commitments for title insurance and title insurance policies. Abstracts of title, if existing, shall not be brought down to current date by Seller. Seller shall not bear any third party expenses whatsoever relating to the production of any such title information. Except as provided for in the Conveyancing Documents, Seller will not subdivide the Sellers’ Owned Coal and/or Seller’s Leased Coal for Buyer.

 

  (e) Provisions in Conveyancing Documents. The provisions of the Conveyancing Documents shall be binding upon Buyer and Buyer shall take all Assets subject to all interests, obligations, rights-of-way, easements, leases, deed and plat restrictions, partitions, severances, encumbrances, licenses, reservations and exceptions which are of record as of the date first above written, or any such rights that Buyer has received notice of under the instruments and documents described in Section 3.1(e), and to all rights of persons in possession, and to physical conditions, encroachments and possessory rights which would be evident from an inspection of the Property, including, but not limited to, the restrictive covenants affecting the Assets as set forth in the No Mining Boundary provisions of both the Cyprus #9 Deed and Rogers #9 Sublease and the Buyer hereby accepts the Assets subject to all such rights. Notwithstanding the provisions set forth above in this Section 2(e), Seller and Buyer hereby agree that Section 3(a) of the Rogers #9 Sublease is hereby amended to read as follows:

 

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Advance Royalty; Recoupments. Armstrong Coal shall pay to Cyprus Creek the amount of advance royalty as provided under the Rogers 1947 Mineral Lease plus the amount of the additional advance royalties as provided for in the Additional Advance Royalties Agreement of $6,000.00 per month. Cyprus Creek shall pay the amounts to the Lessors. Armstrong shall be solely entitled to amounts that are recouped or recoupable from the Lessors based upon credits to the Lessee/Sublessor for payments made to Lessors prior to the date hereof. Armstrong Coal shall also be solely entitled to amounts recouped or recoupable from the Lessors based upon credits accrued or payments made of advance royalties after the date hereof.

 

  (f) The Property is sold “AS IS,” and Seller makes no warranty that either the #9 coal reserves being sold, leased and subleased herein are safe or suitable for underground mining, or suitable for any other purpose or use. The ability to mine the #9 coal seam is not warranted by Seller and Buyer recognizes and accepts that the coal may be unsuitable for underground mining for reasons, including, but not limited to, rough, unnatural and unstable surfaces, inadequate subjacent or lateral support, circumstances relating to the environmental quality of the Property, or other conditions arising out of the prior use of the Property. Buyer shall assume all permits and liabilities (including any environmental liabilities) associated with the Property.

 

  (g) Reservation of Non-Exclusive Access to Property. Seller hereby reserves unto itself and its successors and assigns, and unto its Affiliate, Cyprus Creek Land Company, LLC, (the surface owner) and unto Survant, a non-exclusive access to the Property hereby conveyed or leased or subleased, to allow Seller, Cyprus Creek Land Company, and/or Survant, and their successors and assigns access to the coal seams reserves lying beneath the coal seam so conveyed or leased or subleased; provided, however, Seller and its Affiliates acknowledge and agree that should their exercise of this Non-Exclusive Access to Property provision interfere or otherwise prohibit Buyer’s mining of any or all coal seam conveyed and/or leased herein (except those portions of Rogers Tract R237-2 and Fee Tract 209 that remain subject to restrictive covenants prohibiting mining within the No Mining Boundary and subordinate to Seller’s and its Affiliates’ dominant interests), Buyer’s mining operations and plans shall take priority and precedence, and Seller and its Affiliates agree to take whatever steps may be necessary, including, without limitation, the cessation of mining operations, in order to permit Buyer to proceed with its mining operations.

 

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  (h) Consideration. As consideration for the sale, lease and sublease of the Assets pursuant to this Agreement, Buyer shall pay to Sellers the sum of THIRTEEN MILLION THREE HUNDRED SIX THOUSAND FOUR HUNDRED EIGHTY SEVEN AND 50/100 DOLLARS ($13,306,487.50) and all sums due under the Overriding Royalty Agreement (collectively the “Purchase Price”), as follows:

 

  a. EIGHT MILLION EIGHT HUNDRED SEVENTY THOUSAND NINE HUNDRED NINETY-ONE AND 67/100 DOLLARS ($8,870,991.67) cash in hand, (“Cash Payment”) payable at Closing; plus

 

  b. FOUR MILLION FOUR HUNDRED THIRTY-FIVE THOUSAND FOUR HUNDRED NINETY-FIVE AND 83/100 DOLLARS ($4,435,495.83) as evidenced by the Note, and secured by the Mortgage, and the UCC-1 Financing Statement (as extracted collateral) all to be executed and delivered by Buyer to Seller at the Closing; and

 

  c. The “Overriding Royalty” of an overriding royalty payment for each ton (2,000 pounds) of Coal mined, removed, and sold from the Property in the sum of: (i) FIVE DOLLARS AND NO CENTS ($5.00) per ton for each ton of Coal mined, removed, and sold by GRANTEE, its successors and assigns, in excess of ONE MILLION SIX HUNDRED SIXTY THOUSAND EIGHT HUNDRED FIFTY (1,660,850) tons collectively mined, removed, and sold from those certain tracts of the Property conveyed and leased to GRANTEE under the (a) Cyprus #9 Deed and the (b) Cyprus Creek #9 Lease; and, (ii) THREE DOLLARS AND TWENTY-FIVE CENTS ($3.25) per ton for each ton of coal mined, removed, and sold the Property in excess of ONE MILLION FIVE HUNDRED THIRTY-NINE THOUSAND ONE HUNDRED FIFTY (1,539,150) tons collectively mined, removed, and sold from those certain tracts of the Property leased and subleased to GRANTEE under the (a) Rogers #9 Sublease and the (b) Cyprus Creek & Duncan #9 Lease and Sublease. The Overriding Royalty shall be evidenced by the Overriding Royalty Agreement and the Short Form Memorandum thereof, all in same form attached hereto as Exhibit K, to be executed and delivered by Buyer to Seller at the Closing.

The Cash Payment shall be made by wire or interbank transfer, to such account as Seller may designate, in immediately available funds and evidence thereof shall be attached hereto as Exhibit O.

 

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ARTICLE 3

CLOSING AND POST CLOSING

3.1 Transactions at Closing. At the Closing the following transactions shall take place:

(a) Deliveries to Buyer. Seller shall deliver, or cause to be delivered, to Buyer:

 

  (i) Cyprus Creek #9 Deed, thereby transferring and conveying to Buyer title and access to the Sellers’ Owned Coal;

 

  (ii) Rogers #9 Sublease, Cyprus Creek & Duncan #9 Lease and Sublease, and Cyprus Creek #9 Lease, in the forms attached hereto, thereby leasing and subleasing to Buyer the certain owned and leasehold interests in the #9 coal reserves described therein of Seller;

 

  (iii) Copy of executed Rogers Agreement Relating to Additional Earned Royalty (1%) for the Rogers Leased #9 Coal; and

 

  (iv) Roger Consent to Rogers #9 Sublease.

 

  (v) Copy of unrecorded Rogers Agreement Relating to Additional Advance Royalty “Deep #9 Coal N of Pkwy” dated 5/3/07

 

  (vi) Copy of unrecorded Duncan Agreement Relating to Advance Royalties and Recoupment dated October 31, 2007

 

  (vii) Copy of Rogers 1947 Mineral Lease dated December 4, 1947, amended, supplemented, and extended from time to time

 

  (viii) Copy of Notice of Rogers 1947 Mineral Lease, Deed Book 164, page 525

 

  (ix) Copy of “Indenture” (Duncan Coal Lease”) dated June 10, 1967

 

  (x) Copy of Short Form Notice of Duncan Coal Lease, Deed Book 258, page 488

Such other documents or instruments as may be reasonably necessary in order to consummate the transactions contemplated by this Agreement. Cyprus Creek shall use its best efforts to obtain the Duncan Consent to Partial Sublease (#9) post-closing and Armstrong Coal agrees to provide any reasonable assistance necessary to obtain the consent.

(b) Deliveries to Seller. Buyer shall deliver, or cause to be delivered, to Seller:

 

  (i) The Cash Payment;

 

  (ii) The Note;

 

  (iii) The Overriding Royalty Agreement and Short Form Memorandum thereof;

 

  (iv) The Mortgage and the UCC-1 Financing Statement (as-extracted collateral); and

 

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  (v) Short Form Memorandums of the Rogers #9 Sublease, Cyprus Creek & Duncan #9 Lease and Sublease, and Cyprus Creek #9 Lease.

Each of the foregoing actions shall be deemed to have occurred simultaneously at the Closing and unless each of such actions is taken, none of the other actions shall be taken or be deemed to have been taken, and any acts which may have been performed in respect thereof shall be cancelled and treated as if void and of no force and effect.

3.2 Costs, Transfer Taxes and Fees. Regardless whether Closing occurs, except as otherwise expressly provided in this Agreement, each party hereto shall bear its own costs and expenses in connection with this Agreement and the transactions contemplated hereby, including without limitation any examination of title to the Assets, any surveys thereof, and the preparation of this and any other documents in connection with the transactions contemplated hereby. Buyer will pay all costs in connection with any brokers employed by it in connection with this transaction, any costs in connection with its examination and investigation of the Assets, and all costs in connection with the issuance of bonds or other security. All applicable real estate transfer taxes arising out of or incurred in connection with the Cyprus #9 Deed shall be borne by Buyer.

ARTICLE 4

LIABILITIES AND OBLIGATIONS

4.1 Taxes.

(a) The Seller shall be responsible for the payment of all assessed Taxes relating to the Assets for all Tax years ending on or before December 31, 2011, which Taxes are due and payable or accrued before December 31, 2011.

(b) The Buyer shall be responsible for the payment of all assessed Taxes relating to the Assets for all Tax years ending after December 31, 2011, which Taxes shall become due and payable after December 31, 2011.

(c) To the extent required, the Sellers and Buyer shall cooperate in the preparation and filing of all required Tax Returns, including cooperating in the resolution of any disputes related to such Tax Returns.

4.2 Assumption of Liabilities.

(a) On and after the Closing Date, Buyer assumes any and all liabilities to third parties (meaning persons or entities other than Buyer or Seller) of any nature or type whatsoever, accruing on or after the Closing Date, including but not limited to liabilities for property damage, personal injury, bodily injury, consequential damages, punitive damages, fines, penalties, or other damages or injuries, pursuant to any and all causes of action, whether pursuant to contract, tort, statute or otherwise, directly or indirectly, arising out of or related to the use, ownership or operation of the Assets on or after the Closing Date, including but not limited to the condition, design, safety, construction, workmanship, possession, mining, and any other use of any Asset.

 

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES BY BUYER

As an inducement to Seller’s execution of the Agreement and its obligations to consummate the transactions provided herein, Buyer makes the following representations and warranties which shall be true and in effect as of the Closing Date.

5.1 Company Matters. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer has all requisite company power and authority to carry on its business as now conducted and to execute this Agreement and perform its obligations hereunder. All company action of Buyer necessary for the authorization, execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby has been taken, and this Agreement constitutes, and will constitute, the legal, valid and binding obligation of Buyer enforceable in accordance with its terms.

5.2 Compliance With Other Instruments. The execution, delivery and performance of this Agreement and the consummation by Buyer of the transactions contemplated hereby will not result in the violation of any provision of Buyer’s organization agreement, or any provision of any judgment, writ, decree or order applicable to it or be in conflict with, or violate the terms of, any agreement or instrument to which Buyer is a party, or to which it may be bound, or constitute a default thereunder, or an event which, with the lapse of time or the giving of notice, or both, would result in a default thereunder.

5.3 Governmental Consents. All consents, approvals, orders, authorizations, registrations, qualifications, designations, declarations or filings with any federal, state or other governmental agency or authority on the part of Buyer required in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated herein, have been made or obtained, except as such enforceability may be limited by bankruptcy and similar laws affecting the rights of creditors and general principles of equity. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the performance by Buyer of this Agreement in accordance with its terms will not require, with respect to Buyer, the approval or consent of or notice to any foreign, federal, state, county, local or other governmental or regulatory body, except as expressly provided in this Agreement.

5.4 Brokers’ Fees. Buyer has not retained any broker, finder or agent or agreed to pay any brokerage fees, finder’s fees or commissions with respect to this Agreement or the transactions contemplated hereby.

5.5 Litigation and Claims. There is no suit, claim, action or proceeding now pending, or, to Buyer’s knowledge, threatened, before any court, administrative or regulatory body or any governmental agency to which Buyer is a party and which may result in any judgment, order, decree, liability or other determination which would have a material adverse effect on Buyer’s ability to perform its obligations hereunder. No such judgment, order or decree has been entered against Buyer and remains unsatisfied, nor has any such liability been incurred and not discharged which has such effect.

 

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ARTICLE 6

REPRESENTATIONS AND WARRANTIES BY SELLER

As an inducement to Buyer’s execution of the Agreement and its obligations to consummate the transactions provided herein, Seller makes the following representations and warranties which shall be true and in effect as of the Closing Date.

6.1 Company Matters. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller has all requisite company power and authority to carry on its business as now conducted and to execute this Agreement and perform its obligations hereunder. All company action of Seller necessary for the authorization, execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby has been taken, and this Agreement constitutes, and will constitute, the legal, valid and binding obligation of Seller enforceable in accordance with its terms.

6.2 Compliance With Other Instruments. The execution, delivery and performance of this Agreement and the consummation by Seller of the transactions contemplated hereby will not result in the violation of any provision of Seller’s organization agreement, or any provision of any judgment, writ, decree or order applicable to it or be in conflict with, or violate the terms of, any agreement or instrument to which Seller is a party, or to which it may be bound, or constitute a default thereunder, or an event which, with the lapse of time or the giving of notice, or both, would result in a default thereunder.

6.3 Governmental Consents. All consents, approvals, orders, authorizations, registrations, qualifications, designations, declarations or filings with any federal, state or other governmental agency or authority on the part of Seller required in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated herein, have been made or obtained, except as such enforceability may be limited by bankruptcy and similar laws affecting the rights of creditors and general principles of equity. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the performance by Seller of this Agreement in accordance with its terms will not require, with respect to Seller, the approval or consent of or notice to any foreign, federal, state, county, local or other governmental or regulatory body, except as expressly provided in this Agreement.

6.4 Brokers’ Fees. Seller has not retained any broker, finder or agent or agreed to pay any brokerage fees, finder’s fees or commissions with respect to this Agreement or the transactions contemplated hereby.

6.5 Litigation and Claims. There is no suit, claim, action or proceeding now pending, or, to Seller’s knowledge, threatened, before any court, administrative or regulatory body or any governmental agency to which Seller is a party and which may result in any judgment, order, decree, liability or other determination which would have a material adverse effect on Seller’s ability to perform its obligations hereunder. No such judgment, order or decree has been entered against Seller and remains unsatisfied, nor has any such liability been incurred and not discharged which has such effect.

 

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ARTICLE 7

CONDITIONS TO SELLER’S OBLIGATIONS TO CLOSE

The obligations of Seller to consummate the transactions provided for in this Agreement shall be subject to the satisfaction of all conditions under Article 3 and each of the following conditions on or before the Closing, subject to the right of Seller to waive, in writing, any one or more of such conditions:

7.1 Representations and Warranties of Buyer. On the Closing Date, the representations and warranties of Buyer contained in Article 5 of this Agreement shall be true in all material respects as if made on that date.

7.2 Performance of This Agreement. Buyer shall have duly performed or complied with all of the obligations to be performed or complied with by it under the terms of this Agreement on or prior to the Closing.

7.3 Absence of Litigation. No suit, action or other proceeding or investigation which could have a material adverse effect on Seller, unless instituted by Seller, shall be pending or threatened before or by any court or governmental agency concerning this Agreement or the consummation of the transactions contemplated hereby.

7.4 Further Assurances. Seller shall have received such further instruments and documents as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained and the performance of all conditions to the consummation of such transactions.

7.5 No Default Under Any Negotiable Promissory Note, Mortgage, or Agreement. A condition precedent to sale of Assets and performance by Seller shall be that Buyer and its Affiliates, shall not be in default upon any Promissory Note made and given to Seller or any mortgage or agreement relating thereto including, without limitation, those made and given by Armstrong Coal on December 19, 2011 in the amount of $903,933.12.

7.6 Formation of Survant. On or before Closing, the Parties shall have executed the Company’s Formation and Transfer Agreement, Operating Agreement, Sales Representation Agreement, and Management Agreement.

ARTICLE 8

CONDITIONS TO BUYER’S OBLIGATIONS TO CLOSE

The obligations of Buyer to consummate the transactions provided for in this Agreement shall be subject to the satisfaction of all conditions under Article 3 and each of the following conditions on or before the Closing, subject to the right of Buyer to waive, in writing, any one or more of such conditions:

8.1 Representations and Warranties of Seller. On the Closing Date, the representations and warranties of Buyer contained in Article 6 of this Agreement shall be true in all material respects as if made on that date.

 

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8.2 Performance of This Agreement. Seller shall have duly performed or complied with all of the obligations to be performed or complied with by it under the terms of this Agreement on or prior to the Closing.

8.3 Absence of Litigation. No suit, action or other proceeding or investigation which could have a material adverse effect on Buyer, unless instituted by Buyer, shall be pending or threatened before or by any court or governmental agency concerning this Agreement or the consummation of the transactions contemplated hereby.

8.4 Further Assurances. Buyer shall have received such further instruments and documents as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained and the performance of all conditions to the consummation of such transactions.

8.5 Formation of Survant. On or before Closing, the Parties shall have executed the Company’s Formation and Transfer Agreement, Operating Agreement, Sales Representation Agreement, and Management Agreement.

ARTICLE 9

GENERAL INDEMNITEES

9.1 Indemnity by Seller. Seller hereby agrees from and after the Closing to defend, indemnify and hold harmless Buyer and its successors, assigns, officers, directors and employees against and in respect of:

(a) Any and all losses and damages resulting from (i) any misrepresentations or breaches of warranty, agreement or undertaking by Seller under this Agreement, (ii) Sellers’ failure to perform or otherwise fulfill any of its agreements under this Agreement, or (iii) any and all third party actions, suits, proceedings, claims, liabilities and demands for damages of any type or nature whatsoever, resulting from the use, ownership or operation of the Property, arising or accruing before the Closing, including but not limited to liabilities for property damage, personal injury, bodily injury, consequential damages, punitive damages, fines, penalties, or other damages or injuries, pursuant to any and all causes of action, whether pursuant to contract, tort, statute or otherwise, directly or indirectly, arising out of or related to the Assets, including but not limited to the condition, design, safety, construction, workmanship, possession, mining, any other use of any Asset. In no event shall Sellers indemnify Buyer for third party claims related to the Assets for damages or claims accruing after the Closing as set forth in Section 9.2 or any claims relating to the condition of the Assets previously disclosed to or known by Buyer pursuant to Sections 2(e) and 3.1(a);

(b) Any and all third party actions, suits, proceedings, claims, liabilities, demands, assessments alleging matter encompassed by Section 9.1(a), judgments and costs and expenses of any action, suit or proceeding, including reasonable attorneys’ fees actually incurred incident to any of the foregoing or the indemnification provided hereby, including a successful defense; and

 

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(c) Notwithstanding any other provision of this Agreement, Seller shall indemnify and hold harmless Buyer and its successors and assigns from claims and liabilities arising from any breach or default under the original third party leases (Rogers and Duncan) caused by Seller’s failure to remit any earned royalty, advance royalty, or other payment that Buyer is required to remit to Seller to satisfy any outstanding obligation owed to the original lessors; provided, that Buyer, in fact, timely and properly remits such payments to Seller. In addition, Seller hereby agrees to provide Buyer with copies of all notices of breach and/or default that Seller receives from the lessors in a timely manner. Pursuant to Section 3.1(b), Seller shall use its best efforts to obtain the Duncan Consent to Partial Sublease (#9) post-closing and hereby agrees to indemnify and hold harmless Buyer and its successors and assigns from claims and liabilities associated with any consent requirement for the Cyprus Creek & Duncan #9 Lease and Sublease arising under the Duncan Coal Lease, other than any payment or performance obligations assumed or owed by Buyer under the terms of the Cyprus Creek & Duncan #9 Lease and Sublease.

9.2 Indemnity by Buyer. Buyer hereby agrees from and after the Closing to defend, indemnify and hold harmless Seller and its respective predecessors, successors, related entities, assigns and officers, directors and employees of any of the foregoing against and in respect of:

(a) Any and all losses and damages resulting from (i) any misrepresentations or breaches of warranty, agreement or undertaking by Buyer under this Agreement, or (ii) Buyer’s failure to perform or otherwise fulfill any of its respective agreements under this Agreement, or (iii) any and all third party actions, suits, proceedings, claims, liabilities and demands for damages of any type or nature whatsoever, resulting from the use, ownership or operation of the Property, arising or accruing on or after the Closing, including but not limited to liabilities for property damage, personal injury, bodily injury, consequential damages, punitive damages, fines, penalties, or other damages or injuries, pursuant to any and all causes of action, whether pursuant to contract, tort, statute or otherwise, directly or indirectly, arising out of or related to the Assets, including but not limited to the condition, design, safety, construction, workmanship, possession, mining, any other use of any Asset and any risk assumed by Buyer pursuant to this Agreement.

(c) Any and all third party actions, suits, proceedings, claims, liabilities, demands, assessments alleging matter encompassed by Sections 9.2(a), or judgments and costs and expenses of any action, suit or proceeding, including reasonable attorneys’ fees actually incurred incident to any of the foregoing or the indemnification provided hereby, including a successful defense.

 

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9.3 Defense; Settlement.

(a) If any claim, liability, demand, assessment, action, suit or proceeding (a “Claim”) shall be asserted against an indemnitee in respect of which it proposes to demand indemnification, it shall promptly notify in writing the indemnitor thereof. The notice will specify the circumstances giving rise to such Claim. The indemnitor, at its expense, shall have the responsibility of contesting, defending, litigating or settling the Claim in good faith. The indemnitee may participate at indemnitor’s own expense in the negotiation, litigation or settlement of any such Claim, provided that (notwithstanding any other provision hereof) if the indemnitor agrees in writing promptly after it obtains knowledge thereof to be fully responsible for any such Claim, the indemnitee’s participation shall be at its own expense from the date of such notice. The indemnitor and the indemnitee will cooperate with each other as they reasonably may request in the handling of any Claim. If the indemnitee, without the prior consent of the indemnitor, makes any settlement with respect to any such Claim, the indemnitor shall be discharged from any liability hereunder with respect thereto.

(b) Upon the settlement of any Claim as provided above or the final resolution of any Claim by a court of competent jurisdiction, the indemnitor will notify the indemnitee promptly. The indemnitor promptly will pay such Claim and, in addition, will pay to the indemnitee an amount equal to any losses, damages or expenses for which indemnity is prescribed herein (“Indemnity Amounts”) incurred by the indemnitee in connection with such Claim net of taxes required to make the indemnitee whole.

(c) If the indemnitor fails to comply with its obligations under the preceding Sections, the indemnitee may elect, but shall not be obligated, to contest, defend, litigate or settle any Claim in good faith, and the indemnitor promptly will pay to the indemnitee an amount equal to any Indemnity Amounts incurred by such indemnitee in connection therewith, and any amount net of taxes required to make the indemnitee whole.

9.4 Survival. The representations, warranties, covenants and indemnities made in this Agreement and in any certificate, schedule, document, instrument or in any Conveyancing Documents delivered in connection herewith shall survive the Closing.

ARTICLE 10

MISCELLANEOUS

10.1 Assignment.

(a) Except as otherwise expressly provided herein, neither this Agreement nor any of the rights hereunder may be assigned by either party, in whole or in part, by operation of law or otherwise without the prior written consent of the other party.

(b) Subject to the restriction in Section 10.1(a), this Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective successors and assigns, and the terms “Buyer” and “Seller” in this Agreement shall be deemed to include the successors and assigns of Buyer and Seller.

 

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10.2 Termination of Agreement. This Agreement and the transactions contemplated hereby may be terminated only as follows:

(a) By mutual consent of Seller and Buyer.

(b) By either Seller or Buyer if, for any reason other than the failure of the party seeking to terminate this Agreement to perform its obligations hereunder, the Closing shall not have occurred on or before December 29, 2011, or such later date, if any, as Buyer and Seller may hereafter agree upon.

(c) By Seller if the conditions of Article 7 are not satisfied by Buyer.

(d) By Buyer if the conditions of Article 8 are not satisfied by Seller.

(e) Should this Agreement terminate for any reason or cause, Buyer shall return to Seller any and all information, documents, maps and other materials which were provided to it, and agrees that any information obtained by it with respect to the Assets or the business of Seller, whether or not such business relate to the Assets, shall be kept confidential, shall not be given or disclosed to any other party or entity or in any manner be used by Buyer to make available to any other party or entity.

10.3 Cooperation. Buyer and Seller each agree to use reasonable efforts (i) to cause the conditions precedent to its obligation to consummate the transactions provided for herein to be satisfied, and (ii) to complete the actions required to be taken after the Closing as promptly as practicable.

10.4 Entire Agreement, Modification and Integration. This Agreement, including the schedules and exhibits attached hereto and made a part hereof, constitutes the entire agreement between the parties. No changes of, modifications of, or additions to this Agreement shall be valid unless the same shall be in writing and signed by both parties hereto. This Agreement, together with the Exhibits hereto and the other agreements to be entered into by the Parties pursuant hereto, sets forth the entire agreement and understanding of the Parties in respect to the transactions referenced herein, and supersedes all other agreements, arrangements and understandings relating to the subject matter hereof.

10.5 Third-Party Beneficiaries. Nothing in this Agreement shall entitle any person other than the undersigned parties to any claim, cause of action, remedy or right of any kind.

10.6 Severability. If any provision of this Agreement shall be determined to be contrary to law and unenforceable by any court of law, the remaining provisions shall be severable and enforceable in accordance with their terms, unless such unlawful and unenforceable provision is material to the transactions contemplated hereby, in which case the parties shall attempt, in good faith, to negotiate a substitute provision.

10.7 Counterparts. This Agreement may be executed in one or more identical counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

 

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10.8 Headings. The table of contents and article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement.

10.9 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Kentucky.

10.10 Payment of Fees and Expenses. Each party hereto shall pay its respective fees and expenses for counsel, accountants and other experts and all other expenses incurred by such party incident to the negotiations, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby. Should any finder or broker make claim to any fee or expense, despite the representations made by the parties, the party employing or otherwise responsible for services claimed by such broker or agent shall be responsible for the claim.

10.11 Further Documents. Each party hereby agrees to deliver to the other party, as appropriate, such other and further agreements, consents, documents, or instruments of conveyance, assignment or transfer and to do such other things and to take such other actions, supplemental or confirmatory, as may be reasonably required for the purpose of or in connection with the consummation or evidencing of the transactions contemplated hereunder. If any agreement pertaining to operation of or on any of the Assets has not been included on any schedule, Seller shall, to the extent they have the right and if Buyer elects to take such agreement, assign such agreement to Buyer.

10.12 Notices. All notices, requests, demands and other communications hereunder shall be deemed to have been duly given if the same shall be in writing and shall be delivered personally or sent by registered or certified mail, postage prepaid, and addressed as set forth below:

 

  (a) If to Buyer:

Armstrong Coal Company, Inc.

407 Brown Road

Madisonville, KY 42431

With copy to:

Mason L. Miller

Miller & Wells, PLLC

300 East Main Street, Ste. 360

Lexington, Kentucky 40507

-and-

 

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Armstrong Energy, Inc.

Attn: Martin D. Wilson, President

7733 Forsyth Blvd., Suite 1625

St. Louis, Missouri 63105

 

  (b) If to Sellers:

Cyprus Creek Land Resources, LLC

701 Market Street, Suite 798

St. Louis, Missouri 63101

With copy to:

J. Sale Gordon

Gordon Law Offices, PSC

121 W. 2nd St.

Owensboro, Kentucky 42301

Any party may change the address to which notices are to be addressed by giving the other party notice in the manner herein set forth.

10.13 Retention and Availability of Documents. Buyer agrees to preserve and keep all books and records of Seller transferred to Buyer pursuant to this Agreement for a period of six (6) years after the Closing. Such books and records need not be kept at their current locations. During such period as such books and records are so required to be preserved and kept, duly authorized employees, attorneys, accountants, agents and other representatives of Seller shall, on reasonable prior notice, have access thereto during normal business hours to examine, inspect and copy such books and records. In addition, during such period, Buyer shall cooperate fully with Seller, including, without limitation, the making of personnel available to testify when reasonably requested by Seller, in connection with any claims, demands, audits, suits or matters of a similar nature made by or against Seller as the previous owner and operator of the Assets.

10.14 Inconsistencies. To the extent of any inconsistencies between the provisions of this Agreement relating to the obligations and responsibilities of the Parties and the liabilities assumed by them and the provisions of any other document described in this Agreement or any document required by or described in any such document, the provisions of this Agreement shall control.

10.15 Consequential and Punitive Damages. Neither party shall be liable to the other for, and any remedy shall not include, any consequential or punitive damages under any indemnity, or in connection with any misrepresentation or fraud, a breach of any covenant, warranty or representation, made in this Agreement or any of the instruments or agreements described in and required by this Agreement. This section shall not apply to consequential or punitive damages that may be recovered by a third party for which Buyer or Sellers are to be indemnified.

 

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10.16 Negotiation of Agreement. This Agreement was negotiated and drafted by all Parties and their attorneys, and not by any Party to the exclusion of the other Parties. The Parties agree that no ambiguity in this Agreement shall be construed against or interpreted to the disadvantage of any Party by any court, or other governmental or judicial authority, because of any Party having, or being deemed to have drafted, prepared, structured or dictated this Agreement, or any provision herein.

10.17 Performance. Waiver by any party of performance by any party of any of the provisions of this Agreement shall not be construed as a waiver of any further right to insist upon full performance of the terms of this Agreement.

10.18 Variances in Acreages. No adjustment in the Purchase Price shall be made for any variances in acreage from that represented herein; and the Purchase Price shall be construed as a lump sum amount paid for the Property as described herein.

10.19 No Recording of Agreement. Neither party shall record this Agreement.

10.20 Seller’s Retained Inspection Rights and Associated Costs. Pursuant to the terms of the Cyprus Creek and Duncan #9 Lease and Sublease, the Cyprus Creek #9 Lease, the Rogers #9 Sublease, and the Overriding Royalty Agreement, Seller has retained certain rights to inspect and/or examine the Buyer’s mine and records as more specifically described in the above referenced instruments. Without limiting any such rights, Seller hereby agrees that it shall bear its own costs and expenses associated with such inspections and/or examinations.

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, Seller and Buyer have each caused this Agreement to be duly executed and delivered in its name and on its behalf, all effective as of the day and year first written above.

 

SELLER:    CYPRUS CREEK LAND RESOURCES, LLC
   T.L. Bethel
   By:   /s/ T.L. Bethel
   Its:   VP
BUYER:    ARMSTRONG COAL COMPANY, INC.
   Martin D. Wilson
   By:   /s/ Martin D. Wilson
   Its:   President

 

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Elk Creek

Ohio County

SCHEDULE A

Owned Property

All of Lessor’s right, title and interest in and to the following surface and/or coal tracts situated in Ohio County, Kentucky:

(a) The Ohio County Underground #9 Coal Area of the owned Kentucky #9 seam of coal only comprised of approximately 18,153.5 entire interest acres and 673.5 partial interest acres, for a total of approximately 18, 827 owned #9 coal acres, and all of the #9 coal mining rights and privileges appurtenant thereto, in, on, and underlying the owned entire interest and partial interest #9 coal only tracts, more particularly described on the attached Exhibit A-1 and depicted on the map attached hereto as Exhibit A-2; and

(b) The Elk Creek Surface Area comprised of approximately 415 acres of owned surface, and the surface and coal mining rights and privileges appurtenant thereto, more particularly described on the attached Exhibit B-1 and depicted on the map attached hereto as B-2;

all of the aforesaid Exhibits are incorporated herein by reference and made a part hereof, together with all appurtenants thereunto belonging or in anywise appertaining, and being subject to the known exceptions and prior conveyances more particularly set forth herein.

BEING the same property acquired by Ceralvo Holdings, LLC from Cyprus Creek Land Resources, LLC and Cyprus Creek Land Company by Deed dated March 31, 2008, of record in Deed Book 373, Page 262, in the office of the Clerk of Ohio County, Kentucky.


EXHIBIT A-1

No. 9 Vein of Coal and No. 9 Coal Mining Rights Only

 

Item

    

Orig. L.C. No.

    

Acreage

1.      028 - 296      220.09 acres
AND BEING the same property conveyed to Peabody Coal Company by Big Rivers Electric Corporation by deed dated May 13, 1988, recorded in Deed Book 265, page 418, in the Ohio County Clerk’s office.
2.      028 - 033, T.23      258 acres
          (except portion conveyed at Deed Book 237, page 80)
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by Deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
3.      028 - 122      168 acres
          (except portion conveyed at Deed Book 237, page 80)
AND BEING a portion of the property conveyed to Sentry Royalty Company and Beaver Dam Coal Company by Raymond T. Nall, widower, by deed dated February 14, 1961, recorded in Deed Book 178, page 18; and also being the same property in which Peabody Coal Company conveyed its undivided 1/2 interest to Beaver Dam Coal Company, expressly reserving all underlying coal, by deed dated December 27, 1974, recorded in Deed Book 210, page 657, both in the Ohio County Clerk’s office.
4.      028 - 252      0.55 acres
AND BEING the same property conveyed to Peabody Coal Company by Edwin Brown, et ux, by deed dated June 8, 1977, recorded in Deed Book 224, page 227, in the Ohio County Clerk’s office.
5.      028 - 251      1.25 acres
AND BEING the same property conveyed to Peabody Coal Company by Earl Powers, et ux, by deed dated June 8, 1977, recorded in Deed Book 224, page 229, in the Ohio County Clerk’s office.

