EX-10.21






Exhibit
10.21 

GRANT: PL 105 Multiple




UTAH
STATE LEASE FOR COAL 

ML 51191-OBA





COTTONWOOD COMPETITIVE LEASING UNIT

PARCEL #1 (REVERSIONARY TRACT)




     THIS COAL MINING LEASE AND AGREEMENT (the “Lease”) is entered into and executed in
duplicate as of January 18, 2008 (the “Effective Date”) by and between the STATE OF UTAH, acting by
and through the SCHOOL AND INSTITUTIONAL TRUST LANDS ADMINISTRATION, 675 East 500 South, Suite
500, Salt Lake City, Utah 84102 (“Lessor”), and



Ark Land Company

One CityPlace Drive — Suite 300

St. Louis, MO 63141




having a business address as shown above (“Lessee”).




WITNESSETH:




     That the State of Utah, as Lessor, in consideration of the rentals, royalties, and other
financial consideration paid or required to be paid by Lessee, and the covenants of Lessee set
forth below, does hereby GRANT AND LEASE to Lessee the exclusive right and privilege to explore
for, drill for, mine, remove, transport, convey, cross-haul, commingle, and sell the coal located
within the boundaries of the following-described tract of land located in Emery County, State of
Utah:



PARCEL 1 (Cottonwood Coal Exchange Tract — Partial)




Township
17 South Range, 6 East, SLB&M




	 	 	 
	Section 2: SW4


Section 3: Lots 1 thru 12, SE4 (All)


Section 4: Lots 1, 2, S2NE4, SE4


Section 9: E2, E2W2


Section 10: Lots 1 thru 8, E2 (All)


Section 11: All


Section 12: W2W2



	 	
	Section 13: W2W2
	 	 
	 
	Section 14: Lots 1 thru 4, E2, NW4 (All)
	 	 
	 
	Section 15: Lots 1 thru 12, NE4 (All)
	 	 
	 
	Section 16: NE4NW4
	 	 
	 
	Section 20: E2E2
	 	 
	 
	Section 21: All
	 	 
	 
	Section 22: All
	 	 
	 
	Section 23: Lots 1 thru 12, NE4 (All)
	 	 
	 
	Section 24: W2W2
	 	 
	 
	Section  25 : N2NW4
	 	 
	 
	Section 26: N2NE4, W2SW4NE4, NW4, N2SW4, W2NW4SE4
	 	 
	 






 









 





Section 27:
N2, N2S2


Section-28: N2, N2SW4, SE4


Section 29: NE4




Containing
8,203.87 acres, more or less.



Together with the right and privilege to make use of the surface (but only to the extent owned by
Lessor) and subsurface of the Leased Premises for uses incident to the mining of coal by Lessee on
the Leased Premises or on other lands under the control of Lessee or mined in connection with
operations on the Leased Premises, including, but not limited to, conveying, storing, loading,
hauling, commingling, cross-hauling, and otherwise transporting coal; excavating; removing,
stockpiling, depositing and redepositing of surface materials; and the subsidence, mitigation,
restoration and reclamation of the surface.




     This Coal Mining Lease and Agreement is subject to, and Lessee hereby agrees to and accepts,
the following covenants, terms, and conditions:




	1.	 	LEASED MINERALS.






	 	1.1	 	Coal. This mineral lease covers coal, which shall mean and include black
or brownish-black solid fossil fuels that have been subjected to the natural processes of coalification, and which fall
within the classification of coal by rank as anthracitic, bituminous, sub-bituminous, or lignitic,
together with closely associated substances which include, but are not limited to other
hydrocarbon substances physically contained within the same geologic strata as the coal. In the
event that minerals other than coal are discovered during lease operations, Lessee shall promptly
notify the Lessor.
	 
	 	1.2	 	Coalbed Methane. To the extent that Lessor owns gas, coalbed methane or coal seam gas
(collectively “coalbed methane”) within the Leased Premises, Lessee may remove, vent,
flare or
capture such coalbed methane from the coal strata being mined and any overlying
formations if
such removal is necessary for safety reasons in the reasonable discretion of Lessee.
If Lessee
captures or uses such coalbed methane, it shall pay Lessor royalties on the value of
such coalbed
methane at the prevailing state royalty rate for natural gas, unless such royalties
are expressly
waived by Lessor. In the event that Lessor does not own coalbed methane within the
Leased
Premises, Lessee must obtain the consent of the owner of such coalbed methane prior to
removal
or capture of such gas. Except as expressly granted herein, the right to extract gas,
coalbed
methane and coal seam gas is not granted by this Lease.
	 
	 	1.3	 	No Warranty of Title. Lessor claims title to the mineral estate covered
by this Lease. Lessor does
not warrant title nor represent that no one will dispute the title asserted by Lessor. It is expressly
agreed that Lessor shall not be liable to Lessee for any alleged deficiency in title to the mineral
estate, nor shall Lessee become entitled to any refund for any rentals, bonuses, or royalties paid
under this Lease in the event of title failure.
	 
