MINING LEASE AND AGREEMENT
THIS MINING LEASE, (the "Lease"), is made and entered into as of the
14th date of May, 1998, by and between ▇▇▇▇▇ ▇. ▇▇▇▇, Executor for the
Estate of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and as a single man, ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, a single woman, ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, a/k/a ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, a single man,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a single
woman, ▇▇▇▇ ▇▇▇▇ ▇▇▇. ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, hereinafter called
"Lessor" (whether one or more) and GeoResources, Inc., a Colorado
corporation, P. O. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, hereinafter called
Lessee:
WHEREAS, Lessor is the owner of interests in the following described
land in ▇▇▇▇▇▇▇▇ County, North Dakota:
Township 154 North, Range ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ 8: SE1/4SW1/4
Section 17: E1/2NW1/4, SW1/4NW1/4
containing 160 acres, more or less
(the "Leased Premises");
AND WHEREAS, it is the desire of both parties hereto that Lessee be
permitted the right to mine coal, lignite, or oxidized lignite (hereinafter
referred to collectively as "Leonardite") from the Leased Premises;
NOW, THEREFORE, in consideration of the premises and of mutual
obligations here-inafter set forth and subject to the terms, conditions,
and covenants hereinafter expressed, the parties hereto agree as follows:
1. Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor the exclusive rights to explore and mine the Leased Premises for
Leonardite, and to use so much of the surface as may be reasonably required
in the exercise of the rights herein granted. Lessee shall have exclusive
authority over its operation and shall be the sole judge of choice of
mining methods to be employed, of selecting the Leonardite to be mined, and
of determining the extent and timing of extraction.
2. Lessee agrees to tender to Lessor on or before the 20th day of
each of the months of January, April, July and October of each and every
year so long as this Lease continues in effect production royalties
according to the following royalty schedule for any Leonardite mined and
removed from the Leased Premises during the three calendar months
immediately preceding the payment date month. Lessee shall be responsible
for weighing all Leonardite removed from the Leased Premises and shall
promptly furnish Lessor copies of all weight receipts if so requested.
Lessor shall have the right to test the accuracy of any scale or weighing
device used by Lessee, and to inspect and examine any books or records of
Lessee relating to the quantity of Leonardite removed from the Leased
Premises, all such books and records to be maintained at Lessee's
Williston, North Dakota office.
ROYALTY SCHEDULE
At least Fifty-Six Cents ($.56) per ton but for each three
calendar month payment period not less than the Producer
Price Index (1982 reference base) for all commodities as
prepared and published by the United States Department of
Labor, Bureau of Labor Statistics, for the middle month of
each three month period divided by 105 and multiplied by
$0.56.
3. This Lease shall remain in force for a term of ten (10) years
from the 14th day of May, 1998, and ending the 13th day of May, 2008,
subject to the condition that on or before the 14th day of May each year
beginning May 14, 1998, Lessee tender to Lessor, as advance rental, the sum
of One Thousand Dollars ($1,000.00), which shall operate as annual minimum
royalty to maintain this lease in force. This rental shall be credited
against the first $1,000.00 of any royalties that accrue thereafter during
that year.
4. Lessee shall have the right to build roads necessary for
transporting the equipment and materials necessary for its operations;
provided, however, that all costs of construction and maintenance of
said roads shall be the full responsibility of Lessee.
5. Lessee agrees to exonerate, hold harmless, and indemnify
Lessor from and against any losses, damages, claims, suits, actions,
judgments and costs which may arise or grow out of any injury to or
death of persons or damage to property arising out of or attributable
to negligence, or acts or omissions, or use by Lessee, or its servants,
employees, guests, or customers on the Leased Premises. Lessee further
agrees to hold harmless, protect, and indemnify Lessor from any claims
arising from our asserted or alleged because of water or other
pollution in any manner attributable to Lessee's operations.