 

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6.      028 - 033, T.12, P.1      135.25 acres
          (except portion conveyed at Deed Book 237, page 80)
7.      028 - 033, T.6, P.2      84.875 acres
8.      028 - 033, T.2, P.2      72.5 acres
9.      028 - 033, T.45      22 acres
10.      028 - 033, T.1, P.2      58.5 acres
11.      028 - 033, T.25      41.50 acres 50% Interest
12.      028 - 033, T.15      42 acres
13.      028 - 033, T.47      75 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by Deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
14.      028 - C - 107      67 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
15.      028 - 194      5 acres
AND BEING the same property conveyed to Peabody Coal Company and Beaver Dam Coal Company by J. William Bassett, Trustee, by deed dated March 2, 1971, recorded in Deed Book 192, page 387, in the Ohio County Clerk’s office.
16.      028 - C - 41      25 Less 5 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
17.      028 - 234      3 Less 0.25 acres
AND BEING the same property conveyed to Peabody Coal Company by M. J. Boling, et ux., by deed dated December 2, 1974, recorded in Deed Book 210, page 311, in the Ohio County Clerk’s office.
18.      028 - O - 7      10 acres
AND BEING the same property conveyed to The Ohio County Land & Mining Company, a Kentucky corporation, by J. P. Tichenor, et ux., by deed dated February 24, 1910, recorded in Deed Book 38, page 416, in the Ohio County Clerk’s office. Beaver Dam Coal Company became the owner of all of the stock, mineral tracts, and property of the Ohio County Land & Mining Company, which was composed of the same shareholders as the Beaver Dam Coal Company.

 

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19.      028 - C - 75      100 acres Less 3 acres,
          and Less 10 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
20.      028 - 033, T.14, P.1      34.80 acres
     028 - 033, T.14, P.2      66.15 acres
21.      028 - 033, T.1, P.1      95 acres
22.      028 - 033, T.7, P.1      100 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
23.      028 - C - 68      26.5 acres
24.      028 - C - 69      100 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
25.      028 - 033, T.2, P.3      82.5 acres
26.      028 - 033, T.9      83.88 acres
27.      028 - 033, T.5, P.1      125 acres
28.      028 - 033, T.27      6.25 acres
29.      028 - 033, T.5, P.1      25 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by eed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
30.      028 - C - 133      35 acres
31.      028 - C - 134      15 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
32.      028 - 033, T.29, P.4      262 acres except cemetery
33.      028 - 033, T.29, P.5      101.25 acres

 

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          (except portion conveyed at Deed Book 237, page 80)
34.      028 - 033, T.32, P.3      25 acres Undivided 1/2 Interest
          (except portion conveyed at Deed Book 237, page 80)
35.      028 - 033, T.18, P.1      240 acres
          (except portion conveyed at Deed Book 237, page 80)
36.      028 - 033, T.16      100 acres
          (except portion conveyed at Deed Book 237, page 80)
37.      028 - 033, T.17      55 acres
          (except portion conveyed at Deed Book 237, page 80)
38.      028 - 033, T.28, P.1      41 acres
          (except portion conveyed at Deed Book 237, page 80)
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
39.      028 - C - 35      679 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
40.      028 - 033, T.29, P.6      9.58 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by Deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
41.      028 - C - 144      123.75 acres
42.      028 - C - 72      109 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
43.      028 - 033, T.61      53 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal

 

11


Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
44.      028 - C - 36      133 acres
45.      028 - C - 74      16 acres
46.      028 - C - 45      36 acres
47.      028 - C - 65      80 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15,1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
48.      028 - 033, T.32, P.2      5 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
49.      028 - C - 73      50 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
50.      028 - 033, T.32, P.1      60 acres
51.      028 - 033, T.31, P.2      124.50 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
52.      028 - C - 127      30 acres
53.      028 - C - 128      29 acres
54.      028 - C - 126      60 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
55.      028 - 033, T.42      71.5 acres

 

12


AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
56.      028 - C - 34      22.5 acres
57.      028 - C - 113      230 acres Less 1 acre Cemetery
58.      028 - C - 63      62.5 acres
59.      028 - C - 64      25 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
60.      028 - 033, T.54      110.5 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
61.      028 - C - 60      80 Less 20 acres, and Less 15 acres
62.      028 - C - 61      40.25 acres
63.      028 - C - 70      36 acres
64.      028 - C - 66      90.5 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
65.      028 - 033, T.13      102.45 acres
66.      028 - 033, T.49, P.1      81 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
67.      028 - C - 67      31 acres

 

13


AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
68.      028 - 033, T.43      25 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
69.      028 - C - 71      20 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office. Also being a portion of the property in which Beaver Dam Coal Company conveyed all coal above the # 9 seam of coal to Blue Diamond Mining Company by deed dated November 15, 1921, recorded in Deed Book 62, page 381, in the Office of the Ohio County Clerk.
70.      028 - E - 81      13.5 Less 0.07 Acres
AND BEING the same property conveyed to Beaver Dam Coal Company by Robert Snodgrass, et ux., by deed dated December 18, 1974, recorded in Deed Book 210, page 654, in the Ohio County Clerk’s office.
71.      028 - C - 123      69.5 acres
72.      028 - C - 122      50 acres
73.      028 - C - 111      42 acres and 74 poles
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office. Also being a portion of the property in which Beaver Dam Coal Company conveyed all coal above the # 9 seam of coal to Blue Diamond Mining Company by deed dated November 15, 1921, recorded in Deed Book 62, page 381, in the Ohio County Clerk’s Office.
74.      028 - 195      42 acres and 74 poles
AND BEING the same property conveyed to Peabody Coal Company and Beaver Dam Coal Company by J. William Bassett, Trustee, by deed dated March 12, 1971, recorded in Deed Book 192, page 385, in the Ohio County Clerk’s office.
75.      038 - 121      42 acres and 74 poles
AND BEING the same property conveyed to Peabody Coal Company by Robert Snodgrass, et ux., by deed dated February 26, 1979, recorded in Deed Book 231, page 661, in the Ohio County Clerk’s office.

 

14


76.      028 - C - 112      42 acres and 74 poles
77.      028 - C - 108      15 acres
78.      028 - C - 110      43 acres and 77 poles, except 2.5 acres
79.      028 - C - 109      42 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
80.      028 - D - 87      156.875 acres Except 1 acre cemetery
81.      028 - D - 82      138.50 acres
82.      028 - D - 84      55 acres
          38/40 Interest; and 2/40 Interest Adversely Possessed
83.      028 - D - 19      33.33 acres
84.      028 - D - 81      61.50 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
85.      028 - 250(2), P.2      LEASEHOLD RESERVED HEREIN
86.      028 - D - 50      31 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
87.      028 - 202      17 acres       Undivided 2/7 Interest
     028 - 220      17 acres       Undivided 5/7 Interest
AND BEING the same property from which Katie Ball, widow, et al., conveyed an undivided 2/7 interest to Peabody Coal Company by deed dated January 28, 1972, recorded in Deed Book 197, page 345; and from which Ernest Duncan, et ux., conveyed an undivided 5/7 interest to Peabody Coal Company by deed dated December 7, 1972, recorded in Deed Book 216, page 604; both in the Ohio County Clerk’s office.
88.      028 - D - 56      50 acres
89.      028 - D - 80      38 acres
90.      028 - D - 49      38 acres
91.      028 - D - 48      77 acres and 23 poles
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
92.      028 - C - 1      92 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.

 

15


93.      028 - 250(2), P.1, T.2 and T.3      LEASEHOLD RESERVED HEREIN
94.      028 - 250(2), P.1, T.1      LEASEHOLD RESERVED HEREIN
95.      028 - 250(2), P.1, T.4      LEASEHOLD RESERVED HEREIN
96.      028 - 250(2), P.1, T.5 and T.6      LEASEHOLD RESERVED HEREIN
97.      028 - C - 62      139 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company by Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
98.      028 - 185, P.5      279 acres
AND BEING the same property, conveyed to Peabody Coal Company by BB Mining Company by deed dated August 24, 1970, recorded in Deed Book 191, page 280, in the Ohio County Clerk’s office.
99.      028 - 137, T.1      75 acres
     028 - 137, T.2      56 acres
     028 - 137, T.3, P.1      64.75 acres
     028 - 137, T.3, P.2      76 acres
     028 - 137, T.4, P.1      29.25 acres
     028 - 137, T.4, P.2      27.20 acres
     028 - 137, T.5      75 acres
     028 - 137, T.6      64 acres
AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company by Deed from Grace Addington, et al., dated November 7, 1964, recorded in Deed Book 163, page 241, in the Ohio County Clerk’s office.
100.      028 - C - 129      20 acres and 62 poles
101.      028 - C - 16      56 acres
102.      028 - C - 43      25 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
103.      028 - O - 6      15 acres
AND BEING the same property conveyed to The Ohio County Land & Mining Company, a Kentucky corporation, by Louis Brown, et ux., by deed dated September 21, 1907, recorded in Deed Book 85, page 314, in the Ohio County Clerk’s office. Beaver Dam Coal Company became the owner of all of the stock, mineral tracts, and property of the Ohio County Land & Mining Company, which was composed of the same shareholders as the Beaver Dam Coal Company.
104.      028 - 033, T.41      25 acres also known as 028 - 092, T.4
     028 - 092, T.4      25 acres also known as 028 - 033, T.41

 

16


AND BEING a portion of Tracts No. 028 - 033 conveyed to Beaver Dam Coal Company and Rough River Coal Company by Deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
FURTHER BEING a portion of Tracts No. 028 - 092 conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Gertrude Igleheart, widow, et al., by deed dated December 24, 1957, recorded in Deed Book 135, page 400; and by deed of correction dated January 3, 1959, recorded in Deed Book 139, page 338, in the Ohio County Clerk’s office.
105.      028 - C - 38      23 acres
106.      028 - C - 22      28.375 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
107.      028 - 033, T.31, P.1      39.5 acres
108.      028 - 033, T.30      2.2 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Rough River Coal Company by Deed from W. G. Parrott, et ux., dated December 17, 1946, recorded in Deed Book 103, page 394, in the Ohio County Clerk’s office. Rough River Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to The Alston Coal Company by deed dated November 21, 1947, recorded in Deed Book 105, page 621; and The Alston Coal Company conveyed its undivided 1/2 interest in Tracts No. 028 - 033 to Sentry Royalty Company by deed dated December 1, 1956, recorded in Deed Book 154, page 573; of record in the Ohio County Clerk’s office.
109.      028 - C - 40      18 acres
110.      028 - C - 37      63 Less 6 acres
111.      028 - C - 29      100.25 acres
112.      028 - C - 31      27 acres
113.      028 - C - 30      130 acres
114.      028 - C - 28      60 acres
115.      028 - C - 33      2.5 acres
116.      028 - C - 32      40 acres
117.      028 - C - 21      68.75 acres
118.      028 - C - 20      133 Less 68.75 acres
119.      028 - C - 18      50 acres Except 0.75 acre school lot
120.      028 - C - 19      26.80 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
121.      028 - 111, P.1, T.1      1 acre

 

17


AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Ray Ward, et ux., by deed dated July 25, 1960, recorded in Deed Book 145, page 479, in the Ohio County Clerk’s office.
122.      028 - 092, T.1      15.75 acres
     028 - 092, T.2      53 acres
     028 - 092, T.3      68 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Gertrude Igleheart, widow, et al., by deed dated December 24, 1957, recorded in Deed Book 135, page 400; and by deed of correction dated January 3, 1959, recorded in Deed Book 139, page 338, in the Ohio County Clerk’s office.
123.      028 - C - 39      65 acres
124.      028 - C - 17      80 acres
125.      028 - C - 50      80 acres
126.      028 - C - 10      64.75 acres
127.      028 - C - 27      59 acres
128.      028 - C - 26      40 acres
129.      028 - C - 114      51 acres
130.      028 - C - 115      182 Less 51 acres
131.      028 - C - 11      156 Less 7 acres
132.      028 - C - 23      7 acres
133.      028 - C - 24      1 acre
134.      028 - C - 125      156.25 acres
135.      028 - C - 44      10 acres
136.      028 - C - 42      70 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
137.      028 - 095      26.875 acres
AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company from John W. Fulkerson, single, by deed dated December 30, 1957, recorded in Deed Book 135, page 445, in the Ohio County Clerk’s office.
138.      028 - 091      67.1 acres
AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Elmer L. Fulkerson, et ux., by deed dated December 23, 1957, recorded in Deed Book 135, page 391, in the Ohio County Clerk’s office.
139.      028 - 094      67.1 acres
AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company from O. D. Fulkerson, et ux., by deed dated December 24, 1957, recorded in Deed Book 135, page 406, in the Ohio County Clerk’s office.
140.      028 - 093, T.1      129.25 acres

 

18


AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company in the following deeds of record in the Ohio County Clerk’s office:
(a)      Gertrude Igleheart, widow, by deed dated December 24, 1957, recorded in Deed Book 135, page 397;
(b)      Leslie K. Grimes, et ux., by deed dated January 2, 1958, recorded in Deed Book 135, page 504;
(c)      Charles M. Grimes, et ux., by deed dated January 13, 1958, recorded in Deed Book 135, page 523;
(d)      Mayme Jane Grimes Holland, et vir., by deed dated January 15, 1958, recorded in Deed Book 135, page 572;
(e)      David E. Grimes, et ux., by deed dated January 21, 1958, recorded in Deed Book 135, page 587.
141.      028 - 185, P.4      151.875 acres
AND BEING the same property conveyed to Peabody Coal Company from BB Mining Company by deed dated August 24, 1970, recorded in Deed Book 191, page 280, in the Ohio County Clerk’s office.
142.      028 - 126, T.1      35 acres
     028 - 126, T.2      3 acres
     028 - 126, T.3      148 acres
     028 - 126, T.4      71.5 acres
AND BEING the same tracts conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Ross Morton, et ux., by deed dated January 20, 1962, recorded in Deed Book 151, page 180, in the Ohio County Clerk’s office.
143.      028 - D - 38      73 acres
144.      028 - D - 63      54 Less 2 acres and               100% Interest
          2-acre portion of 54 acres     80% Interest
145.      028 - D - 22      53.33 acres
146.      028 - D - 39      52.50 acres
     028 - D - 40      52 acres
147.      028 - D - 40A      3.50 acres
148.      028 - D - 53      40 acres
149.      028 - D - 47      83 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
150.      028 - C - 151      106 acres and 69.25 poles
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
151.      1928 - 300      1.5 acres and 10.75 poles 50% Interest
     1928 - 300 - 01      1.5 acres and 10.75 poles 40% Interest

 

19


AND BEING the same property from which an undivided 1/2 interest was conveyed from Morgan Duncan, et ux., to Peabody Development Company, LLC, by deed dated February 1, 2005, recorded in Deed Book 353, page 38; and from which an undivided 2/5 interest was conveyed from Joseph S. Allen, et ux., to Peabody Development Company, LLC, by deed dated February 10, 2005, recorded in Deed Book 353, page 42; both in the Ohio County Clerk’s office.
152.      1928 - 302      7 acres                 60% Interest
AND BEING the same property conveyed to Peabody Development Company, LLC, in the Ohio County Clerk’s office, as follows:
(a)      Fanny M. Curtis by deed dated March 17, 2005, recorded in Deed Book 354, page 341;
(b)      Lillian Finley Bassett by deed dated April 25, 2005, recorded in Deed Book 354, page 350;
(c)      Hubert Ashby by deed dated April 18, 2005, recorded in Deed Book 354, page 358.
153.      028 - D - 78      141.50 acres Except 15 acres
154.      028 - D - 1      52.75 acres
155.      028 - D - 23      243.33 acres
156.      028 - D - 77      40 acres
157.      028 - D - 76      160 acres Except 6 acres and 20 poles
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
158.      028 - C - 77      50 acres
159.      028 - C - 76      78 acres
160.      028 - C - 52      50 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
161.      028 - D - 42      60 Less 5 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
162.      028 - C - 53      5 acres
163.      028 - C - 54      137 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
164.      028 - D - 46      25 acres

 

20


AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
165.      028 - C - 154      71 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
166.      028 - D - 37      23 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
167.      028 - C - 55      60 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
168.      028 - D - 79      102.50 acres and 22 poles
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
169.      028 - 083, T.5      80 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Ross Morton, et ux., et al., by deed dated February 18, 1957, recorded in Deed Book 131, page 492, in the Ohio County Clerk’s office.
170.      028 - C - 105      40 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
171.      028 - D - 65      57 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
172.      028 - 146      30 acres
AND BEING the same tract conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Elzoria Stearman Bishop, et al., by Master Commissioner Deed dated April 14, 1966, recorded in Commissioner’s Deed Book M, page 201, in the Ohio County Clerk’s office.

 

21


173.      028 - 081, T.1      130 acres
     028 - 081, T.2      100 acres
AND BEING the same tracts conveyed to Beaver Dam Coal Company and Sentry Royalty Company from R. H. Morris, et ux., by deed dated February 13, 1957, recorded in Deed Book 131, page 351; in the Ohio County Clerk’s office.
174.      028 - C - 5      38 acres
175.      028 - C - 8      105 acres except 1 acre school lot
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
176.      028 - 096      35 acres
AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Ethel Morton, et al., by Master Commissioner Deed dated April 19, 1958, recorded in Commissioner’s Deed Book L, page 391, in the Ohio County Clerk’s office.
177.      028 - C - 6      40 acres
178.      028 - C - 7      10 acres
179.      028 - C - 155      90 acres
180.      028 - C - 58      55 acres
181.      028 - C - 118      80 acres
182.      028 - C - 13      86 acres
183.      028 - C - 15      85.75 acres
184      028 - C - 14      2 acres
185.      028 - C - 12      100 Less 2 acres except cemetery
186.      028 - C - 131      100 acres
187.      028 - C - 132      69.5 Less 31.25 acres
188.      028 - C - 130      31.25 acres
189.      028 - C - 47      50.5 acres except 0.5 acre cemetery
190.      028 - C - 48      55 acres
191.      028 - C - 157      87.35 less 5 acres
192.      028 - C - 9      166 acres
193.      028 - C - 149      47.25 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
194.      1123 - 005, T.1, P.1      100 acres except portion of 47.5 acres
     1123 - 005, T.1, P.2      9 acres, 2 roods
          & 38 poles except portion of 47.5 acres
     1123 - 005, T.1, P.3      9 acres, 1 rood
          & 23 poles except portion of 47.5 acres
     1123 - 005, T.1, P.4      30 acres, 3 roods
          & 19 poles except portion of 47.5 acres
     1123 - 005, T.2      19 acres

 

22


AND BEING the same property conveyed to Peabody Development Company, LLC, from Wallace L. Loyd, et ux., et al. (heirs of O. J. Loyd) by deed dated October 14, 2004, recorded in Deed Book 351, page 240, in the Ohio County Clerk’s office.
195.      028 - C - 159      45.40 acres
196.      028 - C - 158      65 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
197.      028 - 125, T.1      10.66 acres        100% Interest
     028 - 125, T.2      31.80 acres        Approx. 93.3% Interest
     028 - 125, T.3      44.20 acres        Approx. 93.3% Interest
AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company by the following deeds of record in the Ohio County Clerk’s office:
(a) Altha Addington Morton, widow, et al., by deed dated January 20, 1962, recorded in Deed Book 151, page 184;
(b) Orhal Smith, single, by deed dated March 9, 1965, recorded in Deed Book 164, page 415;
(c) Alice Addington, widow, et al., by deed dated March 24, 1965, recorded in Deed Book 164, page 591;
(d) Esther Addington, widow, et al., by deed dated March 13, 1965, recorded in Deed Book 165, page 641; and
(e) Esther Addington, widow, et al., by deed dated April 7, 1966, recorded in Deed Book 168, page 609.
198.      028 - C - 56      91 less 2 acres
199.      028 - C - 49      140 less 30 acres
200.      028 - C - 51      68 acres
201.      028 - C - 25      30 acres
202.      028 - C - 135      70 acres
203.      028 - C - 46      62.5 less 12 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
204.      028 - 083, T.1      62.5 acres          80% Interest
     028 - 083, T.2      75 acres             100% Interest
     028 - 083, T.3      102 acres           100% Interest
     028 - 083, T.4      12 acres             100% Interest
AND BEING a portion of the property conveyed to Beaver Dam Coal Company and Sentry Royalty Company from Ross Morton, et ux., et al., by deed dated February 18, 1957, recorded in Deed Book 131, page 492, in the Ohio County Clerk’s office.
205.      028 - C - 136      15.25 less 2.50 acres
206.      028 - C - 137      1.75 acres
207.      028 - C - 138      16.50 acres
208.      028 - C - 119      4.40 acres

 

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209.      028 - C - 140      17 acres
210.      028 - C - 139      0.75 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
211.      028 - 138      135.5 acres         Approx. 58.432% Interest
AND BEING the same property conveyed to Beaver Dam Coal Company and Sentry Royalty Company by the following deeds of record in the Ohio County Clerk’s office:
(a) Ida Hicks, et vir., by deed dated December 14, 1964, recorded in Deed Book 163, page 535;
(b) O. D. Fulkerson by deed dated December 18, 1964, recorded in Deed Book 163, page 577;
(c) Athel Danks, et vir., et al., by deed dated December 15, 1964, recorded in Deed Book 163, page 582;
(d) C. O. Hunter, et ux., by deed dated December 24, 1964, recorded in Deed Book 163, page 585;
(e) Willie E. Henry, et vir., by deed dated August 17, 1967, recorded in Deed Book 175, page 560;
(f) Austin C. Hunter, et ux., by deed dated September 19, 1967, recorded in Deed Book 176, page 235;
(g) Roy Hunter Trunnell, et ux., by deed dated March 25, 1968, recorded in Deed Book 178, page 527;
(h) Martha Barnard Hess, et vir., by deed dated April 10, 1968, recorded in Deed Book 179, page 37; and
(i) Ernest B. Trunnell, et ux., by deed dated February 3, 1976, recorded in Deed Book 217, page 313.
212.      028 - C - 120      57.50 acres         100% Interest
213.      028 - C - 121      40 acres              100% Interest
214.      028 - C - 59      88 acres              50% Interest
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
215.      028 - 147, T.1      40 acres
AND BEING the same property conveyed to Peabody Coal Company and Beaver Dam Coal Company from Pauline Johnson, et ux., by deed dated April 28, 1966, recorded in Deed Book 169, page 130; from Fannie White, et ux., by deed dated September 20, 1968, recorded in Deed Book 181, page 63; and from Ellen Bellew by deed dated October 1, 1968, recorded in Deed Book 181, page 155; all in the Ohio County Clerk’s office.
216.      028 - C - 57      115 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.

 

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217.      028 - 100, T.2      59 acres
AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Icelean Bennett Young by deed dated May 12, 1959, recorded in Deed Book 141, page 115, in the Ohio County Clerk’s office.
218.      028 - 070      86.5 acres
AND BEING the same property conveyed to Homestead Coal Company and Beaver Dam Coal Company from Herbert Martin, et ux., by deed dated September 22, 1955, recorded in Deed Book 126, page 245, in the Ohio County Clerk’s office.
219.      028 - 053      175 Less 7 acres
AND BEING the same property conveyed to Homestead Coal Company and Beaver Dam Coal Company from O. E. Allen, et ux., by deed dated March 30, 1955, recorded in Deed Book 124, page 73; and from Margaret Gill, et vir., et al., by deed dated May 23, 1955, recorded in Deed Book 124, page 443; both in the Ohio County Clerk’s office.
220.      028 - 069      145 acres
AND BEING the same property conveyed to Homestead Coal Company and Beaver Dam Coal Company from Mary Lee Drake, et vir., by deed dated September 22, 1955, recorded in Deed Book 126, page 213, in the Ohio County Clerk’s office.
221.      028 - 100, T.1      30.75 acres
AND BEING the same property conveyed from Icelean Bennett Young to Sentry Royalty Company and Beaver Dam Coal Company by deed dated May 12, 1959, recorded in Deed Book 141, page 115, in the Ohio County Clerk’s office.
222.      028 - 102, T.1      12 acres
     028 - 102, T.2      37.5 acres
AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company in the following deeds, all in the Ohio County Clerk’s office:
a) Ed Bennett, et ux., dated September 15, 1959, recorded in Deed Book 142, page 512;
b) Stella Russell dated September 19, 1959, recorded in Deed Book 142, page 516;
c) Minnie Perry, et al., dated September 25, 1959, recorded in Deed Book 142, page 514;
d) Augusta Miller, et al., dated October 14, 1959, recorded in Deed Book 142, page 635;
e) Seward Bennett, et al., dated September 21, 1959, recorded in Deed Book 143, page 26;
f) Pauline Hampton, et al., dated October 14, 1959, recorded in Deed Book 143, page 28;
g) Ariee Bennett Taylor, et al., dated October 22, 1959, recorded in Deed Book 143, page 80;
h) Wilbert Bennett dated November 16, 1959, recorded in Deed Book 143, page 207;
i) Louise Anderson dated November 16, 1959, recorded in Deed Book 143, page 205.
223.      028 - 101      76.1 acres

 

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AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Ed Bennett, et ux., by deed dated July 15, 1959, recorded in Deed Book 142, page 83, in the Ohio County Clerk’s office.
224.      1123 - 004, T.1      58.5 acres
     123 - 004, T.2      88.6 acres
AND BEING the same property conveyed to Peabody Development Company from Virginia Sue Campbell, et al. (heirs of Charles E. Wolcott), by deed dated January 30, 1998, recorded in Deed Book 311, page 79, in the Ohio County Clerk’s office.
225.      028 - 099, T.1      150 acres
AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Render Bradshaw, et al., by deed dated April 6, 1959, recorded in Deed Book 140, page 279, in the Ohio County Clerk’s office.
226.      028 - 080      186 acres
AND BEING the same property conveyed to Homestead Coal Company and Beaver Dam Coal Company from Roxie P. Gish, et al., by deed dated September 8, 1956, recorded in Deed Book 130, page 189, in the Ohio County Clerk’s office.
227.      028 - C - 148      131.5 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
228.      028 - 056, T.1      115 less 2 acres
     028 - 056, T.2      Approx. 103 acres
AND BEING the same property conveyed to Homestead Coal Company and Beaver Dam Coal Company from Lucy Taylor, et vir., by deed dated April 7, 1955, recorded in Deed Book 124, page 179, in the Ohio County Clerk’s office.
229.      028 - C - 141      392.3 acres
230.      028 - C - 147      51 less 2 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
231.      028 - 099, T.2      2 acres
AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Render Bradshaw, et al., by deed dated April 6, 1959, recorded in Deed Book 140, page 279, in the Ohio County Clerk’s office.
232.      028 - 169, T.7      “100 to 120 acres” (per deed)
     028 - 169, T.8      115 1/4 acres Less 40 1/4 acres

 

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AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Farm Enterprises, Inc., by deed dated November 22, 1967, recorded in Deed Book 177, page 105, in the Ohio County Clerk’s office.
233.      028 - C - 146      70 acres
234.      028 - C - 143      40 acres and 1 acre
235.      028 - C - 145      95 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
236.      1123 - 002 - 0A      Undivided 1/2 Interest 152.1 acres
AND BEING the same property from which an undivided 1/2 interest was conveyed to Peabody Development Company by Master Commissioner’s Deed dated February 10, 1999, recorded in Deed Book 316, page 697, of the Ohio County Clerk’s office.
237.      028 - C - 142      135 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from Hattie B. Speed, et al., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
238.      028 - 068, T.1      93.5 acres
     028 - 068, T.2      76.8 acres
     028 - 068, T.3      0.5 acres
     028 - 068, T.4      20 acres
     028 - 068, T.5      17.48 acres
     028 - 068, T.6      21.25 acres
     028 - 068, T.7      94.5 acres
AND BEING the same property conveyed to Homestead Coal Company and Beaver Dam Coal Company by deed from Wallace Roe, et ux., et al., dated September 15, 1955, recorded in Deed Book 126, page 152; and by deed from Gussie C. Roe, et vir., dated September 22, 1955, recorded in Deed Book 126, page 215; both in the Ohio County Clerk’s office.
239.      028 - 086      50 acres
AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Walter Withrow, et ux., by deed dated July 9, 1957, recorded in Deed Book 133, page 315, in the Ohio County Clerk’s office.
240.      028 - 090      178 acres
AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Bertie Eudaley, et al., by the following deeds of record in the Ohio County Clerk’s office:
a) Opia Coin, et vir., dated December 14, 1957, recorded in Deed Book 135, page 351;
b) George Erwin dated December 16, 1957, recorded in Deed Book 135, page 353;
c) Sudie Boone dated December 13, 1957, recorded in Deed Book 135, page 355;

 

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d) William Eudaley dated November 7, 1957, recorded in Deed Book 135, page 357;
e) Bertie Eudaley, et al., dated December 13, 1957, recorded in Deed Book 135, page 359;
f) Ruth Brennick, et ux., dated December 30, 1957, recorded in Deed Book 135, page 443;
g) Mary Elizabeth Craft dated January 8, 1958, recorded in Deed Book 135, page 487;
h) Luvina Reid dated January 18, 1958, recorded in Deed Book 135, page 555; and
i) Rodney Chinn, Guardian for E. Robert and Erma Lee, dated December 28, 1957, recorded in Deed Book 136, page 350.
241.      028 - 082      189 acres
AND BEING the same property conveyed to Sentry Royalty Company and Beaver Dam Coal Company by the following deeds of record in the Ohio County Clerk’s office:
a) Eva Morton Vance, et vir., dated February 15, 1957, recorded in Deed Book 131, page 363;
b) Jean Morton Sherrill, et vir., dated February 22, 1957, recorded in Deed Book 131, page 425;
c) Ethyl Morton dated February 22, 1957, recorded in Deed Book 131, page 436.
242.      028 - 215      LEASEHOLD RESERVED HEREIN
243.      028 - D - 64      56 acres and 40 poles
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
244.      028 - 210      45 Less 3 acres
AND BEING the same property conveyed to Peabody Coal Company and Beaver Dam Coal Company from Martha M. Marsh, et vir., by deed dated April 10, 1972, recorded in Deed Book 198, page 241, in the Ohio County Clerk’s office.
245.      028 - C - 150      50 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
246.      028 - D - 70      40 acres
247.      028 - D - 69      47.60 acres
248.      028 - D - 71      60 acres 3 rods and 4 poles except 6 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
249.      028 - D - 74      45 acres             25% Interest
     028 - 211      45 acres             75% Interest
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101; and the same 45-acre tract conveyed to Beaver Dam Coal Company and Peabody Coal Company from

 

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Ben Kimmel, et ux., by deed dated May 2, 1972, recorded in Deed Book 198, page 383; both in the Ohio County Clerk’s office.
250.      028 - 204   63.50 less 19.75 acres 66% Interest
AND BEING the same property conveyed to Beaver Dam Coal Company and Peabody Coal Company from heirs of Druzilla Barnard in the following deeds of record in the Ohio County Clerk’s office:
a) Margret Everly, et al., by deed dated August 11, 1971, recorded in Deed Book 195, page 18;
b) Margaret D. Barnard, et al., by deed dated April 1, 1972, recorded in Deed Book 198, page 130;
c) Jessie B. Woodward, et vir., by deed dated August 20, 1971, recorded in Deed Book 195, page 145.
251.      028 - D - 75   19.75 acres                 25% Interest
252.      028 - D - 74   202 acres and 10 acres
       except 60 acres          25% Interest
253.      028 - D - 41   66 less 30 acres
254.      028 - D - 68   30 acres
255.      028 - D - 67   64 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
256.      028 - C - 153   18.375 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
257.      028 - D - 51   133.60 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 101, in the Ohio County Clerk’s office.
258.      028 - C - 152   40 acres
AND BEING a portion of the property conveyed to Beaver Dam Coal Company from I. P. Barnard, et ux., by deed dated March 15, 1916, recorded in Deed Book 51, page 135, in the Ohio County Clerk’s office.
259.      028 - 185, P.3, T.1   120 acres
     028 - 185, P.3, T.2   74 acres
AND BEING a portion of the property conveyed to Peabody Coal Company from BB Mining Company by deed dated August 24, 1970, recorded in Deed Book 191, page 280, in the Ohio County Clerk’s office.
260.      Part of 2699-000006-00-formerly: K-128-018, G. 6, T. 2             50 acres
           formerly: K-128-018, G. 6, T. 3             0.50 acres

 

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AND BEING a portion of the property conveyed to Cyprus Creek Land Resources, LLC, from CNX Gas Company, LLC, by deed dated October 9, 2007, of record in Deed Book 370, page 657, in the Ohio County Clerk’s office.

261. Part of 2699-000006-00 - formerly: K-128-018, G.4 55 acres

AND BEING a portion of the property conveyed to Cyprus Creek Land Resources, LLC, from CNX Gas Company, LLC, by deed dated October 9, 2007, of record in Deed Book 370, page 657, in the Ohio County Clerk’s office.

Common Sources of Title

1. By Quitclaim Deed dated September 30, 1957, recorded in Deed Book 134, page 219, Homestead Coal Company, a Kentucky corporation, conveyed all of the land it owned in Ohio County to Sentry Royalty Company, a Nevada corporation. (Also see the Quitclaim Deed dated December 1, 1967, recorded in Deed Book 177, page 236; both in the Ohio County Clerk’s office.)