	 	1.4	 	Reversion of Leased Premises to United States. Pursuant to the May 8, 1998 “Agreement to
Exchange Utah School Trust Lands Between the State of Utah and the United States of
America”,
as ratified by Pub. L. No. 105-335, 112 Stat. 3139, ownership of the Leased Premises
shall revert
to the United States when SITLA has received $26,102,210 in rental and royalty income
plus
accrued interest, calculated pursuant to Section I.D.4 of that certain Memorandum of
Understanding dated January 5, 1999 between the Utah School & Institutional Trust
Lands




 









 











ML 51191-OBA-COAL





	 	 	 	Administration, the U.S. Department of the Interior, and the USDA-Forest Service.
Upon reversion the United States shall succeed the State of Utah as Lessor.






	2.	 	RESERVATIONS TO LESSOR. Subject to the exclusive rights and privileges granted to
Lessee under this Lease, and further provided that Lessor shall refrain from taking actions
with respect to the Leased Premises that may unreasonably interfere with Lessee’s
operations, Lessor hereby excepts and reserves from the operation of this Lease the following
rights and privileges (to the extent that Lessor has the right to grant such rights and
privileges):






	 	2.1	 	Rights-of-Way and Easements. Lessor reserves the right, following
consultation with the Lessee,
to establish rights-of-way and easements upon, through or over the Leased Premises,
under terms
and conditions that will not unreasonably interfere with operations under this Lease,
for roads,
pipelines, electric transmission lines, transportation and utility corridors, mineral
access, and any
other purpose deemed reasonably necessary by Lessor.
	 
	 	2.2	 	Other Mineral Leases. Lessor reserves the right to enter into mineral
leases and agreements with
third parties covering minerals other than coal, under terms and conditions that will
not
unreasonably interfere with operations under this Lease in accordance with Lessor’s
regulations,
if any, governing multiple mineral development.
	 
	 	2.3	 	Use and Disposal of Surface. To the extent that Lessor owns the surface
estate of the Leased
Premises and subject to the rights granted to the Lessee pursuant to this Lease,
Lessor reserves the
right to use, lease, sell, or otherwise dispose of the surface estate or any part
thereof. Lessor shall
notify Lessee of any such sale, lease, or other disposition of the surface estate.
	 
	 	2.4	 	Previously Authorized Improvements. If authorized improvements have been
placed upon the
Leased Premises by a third party prior to the commencement of this Lease, Lessee shall
allow the
owner of such improvements to remove them within ninety (90) days after the Lease term
commences. Nothing in this paragraph shall authorize Lessee to remove surface
improvements
where Lessor does not own the surface estate.
	 
	 	2.5	 	Rights Not Expressly Granted. Lessor further reserves all rights and
privileges of every kind and
nature, except as specifically granted in this Lease.






	3.	 	TERM OF LEASE;  READJUSTMENT.






	 	3.1	 	Primary Term. This Lease is granted for a
“primary term” of ten (10)
years commencing on the Effective Date and for a “secondary term” of an additional ten
(10) years, subject to Lessee’s compliance with the requirements of paragraph 3.3,
Diligent Operations; Minimum Royalty.




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	 	3.2	 	Extension Beyond Secondary Term. Subject to Lessee’s compliance with the other
provisions of
this Lease, this Lease shall remain in effect beyond the secondary term and for as long thereafter
as coal is produced in commercial quantities from the Leased Premises, or from lands constituting
either (i) a logical mining unit approved by the Bureau of Land Management containing the
Leased Premises, or (ii) a mining unit, in which the recoverable coal reserves can be developed in
an efficient, economical and orderly manner as a unit with due regard to the conservation of
recoverable coal reserves. The second type of mining unit requires a determination by the Lessor
that the criteria set forth in item (ii) have been satisfied. The satisfaction of either (i) or (ii) above
shall mean that the Lease is contained within an “approved mining unit”. For the purposes of this
Lease, production of coal in commercial quantities shall mean production during each lease year
of at least one per cent (1%) of the recoverable coal reserves within the Leased Premises or within
lands constituting an approved mining unit which includes the Leased Premises, as such
recoverable coal reserves are determined by Lessor after consultation with Lessee, subject to
adjustment from time to time based upon reasonable justification from the Lessee.
	 