6. Lessor is not liable for any damage to any property of
Lessee kept or stored on the Leased Premises; all of such property kept
or stored on the Leased Premises is so kept or stored at the risk of
Lessee only and Lessee shall hold Lessor harmless from any claims
arising out of damage to same, including subrogation of any claims by
Lessee's insurer, unless the damage was caused by a willful act or the
gross negligence of Lessor.
7. Lessee warrants that its exploring, mining and reclamation
operations shall at all times be in full compliance with all laws,
statutes, ordinances and regulations of federal, state, county, and
municipal governments and agencies, including but not limited to, the
North Dakota Public Service Commission rules and regulations for
reclamation of surface-mined lands.
8. Lessee shall conduct its business in such a manner as to
insure that no lien, attachment or execution shall in any manner be
placed on the Leased Premises, but, if any such lien, attachment or
execution shall be so placed, Lessor may at its option, after giving
Lessee notice and reasonable opportunity to cure, discharge the same
and Lessee shall reimburse Lessor for all costs in connection
therewith, with interest at ten percent (10%).
9. Lessor shall have the right at all reasonable times and at
Lessor's risk and expense to inspect the Leased Premises and Lessee's
operations thereon.
10. Lessee shall pay all severance taxes and all taxes on
personal property, fixtures, and improvements placed on the Leased
Premises by Lessee as such taxes accrue, provided however, that if
Lessee fails to pay such taxes when due, Lessor may at its option pay
the taxes, and Lessee shall reimburse Lessor for any such payment with
interests at ten percent (10%).
11. Lessor is not required to provide any services or perform
any act except as other-wise provided herein, and rent and royalties
must be paid without any claim for diminution or abatement, and the
fact that Lessee's use of the Leased Premises is disturbed from any
cause whatsoever except Lessor's acts shall not in any way suspend,
▇▇▇▇▇ or reduce the rental or royalty payments due except as otherwise
provided in this Lease.
12. If this Lease terminates because of default by the Lessee,
Lessor shall have a lien upon all personal property and improvements
placed on or under the Leased Premises by the Lessee for the amount due
under the Lease, and Lessee shall be prohibited from removing same
until all such amounts have been paid in full.
13. Any notice or demand contemplated by this Lease, other than
rental and royalty payments, shall be deemed given to Lessor five (5)
days after mailed by certified or registered mail, return receipt
requested, addressed to:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and to Lessee at:
GeoResources, Inc.
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
or to such other address as either party may by notice in writing
specify.
14. (a) This Lease shall be governed by the laws of the State
of North Dakota.
(b) Division of this Lease into sections is for convenience
only, and shall not be considered in its interpretation.
(c) This Lease contains the entire agreement of the parties
concerning the Leased Premises and supersedes all prior statements of
agreements whether oral or written.
(d) No waiver of any covenant of this Lease shall be deemed a
waiver of any other covenant herein.
15. It is mutually understood and agreed that Lessee may at
any time surrender and terminate this Lease upon giving Lessor thirty
(30) days notice in writing and paying to Lessor all payments due to
the effective date of such surrender.
16. Each obligation and benefit hereunder shall be binding
upon and inure to the benefit of the respective heirs, executors,
administrators, successors and assigns of the parties, although it is
agreed that no change or division in ownership of the rentals or
royalties shall operate to enlarge the obligations or diminish the
rights of Lessee, and any such change shall not be binding on the
Lessee until after Lessee has been furnished with certified copies of
monuments of title.
17. This instrument may be executed in any number of counter
parts, each of which shall be considered an original for all purposes.
IN WITNESS WHEREOF, the Lessor and Lessee have executed this Lease
this 19th day of June, 1998, to be effective the day and year first above
written.
GEORESOURCES, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇, Executor
▇. ▇. ▇▇▇▇▇▇▇, President ▇▇▇▇▇ ▇. ▇▇▇▇, Executor of the
Estate of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
ATTEST: ▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, Secretary /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LESSEE LESSOR