2. By Merger approved by the Illinois Secretary of State on February 5, 1968, recorded July 28, 1972, in Miscellaneous Book 6, page 375, in the Ohio County Clerk’s office, Sentry Royalty Company merged with Peabody Coal Company. The merger occurred pursuant to Illinois law, and the instrument recites that Peabody Coal Company, an Illinois corporation, owned all of the stock of the non-surviving corporation.

3. By Deed dated March 29, 1968, recorded in Deed Book 178, page 395, in the Ohio County Clerk’s office, Peabody Coal Company, an Illinois corporation, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Coal Company, a Delaware corporation.

4. By Deed dated September 12, 1989, recorded in Deed Book 271, page 109, in the Ohio County Clerk’s office, Peabody Coal Company, a Delaware corporation, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Development Company, a Delaware corporation.

5. Pursuant to Section 266 of the Delaware General Corporation Law, Peabody Development Company, a Delaware corporation, converted and changed its name to Peabody Development Company, LLC, a Delaware limited liability company, effective December 16, 2003, recorded April 27, 2004, in Miscellaneous Book 52, pages 627 - 630, in the Ohio County Clerk’s office.

6. Pursuant to Section 266 of the Delaware General Corporation Law, Peabody Coal Company, a Delaware corporation, converted and changed its name to Peabody Coal Company, LLC, a Delaware limited liability company, effective July 11, 2005, of record August 25, 2005, in Miscellaneous Book 55, pages 147 -152, in the Ohio County Clerk’s office.

7. By instrument effective September 12, 1989, dated December 20, 2005, and recorded in Deed Book 358, page 226, in the Ohio County Clerk’s office, Peabody Coal Company, LLC, and Peabody Development Company, LLC, confirmed the reserves transfer of September 12, 1989, at Deed Book 271, page 109.

 

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8. By Corporate Special Warranty Deed dated and recorded on December 20, 2005, in Deed Book 358, page 301, in the Ohio County Clerk’s office, Peabody Coal Company, LLC, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Development Company, LLC.

9. By Corporate Special Warranty Deed dated and recorded December 20, 2005, in Deed Book 358, page 308, in the Ohio County Clerk’s office, Peabody Development Company, LLC, conveyed all of the property it owned in Ohio County, Kentucky, to Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company.

10. By Deed of Confirmation effective December 20, 2005, dated December 27, 2005, and recorded January 17, 2006, in Deed Book 358, page 583, in the Ohio County Clerk’s office, Peabody Development Company, LLC, confirmed the conveyance of the surface only of certain property previously conveyed at Deed Book 358, page 308, to Central States Coal Reserves of Kentucky, LLC.

11. By instrument effective December 20, 2005, dated August 23, 2006, recorded August 24, 2006, in Deed Book 362, page 558, in the Ohio County Clerk’s office, Peabody Coal Company, LLC, confirmed that it had conveyed certain tracts to Peabody Development Company, LLC.

12. By instrument effective December 20, 2005, dated August 23, 2006, recorded August 24, 2006, in Deed Book 362, page 563, in the Ohio County Clerk’s office, Peabody Development Company, LLC, confirmed that it had conveyed certain tracts to Central States Coal Reserves of Kentucky, LLC.

13. Pursuant to Section 266 of the Delaware General Corporation Law, Beaver Dam Coal Company, a Delaware corporation, converted and changed its name to Beaver Dam Coal Company, LLC, a Delaware limited liability company, effective May 16, 2007, recorded May 21, 2007, in Miscellaneous Book 58, pages 499 - 503, in the Ohio County Clerk’s office.

14. All of the foregoing is a portion of the same property conveyed by Beaver Dam Coal Company, LLC, and Central States Coal Reserves of Kentucky, LLC, to Cyprus Creek Land Resources, LLC, by deed dated September 13, 2007, of record in Deed Book 370, page 144, in the office of the Ohio County Clerk.

15. All of the foregoing is a portion of the same property conveyed by Beaver Dam Coal Company, LLC and Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC by Correction Special Warranty Deed effective September 13, 2007, recorded March 18, 2008, in Deed Book 373, page 43, in the Office of the Ohio County Clerk.

Schedule of Known

Exceptions and Prior Conveyances

1. Subject to the conveyance to A. J. Early of “all the gases, and all rights thereto” underlying all property owned by Beaver Dam Coal Company within a boundary containing 33,925.37 acres, by deed dated March 22, 1928, recorded in Deed Book 74, page 103, in the Office of the Ohio County Clerk.

 

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2. Subject to the Notice of Royalty interest in favor of William G. Parrott, et al., dated December 19, 1983, recorded in Miscellaneous Book 16, pages 452 - 459, in the Ohio County Clerk’s office, concerning the First, Third, and Fourth Boundaries described therein.

3. Subject to the overriding royalty Agreement dated June 1, 1967, recorded in Deed Book 179, page 259, in the Ohio County Clerk’s office, between Sentry Royalty Company and W. B. Dozier, Hellen Dozier and Lula Hickman, concerning the Third Boundary described therein; additionally, all Tracts designated “028 – 033” herein.

4. Subject to the Easement Agreement among Peabody Development Company, Beaver Dam Coal Company, and Big Rivers Electric Corporation dated April 12, 1996, recorded in Deed Book 302, page 142, in the Office of the Ohio County Clerk.

5. Subject to the Easement Agreement between Peabody Coal Company and Big Rivers Electric Corporation dated March 13, 1996, recorded in Deed Book 302, page 150, in the Office of the Ohio County Clerk.

6. Subject to the Transmission Line Easements from Peabody Coal Company, Peabody Development Company, and Beaver Dam Coal Company to Kentucky Utilities Company, dated September 18, 1996, recorded in Deed Book 304, pages 39 - 89, in the Office of the Ohio County Clerk.

7. Subject to the Utility Easement from Central States Coal Reserves of Kentucky, LLC, to Cyprus Creek Land Company by instrument dated November 5, 2006, recorded in Deed Book 364, page 352, in the Office of the Ohio County Clerk.

8. Item 3: Subject to the Easement from Beaver Dam Coal Company to Big Rivers Electric Corporation dated August 17, 1982, recorded in Deed Book 245, page 600, in the Ohio County Clerk’s office.

9. Item 74: Subject to the Unrecorded 1957 Trust Agreement in which certain beneficiaries designated J. William Bassett as trustee on their behalf, to purchase the real estate of Chandler Brothers, Inc. The Agreement empowered Bassett to sell, convey, lease, or dispose of the trust estate on behalf of the beneficiaries without their personal execution of instruments; and further empowered Bassett to pay all necessary and actual expenses incident to the acquisition, ownership, and disposal of the subject real estate on behalf of the beneficiaries.

10. Item 78: Subject to the exception of a church and cemetery described in the Commissioner’s deed to John S. Dexter dated March 24, 1894, recorded in Commissioner’s Deed Book E, page 434, in the Office of the Ohio County Clerk.

11. Item 140: Subject to the highway right-of-way from Beaver Dam Coal Company and Sentry Royalty Company to Ohio County, Kentucky, dated July 17, 1961, recorded in Deed Book 156, page 45, in the Office of the Ohio County Clerk.

12. Item 142: Subject to the pipeline easement from Ross Morton, et ux., to Ashland Oil Transportation Company, by instrument dated October 13, 1955, recorded in Deed Book 127, page 33, in the Office of the Ohio County Clerk;

 

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13. Item 144: A two (2) acre portion of the 54-acre tract is subject to an undivided 1/5 interest outstanding in the unknown heirs, unknown successors and/or assigns of Samuel K. Bishop and Catherine Ellis Bishop, husband and wife, who last appear of record in Ohio County in 1886 (Deed Book 5, page 356, in the Ohio County Clerk’s Office) as residents of Muhlenberg County, Kentucky.

14. Item 145: Subject to an undivided 1/5 interest outstanding in the unknown heirs, unknown successors and/or assigns of Samuel K. Bishop and Catherine Ellis Bishop, his wife, who last appear of record in Ohio County in 1886 (Deed Book 5, page 356, in the Ohio County Clerk’s Office) as residents of Muhlenberg County, Kentucky.

15. Item 151: Subject to an undivided interest in all coal owned by Gladys Marie Burgess 5%, Sherry Ann Maddox 1.666%, Jim V. Maddox 1.666%, and Geneva Maddox Fulkerson 1.666%.

16. Item 155: Subject to the deed from John Maddox, et al., to the United Baptist Church of West Providence dated May 7, 1855, recorded in Deed Book O, page 537, in the Ohio County Clerk’s office.

17. Items 172 and 173: Subject to the pipeline easement from Ross Morton, et ux., to Ashland Oil Transportation Company by instrument dated October 13, 1955, recorded in Deed Book 127, page 33, in the Ohio County Clerk’s office.

18. Item 150: Subject to the conveyance by J. W. Chancellor, et ux., to the Trustees of Lone Star Church by deed dated February 3, 1904, recorded in Deed Book 26, page 89, which tract description cited the existence of a graveyard in 1904.

19. Item 175: Subject to the exception of a one (1) acre school tract as stated in the tract description. The parent tract chain of title reveals no recorded conveyance of one (1) acre for a school; however, the Beaver Dam Coal Company map indicates some type of exception within the bounds of Coal Tract No. 028 - C - 8.

20. Item 185: Subject to (a) the cemetery conveyance from William L. Barnard, et ux., to trustees of Equality Church, by deed dated March 7, 1889, recorded in Deed Book 8, page 305; and (b) the exception of two (2) acres conveyed from C. M. Igleheart, et ux., to Andrew Addington, by deed dated December 12, 1899, recorded in Deed Book 24, page 452; both conveyances recorded in the Office of the Ohio County Clerk. The two (2) acre tract is designated Item 184 herein.

21. Items 193 and 194: Tract 1, and Parcels 1 through 4, are subject to an undivided 1/8 fee simple interest outstanding in the unknown heirs of Martha Tichenor Bennett and Timothy Bennett, husband and wife in 1850 (Ohio County Marriage Book F, page 90).

22. Item 196: Subject to the Transmission Line Easement from Beaver Dam Coal Company to Kentucky Utilities Company dated March 1, 1977, recorded in Deed Book 226, page 174, in the Ohio County Clerk’s office.

23. Item 197: Grantors possess no information to substantiate the ownership interest purportedly conveyed from these three tracts.

24. Item 197: Subject to outstanding partial interests in 028-125, T2 and T3.

 

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25. Item 204:

(a) Tract 1 (62 1/2 acres) is subject to the life estate in an undivided 1/30 interest in coal of Fannie E. Bullock, widow of W. C. Bullock who died in 1940. (See Deed Book 89, page 354.) No Affidavit of Death of Fannie E. Bullock appears of record in Ohio County.

(b) Tract 1 (62 1/2 acres) is subject to an outstanding undivided 20% interest in all coal arising under the Will of Samuel Morton, recorded July 7, 1913, in Will Book E, page 28, in the Office of the Ohio County Clerk. In 2003, the outstanding 20% interest in all coal was owned by Hulan L. Bullock (13.33 percent), William M. Overhults (3.333 percent), and the Effie D. Everly heirs (3.333 percent).

26. Item 205: Subject to a 2 1/2-acre fee simple exception, severed from J. R. Hunter, et ux., to Sam Morton by deed dated January 20, 1902, recorded in Deed Book 24, page 343, in the Office of the Ohio County Clerk. The 2 1/2-acre tract is a southwest portion of PVA Tract No. 126-19.

27. Item 211: Subject to the following, according to instruments of record in the Ohio County Clerk’s office:

(a) Execution and recording of an Affidavit of Death in order to extinguish the dower interest of Virgie Hunter Vincent (wife of Ben. T. Vincent) in all coal underlying the 135 1/2-acre tract.

(b) Approximately an undivided 41.568% interest in all coal underlying the 135 1/2-acre tract was owned in 2003 by William M. Overhults, W. C. Overhuls, O. W. Overhuls, Susie Yeiser, Robert D. Hunter, William M. Hunter, Margaret Ethel Hunter, and the unknown heirs, successors and/or assigns of Howard H. Hunter, deceased.

(c) Pipeline right-of-way easement from Kenneth Geary, et ux., to Ashland Oil & Transportation Company by instrument dated October 21, 1955, recorded in Deed Book 127, page 28, in the Office of the Ohio County Clerk.

28. Items 215, 217 218, 220, 225 and 226: Subject to the Easement Agreement dated April 12, 1996, from Peabody Development Company and Beaver Dam Coal Company to Big Rivers Electric Corporation recorded in Deed Book 302, page 142, in the Ohio County Clerk’s office.

29. Item 215: Subject to the Easement granted to Kentucky Utilities Company by Carl Addington, et ux., dated October 4, 1977, recorded in Deed Book 226, page 168, in the Ohio County Clerk’s office.

30. Items 217 and 219: Subject to the Easement granted to Kentucky Utilities Company by Peabody Coal Company and Beaver Dam Coal Company dated March 1, 1977, recorded in Deed Book 226, page 162, in the Ohio County Clerk’s office.

31. Item 216: Subject to the following instruments of record in the Ohio County Clerk’s office:

 

a) Highway right-of-way granted to the Commonwealth of Kentucky by Nancy E. Spicer, by instrument dated April 12, 1934, recorded in Deed Book 89, page 102;

 

34


b) Easement granted to Kentucky Utilities Company by Elwood Cundiff, et ux., dated April 12, 1934, recorded in Deed Book 111, page 247;

 

c) Pipeline Easement granted to Ashland Oil & Transportation Company by Elwood Cundiff, et ux., in the undated instrument recorded in Deed Book 127, page 81;

 

d) Easement granted to Kentucky Utilities Company by Delphine Addington dated October 11, 1977, recorded in Deed Book 226, page 166.

32. Items 218 and 220: Subject to the following instruments of record in the Ohio County Clerk’s office:

(a) Easement granted to Kentucky Utilities Company by Herbert Martin, et ux., dated January 9, 1948, recorded in Deed Book 106, page 379;

(b) Easement granted to Kentucky Utilities Company by Fosteen Burden dated October 5, 1977, recorded in Deed Book 226, page 160; and

(c) Pipeline Easement granted to Ashland Oil & Transportation Company by Herbert Martin, et ux., in an undated instrument recorded in Deed Book 127, page 81.

33. Item 219: Subject to the following instruments of record in the Ohio County Clerk’s office:

(a) Highway right-of-way granted to the Commonwealth of Kentucky by R. H. Bennett, et ux., in the instrument dated April 11, 1934, recorded in Deed Book 89, page 112;

(b) Easement granted to Kentucky Utilities Company by lcelean B. Young dated January 8, 1948, recorded in Deed Book 106, page 405; and

(c) Pipeline Easement granted to Ashland Oil & Transportation Company by Ernest Burden, et ux., in the instrument dated October 4, 1955, recorded in Deed Book 127, page 80, in the Ohio County Clerk’s office.

34. Item 223: Subject to the 15 foot private road Easement granted to H. P. Addington by Robert Bennett, et ux., in the deed dated September 18, 1906, recorded in Deed Book 29, page 607, in the Ohio County Clerk’s office, now possessed by owners of PVA Tract No. 148 - 4B.

35. Item 225: Subject to the Easement granted to Kentucky Utilities Company by Peabody Coal Company and Beaver Dam Coal Company dated March 1, 1977, recorded in Deed Book 226, page 158, in the Ohio County Clerk’s office.

36. Item 230: Subject to the Pipeline Easement granted to Ashland Oil & Transportation Company by Herman Jones, et ux., in the instrument dated September 12, 1955, recorded in Deed Book 127, page 9, in the Ohio County Clerk’s office.

37. Items 224 and 226: Subject to the Pipeline Easement granted to Ashland Oil & Transportation Company by J. J. Wolcott, et ux., and P. M. Wolcott, et ux., in the instrument dated September 29, 1955, recorded in Deed Book 127, page 1, in the Ohio County Clerk’s office.

38. Item 238: (a) Tract No. 028 - 068, T.2, is subject to the Oil and Gas Lease dated March 27, 1992, recorded in Lease Book 180, page 385, in the Ohio County Clerk’s office, from

 

35


Warren C. Roe (trustee for Richard Wallace Hughes, II, and Jonathan Todd Hughes) to Refuge Exploration Company, Inc. of 734 Carlton Drive, Owensboro, Kentucky, 42303, for a primary term of three (3) years, or so long thereafter as production occurred on the premises; and (b) Tract No. 028 - 068, T.2 and T.4 are subject to the Oil and Gas Lease dated March 27, 1992, recorded in Lease Book 180, page 387, in the Office of the Ohio County Clerk, from Warren C. Roe, et ux., to Refuge Exploration Company, Inc. of 734 Carlton Drive, Owensboro, Kentucky, 42303, for a primary term of three (3) years, or so long thereafter as production occurred from the premises.

39. Items 229 and 230: Subject to the highway right-of-way granted to the Commonwealth of Kentucky by C. A. Liter in the deed dated April 10, 1934, recorded in Deed Book 89, page 97, in the Office of the Ohio County Clerk; and (b) C. D. Kessinger executed a similar conveyance in 1939 which cannot be reviewed due to erroneous recording information in the indices of the Ohio County Clerk.

40. Items 235 and 236: Subject to the highway right-of-way granted to the Commonwealth of Kentucky by H. G. Barnard, et ux., in the deed dated April 10, 1934, recorded in Deed Book 89, page 100, in the Ohio County Clerk’s office.

41. Items 234, 235, 236 and 237: Subject to the Pipeline Easement granted to Ashland Oil & Transportation Company by the H. G. Barnard heirs by instrument dated September 12, 1955, recorded in Deed Book 127, page 5, in the Ohio County Clerk’s office.

42. Items 214, 215, 216, 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 227, 228, 229, 230, 231, 232, 233, 234, 235, 236, 237, 238 and 239: Subject to the Reciprocal Mining Agreement dated May 31, 2007, between Beaver Dam Coal Company, LLC and Central States Coal Reserves of Kentucky, LLC and Western Land Company, LLC, recorded in Deed Book 368, page 1, in the Office of the Ohio County Clerk.

43. Items 216, 219, 221, 222 and 232: Subject to the Utility Easement from Western Land Company, LLC, to Central States Coal Reserves of Kentucky, LLC, dated December 12, 2006, recorded in Deed Book 365, page 66, in the Office of the Ohio County Clerk.

44. Items 113, 115, 116, 126, 127 and 128: Subject to the Transmission Line Easement from Western Land Company, LLC, to Central States Coal Reserves of Kentucky, LLC, dated December 27, 2006, recorded in Deed Book 365, page 397, in the Office of the Ohio County Clerk.

45. Items 249 and 252: Subject to Correction Deed by Central States Coal Reserves of Kentucky, LLC and Beaver Dam Coal Company, LLC, both Delaware limited liability companies, to Western Diamond, LLC, a Nevada limited liability company, dated September 11, 2007, of record in Deed Book 369, page 759, in the Office of the Ohio County Clerk.

46. Items 260 and 261: Subject to the limitation on grant of deeded assets, Grantor’s reservation of rights, and Grantee’s assumed liabilities contained in the Special Warranty Deed, Assignment, Assumption and Bill of Sale from CNX Gas Company, LLC, as Grantor, to Cyprus Creek Land Resources, LLC, as Grantee, dated October 9, 2007, of record in Deed Book 370, page 657, in the Office of the Ohio County Clerk.

END OF EXHIBIT A-1

 

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LOGO


EXHIBIT B-1

Surface and Surface Coal Mining Rights Only

 

Item

    

Orig. L.C. No.

    

Acreage

1.      028 - 181(2)      103 acres
AND BEING a portion of the property conveyed to Peabody Coal Company and Beaver Dam Coal Company from William I. Brown, et ux., by deed dated March 13, 1970, recorded in Deed Book 201, page 381, in the Ohio County Clerk’s office.
2.      028 - 242      32 acres
AND BEING the same property conveyed to Peabody Coal Company and Beaver Dam Coal Company from Ella B. Bell, unmarried widow, by deed dated February 24, 1976, recorded in Deed Book 217, page 447, in the Ohio County Clerk’s office.
3.      028 - 296      220.09 acres
AND BEING the same property conveyed to Peabody Coal Company from Big Rivers Electric Corporation by deed dated May 13, 1988, recorded in Deed Book 265, page 418, in the Ohio County Clerk’s office.
4.      028 - 161, T.1      60.25 acres
          (except portion conveyed at Deed Book 237, page 90)
     028 - 161, T.2      75.00 acres
          (except portion conveyed at Deed Book 237, page 90)
AND BEING a portion of the property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Foster James, et ux., by deed dated December 15, 1966, recorded in Deed Book 177, page 317, in the Ohio County Clerk’s office.
5.      028 - 108, T.2      258 acres
          (except portion conveyed at Deed Book 237, page 90)
AND BEING a portion of the property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from John Lindley, et ux., by deed dated May 17, 1960, recorded in Deed Book 155, page 151, in the Ohio County Clerk’s office.
6.      028 - 122      168 acres
          (except portion conveyed at Deed Book 237, page 90)
AND BEING a portion of the property conveyed to Sentry Royalty Company and Beaver Dam Coal Company from Raymond T. Nall, widower, by deed dated February 14, 1961, recorded in Deed Book 178, page 18; and also being the same property in which Peabody Coal Company conveyed its undivided 1/2 interest to Beaver Dam Coal Company, expressly reserving all underlying coal, by deed dated December 27, 1974, recorded in Deed Book 210, page 657; both in the Ohio County Clerk’s office.

 

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7.      028 - 252      0.55 acres
AND BEING the same property conveyed to Peabody Coal Company from Edwin Brown, et ux., by deed dated June 8, 1977, recorded in Deed Book 224, page 227, in the Ohio County Clerk’s office.
8.      028 - 251      1.25 acres

AND BEING the same property conveyed to Peabody Coal Company from Earl Powers, et ux., by deed dated June 8, 1977, recorded in Deed Book 224, page 229, in the Ohio County Clerk’s office.

Common Sources of Title

(All recorded references are to the Ohio County, Kentucky, Clerk’s Office)

1. By Quitclaim Deed dated September 30, 1957, recorded in Deed Book 134, page 219, Homestead Coal Company, a Kentucky corporation, conveyed all of the land it owned in Ohio County to Sentry Royalty Company, a Nevada corporation. Also see the Quitclaim Deed dated December 1, 1967, recorded in Deed Book 177, page 236.

2. By Merger approved by the Illinois Secretary of State on February 5, 1968, recorded July 28, 1972, in Miscellaneous Book 6, page 375, Sentry Royalty Company merged with Peabody Coal Company. The merger occurred pursuant to Illinois law, and the instrument recites that Peabody Coal Company, an Illinois corporation, owned all of the stock of the non-surviving corporation.

3. By Deed dated March 29, 1968, recorded in Deed Book 178, page 395, Peabody Coal Company, an Illinois corporation, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Coal Company, a Delaware corporation.

4. By Deed dated September 12, 1989, recorded in Deed Book 271, page 109, Peabody Coal Company, a Delaware corporation, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Development Company, a Delaware corporation.

5. Pursuant to Section 266 of the Delaware General Corporation Law, Peabody Development Company, a Delaware corporation, converted and changed its name to Peabody Development Company, LLC, a Delaware limited liability company, effective December 16, 2003, recorded April 27, 2004, in Miscellaneous Book 52, pages 627 - 630.

6. Pursuant to Section 226 of the Delaware General Corporation Law, Peabody Coal Company, a Delaware corporation, converted and changed its name to Peabody Coal Company, LLC, a Delaware limited liability company, effective July 11, 2005, of record August 25, 2005, in Miscellaneous Book 55, pages 147 - 152.

7. By instrument effective September 12, 1989, dated December 20, 2005, and recorded in Deed Book 358, page 226, Peabody Coal Company, LLC, and Peabody Development Company, LLC, confirmed the reserves transfer of September 12, 1989, at Deed Book 271, page 109.

 

39


8. By Corporate Special Warranty Deed dated and recorded December 20, 2005, in Deed Book 358, page 301, Peabody Coal Company, LLC, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Development Company, LLC.

9. By Corporate Special Warranty Deed dated and recorded December 20, 2005, in Deed Book 358, page 308, Peabody Development Company, LLC, conveyed all of the property it owned in Ohio County, Kentucky, to Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company.

10. By Deed of Confirmation effective December 20, 2005, dated December 27, 2005, and recorded January 17, 2006, in Deed Book 358, page 583, Peabody Development Company, LLC, confirmed the conveyance of the surface only of certain property previously conveyed at Deed Book 358, page 308, to Central States Coal Reserves of Kentucky, LLC.

11. By instrument effective December 20, 2005, dated August 23, 2006, recorded August 24, 2006, in Deed Book 362, page 558, Peabody Coal Company, LLC, confirmed that it had conveyed certain tracts to Peabody Development Company, LLC.

12. By instrument effective December 20, 2005, dated August 23, 2006, recorded August 24, 2006, in Deed Book 362, page 563, Peabody Development Company, LLC, confirmed that it had conveyed certain tracts to Central States Coal Reserves of Kentucky, LLC.

13. Pursuant to Section 266 of the Delaware General Corporation Law, Beaver Dam Coal Company, a Delaware corporation, converted and changed its name to Beaver Dam Coal Company, LLC, a Delaware limited liability company, effective May 16, 2007, recorded May 21, 2007, in Miscellaneous Book 58, pages 499 - 503.

14. And being a portion of the same property conveyed by Beaver Dam Coal Company, LLC and Central States Coal Reserves of Kentucky, LLC, to Cyprus Creek Land Resources, LLC, by deed dated September 13, 2007, of record in Deed Book 370, page 144.

15. And being a portion of the same property conveyed by Cyprus Creek Land Resources, LLC to Cyprus Creek Land Company by deed dated September 13, 2007, recorded in Deed Book 370, page 199.

16. And being a portion of the same property conveyed by Beaver Dam Coal Company, LLC and Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC, by Correction Special Warranty Deed of Conveyance effective September 13, 2007, recorded March 28, 2008, in Deed Book 373, page 43.

Schedule of Known

Exceptions and Prior Conveyances

1. Subject to the Notice of Royalty Interest in favor of William G. Parrott, et al., dated December 19, 1983, recorded in Miscellaneous Book 16, page 452, concerning the Third Boundary described therein.

2. Subject to the Overriding Royalty Agreement dated June 1, 1967, recorded in Deed Book 179, page 259, between Sentry Royalty Company and W. B. Dozier, Helen Dozier, and Lula Hickman, concerning the Third Boundary described therein.

 

40


3. Subject to the conveyance to A. J. Early of “all the gases, and all rights thereto” underlying all property owned by Beaver Dam Coal Company within a boundary containing 33,925.37 acres, by deed dated March 22, 1928, recorded in Deed Book 74, page 103.

4. Item 4: Subject to the following instruments of record:

(a) The 1/4-acre cemetery excepted by heirs of John Howell in the deed dated and recorded April 8, 1833, in Deed Book F, page 393;

(b) Highway right-of-way to Ohio County, Kentucky, dated February 13, 1931, recorded in Deed Book 78, page 194;

(c) Highway right-of-way to the Commonwealth of Kentucky dated September 9, 1933, recorded in Deed Book 81, page 595;

(d) Highway right-of-way to the Commonwealth of Kentucky dated September 19, 1933, recorded in Deed Book 81, page 596;

(e) Conveyance of Raymond Nall Road by Big Rivers Electric Corporation, et al., to Ohio County, Kentucky, dated January 10, 1984, recorded in Deed Book 249, page 599; and

(f) Pole Line Agreement from Bernie Tichenor, et ux., to Kentucky Utilities Company dated March 17, 1947, recorded in Deed Book 104, page 331. The cited utility easement has been relocated but no instrument appears of record to this effect. See the plat of record in Deed Book 237, page 102, which depicts the power line easement as located in 1980.

5. Item 5: Subject to the following instruments of record:

(a) The undivided 1/8 interest in the Alney Tichenor estate (179 acres) outstanding in the heirs of Maria Tichenor and Squire W. Tichenor, wife and husband. Maria Tichenor last appears of record in 1903 (Deed Book 30, page 453). The Affidavit of Descent dated April 17, 1950, recorded April 22, 1950, in Deed Book 111, page 120, states that S. W. Tichenor died intestate circa 1945, an unmarried resident of Ohio County, survived by the following persons who constitute his sole heirs:

 

Clyde Tichenor    Son    64    Centertown, Ky.    1/4
Gerda M. Tichenor    Daughter    72    Centertown, Ky.    1/4
Melissa A. James    Daughter    64    Centertown, Ky.    1/4
Willie L. Myers    Daughter    68    Alcoa, Tn.    1/4

(b) Road reservation described in the deed dated September 19, 1919, recorded in Deed Book 57, page 639, in which C. A. Lindley, et ux., and John Lindley, et ux., conveyed the 258 acre parent tract to Homer Nation and Bert Nation. The road is located within Surface Tract No. 028 - 197, T. 1, as the same was conveyed to Theodore Hill, et ux., in 1919 (Deed Book 61, page 525).

(c) Agreement of Right of Way dated November 2, 1936, recorded in Deed Book 85, page 97, in which Bert Nation, et ux., et al., granted a right-of-way across the subject tract to Kentucky Natural Gas Corporation of Owensboro, Kentucky.

6. Item 6: Subject to the following instruments of record:

(a) The 168 acre tract is erroneously described in all instruments of record from 1875 to the present, which description fails to account for an 18 3/4 acre parcel described in 1830 at Deed Book F, page 242, comprising a northeastern portion of the 168 acre parent tract.

 

41


(b) The highway right-of-way deed dated September 6, 1933, recorded in Deed Book 81, page 593, by James N. Nall, et ux., to the Commonwealth of Kentucky, State Highway Commission.

(c) Pole Line Agreement dated May 13, 1947, recorded in Deed Book 104, page 392, by Raymond T. Nall to Kentucky Utilities Company.

7. Item 8: Subject to the following highway rights-of-way of record:

(a) Deed dated February 3, 1931, recorded in Deed Book 78, page 191, by J. N. Nall, et ux., to Ohio County, Kentucky;

(b) Deed dated August 22, 1931, recorded in Deed Book 78, page 216, by J. N. Nall, et ux., to Ohio County, Kentucky; and

(c) Deed dated September 6, 1933, recorded in Deed Book 81, page 593, by J. N. Nall, et ux., to the Commonwealth of Kentucky, State Highway Commission.

END OF EXHIBIT B-1

 

42


LOGO


SCHEDULE B

Leased Property

All of Lessor’s right, title and interest in and to the following surface and/or coal tracts situated in Ohio County, Kentucky: all of the #9 vein or seam of coal and the coal mining rights and privileges appurtenant thereto, in, on and underlying the real property more particularly described on Exhibit A attached hereto and depicted on the map attached as Exhibit B, both of the aforesaid Exhibits are incorporated herein by reference and made a part hereof, together with all appurtenants thereunto belonging or in anywise appertaining, and being subject to the known exceptions and prior conveyances more particularly set forth herein.

BEING the same property acquired by Ceralvo Holdings, LLC from Cyprus Creek Land Resources, LLC by Assignment and Assumption of Mineral Leasehold Estate (Danks and Ray #9 Coal Only), dated March 31, 2008, a Memorandum of which being of record in Deed Book 373, Page 199, in the office of the Clerk of Ohio County, Kentucky.

Underlying lease: Agreement between Athel W. Danks and Richard A. Danks and Amy Ray and Ed Ray in favor of Peabody Coal Company dated August 25, 1972, a short form of which is of record in Deed Book 200, Page 215, in the office of the Clerk of Ohio County, Kentucky.

 

2


EXHIBIT A

Tract No. 028 - 215, Parcels 1 - 6

Parcel 1: Beginning at two beeches on the bank of Green River, thence N. 12-1/2 E. 167 poles and 13 links to a stone; thence S. 68-1/4 E. 143 poles to a stone, thence S. 28 W. 76 poles and 23 links to a stone; thence S. 57-1/2 E. 30 poles and 8 links to a stone; thence S. 20-1/2 W. 66 poles to a hickory bush and stone on the bank of Green River; thence down the river to the beginning, containing 131 acres.

Parcel 2: Beginning at a stone; thence N. 12-1/2 E. 58 poles and 12 links to a small ash and stone; thence S. 68-1/4 E. 141 poles to a stone, thence South 2 West 38 poles and 5 links to a stone; thence South 28 West 21 poles and 12 links to a stone; thence North 68-1/4 West 143 poles to the beginning, containing 52 acres.

Parcel 3: Beginning at a stone; thence South 57-1/2 E. 30 poles and 8 links to a stone; thence South 66 East 49 poles and 5 links to a stone; thence North 48-1/2 E. 20 poles and 7 links to a stone in the Hartford and Ceralvo Road; thence North 65-1/2 East 43 poles and 16 links to a stone in said road; thence North 50-3/4 E. 24 poles and 20 links to a stone; thence South 69 East 20 poles to two black oaks and a stone; thence North 36-3/4 East 8 poles and 17 links to a black oak and stone; thence North 11 W. 33 poles and 5 links to a down poplar, black gum and stone; thence North 9-1/2 East 38 poles and 20 links to a poplar and hickory; thence North 72-1/2 W. 32 poles to a black oak stump, hickory and stone; thence North 68-1/4 W. 113 poles and 20 links to a stone; thence South 2 West 38 poles and 5 links to a stone; thence S. 28 W. 98 poles and 10 links to the beginning, containing 115-1/2 acres.

Parcel 4: Beginning at a stone in the original line between Presley L. Wood and D. W. Kimmel on the West side of the Hartford and Ceralvo road; thence with said road N. 36 1/4 E. 31 rods and 8 links to a stone, thence with said road N. 26 E. 11 rods and 20 links to a stone, thence with the road that connects the Hartford and Ceralvo road with the Hartford and South Carrollton road, N. 42 1/4 W. 35 rods and 16 links to a stone; thence S. 9 1/2 W. 34 rods to a black gum down poplar and stone; thence S. 11 E. 30 rods to the beginning, containing Six acres more or less.

Parcel 5: Beginning at a black gum, the South west corner of J. O. Kimbley’s land, thence North 104-8/11 poles to a stone in the original line thence North 70 West 91 poles to a stone in a branch, thence North 3 East 57 1/2 poles to a stone on bank of branch in M. F. Kimbley’s line, thence with his line North 87 1/2 West 27 poles to a poplar tree and stone, E. W. Smith’s corner in M. F. Kimbley’s line, thence with E. W. Smith’s line South 152 8/11 poles to a gum tree and stone in V. B. Morton’s line, thence South 70 East 121 poles to the beginning and containing 81 acres more or less.

Parcel 6: Beginning at a stone in Hartford and Ceralvo Road; thence South 63-1/2 East 30 rods and 23 links to a stone; thence South 17-3/4 West 12 rods and 15 links to a stone in the back line of the Town Plat of Ceralvo; thence South 64-1/2 East 23 rods and 17 links to a stone in Mrs. Druzilla Barnard’s line; thence North [28 E] 76-1/2 rods to a stone and two black oaks, P. L. Wood’s corner; thence N. 69 W. 20 rods to a stone; thence South 50-3/4 West 24 rods and 20 links to a stone in the Hartford and Ceralvo road; thence S. 65-1/2 W. with said road 50 rods and 10 links to the beginning, containing 16 acres more or less.

 

-6-


AND BEING the same property in which the No. 9 seam of coal was leased to Peabody Coal Company by Athel W. Danks, et vir., and Ama W. Ray, et vir., by Agreement dated August 25, 1972, recorded in Deed Book 200, page 215, in the Ohio County Clerk’s office.

Common Sources of Title

All recording references are to the Office of the Ohio County Clerk:

1. By Deed dated September 12, 1989, recorded in Deed Book 271, page 109, Peabody Coal Company, a Delaware corporation, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Development Company, a Delaware corporation.

2. Pursuant to Section 266 of the Delaware General Corporation Law, Peabody Development Company, a Delaware corporation, converted and changed its name to Peabody Development Company, LLC, a Delaware limited liability company, effective December 16, 2003, recorded April 27, 2004, in Miscellaneous Book 52, pages 627 - 630.

3. Pursuant to Section 226 of the Delaware General Corporation Law, Peabody Coal Company, a Delaware corporation, converted and changed its name to Peabody Coal Company, LLC, a Delaware limited liability company, effective July 11, 2005, of record August 25, 2005, in Miscellaneous Book 55, pages 147 - 152.

4. By instrument effective September 12, 1989, dated December 20, 2005, and recorded in Deed Book 358, page 226, Peabody Coal Company, LLC, and Peabody Development Company, LLC, confirmed the reserves transfer of September 12, 1989, at Deed Book 271, page 109.

5. By Corporate Special Warranty Deed dated and recorded December 20, 2005, in Deed Book 358, page 301, Peabody Coal Company, LLC, conveyed all of the property it owned in Ohio County, Kentucky, to Peabody Development Company, LLC.

6. By Corporate Special Warranty Deed dated and recorded December 20, 2005, in Deed Book 358, page 308, Peabody Development Company, LLC, conveyed all of the property it owned in Ohio County, Kentucky, to Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company.

7. By Deed of Confirmation effective December 20, 2005, dated December 27, 2005, and recorded January 17, 2006, in Deed Book 358, page 583, Peabody Development Company, LLC, confirmed the conveyance of the surface only of certain property previously conveyed at Deed Book 358, page 308, to Central States Coal Reserves of Kentucky, LLC.

8. By instrument effective December 20, 2005, dated August 23, 2006, recorded August 24, 2006, in Deed Book 362, page 558, Peabody Coal Company, LLC, confirmed that it had conveyed certain tracts to Peabody Development Company, LLC.

 

-7-


9. By instrument effective December 20, 2005, dated August 23, 2006, recorded August 24, 2006, in Deed Book 362, page 563, Peabody Development Company, LLC, confirmed that it had conveyed certain tracts to Central States Coal Reserves of Kentucky, LLC.

10. By Assignment and Assumption of Mineral Leasehold Estate dated September 10, 2007, of record in Deed Book 370, page 368, Central States Coal Reserves of Kentucky, LLC assigned to Cyprus Creek Land Resources, LLC, a Delaware limited liability company, all of its right, title and interest in and to the Dank/Ray Agreement.

Schedule of Known

Exceptions and Prior Conveyances

1. Subject to an overriding royalty interest referred to in the Notice of Royalty Interest in favor of William G. Parrott, et al, dated December 19, 1983, recorded in Miscellaneous Book 16, page 452, in the Office of the Ohio County Clerk, concerning the Fourth Boundary described therein.

2. Parcels 2, 5 and 6 are subject to the unrecorded Affidavit of Descent of E. B. Wood executed by Athel W. Danks in 1972, which is in the possession of the grantors herein.

3. Parcels 3 and 4 are subject to the coal reservation by Athel Wood Danks, et vir., et al., by deed dated August 15, 1946, recorded in Deed Book 102, page 304.

4. Parcel 5 is subject to the coal reservation by E. B. Wood by deed dated May 22, 1917, recorded in Deed Book 53, page 249.

 

-8-


LOGO


EXHIBIT A

TO

ASSET PURCHASE AGREEMENT

Corporation Special Warranty Deed – Tracts 209 and 199


CORPORATION SPECIAL WARRANTY DEED

THIS CORPORATION SPECIAL WARRANTY DEED (“Deed”) is made and entered into on this the              day of             , 2011, by and between:

CYPRUS CREEK LAND RESOURCES, LLC

A Delaware limited liability company

701 Market Street, Suite 798

St. Louis, Missouri 63101

(hereinafter called “GRANTOR”)

-and-

ARMSTRONG COAL COMPANY, INC.

A Delaware corporation

407 Brown Road

Madisonville, Kentucky 42431

(hereinafter called “GRANTEE”).

WITNESSETH: That for and in consideration of the total sum of EIGHT MILLION, THREE HUNDRED FOUR THOUSAND, TWO HUNDRED FIFTY DOLLARS ($8,304,250.00), cash-in-hand paid by Grantee to Grantor upon the date hereof, the receipt of which is hereby acknowledged, and the payment by Grantee to Grantor of an overriding royalty upon coal mined and sold from the following defined #9 Coal Property as stated in a certain Overriding Royalty Agreement between the parties of even date herewith; and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby GRANT, BARGAIN, SELL, CONVEY, and WARRANT SPECIALLY, as hereinafter recited, unto Grantee its successors and assigns forever, two tracts of the Kentucky Number 9 seam of coal only together with the Kentucky Number 9 coal mining rights and privileges only, subject to a certain restrictive covenant running with land set forth below, situated in Muhlenberg County, State of Kentucky, and generally situated within the boundaries depicted on the map attached hereto as Exhibit A and more particularly described on Exhibit B attached hereto, incorporated herein by reference and made a part hereof (hereinafter the “#9 Coal Property”) together with all the hereditaments and appurtenances thereunto belonging, and with all the estate, right, title, interest, claim or demand whatsoever, of the Grantor, either in law or equity, of, in and to the #9 Coal Property.

 

Tracts 199 and 209

   12/12/11

#9 Coal & #9 Coal Mining Rights

  

N of S ROW of Parkway

  

Muhlenberg Co., Ky.

  

 

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RECORD NOTICE OF OVERRIDING ROYALTY AGREEMENT. The #9 Coal Property is subject to an Overriding Royalty Agreement granted by Armstrong Coal Company, Inc., Grantee herein, to Cyprus Creek Land Resources, LLC, Grantor herein, of even date herewith which grants an overriding royalty of a certain percentage of the Gross Sales Price, as defined in the Overriding Royalty Agreement, which shall be deemed a covenant running with the land. This Deed is intended to serve as record notice of the Overriding Royalty Agreement, as it relates to the two tracts of #9 Coal Property conveyed herein, and the parties’ respective interest in and to that Agreement and this Deed shall not be construed as a change, modification, amendment, or enlargement of the Overriding Royalty Agreement, a short form memorandum of which has also been filed of record.

The Grantor, for itself, and for its successors, does represent, warrant, promise and agree, to and with the Grantee, its successors and assigns, that Grantor has not done, or suffered to be done, anything whereby Grantor’s title in said #9 Coal Property hereby granted is, or has been, in any manner encumbered or charged, except as herein recited; and that Grantor will warrant and forever defend Grantor’s title in the #9 Coal Property against all persons claiming, or to claim the same, by, through or under Grantor and against none else. The Grantor does not warrant title generally. Grantor shall not be responsible for or liable to Grantee or its successors and assigns for defects in title existing, attaching, or accruing prior to Grantor’s acquisition of the #9 Coal Property.

This conveyance is subject to all rights-of-way, easements, leases, deed and plat restrictions, partitions, severances, encumbrances, licenses, reservations and exceptions which are of record as of the date first above written, to the lien of real property taxes and special assessments, if any, upon the #9 Coal Property which taxes and assessments are not yet due and payable, and to all rights of persons in possession, and to physical conditions, encroachments and possessory rights which would be evident from an inspection of the #9 Coal Property. Grantor agrees to pay the 2011 Unmined Minerals (Coal) taxes.

RESTRICTIVE CONVENANT RUNNING WITH THE LAND. The #9 Coal Property hereby conveyed shall be subject to a restrictive covenant running with the land prohibiting the Grantee, its successors and assigns, and any subsequent owner, lessee and other holders of the #9 Coal Property from entering upon or mining any portion of Tract 209, depicted on Exhibit A, situated within the “No Mining Boundary” depicted on Exhibit A, and described on Exhibit B hereto. This restrictive covenant shall be to the benefit of the Grantor, its affiliated company, Cyprus Creek Land Company, Inc., a Delaware corporation (the present surface owner), and their respective successors and assigns. Grantor and Grantee agree the boundary of the no mining area need not be surveyed and that they are familiar with the location of the no mining area located within the “No Mining Boundary” depicted on Exhibit A hereto. To ensure compliance with this restrictive covenant, Grantee shall be obligated to furnish Grantor copies of its projected mine plans affecting Tract 209 prior to mining upon that tract and upon completion of mining of that tract.

Grantee represents that it has inspected the Property and agrees to accept the same “AS IS.”

TO HAVE AND TO HOLD the #9 Coal Property unto the Grantee, its successors and assigns, forever; provided, however, that this conveyance is made and accepted upon the following covenants which shall be binding upon and enforceable against Grantee and Grantee’s successors and assigns and shall be deemed covenants running with the land: (1) Grantee assumes all risks and responsibility for any injuries or damages sustained by any

 

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person or to any property, in whole or in part, resulting from, arising out of, or in any way connected with, the possession or use of the #9 Coal Property by Grantee; (2) Grantor does not warrant or represent subjacent or lateral support of the surface or sub-surfaces of the #9 Coal Property and does hereby reserve and except from its conveyance herein all rights and interests to same unto Grantor, its successors and assigns; (3) Grantor does not warrant or represent that the #9 Coal Property is safe, habitable or otherwise suitable for the purposes for which it is intended to be used by Grantee or for any other purpose whatsoever; and (4) Grantee takes the #9 Coal Property subject to the restrictive covenant running with the land, set forth herein above, prohibiting entry upon or mining any portion of Tract 209 that is situated within the “No Mining Boundary” depicted on Exhibit A hereto.

The ability to mine such coal seam is not warranted by Grantor and Grantee recognizes and accepts that the coal seam may be unsuitable for either surface and/or underground mining for reasons including, but not limited to, rough unnatural and unstable surface, inadequate subjacent or lateral support, circumstances related to the environmental quality of the #9 Coal Property or other conditions arising out of the prior use of the #9 Coal Property.

The parties do hereby certify and affirm under oath that the true and actual consideration paid for transfer of the real property herein is $8,304,250.00.

The Unmined Minerals (Coal) Tax bill for 2011 shall be sent to Cyprus Creek Land Resources, LLC at its address of 701 Market Street, Suite 798, St. Louis, Missouri 63101. For tax years 2012 and thereafter, such bills shall be sent to Armstrong Coal Company, Inc., at its address of 407 Brown Road, Madisonville, Kentucky 42431.

This Deed may be executed in one or more identical counterparts which may be combined into one or more identical documents, but all of which together shall constitute one and the same instrument, each of which shall be deemed an original.

Grantor and Grantee, by their execution hereof, hereby certify, pursuant to KRS 382.135 that the amount stated hereinabove is the full consideration given for the real property described above.

-REMAINDER OF PAGE INTENTIONALLY LEFT BLANK-

 

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IN WITNESS WHEREOF, said Grantor and Grantee have caused this instrument to be executed by their respective duly authorized officers, who represent and certify that they are the duly elected officers of the Grantor and Grantee, respectively, and have full authority on behalf of their respective corporations to execute and deliver this Corporation Special Warranty Deed; that Grantor represents that it has full corporate capacity to convey the real estate hereby conveyed and that all necessary action for the making of such conveyance has been taken and done.

 

GRANTOR:     CYPRUS CREEK LAND RESOURCES, LLC
    By:    
      James C. Sevem, Vice President

 

STATE OF MISSOURI                     )

  
                                                             ) SS:   
CITY OF ST. LOUIS                         )   

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by James C. Sevem as Vice President for and on behalf of Cyprus Creek Land Resources, LLC, a Delaware limited liability company, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law, for the purposes set forth herein, on this the              day of             , 2011.

 

(SEAL)

 

 

  Notary Public,  

 

My commission expires:                     

 

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WITNESS, the execution of:

 

GRANTEE:     ARMSTRONG COAL COMPANY, INC.
    By:    
      Martin D. Wilson, President

 

STATE OF MISSOURI                     )

  
                                                             ) SS:   
CITY OF ST. LOUIS                         )   

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Martin D. Wilson as President for and on behalf of Armstrong Coal Company, Inc., a Delaware corporation, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law, for the purposes set forth herein, on this the              day of             , 2011.

 

(SEAL)

 

 

  Notary Public,  

 

My commission expires:                     

THIS INSTRUMENT PREPARED BY:

 

     

M. Kirby Gordon II

GORDON & GORDON, P.S.C.

6357 KY Hwy 405

P.O. Box 398

Owensboro, Kentucky 42302-0398

(270) 281-0398

 

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EXHIBIT A

TO

CORPORATION SPECIAL WARRANTY DEED

MAP

 

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LOGO

 

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EXHIBIT B

TO

CORPORATION SPECIAL WARRANTY DEED

All recording references are to the Office of the Muhlenberg County Clerk.

TRACT 199 – LC#016-745 P16 and P17

Parcel 16

A strip of land of even width, 100 feet on each side of the following described centerline; beginning at an iron pipe, 4 feet E of a 30 inch gum in the East — West property line between Ayrshire Collieries Corporation’s 126.5 acre Roy Johnson tract and Katie B. Reneer, which iron pipe is N 88-20 W 3231 feet (old call S 86 W) from a 1-1/4 inch iron axle at a root wad, corner to Rogers, Ayrshire Collieries Corporation and Katie B. Reneer; thence N 02-14 W 858.4 feet across the lands of Katie B. Reneer to another iron pipe near a 10-inch elm and 18-inch gum on the S side of a ditch in the East — West property line between Ayrshire Collieries Corporation’s 77-acre Luther Faught tract and Katie B. Reneer, which iron pipe is approximately 477 feet East of Katie B. Reneer’s Northwest corner. Said tract of land contains 3.94 acres and extends from the Roy Johnson tract on the South to the Luther Faught tract on the North.

Parcel17

Tract #1: Beginning at an old corner, gum and maple, corner to Joseph Milligan; thence N 4 W 52 poles to a rock marked “BB”; thence N 86 E 154 poles to a rock marked “BB”; thence S 4 E 52 poles to a small dogwood, black gum and hickory in Milligan’s line; thence with same S 86 W 150 poles to the beginning, containing 50 acres, more or less.

Tract #2: Beginning at a rock near a maple and beech corner to John Brinkman’s survey running N 86 E about 70 poles to the old line, a red oak, elm and hickory marked; thence S 4 E 52 poles to the old corner of original survey, a mulberry; thence S 86 W about 70 poles to Brinkman’s corner in the old line, dogwood, black gum and hickory; thence with Brinkman’s line to the beginning

LESS AND EXCEPTED:

“There is excepted 3.94 acres of surface heretofore conveyed to the party of the second part by the party of the first part”.

 

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Source Of Title

1. And being Parcels 16 and 17, Tract 1 and 2 conveyed by AMAX INC to Peabody Coal Company by deed dated October 19, 1987, recorded October 22, 1987 in Deed Book 384, page 652 at recorded page 668.

2. And being a portion of the property conveyed by Peabody Coal Company, a Delaware Corporation, to Peabody Development Company, a Delaware Corporation, by deed dated September 12, 1989, recorded October 22, 1987 in Deed Book 398, page 37, as Item 235.

3. Effective December 16, 2003, in pursuant to Section 266 of the Delaware General Corporation Law, Peabody Development Company, a Delaware Corporation, converted and changed its name to Peabody Development Company, LLC, a Delaware Limited Liability Corporation, as shown in Articles of Incorporation Book 14, pages 635 – 638.

4. And further being a portion of the property conveyed by Peabody Development Company, LLC to Central States Coal Reserves of Kentucky, LLC by deed dated December 20, 2005, recorded in Deed Book 516, page 599, as corrected by Deed of Confirmation between Peabody Development Company, LLC and Central States Coal Reserves of Kentucky, LLC by deed dated December 27, 2005, effective December 20, 2005 and recorded in Deed Book 516, page 716.

5. Being a portion of the property conveyed by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC by deed dated September 13, 2007 recorded in Deed Book 530, page 620, as Tract 199

TRACT 209 – LC#1304-001 T1A

Only that portion of the following tract as lies North of the South Right-of-Way of the Western Kentucky Parkway (now Wendell Ford Parkway).

Beginning at an iron axle the Southeast corner of the “Heck” tract, thence S 81° 47’ W with the south line of “Heck” for 3637.4 feet to a stump; thence N 70° 32’ W for 923.8 feet to a gum; thence N 24° 57’ W for 678.3 feet to a rock; thence N 72° 26’ w for 3,438.3 feet; thence S 17° 04’ W for 2714.6 feet; thence S 71° 08’ E for 1011.3 feet; thence S 39° 56’ W for 1151.6 feet to an iron axle; thence S 23° 19’ E for 63.2 feet; thence S. 35° 50’ E for 1677.5 feet; thence S 35° 47’ E for 2,159.7 feet; thence N 53° 13’ E for 1725.5 feet to a 3” iron axle; thence S 14° 01’ E for 2547.8 feet to a 3” iron axle; thence N 71° 56’ E for 2,163.7 feet, to a 2” iron axle; thence N 12° 15’ W for 2663.7 feet to a road; thence N 69° 53’ E for 342.9 feet, S 67° 35’ E for 401.3 feet, s 49° 37’ E for 228.4 feet, thence N 15° 46’ W for 1000.6 feet, thence S 83° 45’ E for 1514.0 feet; thence N 13° 42’ E for 2,573.3 feet to the southeast corner of the church lot, thence N 80° 00’ W for 289.0 feet to a point which is 30 feet east

 

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of the center line of U. S. Highway 62, thence parallel with Highway 62 and 30 feet east of its center line N 36° 10’ E for 70.0 feet, N 28° 50’ E for 75.0 feet, N 21° 25’ E for 95.0 feet, thence leaving the highway s 80° 00’ E for 230.0 feet to a point in the old line, thence with the old line N 13° 42’ E for 370.0 feet to the place of beginning. Containing 916.71 acres more or less.

Source Of Title

1. And being a portion of a 916.71 acre tract identified as “Martwick Tract ‘A’ Minerals” conveyed by Peabody Coal Company to Peabody Development Company by deed dated July 19, 1984, recorded August 31, 1984, in Deed Book 363, page 420.

2. Effective December 16, 2003, in pursuant to Section 266 of the Delaware General Corporation Law, Peabody Development Company, a Delaware Corporation, converted and changed its name to Peabody Development Company, LLC, a Delaware Limited Liability Corporation, as shown in Articles of Incorporation Book 14, pages 635 – 638.

3. And further being a portion of the property conveyed by Peabody Development Company, LLC to Central States Coal Reserves of Kentucky, LLC by deed dated December 20, 2005, recorded in Deed Book 516, page 599, as corrected by Deed of Confirmation between Peabody Development Company, LLC and Central States Coal Reserves of Kentucky, LLC by deed dated December 27, 2005, effective December 20, 2005 and recorded in Deed Book 516, page 716.

4. Being a portion of the property conveyed by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC by deed dated September 13, 2007 recorded in Deed Book 530, page 620, as Tract 209

END OF EXHIBIT B

 

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EXHIBIT B

TO

ASSET PURCHASE AGREEMENT

Promissory Note


NEGOTIABLE PROMISSORY NOTE

ARMSTRONG COAL COMPANY, INC.

 

$4,435,495.83

                                             , 2011
   St. Louis, Missouri             

FOR VALUE RECEIVED, ARMSTRONG COAL COMPANY, INC., a Delaware corporation (the “Maker”) with an address at 407 Brown Rd., Madisonville, KY 42431, unconditionally promises to pay to the order of CYPRUS CREEK LAND RESOURCES, LLC, a Delaware limited liability company, its successors or assigns (the “Holder”), with an address at 701 Market Street, Suite 798, St. Louis, Missouri 63101, or at such other place as the Holder of this Note may from time to time designate, the principal sum of FOUR MILLION FOUR HUNDRED THIRTY-FIVE THOUSAND FOUR HUNDRED NINETY-FIVE AND 83/100 DOLLARS ($4,435,495.83) (the “Principal Amount”). The Principal Amount shall be due and payable on June 30, 2012 (“Due Date”). The Principal Amount shall not bear interest provided the payment is made by the Due Date as hereinafter set forth.

In the event the wire transfer of good funds does not occur on or before the Due Date, then interest in the amount of twelve percent (12%) per annum compounded quarterly and calculated on a 360 day per year basis (“Interest”), shall accrue from the date of this Note,             , 2011, on the unpaid Principal Amount, until paid in full. All payments hereunder shall be made in lawful money of the United States of America and in immediately available funds without any offset, reduction, deduction or diminution.

Failure to pay any of the Principal Amount or Interest payments when due and payable shall constitute an event of default hereunder in addition to any of the events deemed events of default under the Mortgage executed and delivered by the Maker to secure the full and timely payment and performance of this Note, each being an event of default hereunder (“Event of Default”). Upon the occurrence of an Event of Default hereunder, the entire unpaid Principal Amount hereof and all accrued and unpaid Interest thereon, shall be immediately due and payable, at the option of the Holder, without demand or any notice whatever, and in addition thereto, and not in substitution therefore, the Holder shall be entitled to exercise any right or remedy as provided at law or in equity. Notwithstanding the above, upon the occurrence of any event deemed an event of default under the Mortgage, the Holder shall be entitled to terminate and/or cancel a certain Underground Coal Mining Lease, a certain Underground Coal Mining Lease and Sublease and a certain Underground Coal Mining Sublease (collectively the “Leasehold Estates”), all dated December 29th, 2011 between the Maker and Holder; provided, that Holder provides Maker with written notice of such Event of Default and allows Maker thirty (30) days from the date of Maker’s receipt of the notice to cure the default by satisfying the entire outstanding unpaid Principal Amount and any Interest payments owed under this Note in full. Failure to exercise said option or to pursue such option or such other rights and remedies shall not constitute a waiver of such option or such other rights and remedies or

 

Muhlenberg Co., Ky.

   12/26/11

 

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of the right to exercise any of the same in the event of any subsequent Event of Default. The Maker promises to pay all costs and expenses (including, without limitation, reasonable attorney’s fees and expenses) incurred in connection with the collection of any and all amounts due and payable hereunder.

The Maker hereby waives presentment, protest, demand, notice of dishonor, and all other notices, and all defenses and pleas on the grounds of any extension or extensions of the time of payments or the due dates of this Note, in whole or in part, before or after maturity with or without notice. No renewal or extension of this Note, no release or surrender of any collateral given as security for this Note, and no delay in enforcement of this Note shall affect the liability of the Maker.

Whenever used herein, the words “Maker” and “Holders” shall be deemed to include their respective successors and assigns.

This Note is intended to be performed in the Commonwealth of Kentucky and shall be governed by and construed under and in accordance with the laws of the Commonwealth of Kentucky.

IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed on its behalf as of the day and year first hereinabove set forth.

 

ARMSTRONG COAL COMPANY, INC.
By:    
Title:    

 

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EXHIBIT C

TO

ASSET PURCHASE AGREEMENT

Rogers #9 Sublease


NOT TO BE RECORDED

UNDERGROUND COAL MINING SUBLEASE

(Deep #9 Coal Lying North of the South ROW Line of Wendell Ford Parkway)

This UNDERGROUND COAL MINING SUBLEASE (“Sublease”), is made and entered into on this the              day of             , 201    , (“Lease Date”), by and between CYPRUS CREEK LAND RESOURCES, LLC (“Cyprus Creek” or “Sublessor”), Delaware limited liability company with an address of 701 Market Street, Suite 798, St. Louis, Missouri 63101 and ARMSTRONG COAL COMPANY, INC., a Delaware corporation with an address of 407 Brown Road, Madisonville, Kentucky 42431 (“Armstrong Coal” or “Sublessee”), collectively hereinafter the “Parties”.

W I T N E S S E T H:

WHEREAS, SUBLESSOR by and through its predecessors in title became the Lessee to a certain coal properties and coal mining rights located in Muhlenberg County, Kentucky by Mineral Lease dated December 4, 1947, of record in Deed Book 164, page 525, in the Office of the Muhlenberg County Clerk, as amended, supplemented, and extended from time to time (“Rogers 1947 Mineral Lease”) including the deep #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky, as more particularly described in the 1947 Mineral Lease, incorporated herein by reference and made a part hereof;

WHEREAS, the Rogers 1947 Mineral Lease is subject to (i) that certain unrecorded Agreement Relating to Additional Advance Royalties “Deep #9 Coal North of Western Kentucky Parkway” dated May 3, 2007 (hereinafter called the “Additional Advance Royalties Agreement”), and (ii) that certain unrecorded Agreement Relating to Additional Earned Royalties “Deep #9 Coal North of South ROW Line of Wendell Ford Parkway” dated             , 201     (hereinafter called the “Additional Earned Royalty Agreement”), both regarding additional royalties due under the terms and conditions of the Rogers 1947 Mineral Lease with respect to the Deep #9 Coal lying north of the south right-of-way line of the Wendell Ford Parkway, all of which are incorporated herein by reference and made a part hereof; and,

WHEREAS, SUBLESSOR desires to sublease to SUBLESSEE and SUBLESSEE desires to accept SUBLESSOR’s grant of a sublease of SUBLESSOR’s right, title and leasehold interest in and to that portion of the Rogers 1947 Mineral Lease being all of the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “Coal”), as more particularly depicted on Exhibit A attached hereto and described on the attached Exhibit B, incorporated herein by reference and made a part hereof (the “Property”); and,

WHEREAS, SUBLESSOR warrants and represents that it has provided true and actual copies of the Additional Advance Royalties Agreement and the Additional Earned Royalty Agreement to SUBLESSEE; and,

WHEREAS, SUBLESSOR and SUBLESSEE have obtained the consents of the respective Lessors under the Rogers 1947 Mineral Lease to the sublease thereof to SUBLESSEE, as hereinafter set forth.

 

Rogers #9 Sublease    12/20/11
Deep #9 Coal N of Pkwy.   
Muhlenberg Co., Ky.   

 

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NOW, THEREFORE, in consideration of the payment of the first installment of the Earned Royalty (defined below) by Armstrong Coal to Cyprus Creek, and in consideration of all other obligations of Armstrong Coal stated in this Sublease, Cyprus Creek does hereby grant, let, sublet, and sublease unto Armstrong Coal all of its RIGHT, TITLE and LEASEHOLD INTEREST, but only to the extent held by Cyprus Creek in the deep #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “Coal”), as more particularly depicted on the map attached as Exhibit A and described on the attached Exhibit B, incorporated herein by reference and made a part hereof, subject to the Additional Royalty Agreements (the “Property”).

1. SPECIAL RIGHTS OF ARMSTRONG COAL. In addition to whatever rights Armstrong Coal may have by implication of law hereunder, Armstrong Coal shall have the following exclusive rights (“Rights”) to the extent in fact owned or held by Cyprus Creek:

 

  (a) To drill, take core samples, survey, map and otherwise evaluate the Coal and to perform environmental research.

 

  (b) To mine, extract or remove the Coal and other substances which are necessarily removed in the underground coal mining process by any and all underground mining methods now or hereafter in existence, including the right to disturb, cast, and pile all strata without regard to mineral content and for preparing and marketing coal; such rights, including, without limitation, to the extent permitted by applicable statutes and regulations and to the extent Cyprus Creek has the right to grant the same, the right to install and maintain railroad and truck loading facilities, storage areas, railroad tracks and switches, pumping stations, pole lines and wires; to dig ditches for the drainage of water; to lay pipe lines; to erect towers; to provide for the storage of materials and supplies; to construct and use roadways; to erect and use buildings, plants and structures of every kind; and, in general, and without limitation, to do any and all things incident to Armstrong’s mining, processing, and marketing of coal produced from the Property; provided, however, that Armstrong Coal has, by its execution of this Sublease, accepted all liability which may arise at any time after the execution hereof for any and all damage to surface and/or structures situated in, on or under the surface, where such damage was caused by Armstrong Coal’s operations under this Sublease. It is the express intent of the Parties hereto that by the language of this Section 1(b), Armstrong Coal shall have accepted all responsibility and liability for any and all subsidence and damage caused thereby as it relates to the Property and/or Coal from and after the date of execution hereof.

 

  (c) A free access to, in, from and across the Property and the Coal and the right to undertake any other thing or use necessary or convenient for the underground mining of the Coal.

 

  (d) To utilize underground tunnels, entries, passageways, rooms, haulage ways, pumping stations, pipelines, conveyors, storage facilities, drains and other surface and underground facilities, all with respect to the mining of Coal and for the purpose of mining of coal in, on or under the Property.

 

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2. TERM.

(a) This term of this Sublease (the “Term”) shall be for the longer of: (i) five (5) years commencing on the effective date of this Sublease; or (ii) until such time as all of the mineable and merchantable coal has been mined and removed; provided that Armstrong Coal is engaged in mining coal on the Property by no later than five (5) years from the effective date of this Sublease and further provided that Armstrong Coal has continuously mined such Coal and is actively mining and removing such Coal from the Property. Notwithstanding any provision to the contrary, Armstrong Coal may terminate this Sublease at any time during the term upon thirty (30) days written notice to Cyprus Creek. In the event that Armstrong Coal completes its mining activities prior to the expiration of the Term, this Sublease shall terminate and Armstrong Coal shall provide written notice to Cyprus Creek within five (5) days of the date on which Armstrong Coal last loads Coal from the Property for shipment to customers. This Sublease shall expire on the date of such written notice.

(b) Upon expiration or termination of this Sublease, Armstrong Coal shall, at Cyprus Creek’s request, execute a Release of this Sublease for purposes of recording. After expiration or termination of this Sublease, Armstrong Coal shall have the right to re-enter the Property and remove all of Armstrong Coal’s mining equipment and related property from the Property, and thereafter, as and when required by Federal, state or local law or regulation, as a result of Armstrong Coal’s operations under this Sublease, Armstrong Coal shall perform reclamation and environmental work on and respecting the Property.

(c) If, at any time, Armstrong Coal shall fail to perform reclamation and environmental work on and respecting the Property, as and when required by law, Cyprus Creek, at its option, shall have the right to:

 

  (i) seek specific performance of this obligation from a court of competent jurisdiction; and/or,

 

  (ii) re-enter the Property and perform such reclamation and environmental work as may be required at the expense of Armstrong Coal, which expense Armstrong Coal shall be obligated to pay without legal recourse.

 

  (iii) Notwithstanding the foregoing, Cyprus Creek shall provide Armstrong Coal thirty (30) days prior written notice of its intent to proceed under (i) or (ii) above and allow Armstrong Coal a reasonable time within which to perform reclamation work as set forth above.

3. ROYALTIES. Armstrong Coal shall pay to Cyprus Creek, in full payment for all of the benefits secured by Armstrong Coal under or in connection with the mining of coal pursuant to this Sublease, the following Royalties (“Royalties”), when and to the extent stated:

 

  (a)

Advance Royalty; Recoupments. Armstrong Coal shall pay to Cyprus Creek the amount of advance royalty as provided under the Rogers 1947

 

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  Mineral Lease plus the amount of the additional advance royalties as provided for in the Additional Advance Royalties Agreement of $6,000.00 per month. Cyprus Creek shall pay the amounts to the Lessors. Cyprus Creek shall also be paid any and all amounts that are recouped or recoupable from the Lessors based upon credits to the Lessee/Sublessor for payments made to Lessors prior to the date hereof. Armstrong Coal shall be solely entitled to amounts recouped or recoupable from the Lessors based upon credits accrued or payments made of advance royalties after the date hereof.

 

  (b) Earned Royalty. Armstrong Coal shall pay to Cyprus Creek as an Earned Royalty (“Earned Royalty”) on each ton of Coal mined and sold from the Property five percent (5%) of Armstrong Coal’s per ton royalty basis per ton, as provided in the Rogers 1947 Mineral Lease plus the additional royalties of one percent (1%) of Armstrong Coal’s per ton royalty basis as provided for in the Additional Earned Royalty Agreement affecting the Coal mined and sold hereunder.

 

  (c) Payment. All Earned Royalty shall be payable on the 25th day of each month for all coal mined and sold by Armstrong Coal from the Property during the preceding calendar month. No Earned Royalty shall be payable on or with respect to gob, slurry, tailings or other residue resulting from the processing, including washing of Coal for sale from the Property, and Armstrong Coal shall have clear title to all such material from the Property, provided that all such material is removed from the Property prior to the expiration or termination of this Sublease.

 

  (d) Additional Expenses. Armstrong Coal shall be responsible for the payment of all costs and expenses resulting from or related to the mining, removal, and sale of the Coal, all reporting costs, taxes, and all engineering fees. It shall be solely responsible for all additional costs including costs relating to the Lessors and the leasehold estate herein subleased.

 

  (e) Reports. Beginning with the month following the month in which coal is first mined from the Property, and for each month thereafter, Armstrong Coal shall furnish to Cyprus Creek a report stating for that month the number of coal acres mined and the tons of coal mined and sold from each parcel as depicted on Exhibit A and described on Exhibit B, the per ton Royalty Basis (defined below) showing all adjustments made to the monthly invoice sales price; the calculated royalty rate per ton; and credits, if any.

 

  (f) Delinquent Payments. Delinquent payments shall bear interest from their due date at a per annum rate which is one percent (1%) above the prime interest rate as reported in the Wall Street Journal, as quoted on the first day of the month in which payment is due.

4. ROYALTY BASIS. Royalty Basis hereunder shall mean the invoice sales price of the coal, F.O.B. mine, without any deduction for taxes, fees or any other amounts whatsoever. Except as otherwise restricted or prohibited by the Rogers 1947 Mineral Lease, Armstrong Coal may commingle the Coal with other coal from Armstrong Coal’s mine(s). The payment of royalties, when and as due hereunder, shall be construed as full payment of Armstrong Coal’s right to retain the leasehold estate and all of the rights granted by Cyprus Creek under this Sublease.

 

4


5. MINE PLANS. Armstrong Coal shall make available for inspection by Cyprus Creek a copy of Armstrong Coal’s Mine Plan map and any revisions thereto and of Armstrong Coal’s Coal Mining and Reclamation Operations Permit to Mine the Coal, including the application for such permit, and all maps and diagrams submitted therewith. Cyprus Creek shall not interfere with Armstrong Coal’s permitting activities, provided that Armstrong Coal shall have complied with the terms and conditions of this Sublease. In addition, Cyprus Creek shall have the right to review such mine plans on no less than an annual basis to determine for itself whether appropriate steps are being taken by Armstrong Coal to protect all accessible coal reserves from unnecessary damage. Armstrong Coal shall furnish to Cyprus Creek on January 25 and July 25 of each year a map showing the area mined in the previous six (6) months and showing the area projected to be mined in the following six (6) months. These maps shall be certified by a Registered Professional Engineer, Certified Professional Geologist or Registered Land Surveyor and shall be at scale of not more than 1” = 100’, showing a minimum, by month, the actual extent of Coal extracted and thickness of each of the Coal seams mined.

6. CYPRUS CREEK’S RIGHT TO INSPECT. Cyprus Creek or its representatives at reasonable times, and upon at least forty-eight (48) hours advance written notice, shall have the right to make surveys of the workings in the Coal herein leased to determine the accuracy of Armstrong Coal’s surveys of such workings; and at reasonable times, and upon at least forty-eight (48) hours advance written notice, to examine the maps and engineering records of Armstrong Coal with reference to said surveys. Armstrong Coal shall keep records of all coal mined and sold from the Property and Cyprus Creek shall have the right to inspect the records at all reasonable times. Cyprus Creek or its representatives shall also have the right at reasonable times, and upon at least forty-eight (48) hours advance written notice, to examine and check the invoices, sales records and other directly relevant records of Armstrong Coal to determine the accuracy of Armstrong Coal’s reports to Cyprus Creek. Cyprus Creek agrees to treat Armstrong Coal’s invoices and sales records as confidential and not to disclose such records to Cyprus Creek’s or its affiliates’ sales representatives. Armstrong Coal shall not be responsible for any injury, loss or damages suffered by Cyprus Creek’s representatives that enter the Property, except for any injury, loss or damages caused in whole or in part by the material negligence of Armstrong Coal, its agents or employees.

7. TITLE. Cyprus Creek does not warrant its title to the Coal or the Property generally and shall have no liability to Armstrong Coal for any impairment of or interference with the exchange of Armstrong Coal’s rights under this Sublease by any person claiming title superior to Cyprus Creek’s. During the term of this Sublease, however, Cyprus Creek shall not impair or suffer by act or omission any impairment of its title to the Property which would interfere with Armstrong Coal’s exercise of its rights under this Sublease, except as otherwise restricted or prevented by the Rogers 1947 Mineral Lease. Defects in Cyprus Creek’s title may be corrected by Armstrong Coal at Armstrong Coal’s sole discretion and cost, and Cyprus Creek agrees to cooperate with Armstrong Coal in such corrective activity in the event it is requested to do so. Cyprus Creek agrees to furnish Armstrong Coal all title information in its possession or readily available to Cyprus Creek, including abstracts of title, commitments for title insurance and title insurance policies. The Parties agree to execute necessary releases as to any property to which Armstrong Coal notifies Cyprus Creek of tile defects to which it elects not to cure.

 

5


8. NO MINING BOUNDARY. A portion of Tract 237-2 hereby subleased shall be subject to a restrictive covenant prohibiting Armstrong Coal, its successors and assigns, from entering upon or mining any portion of Tract 237-2, described on Exhibit B and depicted on Exhibit A, situated within the area depicted on the attached Exhibit A as the “No Mining Boundary.” This restrictive covenant shall be to the benefit of Cyprus Creek, its affiliated company, Cyprus Creek Land Company, Inc., a Delaware corporation (the present surface owner), and their respective successors and assigns. Cyprus Creek and Armstrong Coal agree the boundary of the no mining area need not be surveyed and that they are familiar with the location of the no mining area located within the “No Mining Area” depicted on Exhibit A hereto. To ensure compliance with this restrictvie covenant, Armstrong Coal shall be obligated to furnish Cyprus Creek copies of its projected mine plans affecting Tract 237-2 prior to mining upon that tract and upon completion of mining that tract.

9. COMPLIANCE WITH LAWS.

(a) Armstrong Coal shall perform all legally required reclamation and comply with all applicable Federal, state and local laws, rules and regulations; obtain all necessary permits; pay all employment and other taxes required in connection herewith, and shall indemnify and defend Cyprus Creek against all actions, including penalties and fines, resulting from Armstrong Coal’s failure to do so.

(b) Armstrong Coal shall secure and keep in force a reclamation bond. Armstrong Coal shall not continue its mining operations, without the written permission of Cyprus Creek, if it should fail to keep in force such bond, or if for any other reason, including the failure of the bonding company, the bond fails.

10. INDEMNIFICATION. Except as provided in Section 6 above, Armstrong Coal shall indemnify, defend and save harmless Cyprus Creek and the Lessors against any and all claims, loss and expense by reason of liability imposed or claimed to be imposed by law for damage due to bodily injuries, (including death) and property damage sustained by any person(s), including the employees of Armstrong Coal, arising out of or in consequence of Armstrong Coal’s exercise of its rights, whether same arise in whole or in part from negligence (or from any other legal basis) of Armstrong Coal, its employees or agents. Cyprus Creek shall indemnify, defend and save harmless Armstrong Coal against any and all claims, loss and expense by reason of liability imposed or claimed to be imposed by law for damage due to bodily injuries, (including death) and property damage sustained by any person(s), including the employees of Cyprus Creek, arising out of or in consequence of Cyprus Creek’s exercise of its rights, whether same arise in whole or in part from negligence (or from any other legal basis) of Cyprus Creek, its employees or agents. This provision shall survive any termination or cancellation of this Sublease.

11. INSURANCE. Armstrong Coal shall obtain and continue in force, during the term of this Sublease, the following insurance coverages:

 

  (a) Employer’s Liability insurance with limits of $500,000 each occurrence, unless the laws of the State in which the work is to be performed preclude an independent right of action by an employee against an employer under common law.

 

6


  (b) Comprehensive Automobile Liability insurance with Bodily Injury and Property Damage both with $1,000,000 combined single limit.

 

  (c) Comprehensive General Liability insurance, including Contractual Liability coverages with Bodily Injury, and Property Damage both with $1,000,000 combined single limit.

 

  (d) Workers’ Compensation coverage with statutory limits. All insurance policies must contain an unqualified provision that the insurance carrier will give Cyprus Creek thirty (30) days prior notice in writing of any cancellation, change or lapse of such policy. Prior to occupancy or use of the Property, Armstrong Coal shall furnish to Cyprus Creek (in form satisfactory to Cyprus Creek) a certificate of insurance showing that the requirements of this paragraph have been satisfied. The certificate of insurance shall name Cyprus Creek as an additional insured and certificate holder on all aforementioned policies. The liability assumed by Armstrong Coal under this Sublease is not limited by the amount of insurance which Armstrong Coal is required to provide under this paragraph.

12. DEFAULT AND TERMINATION. In the event of the failure on the part of Armstrong Coal to make any payment hereunder when due, or failure of Armstrong Coal to make any payment due and payable under that certain Promissory Note between Armstrong Coal and Cyprus Creek of even date herewith, or in the event a Party fails to observe and perform any other agreement or undertaking as herein provided, then the other Party shall have the right immediately to give the defaulting Party a written notice designating the particular default or defaults of which complaint is made and notifying the defaulting Party of its intention and election to terminate the Sublease by reason of such default or defaults, and unless the defaulting Party shall make the payment in default within TEN (10) days after giving of said notice and remove any other default complained of within THIRTY (30) days after the giving of said notice (except any default not susceptible of being cured within such THIRTY (30) day period, in which event the time permitted to the defaulting Party to complete the same, provided the defaulting Party commences promptly and proceeds diligently to complete such performance), then without further notice this Sublease and the rights of the defaulting Party hereunder shall be forfeited, canceled and terminated. Such termination of this Sublease shall not, however, relieve the obligation for any Royalty due under this Sublease to date of such termination or liability of the defaulting Party for any other damage resulting to the other Party from said default. Armstrong Coal shall have the right, and the obligation should Cyprus Creek so demand, to remove any of its property from the Property for a period of one (1) year after expiration or termination of this Sublease, subject to Armstrong Coal’s rights under Section 1(d) hereof.

13. TAXES. At all times during the term of this Sublease and any extension hereof, Armstrong Coal shall be responsible for and shall pay all state and local real property taxes imposed upon the interests subleased hereunder. Such taxes shall include, but not be limited to, real estate taxes upon the mineral interest subleased hereunder, severance taxes, production taxes, business taxes and personal property taxes. The intent of this provision is to make clear that while this Sublease is in effect, Cyprus Creek

 

7


shall have no liability for any taxes or government impositions whatsoever which may be imposed upon the Property, or the Coal, or upon the operations of Armstrong Coal as they relate to the Property, or the Coal subleased hereunder or the rights granted to Armstrong Coal hereunder. However, it is the understanding of the Parties that Cyprus Creek shall pay all real estate taxes only, which may be imposed upon the Property to the appropriate taxing authority; thereafter, Armstrong Coal shall reimburse Cyprus Creek for the full amount of all such paid taxes immediately upon its receipt of an invoice from Cyprus Creek evidencing same.

14. ANCILLARY PROVISIONS OF THIS SUBLEASE. This Sublease, and the attached Exhibits A and B (made a part hereof) constitute the entire agreement between the Parties, supersede all representations, bids, agreements, memoranda and correspondence between, by or for the Parties relating to the Property, and shall be construed in accordance with the laws of the state of Kentucky. No amendment or modification of this Sublease shall be binding unless made by a written instrument of equal formality with this Sublease. Waiver by either party of performance by the other party of any of the provisions of this Sublease shall not be construed as a waiver of any further right to insist upon full performance of the terms of this Sublease. Each Party shall be entitled to insist strictly upon timeliness of performance by the other Party of the other Party’s obligations.

15. FORCE MAJEURE. Except for the failure to pay money due and payable to Cyprus Creek, Armstrong Coal shall not be deemed to be in default for any failure to perform or observe any of the terms, conditions, provisions, obligations or covenants to be performed or observed by it hereunder during periods in which such performance or observance is prevented by any event reasonably beyond Armstrong Coal’s control including, but not by way of limitation, any order, decree, direction, inaction, or denial of permit by any governmental law, executive order, rule, regulation, or request enacted or promulgated under color of authority; by scarcity or inability to obtain equipment, material, power or fuel; by lack of satisfactory market in the sole opinion and discretion of Armstrong Coal for Coal mined from the Property; by riot, strike, lockout, insurrection or industrial disturbance; by failure of carriers to transport or furnish facilities for transportation; by any act of God (including, with limitation, lightning, earthquake, cave-in, fire, storm, flood, washout); or by breakage or accident to machinery or facilities; fires or explosions; provided that Armstrong Coal shall exercise reasonable diligence to resume mining operations. Armstrong Coal shall have the right to determine and settle any strikes, lockouts or industrial disputes in its sole discretion, and the aforesaid requirement of exercising reasonable diligence to resume mining shall not require Armstrong Coal to accede to any demand or position of any other party involved in such strike, lockout or industrial dispute.

16. PRESERVATION OF TITLE. During the term of this Sublease, Cyprus Creek shall not do anything or fail to do anything, which would prevent or obstruct Armstrong Coal’s rights hereunder. Nothing herein shall create or be interpreted to create a hindrance of any kind whatsoever to Cyprus Creek’s freedom to dispose of its interest in this Sublease, the Property, or the Coal provided such proposal is made subject to this Sublease.

 

17. RECORDING. Neither Party shall record this Sublease without the prior written consent of the other Party.

 

8


18. ASSIGNMENT. Armstrong Coal shall not assign this Sublease or any part of its right hereunder, without the prior written consent of Cyprus Creek, which shall not be unreasonably withheld. Absent Cyprus Creek’s prior written consent, any assignment or attempted or purported assignment shall be void as to Cyprus Creek and, moreover, shall constitute a material breach of this Sublease.

19. NOTICES. Any notice or communication required by this Lease shall be in writing addressed to the address of each of the Parties respectively as follows:

 

To CYPRUS CREEK    To Armstrong
Cyprus Creek Land Resources, LLC    Armstrong Coal Mining Company, Inc.
701 Market Street, Ste. 798    407 Brown Road
St. Louis, MO 63101-1826    Madisonville, Kentucky 42431
ATTN: President    ATTN: Vice President of Operations

At any time, either Party may specify in writing a new address for notification hereunder.

20. MEMORANDUM OF SUBLEASE. The Parties hereby agree to execute a memorandum or notice of this Sublease in form suitable for recording.

IN WITNESS WHEREOF, the Parties have executed this Underground Coal Mining Sublease in duplicate, as of the effective date first above written, by their own hand and deed, and/or by their duly authorized representatives, each of which representative, by signing this Underground Coal Mining Sublease, personally represents and guarantees his authority to sign for the Party indicated.

 

Cyprus Creek:     CYPRUS CREEK LAND RESOURCES, LLC
    By:  

 

      James C. Sevem, Vice President

 

STATE OF MISSOURI    )      
   ) SS:      
CITY OF ST. LOUIS    )      

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by James C. Sevem as Vice President of Cyprus Creek Land Resources, LLC, a Delaware limited liability company, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the              day of             , 201    .

 

(SEAL)   

 

   Notary Public,                                                                                 
My commission expires:                                                                        

 

9


WITNESS, the execution of:

 

Armstrong Coal:     ARMSTRONG COAL COMPANY, INC.
    By:  

 

      Martin D. Wilson, President

 

STATE OF MISSOURI    )      
   ) SS:      
CITY OF ST. LOUIS    )      

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Martin D. Wilson as President of Armstrong Coal Company, Inc., a Delaware corporation, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the              day of             , 201    .

 

(SEAL)   

 

   Notary Public,                                                                                 
My commission expires:                                                                        

 

10


EXHIBIT A

TO

UNDERGROUND COAL MINING SUBLEASE

Map

 

11


 

LOGO

 

12


EXHIBIT B

TO

UNDERGROUND COAL MINING SUBLEASE

All recording references are to the Office of the Muhlenberg County Clerk.

Rogers #9 Subleased Coal

 

     Map No   

LC#

   Acres    DB/P    Date    Footnote   

Comment

1    R200    2699-011Rogers 200    UNK    4/18/97

518/343

   1/6/93

2/27/06

   1,2   
2    R202    2699-011Rogers 202    265.2    4/18/97

518/343

   1/6/93

2/27/06

   2   
3    R203    2699-011Rogers 203    4.6    4/18/97

518/343

   1/6/93

2/27/06

   3   
4    R204    2699-011Rogers 204    UNK    4/18/97

518/343

   1/6/93

2/27/06

   1,2   
5    R205    2699-011Rogers 205    158.8    4/18/97

518/343

   1/6/93

2/27/06

     
6    R206    2699-011Rogers 206    24    4/18/97

518/343

   1/6/93

2/27/06

   2   
7    R207    2699-011Rogers 207    198    4/18/97

518/343

   1/6/93

2/27/06

   3   
8    R208    2699-011Rogers 208    36.1    4/18/97

518/343

   1/6/93

2/27/06

   3   
9    R212    2699-011Rogers 212    110.7    4/18/97

518/343

   1/6/93

2/27/06

     
10    NONE    2699-011Rogers 214    UNK    4/18/97

518/343

   1/6/93

2/27/06

   1,2    Coal under R242 and R241
11    R217    2699-011Rogers 217    235    4/18/97

518/343

   1/6/93

2/27/06

   3   
12    R225    2699-011Rogers 225    60    4/18/97

518/343

   1/6/93

2/27/06

   2   
13    R227    2699-011Rogers 227    28    4/18/97

518/343

   1/6/93

2/27/06

   2   
14    R228    2699-011Rogers 228    71.82    4/18/97

518/343

   1/6/93

2/27/06

     
15    R229    2699-011Rogers 229    68.58    4/18/97

518/343

   1/6/93

2/27/06

     
16    R237-2    2699-011Rogers 237-2    329    4/18/97

518/343

   1/6/93

2/27/06

   3   

 

13


     Map No   

LC#

   Acres    DB/P    Date    Footnote   

Comment

17    R238    2699-011Rogers 238    40    4/18/97

518/343

   1/6/93

2/27/06

   4   
18    R241    2699-011Rogers    14.2    4/18/97

518/343

   1/6/93

2/27/06

   1,2,4    See also R214
19    R242    2699-011Rogers 242    22    4/18/97

518/343

   1/6/93

2/27/06

   1,2,4    See also R214
20    R316    2699-011Rogers 316    139.5    4/18/97

518/343

   1/6/93

2/27/06

   2   
21    R317    2699-011Rogers 317    142.8    4/18/97

518/343

   1/6/93

2/27/06

     

Schedule of Known Exception

 

Footnote

  

Description

1    Less and except that portion lying south of the south Right of Way of the Wendell Ford Parkway, formerly the Western Kentucky Parkway, assigned by Central States Coal Reserves of Kentucky, LLC to Western Land Company, LLC by Assignment dated December 12, 2006, of record in Deed Book 524, page 523.
2    Subject to Right of Way and/or ownership in the Commonwealth of Kentucky for the Wendell Ford Parkway, formerly the Western Kentucky Parkway, dated December 10, 1962, of record in Deed Book 232, page 558.
3    Subject to Right of Way for the P&L Railroad, formerly I. C. Railroad
4    Tract also lies within the boundary of Rogers Tract 214.

Source of Title

Rogers Tracts LC#2699-011

 

  1. AND BEING a portion of the property assigned by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC by Deed dated August 31, 2007, of record in Deed Book 531, page 227.

 

  2. By unrecorded Consent to Assignment and Assumption of Lease dated October 3, 2007, Martha Rogers Haas 1996 Revocable Trust, Talmage G. Rogers, et al, consented to the partial assignment and assumption by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC.

END OF EXHIBIT B

 

14


EXHIBIT D

TO

ASSET PURCHASE AGREEMENT

Memo of Rogers #9 Sublease


EXHIBIT D TO CONTRACT

MEMORANDUM OF

UNDERGROUND COAL MINING SUBLEASE

(Deep #9 Coal Lying North of the South ROW Line of Wendell Ford Parkway)

This MEMORANDUM OF UNDERGROUND COAL MINING SUBLEASE (“Memorandum”), is made and entered into on this the              day of             , 201    , (“Lease Date”), by and between CYPRUS CREEK LAND RESOURCES, LLC, Delaware limited liability company with an address of 701 Market Street, Suite 798, St. Louis, Missouri 63101 (“Cyprus Creek” or “Sublessor”) and ARMSTRONG COAL COMPANY, INC., a Delaware corporation with an address of 407 Brown Road, Madisonville, Kentucky 42431 (“Armstrong Coal” or “Sublessee”), collectively hereinafter the “Parties”.

W I T N E S S E T H:

WHEREAS, by separate Underground Coal Mining Sublease of even date herewith between Cyprus Creek as Sublessor and Armstrong Coal as Sublessee, Cyprus Creek did grant, let, sublet, and sublease unto Armstrong Coal all of its right, title, and leasehold interest in and to a portion of the Rogers 1947 Mineral Lease being all of the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “Coal”), as more particularly depicted on the map attached as Exhibit A and described on Exhibit B attached thereto (the “Property”) (the “Rogers #9 Sublease”);

WHEREAS, Sublessor and Sublessee have obtained the consents of the respective Lessors under the Rogers 1947 Mineral Lease to the Rogers #9 Sublease to Sublessee as more particularly set forth in said Rogers #9 Sublease;

WHEREAS, the Parties desire to have recorded a Memorandum for the purpose of filing record notice thereof, and for that purpose, have executed this Memorandum.

 

Rogers #9 Sublease

Deep #9 Coal N of Pkwy.

Muhlenberg Co., Ky.

   12/14/11

 

1


NOW, THEREFORE, for and in consideration of the execution of the Underground Coal Mining Sublease (“Rogers #9 Sublease”) between the Parties and the mutual covenants and agreements set forth therein, Sublessor does hereby sublet and sublease unto Sublessee all of its right, title and leasehold interest in and to that portion of the Rogers 1947 Mineral Lease being all of the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky, and the coal mining rights and privileges thereto, more particularly depicted on the map attached hereto as Exhibit A and described on the attached Exhibit B, incorporated herein by reference and made a part hereof (Deed Book 164, page 525).

(a) The term of the Rogers #9 Sublease (the “Term”) shall be for the longer of: (i) five (5) years commencing on the effective date of this Lease; or (ii) until such time as all of the mineable and merchantable coal has been mined and removed; provided that Armstrong Coal is engaged in mining coal on the Property by no later than five (5) years from the effective date of the Rogers #9 Sublease and further provided that Armstrong Coal has continuously mined such Coal and is actively mining and removing such Coal from the Property. Notwithstanding any provision to the contrary, Armstrong Coal may terminate the Rogers #9 Sublease at any time during the term upon thirty (30) days written notice to Cyprus Creek. In the event that Armstrong Coal completes its mining activities prior to the expiration of the Term, the Rogers #9 Sublease shall terminate and Armstrong Coal shall provide written notice to Cyprus Creek within five (5) days of the date on which Armstrong Coal last loads Coal from the Property for shipment to customers. The Rogers #9 Sublease shall expire on the date of such written notice.

(b) Upon expiration or termination of the Rogers #9 Sublease, Armstrong Coal shall, at Cyprus Creek’s request, execute a Release of the Rogers #9 Sublease for purposes of recording. After expiration or termination of this Sublease, Armstrong Coal shall have the right to re-enter the Property and remove all of Armstrong Coal’s mining equipment and related property from the Property, and thereafter, as and when required by Federal, state or local law or regulation, as a result of Armstrong Coal’s operations under the Rogers #9 Sublease, Armstrong Coal shall perform reclamation and environmental work on and respecting the Property.

(c) If, at any time, Armstrong Coal shall fail to perform reclamation and environmental work on and respecting the Property, as and when required by law, Cyprus Creek, at its option, shall have the right to:

 

  (i) seek specific performance of this obligation from a court of competent jurisdiction; and/or,

 

  (ii) re-enter the Property and perform such reclamation and environmental work as may be required at the expense of Armstrong Coal, which expense Armstrong Coal shall be obligated to pay without legal recourse.

 

  (iii) Notwithstanding the foregoing, Cyprus Creek shall provide Armstrong Coal thirty (30) days prior written notice of its intent to proceed under (i) or (ii) above and allow Armstrong Coal a reasonable time within which to perform reclamation work as set forth above.

This Memorandum is executed solely for the purpose of providing record notice only, and is not intended, nor shall it be deemed, to modify any of the provisions of the Rogers #9 Sublease. Reference should be made to the Underground Coal Mining Sublease to ascertain all of the terms, conditions, and covenants thereof, a true and complete copy of which is in the possession of both SUBLESSOR and SUBLESSEE.

 

2


This Memorandum may be executed in one or more identical counterparts which may be combined into one or more identical documents, but all of which together shall constitute one and the same instrument, each of which shall be deemed an original.

IN WITNESS WHEREOF, the Parties have executed this Memorandum of Underground Coal Mining Sublease as of the effective date first above written.

 

Cyprus Creek:     CYPRUS CREEK LAND RESOURCES, LLC
    By:  

 

      James C. Sevem, Vice President

 

STATE OF MISSOURI    )      
   ) SS:      
CITY OF ST. LOUIS    )      

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by James C. Sevem as Vice President of Cyprus Creek Land Resources, LLC, a Delaware limited liability company, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the             day of             , 201    .

 

(SEAL)   

 

   Notary Public,                                                                                 
My commission expires:                                                                          

 

3


WITNESS, the execution of:

 

Armstrong Coal:     ARMSTRONG COAL COMPANY, INC.
    By:  

 

      Martin D. Wilson, President

 

STATE OF MISSOURI    )      
   ) SS:      
CITY OF ST. LOUIS    )      

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Martin D. Wilson as President of Armstrong Coal Company, Inc., a Delaware corporation, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the              day of             , 201    .

 

(SEAL)   

 

   Notary Public,                                                                                 
My commission expires:                                                                        

 

THIS INSTRUMENT PREPARED BY:

 

   
M. Kirby Gordon, II    
GORDON & GORDON, P.S.C.    
6357 KY Hwy 405    
P.O. Box 398    
Owensboro, Kentucky 42302-0398    
(270) 281-0398    

 

4


EXHIBIT A

TO

UNDERGROUND COAL MINING SUBLEASE

MAP

 

5


LOGO

 

6


EXHIBIT B

TO

UNDERGROUND COAL MINING SUBLEASE

All recording references are to the Office of the Muhlenberg County Clerk.

Rogers #9 Subleased Coal

 

     Map No   

LC#

   Acres    DB/P    Date    Footnote   

Comment

1    R200    2699-011Rogers 200    UNK    4/18/97
518/343
   1/6/93
2/27/06
   1,2   
2    R202    2699-011Rogers 202    265.2    4/18/97
518/343
   1/6/93
2/27/06
   2   
3    R203    2699-011Rogers 203    4.6    4/18/97
518/343
   1/6/93
2/27/06
   3   
4    R204    2699-011Rogers 204    UNK    4/18/97
518/343
   1/6/93
2/27/06
   1,2   
5    R205    2699-011Rogers 205    158.8    4/18/97
518/343
   1/6/93
2/27/06
     
6    R206    2699-011Rogers 206    24    4/18/97
518/343
   1/6/93
2/27/06
   2   
7    R207    2699-011Rogers 207    198    4/18/97
518/343
   1/6/93
2/27/06
   3   
8    R208    2699-011Rogers 208    36.1    4/18/97
518/343
   1/6/93
2/27/06
   3   
9    R212    2699-011Rogers 212    110.7    4/18/97
518/343
   1/6/93
2/27/06
     
10    NONE    2699-011Rogers 214    UNK    4/18/97
518/343
   1/6/93
2/27/06
   1,2    Coal under R242 and R241
11    R217    2699-011Rogers 217    235    4/18/97
518/343
   1/6/93
2/27/06
   3   
12    R225    2699-011Rogers 225    60    4/18/97
518/343
   1/6/93
2/27/06
   2   
13    R227    2699-011Rogers 227    28    4/18/97
518/343
   1/6/93
2/27/06
   2   
14    R228    2699-011Rogers 228    71.82    4/18/97
518/343
   1/6/93
2/27/06
     
15    R229    2699-011Rogers 229    68.58    4/18/97
518/343
   1/6/93
2/27/06
     
16    R237-2    2699-011 Rogers 237-2    329    4/18/97
518/343
   1/6/93
2/27/06
   3   

 

7


     Map No   

LC#

   Acres    DB/P    Date    Footnote   

Comment

17    R238    2699-011Rogers 238    40    4/18/97
518/343
   1/6/93
2/27/06
   4   
18    R241    2699-011Rogers    14.2    4/18/97
518/343
   1/6/93
2/27/06
   1,2,4    See also R214
19    R242    2699-011Rogers 242    22    4/18/97
518/343
   1/6/93
2/27/06
   1,2,4    See also R214
20    R316    2699-011Rogers 316    139.5    4/18/97
518/343
   1/6/93
2/27/06
   2   
21    R317    2699-011Rogers 317    142.8    4/18/97
518/343
   1/6/93
2/27/06
     

Schedule of Known Exception

 

Footnote

  

Description

1    Less and except that portion lying south of the south Right of Way of the Wendell Ford Parkway, formerly the Western Kentucky Parkway, assigned by Central States Coal Reserves of Kentucky, LLC to Western Land Company, LLC by Assignment dated December 12, 2006, of record in Deed Book 524, page 523.
2    Subject to Right of Way and/or ownership in the Commonwealth of Kentucky for the Wendell Ford Parkway, formerly the Western Kentucky Parkway, dated December 10, 1962, of record in Deed Book 232, page 558.
3    Subject to Right of Way for the P&L Railroad, formerly I. C. Railroad
4    Tract also lies within the boundary of Rogers Tract 214.

Source of Title

Rogers Tracts LC#2699-011

 

  1. AND BEING a portion of the property assigned by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC by Deed dated August 31, 2007, of record in Deed Book 531, page 227.

 

  2. By unrecorded Consent to Assignment and Assumption of Lease dated October 3, 2007, Martha Rogers Haas 1996 Revocable Trust, Talmage G. Rogers, et al, consented to the partial assignment and assumption by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC.

END OF EXHIBIT B

 

8


EXHIBIT E

TO

ASSET PURCHASE AGREEMENT

Rogers Consent to #9 Sublease


EXHIBIT E TO CONTRACT

NOT TO BE RECORDED

CONSENT TO PARTIAL SUBLEASE

(Deep #9 Coal Lying North of the South ROW Line of Wendell Ford Parkway)

This CONSENT TO PARTIAL SUBLEASE (“Consent”) is made and entered into on this the             day of             , 201    , by and between:

TALMAR, LLC

A Florida limited liability company authorized to

transact and conduct business in the

Commonwealth of Kentucky under the name of

TALMAR OF FL, LLC, with mailing address of

3975 20th Street, Suite J

Vero Beach, Florida 32960

Talmage G. Rogers, Jr., Manager

-and-

J. L. ROGERS FAMILY, LLC

A Florida limited liability company authorized to

transact and conduct business in the

Commonwealth of Kentucky, with mailing address of

200 Coconut Palm Road

Vero Beach, Florida 32963

James L. Rogers, III, Manager

-and-

JAMES L. ROGERS, III and MARY M. ROGERS, His Wife

200 Coconut Palm Road

Vero Beach, Florida 32963

-and-

SUE ROGERS JOHNSON, a Single Woman

7380 Wildercliff Drive

Atlanta, Georgia 30328

(collectively referred to as “LESSORS”)

-AND-

 

Rogers 1947 Lease

#9 Vein or Seam of Coal

N of the S ROW line of Wendell Ford Parkway

Muhlenberg Co., Ky.

   12/20/11

 

1


CYPRUS CREEK LAND RESOURCES, LLC

a Delaware limited liability company authorized

to transact and conduct business in the

Commonwealth of Kentucky, with offices and

principal place of business at

701 Market Street, Suite 798

St. Louis, Missouri 63102-1826

(hereinafter called “LESSEE/SUBLESSOR”)

-AND-

ARMSTRONG COAL COMPANY, INC.

A Delaware corporation

407 Brown Road

Madisonville, Kentucky 42431

(hereinafter called “SUBLESSEE”).

W I T N E S S E T H:

WHEREAS, LESSORS and LESSEE/SUBLESSOR, by and through their respective predecessors in title more particularly set forth on Addendum 1 and 2 attached hereto and incorporated herein by referenced, are parties to a certain Mineral Lease of coal properties and coal mining rights located in Muhlenberg County, Kentucky (“Leased Premises”), dated December 4, 1947, of record in Deed Book 164, page 525, in the Office of the Muhlenberg County Clerk, as amended, supplemented, and extended from time to time (“1947 Mineral Lease”);

WHEREAS, by Underground Coal Mining Sublease dated             , 201    (“Rogers #9 Sublease”), LESSEE/SUBLESSOR desires to partially sublease to SUBLESSEE a portion of its leasehold estate under the 1947 Mineral Lease only insofar as it relates to the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky, as more particularly described in the 1947 Mineral Lease, incorporated herein by reference and made a part hereof (“#9 Subleased Premises”), and subject to that certain unrecorded Agreement Relating to Additional Advance Royalties “Deep #9 Coal North of Western Kentucky Parkway” dated May 3, 2007 (“Additional Advance Royalties Agreement”), and unrecorded Agreement Relating to Additional Earned Royalty “Deep #9 Coal North of the South ROW Line of the Wendell Ford Parkway” dated             , 201    (“Additional Earned Royalty Agreement”), both regarding additional royalties due under the terms and conditions of the 1947 Mineral Lease with respect to the Deep #9 Coal lying north of the south right-of-way line of the Western Kentucky Parkway (now Wendell Ford Parkway) upon the terms and conditions more particularly set forth therein; and,

WHEREAS, LESSORS desire to grant their consent to the proposed Rogers #9 Sublease, upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, for and in consideration of the mutual covenants and promises of the parties hereto and in exchange for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the LESSORS, LESSEE/SUBLESSOR, and SUBLESSEE do hereby covenant and agree as follows:

 

- 2 -


1. Recitals. The foregoing recitals and the instruments referenced therein are incorporated herein by reference and made a part hereof.

2. Consent. LESSORS do hereby grant their consent to the partial sublease of the 1947 Mineral Lease by a certain Underground Coal Mining Sublease dated             , 201    (“Rogers #9 Sublease”), by and between LESSEE/SUBLESSOR and SUBLESSEE, and the assumption by SUBLESSEE of the duties as Lessee under the 1947 Mineral Lease, but only insofar as they relate to the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway (formerly the Western Kentucky Parkway) in Muhlenberg County, Kentucky depicted on exhibit A and described on Exhibit B to the Rogers #9 Sublease, incorporated herein by reference and made a part hereof, subject to that certain unrecorded Agreement Relating to Additional Advance Royalties “Deep #9 Coal North of Western Kentucky Parkway” dated May 3, 2007 (“Additional Advance Royalties Agreement”), and unrecorded Agreement Relating to Additional Earned Royalty “Deep #9 Coal North of South ROW Line of Wendell Ford Parkway” dated             , 201    (“Additional Earned Royalty Agreement”), regarding additional royalties due under the terms and conditions of the 1947 Mineral Lease with respect to the Deep #9 Coal lying north of the Western Kentucky Parkway (now Wendell Ford Parkway) upon the terms and conditions more particularly set forth therein.

3. No Alteration of 1947 Mineral Lease. Nothing in this Consent nor in the Rogers #9 Sublease shall be construed to alter or amend the terms of the 1947 Mineral Lease or alter, amend or diminish the LESSEE’S/SUBLESSOR’S duties and obligations thereunder. Notwithstanding the Rogers #9 Sublease, LESSEE/SUBLESSOR shall remain responsible for the full and faithful performance of the 1947 Mineral Lease. Without limiting the foregoing, LESSORS, LESSEE/SUBLESSOR and SUBLESSEE agree that the Earned Royalty, together with the additional one percent (1%) per ton royalty provided for in the Additional Earned Royalty Agreement, shall be paid on any mineable and merchantable Coal within the “No Mining Boundary” area affecting Rogers Tract R237-2 depicted on Exhibit A to the Rogers #9 Sublease which is bypassed, abandoned or otherwise left unmined by reason of the restrictive covenant in the Rogers #9 Sublease (“Bypassed Coal”), which payment shall be made at such time as the Bypassed Coal would have otherwise been mined in the normal course of mining operations. Upon payment for Bypassed Coal, LESSOR shall be obligated to quitclaim its entire right, title and interest in and to the Bypassed Coal to LESSEE/SUBLESSOR, or its designee.

4. Binding Effect. This Consent shall inure to the benefit of and be of full and binding effect upon the parties hereto, their respective heirs, successors, and assigns, including, without limitation, Armstrong Coal Company, Inc., if and to the extent of that portion of the 1947 Mineral Lease relating to the #9 Subleased Premises.

5. Governing Law. This Consent shall be construed in accordance with the laws of the Commonwealth of Kentucky.

6. Multiple Counterparts. This Consent may be executed in multiple counterparts, each of which shall be considered an original or which may be conformed into a single document.

[remainder of page intentionally left blank]

 

- 3 -


IN WITNESS WHEREOF, the parties hereto have executed this Consent to Partial Sublease as of the effective date first hereinabove written.

 

LESSORS:     TALMAR, LLC
    By:  

 

            Talmage G. Rogers, Jr., Manager
STATE OF FLORIDA   )    
  )    
COUNTY OF INDIAN RIVER   )    

The foregoing instrument was SUBSCRIBED, SWORN TO, AND ACKNOWLEDGED before me by Talmage G. Rogers, Jr, Manager, of Talmar, LLC, a Florida limited liability company authorized to transact and conduct business in the Commonwealth of Kentucky under the name of TALMAR OF FL, LLC, personally known to me to be the person whose name is subscribed above, and having represented to me that he has full power and authority to so execute on its behalf as its free act and deed in due form of law, for the purposes herein stated, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

- 4 -


WITNESS, the execution of:

 

LESSORS:       J. L. ROGERS FAMILY, LLC
      By:  

 

                James L. Rogers, III, Manager
STATE OF FLORIDA   )      
  )      
COUNTY OF ST LUCIE   )      

The foregoing instrument was SUBSCRIBED, SWORN TO, AND ACKNOWLEDGED before me by James L. Rogers, III, Manager of the J. L. Rogers Family, LLC, a Florida limited liability company authorized to transact and conduct business in the Commonwealth of Kentucky, personally known to me to be the person whose name is subscribed above, and having represented to me that he has full power and authority to so execute on its behalf as its free act and deed in due form of law, for the purposes herein stated, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

- 5 -


WITNESS, the execution of:

 

LESSORS:

 

     
      James L. Rogers, III
     

 

      Mary M. Rogers, His Wife
STATE OF FLORIDA   )    
  )    
COUNTY OF ST LUCIE   )    

The foregoing instrument was SUBSCRIBED, SWORN TO, AND ACKNOWLEDGED before me by James L. Rogers, III, and Mary M. Rogers, his wife, personally known to me to be the persons whose names are subscribed above, as their free act and deed in due form of law, for the purposes herein stated, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

- 6 -


WITNESS, the execution of:

 

LESSORS:    
   
   

 

Sue Rogers Johnson

STATE OF GEORGIA   )  
  )  
COUNTY OF COBB   )  

The foregoing instrument was SUBSCRIBED, SWORN TO, AND ACKNOWLEDGED before me by Sue Rogers Johnson, a single woman, personally known to me to be the person whose name is subscribed above, as her free act and deed in due form of law, for the purposes herein stated, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

- 7 -


WITNESS, the execution of:

 

LESSEE/SUBLESSOR:       CYPRUS CREEK LAND RESOURCES, LLC
      By:  

 

      Title:  

 

STATE OF MISSOURI   )      
  ) SS:      
CITY OF ST. LOUIS   )      

The foregoing instrument was SUBSCRIBED, SWORN TO, AND ACKNOWLEDGED before me by as of Cyprus Creek Land Resources, LLC, a Delaware limited liability company authorized to transact and conduct business in the Commonwealth of Kentucky,, personally known to me to be the person whose name is subscribed above, and having represented to me that he has full power and authority to so execute on its behalf as its free act and deed in due form of law, for the purposes herein stated, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

- 8 -


SUBLESSEE:       ARMSTRONG COAL COMPANY, INC.
      By:    
       
      Title:  

 

STATE OF   )      
  ) SS:      
CITY OF   )      

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by as of Armstrong Coal Company, Inc., a Delaware corporation, personally known to me to be the person whose name is subscribed above, and having represented to me that he has full power and authority to so execute on its behalf as its free act and deed in due form of law, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

- 9 -


ADDENDUM 1

TO

CONSENT TO PARTIAL SUBLEASE

Lessors’ Source of Title

1. By deed dated September 11, 1937, recorded in Deed Book 142, page 3, at page 11, Hite H Huffaker, Special Master in Chancery, U.S. District Court for the Western District of Kentucky in Cause No. 715 entitled “20 South Main Street Corporation v. Gibraltar Coal Mining Company” conveyed on behalf of the parties to this lawsuit and J. A Smith and D. B. Cornett, coal receivers of Gibraltar Coal Mining Company in bankruptcy numerous tracts and estates (less oil & gas) to James L. Rogers.

2. James L. Rogers died testate a resident of Muhlenberg County, Kentucky where his will was proven on January 27, 1945 and is recorded in Will Book 5, page 617. Pursuant to the terms of his will, he devised his property to his sons, T, G. Rogers and J. L. Rogers, Jr., equally.

3. By lease dated December 7, 1947, recorded December 20,1947, in Deed Book 164, page 525, James L Rogers, Jr, and Anne F. Rogers, his wife, and Talmage G. Rogers and Martha F. Rogers, his wife, demised to Ayrshire Collieries Corporation numerous tracts and estates.

T. G. Rogers’ 1/2 Interest

4. As proven by Affidavit of Descent dated February 9, 1948, recorded in Deed Book 165, page 205, T. G. Rogers died intestate on January 29, 1948 and left surviving him his wife, Martha F. Rogers, who inherited a dower interest, which terminated at her death on January 1, 1976, and two children: Martha Ann Rogers (Poulos) Haas and Talmage G. Rogers, Jr., each of whom inherited an undivided 1/2 interest of 1/2. By unrelated document, it is determined that Martha F. Rogers died January 1,1976, thus terminating her dower interest.

5. Martha Ann (Rogers) Haas, a widow, by deed dated May 8, 2003, recorded June 4, 2003, in Deed Book 496, page 501, conveyed her interest in the subject tract to Martha Rogers Haas, Trustee of the Martha Rogers Haas 1996 Revocable Trust dated September 14,1996.

6. By deed dated May 3, 2011, recorded in Deed Book 553, page 92, Martha Rogers Haas, Trustee of the Martha Rogers Haas 1996 Revocable Trust conveyed to Talmar, LLC, a Florida limited liability company, doing business in Kentucky as TALMAR OF FL, LLC, all of their combined right, title and interest in and to coal and coal mining rights and privileges in Muhlenberg County, Kentucky.

7. By deed dated May 3, 2011, recorded in Deed Book 553, page 57, and Talmage G. Rogers, Jr. and Jean M. Rogers, His Wife, conveyed to Talmar, LLC, a Florida limited liability company, doing business in Kentucky as TALMAR OF FL, LLC, all of their combined right, title and interest in and to the coal and coal mining rights and privileges in Muhlenberg County, Kentucky.

 

- 10 -


J. L. Rogers, Jr’s 1/2 Interest

8. By deed dated April 30, 1956, recorded December 14, 1956, in Deed Book 200, page 45, J. L. Rogers, Jr. and wife, Anne F Rogers, conveyed to Wm. P. Donan, Trustee:

“an undivided 1/2 interest in an undivided 1/2 interest (being an undivided 1/4 interest thereof)”

of “all the coal and minerals” in 4 descriptions, one of which is described as that real estate conveyed (Tract 2) to J,, L. Rogers, Trustee, by Hite K Huffaker, Special Master in Chancery, for Gibraltar Coal Mining Company by deed dated September 11,1937, recorded in Deed Book 143, page 3. This deed and trust instrument is for the benefit of their children, James L. Rogers, III, and Sue Rogers, until they each reach the age of 21 years at which time they take free of trust.

This instrument contains the following mineral reservation:

There is reserved from Parcel II, Tracts #1, 2, 3 and 4, all of the coal except the #9 vein of coal. There is also reserved and not conveyed herein, all the #9 coal that is strippable and covered in the coal lease from Talmage G Rogers, et al to Ayrshire Collieries Corporation, dated December 4, 1947 and of record in Deed Book 164, page 525, in the office aforesaid, to which reference is hereby made for a more specific description of the #9 coal excluded from this conveyance.

26. By identically worded deeds:

(a) Dated November 25, 1958, recorded October 2, 1859, in Deed Book 212, page 175;

(b) Dated October 1, 1959, recorded October 2, 1859, in Deed Book 212, page 177;

(c) Dated January 1, 1960, recorded January 12, 1960, in Deed Book 213, page 430; and

(d) Dated January 1, 1961, recorded January 11, 1961, in Deed Book 221, page 421,

26. L. Rogers, Jr. and wife, Anne F Rogers, conveyed to Wm. P. Donan, Trustee:

“an undivided 1/8 interest in an undivided 1/2 (being an undivided 1/16 interest thereof)”

in those real estate interests acquired by J. L. Rogers from Hite H. Huffaker, Special Master, by deed dated September 11, 1937, recorded in Deed Book 143, page 3. Each of these four conveyances contains the identical reservation set forth in paragraph 6.

10. By deed dated June 13, 1962, recorded June 19, 1962, in Deed Book 229, page 302, Wm P. Donan, Trustee, conveyed to James L. Rogers, III, and Sue Ford Grable (nee Rogers) an undivided 1/4 interest each of the interest he held as Trustee.

 

- 11 -


11. James Lloyd Rogers, Jr. died testate July 6, 1968 a resident of Florida. On July 13, 1968, daughter, Sue R, Grable, filed an authenticated copy of the will and the Muhlenberg County Court ordered an ancillary probate in Muhlenberg County. The Will is of record in Will Book 10, page 116. William P Donan was appointed ancillary administrator on July 13, 1968, County Court Order Book 36, page 254. On June 30, 1971, County Court Order Book 38, page 254, the estate was settled.

 

  26. By deed dated June 18, 1971, recorded June 22, 1971, in Deed Book 283, page 168, William Donan, Ancillary Administrator with the will annexed of the estate of James L. Rogers, Jr. conveyed to James L. Rogers, III, Testamentary Trustee under the will of James L Rogers, Jr. an undivided 1/2 interest of the 1/2 interests owned by the decedent James L. Rogers, Jr at the time of his death. In this conveyance, page 175, heading “Brownie Holt, Brownsville and Mercer”, the parcels acquired from Gibraltar Coal Mining Company are conveyed to Grantee, subject to the following exceptions:

“(16) An undivided % interest in an to the deep coal of the #9 vein of coal and all the minerals except coal as set out in Parcel II (2) in the deed from J. L. Rogers, Jr., et ux, to Wm., P. Donan, Trustee, dated April 30,1956, and of record in Deed Book 200, page 45

(17) An undivided 1/16 interest in and to the deep coal of the #9 vein of coal and all the minerals except coal as set out in Parcel I (2) in the deed from J. L. Rogers, Jr., et ux, to Wm. P. Donan, Trustee, dated November 25, 1958, and of record in Deed Book 212, p. 175.

(18) An undivided 1/16 interest in and to the deep coal of the #9 vein of coal and all the minerals except coal as set out in Parcel I (2) in the deed from J. L Rogers, Jr, et ux, to Wm P Donan, Trustee, dated October 1, 1959, and of record in Deed Book 212, page 177.

(19) An undivided 1/16 interest in and to the deep coal of the #9 vein of coal and all the minerals except coal as set out in Parcel I (2) in the deed from J. L. Rogers, Jr., et ux, to Wm P. Donan, Trustee, dated January 1, 1960, and of record in Deed Book 213, page 430

(20) An undivided 1/16 interest in and to the deep coal of the #9 vein of coal and all the minerals except coal as set out in Parcel I (2) in the deed from J. L Rogers, Jr., et ux, to Wm. P. Donan, Trustee, dated January 1, 1961 and of record in Deed Book 221, page 421.”

13. By deed dated June 18, 1971, recorded in Deed Book 283, page 204, William P. Donan, Ancillary Administrator with the will annexed of the estate of James L. Rogers, Jr. conveyed to Anne F. Rogers an undivided 1/2 interest of the 1/2 interests owned by the decedent James L Rogers, Jr. at the time of his death. This instrument contains the identical exceptions set forth in the preceding paragraph.

14. Anne F. Rogers died testate April 22, 1988 a resident of Indian River County, Florida, where her November 15, 1976 will was proven on May 18, 1988 and subsequently filed in Muhlenberg County on June 13, 1988, recorded in Will Book 24, page 1. Pursuant to Item 3, her real property was divided equally between her children, James L. Rogers, III, and Sue Rogers Johnson.

15. By deed dated May 8, 1991, recorded in Deed Book 407, page 64, James R. Rogers, III, et ux; Sue R. Johnson, et vir; James L, Rogers, HI; and Sue R. Johnson as ancillary administrator/trix of the Estate of Anne F. Rogers, deceased, conveyed to James L Rogers, III, Trustee of the James L Rogers, Jr Testamentary Trust:

“all of the surface, and mineral interests Anne F. Rogers had received by deed from Wm. P Donan, ancillary administrator of the Estate of James L. Rogers, Jr.”

 

- 12 -


16. By deed dated April 29, 2011, of record in Deed Book 552, page 778, James L. Rogers, III, Trustee of the James L. Rogers, Jr. Testamentary Trust conveyed to J. L. Rogers Family, LLC, a Florida limited liability company authorized to transact business in Kentucky, all of its right, title and interest in and to coal and coal mining rights and privileges in Muhlenberg County, Kentucky.

END OF ADDENDUM 1

 

- 13 -


ADDENDUM 2

TO

CONSENT TO PARTIAL SUBLEASE

Lessee/Sublessor’s Source of Title

1. By Mineral Lease dated December 4, 1947, recorded in Deed Book 164, page 525, Talmage G. Rogers, et al, leased to Ayrshire Collieries Corp. numerous tracts of properties consisting of both surface and mineral, surface only, coal only, and partial interests in such estates. By mesne instruments, the mineral lease dated December 4, 1947 has been amended and supplemented (“1947 Mineral Lease”).

2. By “Notice” dated February             , 1950, recorded September 30, 1969, in Deed Book 273, page 269, J. L. Rogers, Jr., et al, gave notice to Ayrshire Collieries that certain properties were being added to the demised premises of the 1947 Mineral Lease.

3. By “Third Supplement” dated January 1, 1966, recorded September 25, 1974, in Deed Book 304, page 439, Martha F. Rogers, widow; Martha R. Poulos, et vir; T. G. Rogers, Jr., et ux; J. L. Rogers, III, et ux; and Sue Grable, et vir leased to Ayrshire Collieries “the deep #9 vein of coal excepted by Rogers, et al, under the 3rd paragraph on page 2 of the original lease owned by Lessors contained in the demised premises”.

4. By unrecorded instrument entitled “Notice of Extension of Lease” dated November 1, 1967, Ayrshire Collieries Corporation gave notice to J. L. Rogers, et al, “pursuant to the provisions of said Third Supplemental Agreement has elected to elected to exercise its right to extend said lease for one (1) additional 20-year period or term, that is, until December 3, 1987.”

5. By “Supplemental Agreement” dated November 30, 1967, recorded September 25, 1974, in Deed Book 304, page 453, the initial term of the “deep #9 vein of coal” as demised by Deed Book 304, page 439, was extended until December 3, 1987, and was to run concurrent with the term of the 1947 Mineral Lease.

6. By instrument dated October 20, 1969, recorded December 18, 1969, in Articles of incorporation Book 6, page 211, Ayrshire Collieries Corporation was merged into American Metal Climax, Inc.

7. By instrument dated June 15, 1974, recorded October 4, 1974, in Articles of Incorporation Book 8, page 73, American Metal Climax, Inc. changed its name to Amax, Inc.

8. By “Partial Release of Coal Mining Lease” dated October 16, 1987, recorded in Deed Book 386, page 127, Talmage G. Rogers, Jr., et al, and Ayrshire Collieries Corporation mutually released a portion of the 1947 Mineral Lease by metes and bounds description of 768.11 acres and 15.56 acres. The Release terminated approximately 11.1 acres of Rogers Parcel 227; 16 acres of Rogers Parcel 238 and 25.7 acres of Rogers Parcel 239.

9. By Assignment dated October 19, 1987, recorded in Deed Book 384, page 712, Amax, Inc., assigned to Peabody Coal Company, a partial interest in the 1947 Mineral Lease (“Partial Interest in Mineral Lease”).

 

- 14 -


10. By deed dated September 12, 1989, recorded in Deed Book 389, page 37, Peabody Coal Company, a Delaware corporation, assigned to Peabody Development Company, a Delaware corporation, the Partial Interest in Mineral Lease. See also Deed of Confirmation dated December 20, 2005, effective September 12, 1989, Deed Book 516, page 502.

11. By instrument dated August 30, 1991, recorded October 21, 1991, in Deed Book 410, page 98, Martha Haas, et al, consented to the assignment by Peabody Coal Company, a Delaware corporation, of the Partial Interest in Mineral Lease to Peabody Development Company, a Delaware corporation.

12. By unrecorded instrument dated October 26, 1992, entitled “Amendment to Leases”, Martha Anne Rogers Haas, et al, contracted with Peabody Development Company, a Delaware corporation, for an amendment to the Partial Interest in 1947 Lease as previously amended by “Third Supplement Agreement” dated January 8, 1957 to define gross sales realization to include amounts received by lessee from its customers and payment of state severance tax, federal black lung and federal reclamation or SMCRA taxes imposed on the coal removed from the demised premises.

13. Effective December 16, 2003, Peabody Development Company, a Delaware corporation, converted and changed its name to Peabody Development Company, LLC, a Delaware limited liability corporation, as shown in Articles of Incorporation Book 15, page 635.

14. Effective July 11, 2005, Peabody Coal Company, a Delaware corporation, pursuant to Section 266 of the Delaware General Corporation Law, converted and changed its name to Peabody Coal Company, LLC, a Delaware limited liability company, as shown in Articles of Incorporation Book 15, page 59.

15. By “Deed of Confirmation” dated December 20, 2005, effective September 12, 1989, recorded December 28, 2005, in Deed Book 516, page 502, Peabody Coal Company, LLC, a Delaware limited liability company, confirmed the assignment of the Partial Interest in 1947 Mineral Lease to Peabody Development Company, LLC, a Delaware limited liability company.

16. By deed dated December 20, 2005, recorded December 28, 2005, in Deed Book 516, page 590, Peabody Coal Company, LLC, a Delaware limited liability company, assigned to Peabody Development Company, LLC, a Delaware limited liability company, the Partial Interest in the 1947 Mineral Lease.

17. By deed dated December 20, 2005, recorded December 28, 2005, in Deed Book 516, page 599, Peabody Development Company, LLC, a Delaware limited liability company, conveyed to Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company, all of its real property located in Muhlenberg County, Kentucky, to include the Partial Interest in the 1947 Mineral Lease.

18. By “Deed of Confirmation” dated December 27, 2005, effective December 20, 2005, recorded December 28, 2005, in Deed Book 516, page 527, Peabody Development Company, LLC, a Delaware limited liability company, confirmed its conveyance to Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company, dated December 20, 2005, recorded in Deed Book 516, page 599.

 

- 15 -


19. By “Consent to Assignment and Assumption” dated February 27, 2006, recorded in Deed Book 518, page 331, Talmage G. Rogers, Jr., et al, consented to the assignment and assumption by Peabody Development Company, LLC of the Partial Interest in the 1947 Mineral Lease to Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company.

20. By “Mutual Partial Release” effective February 27, 2006, recorded in Deed Book 518, page 355, Talmage G. Rogers, Jr., et al, and Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company, mutually released “the strippable #9 vein of coal and all coals lying above the strippable #9 vein and all mining rights relating thereto” of Rogers Coal Parcel 214 from its Partial Interest in the 1947 Mineral Lease.

21. By “Mutual Partial Release” effective February 27, 2006, recorded in Deed Book 518, page 365, Talmage G. Rogers, Jr., et al, and Central States Coal Reserves of Kentucky, LLC, mutually released in its entirety Rogers Coal Parcel 308 and a 16.9 acre portion of Rogers Parcel 209 and a 5.3 acre portion of Rogers Parcel 310 from Central States Coal Reserves of Kentucky’s Partial Interest in the 1947 Mineral Lease.

22. By “Partial Assignment and Assumption of Mineral Lease” dated December 12, 2006, recorded in Deed Book 524, page 523, and by “Amended and Restated Partial Assignment of Leasehold Estate” dated April 17, 2007, effective December 12, 2006, recorded in Deed Book 527, page 186, Central States Coal Reserves of Kentucky, LLC, assigned to Western Land Company, LLC, and Western Land Company, LLC, a part of Central States Coal Reserves of Kentucky’s Partial Interest in 1947 Mineral Lease, such assignment being “the deep #9 Coal and coal mining rights” to portions of Rogers Tracts 237, 200, 204 and 214 and all of Rogers Tracts 213, 221, 201, 223 and 222.

23. By “Amendment and Extension of Mineral Lease” dated April 25, 2007, a Memorandum of which is recorded in Deed Book 527, page 410, Talmage G. Rogers, Jr., at al, and Central States Coal Reserves of Kentucky, LLC, amended and extended its Partial Interest in 1947 Mineral Lease, inter alia, to extend the initial term through December 3, 2027.

24. By unrecorded Agreement Relating to Additional Advance Royalties “Deep #9 Coal North of Western Kentucky Parkway” dated May 3, 2007, the Rogers and Central States Coal Reserves of Kentucky, LLC agreed to additional monthly minimum advance royalties under the terms and conditions of the 1947 Mineral Lease with respect to the Deep #9 Coal lying north of the Western Kentucky Parkway (now Wendell Ford Parkway) upon the terms and conditions more particularly set forth therein.

25. By “Assignment and Assumption of Partial Interest In Mineral Lease” dated August 31, 2007, of record in Deed Book 531, page 227, Central States Coal Reserves of Kentucky, LLC, assigned to Cyprus Creek Land Resources, LLC, a Delaware limited liability company, all of its right, title and interest in and to its Partial Interest in the 1947 Mineral Lease.

26. By unrecorded Consent to Assignment and Assumption of Partial Interest in Mineral Lease dated October 3, 2007, between Talmage G. Rogers, Jr., et al, as “LESSORS” consented to the assignment of a partial interest in the 1947 Mineral Lease by Central States Coal Reserves of Kentucky to Cyprus Creek Land Resources, LLC.

END OF ADDENDUM 2

 

- 16 -


EXHIBIT F

TO

ASSET PURCHASE AGREEMENT

Cyprus Creek & Duncan #9 Lease and Sublease


NOT TO BE RECORDED

UNDERGROUND COAL MINING LEASE AND SUBLEASE

(#9 Coal Lying North of the South ROW Line of Wendell Ford Parkway)

This UNDERGROUND COAL MINING LEASE AND SUBLEASE (“Lease and Sublease”), is made and entered into on this the             day of                     , 201    , (“Lease Date”), by and between CYPRUS CREEK LAND RESOURCES, LLC, Delaware limited liability company with an address of 701 Market Street, Suite 798, St. Louis, Missouri 63101 (“Cyprus Creek” or “Sublessor”) and ARMSTRONG COAL COMPANY, INC., a Delaware corporation with an address of 407 Brown Road, Madisonville, Kentucky 42431 (“Armstrong Coal” or “Sublessee”), collectively hereinafter the “Parties”.

W I T N E S S E T H:

WHEREAS, by and through its predecessors in title, Cyprus Creek became the owner of the #9 vein or seam of coal and coal mining rights in and to owned partial interest tracts lying north of the south right-of-way of the Wendell Ford Parkway located in Muhlenberg County, Kentucky, and more particularly described on Exhibit B-1 and depicted on Exhibit A hereto (“#9 Owned Partial Interest Tracts”);

WHEREAS, by an unrecorded Assignment and Assumption of Leasehold Interest in Coal Lease dated February 12, 2008, Cyprus Creek became the exclusive holder of the “Remainder of the Leased Premises”, which is a portion of the leasehold estate demised by an instrument entitled “Indenture” dated June 10, 1967 (“Duncan Coal Lease”), a short form Notice of which is of record in Deed Book 258, page 488, in the Office of the Muhlenberg County Clerk (“Duncan Lease”), relating to an undivided one-half (1/2) interest in and to the approximately 2,142 acres of coal and coal mining rights lying below the top of the #9 vein or seam of coal north of the south right-of-way line of the Wendell Ford Parkway (“#9 Leased Premises”) located in Muhlenberg County, Kentucky, more particularly depicted on the map attached hereto as Exhibit A and described on Exhibit B-2 hereto, which is subject to unrecorded Agreement Relating to Advance Royalties and Recoupment dated October 31, 2007 (“Advance Royalty Agreement”);

WHEREAS, SUBLESSOR desires to lease to SUBLESSEE and SUBLESSEE desires to accept SUBLESSOR’s grant of a lease of SUBLESSOR’s right, title and ownership interest in and to the that portion of the #9 Owned Partial Interest Tracts lying north of the south right-of-way of the Wendell Ford Parkway located in Muhlenberg County, Kentucky, and more particularly depicted on the map attached as Exhibit A and described on Exhibit B-1 incorporated herein by reference and made a part hereof (the “Property”); and,

WHEREAS, SUBLESSOR desires to sublease to SUBLESSEE and SUBLESSEE desires to accept SUBLESSOR’s grant of a sublease of SUBLESSOR’s right, title and leasehold interest in and to that portion of the Remainder of the Leased Premises being all of the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “Coal”), as more particularly depicted on the map attached hereto as Exhibit A and described on the attached Exhibit B-2, incorporated herein by reference and made a part hereof (the “Property”); and,

 

Cyprus Creek #9 Owned Partial Interest Tracts

     12/28/11   

Duncan #9 Remainder Leased Premises

  

N of S ROW of Wendell Ford Pkwy.

  

Muhlenberg Co., Ky.

  

 

1


WHEREAS, SUBLESSOR warrants and represents that it has provided a true and actual copy of the Advance Royalty Agreement to SUBLESSEE.

NOW, THEREFORE, in consideration of the payment of the first installment of the Earned Royalty (defined below) by Armstrong Coal to Cyprus Creek, and in consideration of all other obligations of Armstrong Coal stated in this Lease and Sublease, Cyprus Creek does hereby grant, let, lease, sublet, and sublease unto Armstrong Coal all of its RIGHT, TITLE, and LEASEHOLD INTEREST, but only to the extent owned or leased Cyprus Creek in the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “Coal”), as more particularly depicted on the map attached hereto as Exhibit A and described in Exhibits B-1 and B-2 attached hereto, incorporated herein by reference and made a part hereof (the “Property”).

1. SPECIAL RIGHTS OF ARMSTRONG COAL. In addition to whatever rights Armstrong Coal may have by implication of law hereunder, Armstrong Coal shall have the following exclusive rights (“Rights”) to the extent in fact owned or held by Cyprus Creek:

 

  (a) To drill, take core samples, survey, map and otherwise evaluate the Coal and to perform environmental research.

 

  (b) To mine, extract or remove the Coal and other substances which are necessarily removed in the underground coal mining process by any and all underground mining methods now or hereafter in existence, including the right to disturb, cast, and pile all strata without regard to mineral content and for preparing and marketing coal; such rights, including, without limitation, to the extent permitted by applicable statutes and regulations and to the extent Cyprus Creek has the right to grant the same, the right to install and maintain railroad and truck loading facilities, storage areas, railroad tracks and switches, pumping stations, pole lines and wires; to dig ditches for the drainage of water; to lay pipe lines; to erect towers; to provide for the storage of materials and supplies; to construct and use roadways; to erect and use buildings, plants and structures of every kind; and, in general, and without limitation, to do any and all things incident to Armstrong’s mining, processing, and marketing of coal produced from the Property; provided, however, that Armstrong Coal has, by its execution of this Lease and Sublease, accepted all liability which may arise at any time after the execution hereof for any and all damage to surface and/or structures situated in, on or under the surface, where such damage was caused by Armstrong Coal’s operations under this Lease and Sublease. It is the express intent of the Parties hereto that by the language of this Section 1(b), Armstrong Coal shall have accepted all responsibility and liability for any and all subsidence and damage caused thereby as it relates to the Property and/or Coal from and after the date of execution hereof only.

 

2


  (c) A free access to, in, from and across the Property and the Coal and the right to undertake any other thing or use necessary or convenient for the underground mining of the Coal.

 

  (d) To utilize underground tunnels, entries, passageways, rooms, haulage ways, pumping stations, pipelines, conveyors, storage facilities, drains and other surface and underground facilities, all with respect to the mining of Coal and for the purpose of mining of coal in, on or under the Property.

2. TERM.

(a) This term of this Lease and Sublease (the “Term”) shall be for the longer of: (i) five (5) years commencing on the effective date of this Lease and Sublease; or (ii) until such time as all of the mineable and merchantable coal has been mined and removed; provided that Armstrong Coal is engaged in mining coal on the Property by no later than five (5) years from the effective date of this Lease and Sublease. Notwithstanding any provision to the contrary, Armstrong Coal may terminate this Lease and Sublease at any time during the term upon thirty (30) days written notice to Cyprus Creek. In the event that Armstrong Coal completes its mining activities prior to the expiration of the Term, this Lease and Sublease shall terminate and Armstrong Coal shall provide written notice to Cyprus Creek within thirty (30) days of the date on which Armstrong Coal last loads Coal from the Property for shipment to customers. This Lease and Sublease shall expire on the date of such written notice.

(b) Upon expiration or termination of this Lease and Sublease, Armstrong Coal shall, at Cyprus Creek’s request, execute a Release of this Lease and Sublease for purposes of recording. After expiration or termination of this Lease and Sublease, Armstrong Coal shall have the right to re-enter the Property and remove all of Armstrong Coal’s mining equipment and related property from the Property, and thereafter, as and when required by Federal, state or local law or regulation, as a result of Armstrong Coal’s operations under this Lease and Sublease, Armstrong Coal shall perform reclamation and environmental work on and respecting the Property.

(c) If, at any time, Armstrong Coal shall fail to perform reclamation and environmental work on and respecting the Property, as and when required by law, Cyprus Creek, at its option, shall have the right to:

 

  (i) seek specific performance of this obligation from a court of competent jurisdiction; and/or,

 

  (ii) re-enter the Property and perform such reclamation and environmental work as may be required at the expense of Armstrong Coal, which expense Armstrong Coal shall be obligated to pay without legal recourse.

 

  (iii) Notwithstanding the foregoing, Cyprus Creek shall provide Armstrong Coal thirty (30) days prior written notice of its intent to proceed under (i) or (ii) above and allow Armstrong Coal a reasonable time within which to perform reclamation work as set forth above.

 

3


3. ROYALTIES. Armstrong Coal shall pay to Cyprus Creek, in full payment for all of the benefits secured by Armstrong Coal under or in connection with the mining of coal pursuant to this Lease and Sublease, the following Royalties (“Royalties”), when and to the extent stated:

 

  (a) Advance Royalty; Recoupments. Armstrong Coal shall pay to Cyprus Creek the amount of advance royalty as provided for under the Duncan Lease plus the amount of the additional advance royalty as provided for in the Advance Royalty Agreement of $9,000.00 per year, and Cyprus Creek shall promptly pay such amounts to the Lessors, so long as this Lease and Sublease remains in effect. In accordance with the Advance Royalty Agreement, upon the termination or expiration of Western Diamond, LLC mining, Armstrong Coal shall increase the amount of advance royalty paid to Cyprus Creek to the total of $10,000.00 per year. Cyprus Creek shall pay all advance royalty amounts due to Lessors from the amounts received from Armstrong Coal hereunder. Armstrong Coal shall be solely entitled to amounts that are recouped or recoupable from the Lessors based upon credits to the Lessee/Sublessor for payments made to Lessors prior to the date hereof. Armstrong Coal shall be solely entitled to amounts recouped or recoupable from the Lessors based upon credits accrued or payments made of advance royalties after the date hereof.

 

  (b) Earned Royalty. Armstrong Coal shall pay to Cyprus Creek as an Earned Royalty (“Earned Royalty”) for each ton of Coal mined and sold from the Property five percent (5%) of Armstrong Coal’s per ton royalty basis per ton, as provided in the Duncan Lease affecting each ton of Coal mined and sold hereunder for the one-half (1/2) interest of the Lessors thereunder. Armstrong Coal’s payment of the five percent (5%) per ton royalty shall completely satisfy the Earned Royalty obligations owed for both Cyprus Creek’s #9 Owned Partial Interest Tracts being leased herein and the #9 Leased Premises being subleased herein.

 

  (c) Obligation to Pay Royalties to Lessors. Should Cyprus Creek fail to remit to Lessors any advance royalties as set forth in subsection (a) above or any Earned Royalty as set forth in subsection (b) above, then Armstrong Coal shall have the right to cure any such non-payment or default, and such right to cure shall include, without limitation, the right to make any payment required under the Duncan Coal Lease directly to the Lessors and to deduct such payment from any payment owed to Cyprus Creek under this Sublease or any other agreement between the parties.

 

  (d) Payment. All Earned Royalty shall be payable on the 25th day of each month for all coal mined and sold by Armstrong Coal from the Property during the preceding calendar month. No Earned Royalty shall be payable on or with respect to gob, slurry, tailings or other residue resulting from the processing, including washing of Coal for sale from the Property, and Armstrong Coal shall have clear title to all such material from the Property, provided that all such material is removed from the Property prior to the expiration or termination of this Sublease.

 

4


  (e) Additional Expenses. Armstrong Coal shall be responsible for the payment of all costs and expenses resulting from or related to the mining, removal, and sale of the Coal, all reporting costs, taxes, and all engineering fees. It shall be solely responsible for all additional costs including costs relating to the Lessors and the leasehold estate herein subleased.

 

  (f) Reports. Beginning with the month following the month in which coal is first mined from the Property, and for each month thereafter, Armstrong Coal shall furnish to Cyprus Creek a report stating for that month the number of coal acres mined and the tons of coal mined and sold from each parcel depicted on Exhibit A and described on Exhibits B-1 and B-2, the per ton Royalty Basis (defined below) showing all adjustments made to the monthly invoice sales price; the calculated royalty rate per ton; and credits, if any.

 

  (g) Delinquent Payments. Delinquent payments shall bear interest from their due date at a per annum rate which is one percent (1%) above the prime interest rate as reported in the Wall Street Journal, as quoted on the first day of the month in which payment is due.

4. ROYALTY BASIS. Royalty Basis hereunder shall mean the invoice sales price of the coal, F.O.B. mine, without any deduction for taxes, fees or any other amounts whatsoever. Except as otherwise restricted or prohibited by the Duncan Lease, Armstrong Coal may commingle the Coal with other coal from Armstrong Coal’s mine(s). The payment of royalties, when and as due hereunder, shall be construed as full payment of Armstrong Coal’s right to retain the leasehold estate and all of the rights granted by Cyprus Creek under this Lease and Sublease.

5. MINE PLANS. Armstrong Coal shall make available for inspection by Cyprus Creek upon reasonable advance request a copy of Armstrong Coal’s Mine Plan map and any revisions thereto and of Armstrong Coal’s Coal Mining and Reclamation Operations Permit to Mine the Coal, including the application for such permit, and all maps and diagrams submitted therewith. Cyprus Creek shall not interfere with Armstrong Coal’s permitting activities. In addition, Cyprus Creek shall have the right to review such mine plans on no less than an annual basis. Armstrong Coal shall furnish to Cyprus Creek on January 25 and July 25 of each year a map showing the area mined in the previous six (6) months and showing the area projected to be mined in the following six (6) months. These maps shall be certified by a Registered Professional Engineer, Certified Professional Geologist or Registered Land Surveyor and shall be at scale of not more than 1” = 100’, showing a minimum, by month, the actual extent of Coal extracted and thickness of each of the Coal seams mined.

6. CYPRUS CREEK’S RIGHT TO INSPECT. Cyprus Creek or its representatives at reasonable times, and upon at least forty-eight (48) hours advance written notice, shall have the right to make surveys of the workings in the Coal herein leased to determine the accuracy of Armstrong Coal’s surveys of such workings; and at reasonable times, and upon at least forty-eight (48) hours advance written notice, to examine the maps and engineering records of Armstrong Coal with reference to said surveys. Armstrong Coal shall keep records of all coal mined and sold from the Property for a period of thirty-six (36) months and Cyprus Creek shall have the right to inspect the records at all reasonable times. Cyprus Creek or its representatives shall also have the right at

 

5


reasonable times, and upon at least forty-eight (48) hours advance written notice, to examine and check the invoices, sales records and other directly relevant records of Armstrong Coal to determine the accuracy of Armstrong Coal’s reports to Cyprus Creek. Cyprus Creek agrees to treat Armstrong Coal’s invoices and sales records as confidential and not to disclose such records to Cyprus Creek’s or its affiliates’ sales representatives or any other parties. Armstrong Coal shall not be responsible for any injury, loss or damages suffered by Cyprus Creek’s representatives that enter the Property, except for any injury, loss or damages caused in whole or in part by the gross negligence of Armstrong Coal, its agents or employees.

7. TITLE. Cyprus Creek does not warrant its title to the Coal or the Property generally and shall have no liability to Armstrong Coal for any impairment of or interference with the exchange of Armstrong Coal’s rights under this Lease and Sublease by any person claiming title superior to Cyprus Creek’s; provided however, Cyprus Creek, for itself, and for its successors, does represent, warrant, promise and agree that it has not done, or suffered to be done, anything whereby Cyprus Creek’s right, title and interest in the Coal or the Property is, or has been, in any manner encumbered or charged, and Cyprus Creek will warrant and forever defend its right, title and interest in the Coal and Property against all persons claiming, or to claim the same, by, through or under Cyprus Creek. During the term of this Lease and Sublease, however, Cyprus Creek shall not impair or suffer by act or omission any impairment of its title to the Property which would interfere with Armstrong Coal’s exercise of its rights under this Lease and Sublease. Except as otherwise restricted or prohibited in the Duncan Lease, defects in Cyprus Creek’s title may be corrected by Armstrong Coal at Armstrong Coal’s sole discretion and cost, and Cyprus Creek agrees to cooperate with Armstrong Coal in such corrective activity in the event it is requested to do so. Cyprus Creek agrees to furnish Armstrong Coal all title information in its possession or readily available to Cyprus Creek, including abstracts of title, commitments for title insurance and title insurance policies. The Parties agree to execute necessary releases as to any property to which Armstrong Coal notifies Cyprus Creek of tile defects to which it elects not to cure.

8. COMPLIANCE WITH LAWS.

(a) Armstrong Coal shall perform all legally required reclamation and comply with all applicable Federal, state and local laws, rules and regulations; obtain all necessary permits; pay all employment and other taxes required in connection herewith, and shall indemnify and defend Cyprus Creek against all actions, including penalties and fines, resulting from Armstrong Coal’s failure to do so.

(b) Armstrong Coal shall secure and keep in force a reclamation bond to the extent required by applicable law. Armstrong Coal shall not continue its mining operations, without the written permission of Cyprus Creek, if it should fail to keep in force such bond.

9. INDEMNIFICATION. Except as provided in Section 6 above, Armstrong Coal shall indemnify, defend and save harmless Cyprus Creek against any and all claims, loss and expense arising or accruing after the date of this Lease and Sublease by reason of liability imposed or claimed to be imposed by law for damage due to bodily injuries, (including death) and property damage sustained by any person(s), including the employees of Armstrong Coal, arising out of or in consequence of Armstrong Coal’s exercise of its rights hereunder, whether same arise in whole or in part from negligence

 

6


(or from any other legal basis) of Armstrong Coal, its employees or agents. Cyprus Creek shall indemnify, defend and save harmless Armstrong Coal against any and all claims, loss and expense by reason of liability imposed or claimed to be imposed by law for damage due to bodily injuries, (including death) and property damage sustained by any person(s), including the employees of Cyprus Creek, arising out of or in consequence of Cyprus Creek’s exercise of its rights, whether same arise in whole or in part from negligence (or from any other legal basis) of Cyprus Creek, its employees or agents. This provision shall survive any termination or cancellation of this Lease and Sublease.

10. INSURANCE. Armstrong Coal shall obtain and continue in force, during the term of this Lease and Sublease, the following insurance coverages:

 

  (a) Employer’s Liability insurance with limits of $500,000 each occurrence, unless the laws of the State in which the work is to be performed preclude an independent right of action by an employee against an employer under common law.

 

  (b) Comprehensive Automobile Liability insurance with Bodily Injury and Property Damage both with $1,000,000 combined single limit.

 

  (c) Comprehensive General Liability insurance, including Contractual Liability coverages with Bodily Injury, and Property Damage both with $1,000,000 combined single limit.

 

  (d) Workers’ Compensation coverage with statutory limits. All insurance policies must contain an unqualified provision that the insurance carrier will give Cyprus Creek thirty (30) days prior notice in writing of any cancellation, change or lapse of such policy. Prior to occupancy or use of the Property, Armstrong Coal shall furnish to Cyprus Creek (in form satisfactory to Cyprus Creek) a certificate of insurance showing that the requirements of this paragraph have been satisfied. The certificate of insurance shall name Cyprus Creek as an additional insured and certificate holder on all aforementioned policies. The liability assumed by Armstrong Coal under this Lease and Sublease is not limited by the amount of insurance which Armstrong Coal is required to provide under this paragraph.

11. DEFAULT AND TERMINATION. In the event of the failure on the part of Armstrong Coal to make any payment hereunder when due, or failure of Armstrong Coal to make any payment due and payable under that certain Promissory Note between Armstrong Coal and Cyprus Creek of even date herewith, or in the event a Party fails to observe and perform any other agreement or undertaking as herein provided, then the other Party shall have the right immediately to give the defaulting Party a written notice designating the particular default or defaults of which complaint is made and notifying the defaulting Party of its intention and election to terminate the Lease and Sublease by reason of such default or defaults, and unless the defaulting Party shall make the payment in default within TEN (10) days after giving of said notice and remove any other default complained of within THIRTY (30) days after the giving of said notice (except any default not susceptible of being cured within such THIRTY (30) day period, in which event the time permitted to the defaulting Party to complete the same, provided the defaulting Party commences promptly and proceeds diligently to complete such

 

7


performance), then without further notice this Lease and Sublease and the rights of the defaulting Party hereunder shall be forfeited, canceled and terminated. Such termination of this Lease and Sublease shall not, however, relieve the obligation for any Royalty due under this Lease and Sublease to date of such termination or liability of the defaulting Party for any other damage resulting to the other Party from said default. Armstrong Coal shall have the right, and the obligation should Cyprus Creek so demand, to remove any of its property from the Property for a period of one (1) year after expiration or termination of this Lease and Sublease, subject to Armstrong Coal’s rights under Section 1(d) hereof.

12. TAXES. At all times during the term of this Lease and Sublease and any extension hereof, Armstrong Coal shall be responsible for and shall pay all state and local real property taxes imposed upon the interests Leased and Subleased hereunder. Such taxes shall include, but not be limited to, real estate taxes upon the mineral interest hereunder, severance taxes, production taxes, business taxes and personal property taxes. The intent of this provision is to make clear that while this Lease and Sublease is in effect, Cyprus Creek shall have no liability for any taxes or government impositions whatsoever which may be imposed upon the Property, or the Coal, or upon the operations of Armstrong Coal as they relate to the Property, or the Coal leased and subleased hereunder or the rights granted to Armstrong Coal hereunder. However, it is the understanding of the Parties that Cyprus Creek shall pay all real estate taxes only, which may be imposed upon the Property to the appropriate taxing authority; thereafter, Armstrong Coal shall reimburse Cyprus Creek for the full amount of all such paid taxes upon its receipt of an invoice from Cyprus Creek evidencing same.

13. ANCILLARY PROVISIONS OF THIS LEASE AND SUBLEASE. This Lease and Sublease, and the attached Exhibits A, B-1, and B-2 (made a part hereof) constitute the entire agreement between the Parties, supersede all representations, bids, agreements, memoranda and correspondence between, by or for the Parties relating to the Property, and shall be construed in accordance with the laws of the state of Kentucky. No amendment or modification of this Lease and Sublease shall be binding unless made by a written instrument of equal formality with this Lease and Sublease. Waiver by either party of performance by the other party of any of the provisions of this Lease and Sublease shall not be construed as a waiver of any further right to insist upon full performance of the terms of this Lease and Sublease. Each Party shall be entitled to insist strictly upon timeliness of performance by the other Party of the other Party’s obligations.

14. FORCE MAJEURE. Except for the failure to pay money due and payable to Cyprus Creek, Armstrong Coal shall not be deemed to be in default for any failure to perform or observe any of the terms, conditions, provisions, obligations or covenants to be performed or observed by it hereunder during periods in which such performance or observance is prevented by any event reasonably beyond Armstrong Coal’s control including, but not by way of limitation, any order, decree, direction, inaction, or denial of permit by any governmental law, executive order, rule, regulation, or request enacted or promulgated under color of authority; by scarcity or inability to obtain equipment, material, power or fuel; by lack of satisfactory market in the sole opinion and discretion of Armstrong Coal for Coal mined from the Property; by riot, strike, lockout, insurrection or industrial disturbance; by failure of carriers to transport or furnish facilities for transportation; by any act of God (including, with limitation, lightning, earthquake, cave-in, fire, storm, flood, washout); or by breakage or accident to machinery or facilities; fires or explosions; provided that Armstrong Coal shall exercise reasonable diligence to

 

8


resume mining operations. Armstrong Coal shall have the right to determine and settle any strikes, lockouts or industrial disputes in its sole discretion, and the aforesaid requirement of exercising reasonable diligence to resume mining shall not require Armstrong Coal to accede to any demand or position of any other party involved in such strike, lockout or industrial dispute.

15. PRESERVATION OF TITLE. During the term of this Lease and Sublease, Cyprus Creek shall not do anything or fail to do anything, which would prevent or obstruct Armstrong Coal’s rights hereunder. Nothing herein shall create or be interpreted to create a hindrance of any kind whatsoever to Cyprus Creek’s freedom to dispose of its interest in this Lease and Sublease, the Property, or the Coal provided such proposal is made subject to this Lease and Sublease.

 

16. RECORDING. Neither Party shall record this Lease and Sublease without the prior written consent of the other Party.

17. ASSIGNMENT. Armstrong Coal shall not assign this Lease and Sublease or any part of its right hereunder, without the prior written consent of Cyprus Creek, which shall not be unreasonably withheld. Absent Cyprus Creek’s prior written consent, any assignment or attempted or purported assignment shall be void as to Cyprus Creek and, moreover, shall constitute a material breach of this Lease and Sublease.

18. NOTICES. Any notice or communication required by this Lease shall be in writing addressed to the address of each of the Parties respectively as follows:

 

  (a) If to Armstrong Coal:

Armstrong Coal Company, Inc.

407 Brown Road

Madisonville, KY 42431

With copy to:

Mason L. Miller

Miller & Wells, PLLC

300 East Main Street, Ste. 360

Lexington, Kentucky 40507

-and-

Armstrong Energy, Inc.

Attn: Martin D. Wilson, President

7733 Forsyth Blvd., Suite 1625

St. Louis, Missouri 63105

 

  (b) If to Cyprus:

Cyprus Creek Land Resources, LLC

701 Market Street, Suite 798

St. Louis, Missouri 63101

 

9


With copy to:

J. Sale Gordon

Gordon Law Offices, PSC

121 W. 2nd St.

Owensboro, Kentucky 42301

At any time, either Party may specify in writing a new address for notification hereunder.

19. MEMORANDUM OF LEASE AND SUBLEASE. The Parties hereby agree to execute a memorandum or notice of this Lease and Sublease in form suitable for recording.

IN WITNESS WHEREOF, the Parties have executed this Underground Coal Mining Lease and Sublease in duplicate, as of the effective date first above written, by their own hand and deed, and/or by their duly authorized representatives, each of which representative, by signing this Underground Coal Mining Lease and Sublease, personally represents and guarantees his authority to sign for the Party indicated.

 

Cyprus Creek:       CYPRUS CREEK LAND RESOURCES, LLC
      By:    
        James C. Sevem, Vice President
STATE OF MISSOURI   )      
  ) SS:      
CITY OF ST. LOUIS   )      

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by James C. Sevem as Vice President of Cyprus Creek Land Resources, LLC, a Delaware limited liability company, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

10


WITNESS, the execution of:

 

Armstrong Coal:     ARMSTRONG COAL COMPANY, INC.
    By:      
      Martin D. Wilson, President

 

STATE OF MISSOURI   )  
  ) SS:  
CITY OF ST. LOUIS   )  

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Martin D. Wilson as President of Armstrong Coal Company, Inc., a Delaware corporation, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the             day of                     , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

11


EXHIBIT A

TO

UNDERGROUND COAL MINING LEASE AND SUBLEASE

Map

 

12


LOGO

 

13


EXHIBIT B-1

TO

COAL MINING LEASE AND SUBLEASE

All references are to the Office of the Muhlenberg County Clerk.

Leased #9 Owned Coal

 

     MAP TR   

LC#

   DB/P    DATE    FOOTNOTE

1

   162    016-170 T22    192/405    8/12/1954    1

2

   163    016-170 T8    192/405    8/12/1954    1

3

   164    016-170 T12    192/405    8/12/1954    1

4

   165    016-170 T11    192/405    8/12/1954    1

5

   166    016-170 T16    192/405    8/12/1954    1

6

   167    016-170 T10    192/405    8/12/1954    1

7

   194    016-170 T6    192/405    8/12/1954    1

8

   195    016-170 T9    192/405    8/12/1954    1

9

   196   

016-170 T5

016-655 QCD

   192/405
192/437
   8/12/1954
12/31/1954
   1

10

   197    016-170 T19    192/405    8/12/1954    1

11

   198   

016-170 T23

016-672

   192/405
272/169
272/174
272/179
   8/12/1954
7/23/1969
7/23/1969
7/24/1969
   1

12

   200    016-170 T14    192/405    8/12/1954    1

13

   201    016-170 T37    192/405    8/12/1954    1

14

   202    016-170 T24    192/405    8/12/1954    1

15

   203    016-170 T40    192/405    8/12/1954    1

Schedule of Known Exceptions

 

Footnote

  

Description

1    50 Coal owned, 50% leased from Heirs of W. G. Duncan, dated October 31, 2007, recorded in Deed Book 533, page 345, Land Contract #2699-023-00.

Source of Title

AND BEING a portion of the property conveyed by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC, by Deed dated September 13, 2007, of record in Deed Book 530, page 620.

END OF EXHIBIT B-1

 

14


EXHIBIT B-2

TO

UNDERGROUND COAL MINING LEASE AND SUBLEASE

All recording references are to the Office of the Muhlenberg County Clerk.

Subleased Duncan #9 Coal

 

     Map No   

LC#

   Acres    DB/P    Date    Footnote
1    D5   

2699-023-00

016-170 T5

016-205 T5

   163.3    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
2    D6   

2699-023-00

016-170 T6

016-205 T6

   9.9    258/488
533/345
534/162
258/488
   6/10/1967
10/31/2007
2/12/2008
6/10/1967
   1
3    D8   

2699-023

016-205 T8

   175.8    533/345
534/162
   10/31/2007
2/12/2008
   1
4    D9   

2699-023-00

016-170 T 9

016-205 T9

   175    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
5    D10   

2699-023-00

016-170 T10

016-205 T10

   126.9    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
6    D11   

2699-023-00

016-170 T11

016-205 T11

   113.25    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
7    D12   

2699-023-00

016-170 T12

016-205 T12

   125    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
8    D14   

2699-023-00

016-170 T14

016-205 T14

   101.5    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
9    D16   

2699-023-00

016-170 T16

016-205 T16

   30.25    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
10    D19   

2699-023-00

016-170 T19

016-205 T19

   214.8    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
11    D22   

2699-023

016-205 T22

   102.47    285/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
12    D23   

2699-023-00

016-170 T23

016-205 T23

   126.3    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1

 

15


     Map No   

LC#

   Acres    DB/P    Date    Footnote
13    D24   

2699-023-00

016-170 T24

016-205 T24

   39    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1
14    D37   

2699-023-00

016-170 T37

016-205 T37

   107.5    258/488

533/345
534/162

   6/10/1967

10/31/2007
2/12/2008

   1
15    D40   

2699-023-00

016-170 T40

016-205 T40

   39    258/488
533/345
534/162
   6/10/1967
10/31/2007
2/12/2008
   1

Schedule of Known Exceptions

 

Footnote

  

Description

1    50% Coal leased from Heirs of W. G. Cuncan, dated October 31, 2007, recorded in Deed Book 533, page 345, Land Contract #2699-023

Source of Title

 

1. AND BEING a portion of the same property demised by Angus Fort Duncan, et al, ( W. G. Duncan Heirs) to Central States Coal Reserves of Kentucky, LLC, by instrument dated October 1, 2007, recorded in Deed Book 533, page 345.

 

2. AND BEING apportion of the same property assigned by Central States Coal Reserves of Kentucky, LLC and assumed by Cyprus Creek Land Resources, LLC, by instrument dated February 12, 2008, recorded in Deed Book 534, page 162.

END OF EXHIBI T B-2

 

16


EXHIBIT G

TO

ASEET PURCHASE AGREEMENT

Memo of Cyprus Creek & Duncan #9 Lease and Sublease


MEMORANDUM

OF

UNDERGROUND COAL MINING LEASE AND SUBLEASE

(#9 Coal Lying North of the South ROW Line of Wendell Ford Parkway)

This MEMORANDUM OF UNDERGROUND COAL MINING LEASE AND SUBLEASE (“Memorandum”), is made and entered into on this the             day of             , 201    , (“Lease Date”), by and between CYPRUS CREEK LAND RESOURCES, LLC, Delaware limited liability company with an address of 701 Market Street, Suite 798, St. Louis, Missouri 63101 (“Cyprus Creek” or “Sublessor”) and ARMSTRONG COAL COMPANY, INC., a Delaware corporation with an address of 407 Brown Road, Madisonville, Kentucky 42431 (“Armstrong Coal” or “Sublessee”), collectively hereinafter the “Parties”.

W I T N E S S E T H:

WHEREAS, by and through its predecessors in title, Cyprus Creek became the owner of the #9 vein or seam of coal and coal mining rights in and to owned partial interest tracts lying north of the south right-of-way of the Wendell Ford Parkway located in Muhlenberg County, Kentucky, and more particularly described on Exhibit B-1 and depicted on Exhibit A hereto (“#9 Owned Partial Interest Tracts”);

WHEREAS, by an unrecorded Assignment and Assumption of Leasehold Interest in Coal Lease dated February 12, 2008, Cyprus Creek became the exclusive holder of the “Remainder of the Leased Premises”, which is a portion of the leasehold estate demised by an instrument entitled “Indenture” dated June 10, 1967 (“Duncan Coal Lease”), a short form Notice of which is of record in Deed Book 258, page 488, in the Office of the Muhlenberg County Clerk (“Duncan Lease”), relating to an undivided one-half (1/2) interest in and to the approximately 2,142 acres of coal and coal mining rights lying below the top of the #9 vein or seam of coal north of the south right-of-way line of the Wendell Ford Parkway (“#9 Leased Premises”) located in Muhlenberg County, Kentucky, more particularly described on Exhibit B-2 hereto and depicted on Exhibit A hereto, which is subject to unrecorded Agreement Relating to Advance Royalties and Recoupment dated October 31, 2007 (“Advance Royalty Agreement”);

WHEREAS, by separate Underground Coal Mining Lease and Sublease of even date herewith, SUBLESSOR has leased to SUBLESSEE a lease of SUBLESSOR’s right, title and ownership interest in and to the that portion of the #9 Owned Partial Interest Tracts lying north of the south right-of-way of the Wendell Ford Parkway located in Muhlenberg County, Kentucky, and more particularly described on Exhibit B-1 and depicted on Exhibit A hereto (the “Property”); and, a sublease of SUBLESSOR’s right,

 

Cyprus Creek #9 Owned Partial Interest Tracts

Duncan #9 Remainder Leased Premises

N of Wendell Ford Pkwy.

Muhlenberg Co., Ky.

   12/27/11

 

1


title and leasehold interest in and to that portion of the Remainder of the Leased Premises being all of the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “Coal”), as more particularly depicted on Exhibit A attached hereto and described on the attached Exhibit B-2, incorporated herein by reference and made a part hereof (the “Property”); and

WHEREAS, the Parties desire to have a recorded Memorandum for the purpose of filing record notice thereof, and for that purpose, have executed this Memorandum.

NOW, THEREFORE, in consideration of the execution of the Underground Coal Mining Lease and Sublease of even date herewith between the Parties and mutual covenants and agreements set forth therein, Cyprus Creek does hereby grant, let, lease, sublet, and sublease unto Armstrong Coal all of its RIGHT, TITLE, and LEASEHOLD INTEREST, but only to the extent owned or leased Cyprus Creek in the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “Coal”), as more particularly described in Exhibits B-1 and B-2 attached hereto and depicted on the map attached hereto as Exhibit A, incorporated herein by reference and made a part hereof (the “Property”).

(a) This term of this Lease and Sublease (the “Term”) shall be for the longer of: (i) five (5) years commencing on the effective date of this Lease and Sublease; or (ii) until such time as all of the mineable and merchantable coal has been mined and removed; provided that Armstrong Coal is engaged in mining coal on the Property by no later than five (5) years from the effective date of this Lease and Sublease. Notwithstanding any provision to the contrary, Armstrong Coal may terminate this Lease and Sublease at any time during the term upon thirty (30) days written notice to Cyprus Creek. In the event that Armstrong Coal completes its mining activities prior to the expiration of the Term, this Lease and Sublease shall terminate and Armstrong Coal shall provide written notice to Cyprus Creek within thirty (30) days of the date on which Armstrong Coal last loads Coal from the Property for shipment to customers. This Lease and Sublease shall expire on the date of such written notice.

(b) Upon expiration or termination of this Lease and Sublease, Armstrong Coal shall, at Cyprus Creek’s request, execute a Release of this Lease and Sublease for purposes of recording. After expiration or termination of this Lease and Sublease, Armstrong Coal shall have the right to re-enter the Property and remove all of Armstrong Coal’s mining equipment and related property from the Property, and thereafter, as and when required by Federal, state or local law or regulation, as a result of Armstrong Coal’s operations under this Lease and Sublease, Armstrong Coal shall perform reclamation and environmental work on and respecting the Property.

(c) If, at any time, Armstrong Coal shall fail to perform reclamation and environmental work on and respecting the Property, as and when required by law, Cyprus Creek, at its option, shall have the right to:

 

  (i) seek specific performance of this obligation from a court of competent jurisdiction; and/or,

 

  (ii) re-enter the Property and perform such reclamation and environmental work as may be required at the expense of Armstrong Coal, which expense Armstrong Coal shall be obligated to pay without legal recourse.

 

2


  (iii) Notwithstanding the foregoing, Cyprus Creek shall provide Armstrong Coal thirty (30) days prior written notice of its intent to proceed under (i) or (ii) above and allow Armstrong Coal a reasonable time within which to perform reclamation work as set forth above.

This Memorandum is executed solely for the purpose of providing record notice only, and is not intended, nor shall it be deemed, to modify any of the provisions of the Underground Mining Coal Lease and Sublease. Reference should be made to the Underground Coal Mining Lease to ascertain all of the terms, conditions, and covenants thereof, a true and correct copy of which is in the possession of both Cyprus Creek and Armstrong Coal.

IN WITNESS WHEREOF, the Parties have executed this Memorandum of Underground Coal Mining Lease and Sublease as of the effective date first above written.

 

Cyprus Creek:     CYPRUS CREEK LAND RESOURCES, LLC
    By:      
      James C. Sevem, Vice President

 

STATE OF MISSOURI                       )   
  ) SS:   
CITY OF ST. LOUIS   )   

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by James C. Sevem as Vice President of Cyprus Creek Land Resources, LLC, a Delaware limited liability company, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

 

3


    WITNESS, the execution of:

Armstrong Coal:

 

ARMSTRONG COAL COMPANY, INC.
By:    
  Martin D. Wilson, President

 

STATE OF MISSOURI                 )   
   ) SS:   
CITY OF ST. LOUIS    )   

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Martin D. Wilson as President of Armstrong Coal Company, Inc., a Delaware corporation, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and corporate authority to so execute on its behalf as its free act and deed in due form of law for the purposes stated herein, on this the             day of             , 201    .

 

(SEAL)     
    

 

     Notary Public,                                                                                    
My commission expires:                                                                                      

THIS INSTRUMENT PREPARED BY:

  

M. Kirby Gordon, II

GORDON & GORDON, P.S.C.

6357 KY Hwy 405

P.O. Box 398

Owensboro, Kentucky 42302-0398

(270) 281-0398

 

4


EXHIBIT A

TO

MEMORANDUM OF UNDERGROUND COAL MINING LEASE AND SUBLEASE

Map

 

5


LOGO

 

6


EXHIBIT B-1

TO

MEMORANDUM OF COAL MINING LEASE AND SUBLEASE

All references are to the Office of the Muhlenberg County Clerk.

Leased #9 Owned Coal

 

    

MAP TR

  

LC#

  

DB/P

  

DATE

  

FOOTNOTE

1    162    016-170 T22    192/405    8/12/1954    1
2    163    016-170 T8    192/405    8/12/1954    1
3    164    016-170 T12    192/405    8/12/1954    1
4    165    016-170 T11    192/405    8/12/1954    1
5    166    016-170 T16    192/405    8/12/1954    1
6    167    016-170 T10    192/405    8/12/1954    1
7    194    016-170 T6    192/405    8/12/1954    1
8    195    016-170 T9    192/405    8/12/1954    1
9    196   

016-170 T5

016-655 QCD

  

192/405

192/437

  

8/12/1954

12/31/1954

   1
10    197    016-170 T19    192/405    8/12/1954    1
11    198   

016-170 T23

016-672

  

192/405

272/169

272/174

272/179

  

8/12/1954

7/23/1969

7/23/1969

7/24/1969

   1
12    200    016-170 T14    192/405    8/12/1954    1
13    201    016-170 T37    192/405    8/12/1954    1
14    202    016-170 T24    192/405    8/12/1954    1
15    203    016-170 T40    192/405    8/12/1954    1

Schedule of Known Exceptions

 

Footnote

  

Description

1    50 Coal owned, 50% leased from Heirs of W. G. Duncan, dated October 31, 2007, recorded in Deed Book 533, page 345, Land Contract #2699-023-00.

Source of Title

AND BEING a portion of the property conveyed by Central States Coal Reserves of Kentucky, LLC to Cyprus Creek Land Resources, LLC, by Deed dated September 13, 2007, of record in Deed Book 530, page 620.

END OF EXHIBIT B-1

 

7


EXHIBIT B-2

TO

MEMORANDUM OF UNDERGROUND COAL MINING LEASE AND SUBLEASE

All recording references are to the Office of the Muhlenberg County Clerk.

Subleased Duncan #9 Coal

 

     Map No    LC#    Acres    DB/P    Date    Footnote
1    D5    2699-023-00

016-170 T5

016-205 T5

   163.3    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
2    D6    2699-023-00

016-170 T6

016-205 T6

   9.9    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
3    D8    2699-023

016-205 T8

   175.8    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
4    D9    2699-023-00

016-170 T 9

016-205 T9

   175    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
5    D10    2699-023-00

016-170 T10

016-205 T10

   126.9    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
6    D11    2699-023-00

016-170 T11

016-205 T11

   113.25    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
7    D12    2699-023-00

016-170 T12

016-205 T12

   125    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
8    D14    2699-023-00

016-170 T14

016-205 T14

   101.5    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
9    D16    2699-023-00

016-170 T16

016-205 T16

   30.25    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
10    D19    2699-023-00

016-170 T19

016-205 T19

   241.8    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
11    D22    2699-023

016-205 T22

   102.47    285/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1
12    D23    2699-023-00

016-170 T23

016-205 T23

   126.3    258/488

533/345

534/162

   6/10/1967

10/31/2007

2/12/2008

   1

 

8


    

Map No

  

LC#

  

Acres

  

DB/P

  

Date

  

Footnote

13    D24   

2699-023-00

016-170 T24

016-205

T24

   39   

258/488

533/345

534/162

  

6/10/1967

10/31/2007

2/12/2008

   1
14    D37   

2699-023-00

016-170 T37

016-205

T37

   107.5   

258/488

533/345

534/162

  

6/10/1967

10/31/2007

2/12/2008

   1
15    D40   

2699-023-00

016-170 T40

016-205

T40

   39   

258/488

533/345

534/162

  

6/10/1967

10/31/2007

2/12/2008

   1

Schedule of Known Exceptions

 

Footnote

  

Description

1    50% Coal leased from Heirs of W. G. Cuncan, dated October 31, 2007, recorded in Deed Book 533, page 345, Land Contract #2699-023

Source of Title

 

1. AND BEING a portion of the same property demised by Angus Fort Duncan, et al, ( W. G. Duncan Heirs) to Central States Coal Reserves of Kentucky, LLC, by instrument dated October 1, 2007, recorded in Deed Book 533, page 345.

 

2. AND BEING apportion of the same property assigned by Central States Coal Reserves of Kentucky, LLC and assumed by Cyprus Creek Land Resources, LLC, by instrument dated February 12, 2008, recorded in Deed Book 534, page 162.

END OF EXHIBI T B-2

 

9


EXHIBIT H

TO

ASSET PURCHASE AGREEMENT

Duncan Consent to Sublease


NOT TO BE RECORDED

CONSENT TO PARTIAL SUBLEASE

#9 Coal North of the South ROW Line of Wendell Ford Parkway

This CONSENT TO PARTIAL SUBLEASE (“Consent”) is made and entered into on this the             day of             , 201    , by and among:

ANGUS FORT DUNCAN and JUDITH H. DUNCAN, His Wife

18 Pelican Point Drive

Newport Coast, California 92657

-and-

CATHERINE D. KRESS, Single

1221 N. Barcelona Street

Pensacola, Florida 32501

-and-

ELIZABETH D. MULLIN and JOSEPH B. MULLIN, Her Husband

4313 Galax Trail

Greensboro, North Carolina 27410

-and-

W. GRAHAM DUNCAN, IV and MARY ALICE DUNCAN, His Wife

422 Cardinal Drive

Hopkinsville, Kentucky 42240

-and-

BRENDAN A. MINISH and ANNIE MINISH, His Wife

Raheen’s Castlebar

County Mayo

Republic of Ireland

-and-

EMMA MINISH O’TOOLE and GERARD PATRICK O’TOOLE, Her Husband

Carramore, Liscarney

Newline Westport

County Mayo

Republic of Ireland

(hereinafter called “LESSOR”, whether one or more)

-AND-

 

Duncan Coal Lease

Muhlenberg Co., Ky.

   12/14/11

 

- 1 -


CYPRUS CREEK LAND RESOURCES, LLC

A Delaware limited liability company

701 Market Street, Suite 798

St. Louis, Missouri 63102-1826

(hereinafter called “LESSEE/SUBLESSOR”)

-AND-

ARMSTRONG COAL COMPANY, INC.

A Delaware corporation

407 Brown Road

Madisonville, Kentucky 42431

(hereinafter called “SUBLESSEE”).

W I T N E S S E T H:

WHEREAS, LESSOR and LESSEE/SUBLESSOR, through their respective predecessors in title, more particularly set forth on Addendum 1 hereto, are parties to a certain Indenture (“Coal Lease”) of an undivided one-half (1/2) interest in and to approximately 2,142 acres of coal and coal mining rights located in Muhlenberg County, Kentucky (“Leased Premises”), dated June 10, 1967, a Notice of which is of record in Deed Book 258, page 488, in the Office of the Muhlenberg County Clerk (“Duncan Coal Lease”);

WHEREAS, by Memorandum of Amendment and Extension of Coal Lease Agreement of record in Deed Book 533, page 345, in the Office of the Muhlenberg County Clerk, the Duncan Coal Lease was, inter alia, amended to extend of the term thereof for 25 years through and including June 9, 2012;

WHEREAS, by unrecorded Assignment and Assumption of Leasehold Interest in Coal Lease dated February 12, 2008 (“Assignment and Assumption”), LESSEE/SUBLESSOR became the assignee of that portion of the Leased Premises referred to under the Duncan Coal Lease not partially assigned by Central States Coal Reserves of Kentucky, LLC to Western Diamond, LLC by Partial Assignment and Assumption of Mineral Leasehold Estate dated May 31, 2007, of record in Deed Book 528, page 330, in the Office of the Muhlenberg County Clerk; that is, an undivided one-half interest in and to approximately 2,142 acres of coal lying above the top of the Kentucky #9 seam of coal in, on, and underlying the Leased Premises; referred to in the Assignment and Assumption as the “Remainder of the Leased Premises”, subject to an unrecorded Agreement Relating to Advance Royalties and Recoupment dated October 31, 2007 (“Advance Royalties Agreement”); and,

WHEREAS, LESSOR desires to grant their consent to the sublease by LESSEE/SUBLESSOR to SUBLESSEE (“Duncan #9 Sublease”) of a portion of the #9 vein or seam of coal only of the Remainder of the Leased Premises, more particularly depicted on the map attached as Exhibit A and described on Exhibit B-2 thereto, all of which are incorporated herein by reference and made a part hereof (“Subleased Premises”), upon the terms and conditions hereinafter set forth.

 

- 2 -


NOW, THEREFORE, for and in consideration of the mutual covenants and promises of the parties hereto and in exchange for other good and valuable consideration, the receipt, adequacy, and sufficiency of which are hereby acknowledged, the LESSOR does hereby consent to the partial sublease by LESSEE/SUBLESSOR to SUBLESSEE (“Duncan #9 Sublease”) of a portion of the #9 vein or seam of coal only of the Remainder of the Leased Premises, more particularly depicted on the map attached as Exhibit A thereto and more particularly described on Exhibit B-2 thereto, all of which are incorporated herein by reference and made a part hereof (“Subleased Premises”) subject to the Advance Royalties Agreement.

The foregoing recitals and the instruments referenced therein are incorporated herein by reference and made a part hereof.

LESSEE/SUBLESSOR shall remain solely responsible to LESSOR for SUBLESSEE’s performance under the Duncan Coal Lease with respect to the Subleased Premises.

This Consent shall be construed in accordance with the laws of the Commonwealth of Kentucky.

This Consent may be executed in multiple counterparts, each of which shall be considered an original or which may be conformed into a single document.

IN WITNESS WHEREOF, the parties hereto have executed this Consent to Partial as of the effective date first hereinabove written.

LESSOR:

  
Angus Fort Duncan
  
Judith H. Duncan, his wife

 

STATE OF CALIFORNIA

   )
   ) SS:

COUNTY OF RIVERSIDE             

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Angus Fort Duncan and Judith H. Duncan, his wife, personally known to me to be the same persons whose names are subscribed in the forgoing instrument, as their free act and deed in due form of law, for the uses and purposes set forth therein, on this the             day of             , 201    .

 

     

Notary Public,                                                                            

My commission expires:                                                           

 

- 3 -


WITNESS, the execution of:

LESSOR:

  
Catherine D. Kress, single

 

STATE OF FLORIDA

   )
   ) SS:

COUNTY OF ESCAMBIA                

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Catherine D. Kress, a single woman, personally known to me to be the same person whose name is subscribed in the forgoing instrument, as her free act and deed in due form of law, for the uses and purposes set forth therein, on this the             day of             , 201    .

 

     

Notary Public,                                                                            

My commission expires:                                                           

 

- 4 -


WITNESS, the execution of:

LESSOR:

 

  
Elizabeth D. Mullin
  
Joseph B. Mullin, her husband

 

STATE OF NORTH CAROLINA            

   )
   ) SS:

COUNTY OF GUILFORD

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Elizabeth D. Mullin and Joseph B. Mullin, her husband, personally known to me to be the same persons whose names are subscribed in the forgoing instrument, as their free act and deed in due form of law, for the uses and purposes set forth therein, on this the             day of             , 201    .

 

     

Notary Public,                                                                            

My commission expires:                                                           

 

- 5 -


WITNESS, the execution of:

LESSOR:

  

W. Graham Duncan, IV, by and through

his Attorney-in-Fact, Mary Alice Duncan

  
Mary Alice Duncan, his wife

 

COMMONWEALTH OF KENTUCKY            

   )
   ) SS:

COUNTY OF CHRISTIAN

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by W. Graham Duncan, IV, by and through his Attorney-in-Fact, Mary Alice Duncan, and Mary Alice Duncan, his wife, personally known to me to be the same persons whose names are subscribed in the forgoing instrument, as their free act and deed in due form of law, for the uses and purposes set forth therein, on this the             day of             , 201    .

Notary Public, KY State-at-Large

My commission expires:                                                           

 

- 6 -


WITNESS, the execution of:

LESSOR:

 

Brendan A. Minish
  
Annie Minish, his wife

 

REPUBLIC OF IRELAND             

   )
   ) SS:

COUNTY OF MAYO

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Brendan A. Minish and Annie Minish, his wife, personally known to me to be the same persons whose names are subscribed in the forgoing instrument, as their free act and deed in due form of law, for the uses and purposes set forth therein, on this the             day of             , 201    .

 

     

Notary Public,                                                                            

My commission expires:                                                           

 

- 7 -


WITNESS, the execution of:

LESSOR:

 

Emma Minish O’Toole
  
Gerard Patrick O’Toole, her husband

 

REPUBLIC OF IRELAND            

   )
   ) SS:

COUNTY OF MAYO

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Emma Minish O’Toole and Gerard Patrick O’Toole, her husband, personally known to me to be the same persons whose names are subscribed in the forgoing instrument, as their free act and deed in due form of law, for the uses and purposes set forth therein, on this the             day of             , 201    .

 

     

Notary Public,  

   

My commission expires:  

   

 

- 8 -


WITNESS, the execution of:

LESSEE/SUBLESSOR:

 

CYPRUS CREEK LAND RESOURCES, LLC
By:  

 

  James C. Sevem, Vice President

 

STATE OF MISSOURI            

   )
   ) SS:

CITY OF ST. LOUIS

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by James C. Sevem as Vice President of Cyprus Creek Land Resources, LLC, a Delaware limited liability company, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and authority to so execute on its behalf as its free act and deed in due form of law, on this the             day of             , 201    .

 

     

Notary Public,  

   

My commission expires:  

   

 

- 9 -


WITNESS, the execution of:

SUBLESSEE:

 

ARMSTRONG COAL COMPANY, INC.
By:  

 

Title:  

 

 

STATE OF                                  

   )
   ) SS:

CITY OF                                    

   )

The foregoing instrument was SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by as of Armstrong Coal Company, Inc., a Delaware corporation, personally known to me to be the person whose name is subscribed above and having represented to me that he has full power and authority to so execute on its behalf as its free act and deed in due form of law, on this the             day of             , 201    .

 

     

Notary Public,  

   

My commission expires:  

   

THIS INSTRUMENT PREPARED BY:

  

M. Kirby Gordon II

GORDON & GORDON, P.S.C.

6357 KY Hwy 405

P.O. Box 398

Owensboro, Kentucky 42302-0398

(270) 281-0398

 

- 10 -


ADDENDUM 1

TO

CONSENT TO SUBLEASE OF LEASEHOLD INTEREST

IN PORTION OF COAL MINING LEASE

LESSOR’s Sources of Title

All References to Muhlenberg County Clerk’s Office

AND BEING a part of the same undivided interest acquired by W. G. Duncan, Jr. from 5 J Coal Company by deed dated March 28, 1934, recorded in Deed Book 137, page 541, which descended as follows:

1. W. G. Duncan, Jr. died testate August 9, 1957. His Will was proven August 19, 1957 and is recorded in Will Book 7, page 87. Pursuant to the terms of his Will and Codicil, his ownership interest in these tracts was divided into two portions to be held in trust for the lifetime benefit of his widow, Emma Richardson Duncan, his daughter, Virginia Duncan Minish, and his son, William G. Duncan, III. The remaindermen of this Trust was a class of “each grandchild of mine then living., or in representation of, each grandchild of mine who may then be deceased leaving descendants surviving.” His Will also provided that the interest passing to the remaindermen was to be held in trust until each remainderman reached 27 years of age.

2. As established by Affidavits dated January 12, 1987, recorded in Deed Book 378, page 670, and Deed Book 378, page 673:

(a) Emma Richardson Duncan died January 18, 1978; and,

(b) William G. Duncan, III died July 22, 1986.

3. As established by Affidavit of Descent of Virginia Duncan Minish dated November 26, 2007, recorded in Deed Book 533, page 341, Virginia Duncan Minish died on April 19, 1997.

4. As established by Affidavit of Descent of Lawrence T. Minish, III dated November 26, 2007, recorded in Deed Book 533, page 343, Lawrence T. Minish, III died on November 7, 1985, survived by only two children, Brendan Andrew Nathaniel Minish born November 30, 1970 and Emma Belinda Minish born February 13, 1973.

5. Upon the death of W. G. Duncan, III and upon the death of Virginia Duncan Minish, and upon the death of her only child, Lawrence T. Minish, III, the class of remaindermen was closed with the following persons owning the following interests:

 

W. Graham Duncan, IV

     20

Agnes Fort Duncan

     20

Elizabeth D. Mullin

     20

Katherine D. Kress

     20

Brendan Andrew Nathaniel Minish

     10

Emma Belinda Minish O’Toole

     10

 

- 11 -


6. The aforesaid Affidavits of January 12, 1987, recorded in Deed Book 378, page 670, and Deed Book 378, page 673, confirm that on January 12, 1987, W. Graham Duncan, IV, Agnes Fort Duncan, Elizabeth D. Mullin, and Katherine D. Kress were more than 27 years of age and their interest was free of the trust.

7. By Affidavit dated June 4, 2007, of record in Miscellaneous Book 49, page 119, it is stated that the heirs of the deceased, Lawrence T. Minish, III, being Brendan Andrew Nathaniel Minish and Emma Belinda Minish O’Toole are now over the age of 27 years and that Citi-Smith Barney is the authorized agent and payee on their behalf to receive payments from the Lessee under the aforesaid W. G. Duncan, Jr. Lease.

Lessee/Sublessor’s Sources of Title

1. Indenture to Sentry Royalty Company (“Coal Lease”) of an undivided one-half (1/2) interest in and to approximately 2,142 acres of coal and coal mining rights located in Muhlenberg County, Kentucky (“Leased Premises”), dated June 10, 1967, a short form Notice of which is of record in Deed Book 258, page 488;

2. On September 1, 1967, recorded March 26, 1968, in Articles of Incorporation Book 5, page 593, Sentry Royalty Company was merged into Peabody Coal Company, an Illinois corporation.

3. And being a portion of the real property interests conveyed by Peabody Coal Company, an Illinois corporation, to Peabody Coal Company, a Delaware corporation, by deed dated March 29, 1968, recorded in Deed Book 264, page 1, as a part of Exhibit A, Division 7, Commonwealth of Kentucky, Subdivision 7.07 of that instrument.

4. And being a portion of the real property interests conveyed by Peabody Coal Company to Peabody Development Company by deed dated September 12, 1989, Deed Book 398, page 37.

5. Effective December 16, 2003, Peabody Development Company, a Delaware corporation, converted and changed its name to Peabody Development Company, LLC, a Delaware limited liability corporation, as shown in Articles of Incorporation Book 15, page 635.

6. By deed dated December 20, 2005, recorded December 28, 2005, in Deed Book 516, page 599, Peabody Development Company, LLC conveyed to Central States Coal Reserves of Kentucky, LLC all of its right, title and interest in and to all of its real property interests located in Muhlenberg County, Kentucky.

7. By “Deed of Confirmation” dated December 27, 2005, effective December 20, 2005, recorded December 28, 2005, in Deed Book 516, page 719, Peabody Development Company, LLC confirmed its conveyance of real property interests to Central States Coal Reserves of Kentucky, LLC dated December 20, 2005, recorded in Deed Book 516, page 599.

8. By Amendment and Extension of Lease dated October 31, 2007, a Memorandum of which was recorded January 9, 2008, in Deed Book 533, page 343, the W. G. Duncan, Jr. Lease was amended to extend of the term thereof for 25 years through and including June 9, 2012.

 

- 12 -


9. By Partial Assignment and Assumption of Mineral Leasehold Estate dated May 31, 2007, of record in Deed Book 528, page 300, Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company, assigned to Western Diamond, LLC, a Nevada limited liability company, a portion of its interest in the Duncan Coal Lease only insofar as it relates to an undivided one-half (1/2) interest in and to approximately 2,142 acres of all coal lying above the top of the Ky. #9 seam.

10. By unrecorded Assignment and Assumption of Leasehold Interest in Coal Lease dated February 12, 2008, Central States Coal Reserves of Kentucky, LLC, a Delaware limited liability company, assigned to Cyprus Creek Land Resources, LLC, a Delaware limited liability company, all of that portion of the Leased Premises under Duncan Coal Lease not assigned in Deed Book 528, page 300 (above) referred to as the “ Remainder of the Leased Premises” described on Exhibit A thereto and depicted on a map attached as Exhibit C thereto.

END OF ADDENDUM 1

 

- 13 -


EXHIBIT I

TO

ASSET PURCHASE AGREEMENT

Cyprus Creek #9 Lease


UNDERGROUND COAL MINING LEASE

(#9 Coal Lying North of the South ROW Line of Wendell Ford Parkway)

This UNDERGROUND COAL MINING LEASE (“Lease “), is made and entered into on this the         day of                     , 201    , (“Lease Date”), by and between CYPRUS CREEK LAND RESOURCES, LLC, Delaware limited liability company with an address of 701 Market Street, Suite 798, St. Louis, Missouri 63101 (“Cyprus Creek” or “Lessor”) and ARMSTRONG COAL COMPANY, INC., a Delaware corporation with an address of 407 Brown Road, Madisonville, Kentucky 42431 (“Armstrong Coal” or “Lessee”), collectively hereinafter the “Parties”.

W I T N E S S E T H:

WHEREAS, by and through its predecessors in title, LESSOR became the owner of the #9 vein or seam of coal and coal mining rights in, on and underlying certain tracts or parcels, portions of which lie north of the south right-of-way of the Wendell Ford Parkway located in Muhlenberg County, Kentucky, and more particularly depicted on the map attached as Exhibit A hereto and described on Exhibit B hereto, incorporated herein by reference and made a part hereof (“#9 Owned Coal”); and,

WHEREAS, LESSOR desires to lease to LESSEE and LESSEE desires to accept LESSOR’s grant of a lease of LESSOR’s right, title and interest in and to that portion of #9 Owned Coal being all of the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky, as more particularly depicted on the map attached as Exhibit A and described on the attached Exhibit B, incorporated herein by reference and made a part hereof (the “Property”), upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of TEN DOLLARS ($10.00) cash in hand paid, and other good and valuable consideration including the mutual covenants and agreements of the Parties hereto more particularly set forth in a certain Overriding Royalty Agreement of even date herewith, and all other obligations of Armstrong Coal stated in this Lease, Cyprus Creek does hereby grant, let, and lease unto Armstrong Coal all of its RIGHT, TITLE, and INTEREST, but only to the extent owned by Cyprus Creek in the #9 vein or seam of Coal lying north of the south right-of-way line of the Wendell Ford Parkway in Muhlenberg County, Kentucky (the “#9 Owned Coal”), as more particularly depicted on the map attached as Exhibit A and described in Exhibit B attached hereto, incorporated herein by reference and made a part hereof (the “Property”).

1. SPECIAL RIGHTS OF ARMSTRONG COAL. In addition to whatever rights Armstrong Coal may have by implication of law hereunder, Armstrong Coal shall have the following exclusive rights (“Rights”) to the extent in fact owned or held by Cyprus Creek:

 

  (a) To drill, take core samples, survey, map and otherwise evaluate the #9 Owned and to perform environmental research.

 

#9 Coal Owned Tracts

N of Wendell Ford Pkwy.

Muhlenberg Co., Ky.

     12/28/11   

 

1


  (b) To mine, extract or remove the #9 Owned Coal and other substances which are necessarily removed in the underground coal mining process by any and all underground mining methods now or hereafter in existence, including the right to disturb, cast, and pile all strata without regard to mineral content and for preparing and marketing coal; such rights, including, without limitation, to the extent permitted by applicable statutes and regulations and to the extent Cyprus Creek has the right to grant the same, the right to install and maintain railroad and truck loading facilities, storage areas, railroad tracks and switches, pumping stations, pole lines and wires; to dig ditches for the drainage of water; to lay pipe lines; to erect towers; to provide for the storage of materials and supplies; to construct and use roadways; to erect and use buildings, plants and structures of every kind; and, in general, and without limitation, to do any and all things incident to Armstrong Coal’s mining, processing, and marketing of #9 Owned Coal produced from the Property; provided, however, that Armstrong Coal has, by its execution of this Lease, accepted all liability which may arise at any time after the execution hereof for any and all damage to surface and/or structures situated in, on or under the surface, where such damage was caused by Armstrong Coal’s operations under this Lease. It is the express intent of the Parties hereto that by the language of this Section 1(b), Armstrong Coal shall have accepted all responsibility and liability for any and all subsidence and damage caused thereby as it relates to the Property and/or #9 Owned Coal from and after the date of execution hereof only.

 

  (c) A free access to, in, from and across the Property and the #9 Owned Coal and the right to undertake any other thing or use necessary or convenient for the underground mining of the Coal.

 

  (d) To utilize underground tunnels, entries, passageways, rooms, haulage ways, pumping stations, pipelines, conveyors, storage facilities, drains and other surface and underground facilities, all with respect to the mining of #9 Owned Coal and for the purpose of mining of #9 Owned Coal in, on or under the Property.

2. TERM.

(a) This term of this Lease (the “Term”) shall be for the longer of: (i) five (5) years commencing on the effective date of this Lease; or (ii) until such time as all of the mineable and merchantable #9 Owned Coal has been mined and removed; provided that Armstrong Coal is engaged in mining #9 Owned Coal on the Property by no later than five (5) years from the effective date of this Lease. Notwithstanding any provision to the contrary, Armstrong Coal may terminate this Lease at any time during the term upon thirty (30) days written notice to Cyprus Creek. In the event that Armstrong Coal completes its mining activities prior to the expiration of the Term, this Lease shall terminate and Armstrong Coal shall provide written notice to Cyprus Creek within thirty (30) days of the date on which Armstrong Coal last loads #9 Owned Coal from the Property for shipment to customers. This Lease shall expire on the date of such written notice.

 

2


(b) Upon expiration or termination of this Lease, Armstrong Coal shall, at Cyprus Creek’s request, execute a Release of this Lease for purposes of recording. After expiration or termination of this Lease, Armstrong Coal shall have the right to re-enter the Property and remove all of Armstrong Coal’s mining equipment and related property from the Property, and thereafter, as and when required by Federal, state or local law or regulation, as a result of Armstrong Coal’s operations under this Lease, Armstrong Coal shall perform reclamation and environmental work on and respecting the Property.

(c) If, at any time, Armstrong Coal shall fail to perform reclamation and environmental work on and respecting the Property, as and when required by law, Cyprus Creek, at its option, shall have the right to:

 

  (i) seek specific performance of this obligation from a court of competent jurisdiction; and/or,

 

  (ii) re-enter the Property and perform such reclamation and environmental work as may be required at the expense of Armstrong Coal, which expense Armstrong Coal shall be obligated to pay without legal recourse.

 

  (iii) Notwithstanding the foregoing, Cyprus Creek shall provide Armstrong Coal thirty (30) days prior written notice of its intent to proceed under (i) or (ii) above and allow Armstrong Coal a reasonable time within which to perform reclamation work as set forth above.

3. ROYALTIES. Armstrong Coal shall pay to Cyprus Creek, in full payment for all of the benefits secured by Armstrong Coal under or in connection with the mining of #9 Owned Coal pursuant to this Lease, an overriding royalty in an amount more specifically set forth in a certain “Overriding Royalty Agreement” of even date herewith, a Memorandum of which is of record in Deed Book             , page             , in the Office of the Muhlenberg County Clerk (“Royalty”).

 

  (a) Payment. All Royalty shall be payable pursuant to the terms of the Overriding Royalty Agreement. No Royalty shall be payable on or with respect to gob, slurry, tailings or other residue resulting from the processing, including washing of #9 Owned Coal for sale from the Property, and Armstrong Coal shall have clear title to all such material from the Property, provided that all such material is removed from the Property prior to the expiration or termination of this Lease.

 

  (b) Additional Expenses. Armstrong Coal shall be responsible for the payment of all costs and expenses resulting from or related to the mining, removal, and sale of the #9 Owned Coal, all reporting costs, taxes, and all engineering fees.

 

  (c) Reports. Beginning with the month following the month in which #9 Owned Coal is first mined from the Property, and for each month thereafter, Armstrong Coal shall furnish to Cyprus Creek a report stating for that month the number of coal acres mined and the tons of #9 Owned Coal mined and sold from each parcel depicted on Exhibit A and described on Exhibit B.

 

  (f) Delinquent Payments. Delinquent payments shall bear interest at the rate set forth in the Overriding Royalty Agreement.

 

3


4. MINE PLANS. Armstrong Coal shall make available for inspection by Cyprus Creek upon reasonable advance request a copy of Armstrong Coal’s Mine Plan map and any revisions thereto and of Armstrong Coal’s Coal Mining and Reclamation Operations Permit to Mine the #9 Owned Coal, including the application for such permit, and all maps and diagrams submitted therewith. Cyprus Creek shall not interfere with Armstrong Coal’s permitting activities. In addition, Cyprus Creek shall have the right to review such mine plans on no less than an annual basis. Armstrong Coal shall furnish to Cyprus Creek on January 25 and July 25 of each year a map showing the area mined in the previous six (6) months and showing the area projected to be mined in the following six (6) months. These maps shall be certified by a Registered Professional Engineer, Certified Professional Geologist or Registered Land Surveyor and shall be at scale of not more than 1” = 100’, showing a minimum, by month, the actual extent of #9 Owned Coal extracted and thickness of each of the #9 Owned Coal seams mined.

5. CYPRUS CREEK’S RIGHT TO INSPECT. Cyprus Creek or its representatives at reasonable times, and upon at least forty-eight (48) hours advance written notice, shall have the right to make surveys of the workings in the #9 Owned Coal herein leased to determine the accuracy of Armstrong Coal’s surveys of such workings; and at reasonable times, and upon at least forty-eight (48) hours advance written notice, to examine the maps and engineering records of Armstrong Coal with reference to said surveys. Armstrong Coal shall keep records of all #9 Owned Coal mined and sold from the Property for a period of thirty-six (36) months and Cyprus Creek shall have the right to inspect the records at all reasonable times. Cyprus Creek or its representatives shall also have the right at reasonable times, and upon at least forty-eight (48) hours advance written notice, to examine and check the invoices, sales records and other directly relevant records of Armstrong Coal to determine the accuracy of Armstrong Coal’s reports to Cyprus Creek. Cyprus Creek agrees to treat Armstrong Coal’s invoices and sales records as confidential and not to disclose such records to Cyprus Creek’s or its affiliates’ sales representatives or any other parties. Armstrong Coal shall not be responsible for any injury, loss or damages suffered by Cyprus Creek’s representatives that enter the Property, except for any injury, loss or damages caused in whole or in part by the gross negligence of Armstrong Coal, its agents or employees.

6. TITLE. Cyprus Creek does not warrant its title to the #9 Owned Coal or the Property generally and shall have no liability to Armstrong Coal for any impairment of or interference with the exchange of Armstrong Coal’s rights under this Lease by any person claiming title superior to Cyprus Creek’s. During the term of this Lease, however, Cyprus Creek shall not impair or suffer by act or omission any impairment of its title to the Property which would interfere with Armstrong Coal’s exercise of its rights under this Lease. Defects in Cyprus Creek’s title may be corrected by Armstrong Coal at Armstrong Coal’s sole discretion and cost, and Cyprus Creek agrees to cooperate with Armstrong Coal in such corrective activity in the event it is requested to do so. Cyprus Creek agrees to furnish Armstrong Coal all title information in its possession or readily available to Cyprus Creek, including abstracts of title, commitments for title insurance and title insurance policies. The Parties agree to execute necessary releases as to any property to which Armstrong Coal notifies Cyprus Creek of tile defects to which it elects not to cure.

 

4


7. COMPLIANCE WITH LAWS.

(a) Armstrong Coal shall perform all legally required reclamation and comply with all applicable Federal, state and local laws, rules and regulations; obtain all necessary permits; pay all employment and other taxes required in connection herewith, and shall indemnify and defend Cyprus Creek against all actions, including penalties and fines, resulting from Armstrong Coal’s failure to do so.

(b) Armstrong Coal shall secure and keep in force a reclamation bond to the extent required by applicable law. Armstrong Coal shall not continue its mining operations, without the written permission of Cyprus Creek, if it should fail to keep in force such bond.

8. INDEMNIFICATION. Except as provided above, Armstrong Coal shall indemnify, defend and save harmless Cyprus Creek against any and all claims, loss and expense arising or accruing after the date of this Lease by reason of liability imposed or claimed to be imposed by law for damage due to bodily injuries, (including death) and property damage sustained by any person(s), including the employees of Armstrong Coal, arising out of or in consequence of Armstrong Coal’s exercise of its rights hereunder, whether same arise in whole or in part from negligence (or from any other legal basis) of Armstrong Coal, its employees or agents. Cyprus Creek shall indemnify, defend and save harmless Armstrong Coal against any and all claims, loss and expense by reason of liability imposed or claimed to be imposed by law for damage due to bodily injuries, (including death) and property damage sustained by any person(s), including the employees of Cyprus Creek, arising out of or in consequence of Cyprus Creek’s exercise of its rights, whether same arise in whole or in part from negligence (or from any other legal basis) of Cyprus Creek, its employees or agents. This provision shall survive any termination or cancellation of this Lease.

9. INSURANCE. Armstrong Coal shall obtain and continue in force, during the term of this Lease, the following insurance coverages:

 

  (a) Employer’s Liability insurance with limits of $500,000 each occurrence, unless the laws of the State in which the work is to be performed preclude an independent right of action by an employee against an employer under common law.

 

  (b) Comprehensive Automobile Liability insurance with Bodily Injury and Property Damage both with $1,000,000 combined single limit.

 

  (c) Comprehensive General Liability insurance, including Contractual Liability coverages with Bodily Injury, and Property Damage both with $1,000,000 combined single limit.

 

  (d) Workers’ Compensation coverage with statutory limits. All insurance policies must contain an unqualified provision that the insurance carrier will give Cyprus Creek thirty (30) days prior notice in writing of any cancellation, change or lapse of such policy. Prior to occupancy or use of the Property, Armstrong Coal shall furnish to Cyprus Creek (in form satisfactory to Cyprus Creek) a certificate of insurance showing that the requirements of this paragraph have been satisfied. The certificate of insurance shall name Cyprus Creek as an additional insured and certificate holder on all aforementioned policies. The liability assumed by Armstrong Coal under this Lease is not limited by the amount of insurance which Armstrong Coal is required to provide under this paragraph.

 

5


10. DEFAULT AND TERMINATION. In the event of the failure on the part of Armstrong Coal to make any payment under the Overriding Royalty Agreement when due, or failure of Armstrong Coal to make any payment due and payable under that certain Promissory Note between Armstrong Coal and Cyprus Creek of even date herewith, or in the event a Party fails to observe and perform any other agreement or undertaking as herein provided, then the other Party shall have the right immediately to give the defaulting Party a written notice designating the particular default or defaults of which complaint is made and notifying the defaulting Party of its intention and election to terminate the Lease by reason of such default or defaults, and unless the defaulting Party shall make the payment in default within TEN (10) days after giving of said notice and remove any other default complained of within THIRTY (30) days after the giving of said notice (except any default not susceptible of being cured within such THIRTY (30) day period, in which event the time permitted to the defaulting Party to complete the same, provided the defaulting Party commences promptly and proceeds diligently to complete such performance), then without further notice this Lease and the rights of the defaulting Party hereunder shall be forfeited, canceled and terminated. Such termination of this Lease shall not, however, relieve the obligation for any Royalty due under this Lease to date of such termination or liability of the defaulting Party for any other damage resulting to the other Party from said default. Armstrong Coal shall have the right, and the obligation should Cyprus Creek so demand, to remove any of its property from the Property for a period of one (1) year after expiration or termination of this Lease, subject to Armstrong Coal’s rights under Section 1(d) he