	 	3.3	 	Diligent Operations; Minimum Royalty. In the absence of actual production in commercial
quantities as set forth in paragraph 3.2, Extension Beyond Secondary Term, this Lease shall
remain in effect beyond the primary term only if the Lessee is engaged in diligent
operations,
exploration, research, or development activity (which development activity shall include,
but not
be limited to, pursuit of required permits and approvals) which in Lessor’s reasonable
discretion
is calculated to advance development or production of coal from the Leased Premises or lands
constituting an approved mining unit which includes the Leased Premises, and Lessee pays an
annual minimum royalty in advance on or before the anniversary date of the Effective Date.
The
minimum royalty shall be calculated by determining the production royalty that would be
payable
upon production of one per cent (1%) of the recoverable coal reserves within the Leased
Premises, as such recoverable coal reserves are determined by Lessor after consultation with
Lessee, subject to adjustment from time to time based upon reasonable justification from the
Lessee. The unit value of the recoverable coal reserves for purposes of determining the
minimum
royalty shall be determined by Lessor using the methodology set forth in 43 C.F.R.
3483.4 (c)( 1 )-
(3) (1998). Minimum royalties paid by Lessee pursuant to this paragraph may be credited
against
production royalties accruing during the term of this Lease.
	 
	 	3.4	 	Expiration; Cessation of Production. This Lease may not be extended pursuant to
paragraph 3.3,
Diligent Operations; Minimum Royalty, beyond the end of the twentieth year after the Effective
Date except by the actual production of coal in commercial quantities from the Leased Premises
or from lands constituting an approved mining unit which includes the Leased Premises. After
expiration of the secondary term, this Lease will expire of its own terms, without the necessity of
any notice or action by Lessor, if Lessee ceases production of coal in commercial quantities for
an entire lease year, unless the Lease is suspended pursuant to paragraph 16.3, Suspension.
	 
	 	3.5	 	Readjustment. At the end of the primary term and at the end of each period of ten (10) years
thereafter, Lessor may readjust the terms and conditions of this Lease (including without




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ML 51191-OBA-COAL





	 	 	 	limitation rental rates, minimum royalties, royalty rates and valuation methods, and
provisions concerning reclamation). In the event that the State as Lessor makes such
readjustment prior to reversion, it shall not apply terms and conditions more
economically disadvantageous than corresponding federal regulations and lease terms
unless, based upon written findings after consultation with Lessee, it determines
that the individual term or condition imposing the economic disadvantage is necessary
to serve the best interests of the beneficiaries of the subject trust lands. If
within thirty (30) days after submission of the readjusted lease terms to the Lessee,
the Lessee determines that any or all of the proposed readjusted terms and conditions
are unacceptable, then Lessee shall so notify Lessor in writing and the parties shall
attempt to resolve the objectionable term or condition. If the parties are unable to
resolve the matter and agree upon the readjusted terms and conditions submitted by
Lessor at the end of such ten (10) year period, Lessee shall forfeit any right to the
continued extension of this lease, and the lease shall automatically terminate,
provided that nothing herein shall be deemed to preclude Lessee from appealing any
readjustment by Lessor pursuant to applicable law
	 
	 	3.6	 	Relinquishment. Lessee may relinquish all or portions of this Lease at
any time by filing a written notice of relinquishment with Lessor. Lessor may
disapprove any relinquishment if Lessee has failed to pay all rentals, royalties, and
other amounts due and owing to the Lessor, if the lease is otherwise not in good
standing, or if relinquishment would in Lessor’s reasonable determination cause waste
of economically recoverable coal. Lessee may not relinquish parcels smaller than a
quarter-quarter section or surveyed lot. Upon approval, relinquishment shall relieve
the Lessee of all future rental obligations as to the relinquished lands effective as
of the date of filing of the relinquishment, but shall not relieve Lessee from other
obligations to the extent provided in paragraph 15.2, Effect of Termination.






	4.	 	BONUS BID. Lessee agrees to pay Lessor, an initial bonus bid in the sum of
$21,485,798.50 as partial
consideration for Lessor’s issuance of this Lease, payable in five equal annual installments
of
$4,297,159.70. The first annual installment shall be due with Lessee’s application to lease
and the unpaid
balance of the bonus bid shall be paid in equal installments on or before the next four
successive
anniversaries of the Effective Date of the lease. The bonus bid shall not bear interest;
provided, however,
that if this Lease is relinquished or otherwise terminated prior to the payment in full of
the bonus bid, or if
Lessee fails to make any bonus bid payment when due, the entire unpaid balance of the bonus
bid shall
immediately become due without regard to such relinquishment or termination, and such balance
shall
thereafter bear interest as provided in paragraph 16.2, Interest. Lessor may require Lessee
to submit a
bond or other sufficient surety to secure Lessee’s obligation to pay the unpaid balance of
the bonus bid.
The initial bonus bid may not be credited against any other bonus payments, annual rentals or
royalties
accruing under the lease.
	 
	5.	 	RENTALS. Lessee agrees to pay Lessor an annual rental of three dollars ($3.00) for
each acre and fractional part thereof within the Leased Premises. Lessee shall promptly pay annual rentals
each year in
advance on or before the anniversary date of the Effective Date. Lessee may not credit
rentals against




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ML 51191-OBA-COAL





	 	 	production royalties or against minimum royalties payable pursuant to paragraph 3.3, Diligent
Operations; Minimum Royalty.






	6.	 	ROYALTIES.






	 	6.1	 	Production Royalties. Lessee shall pay Lessor a production royalty of
eight per cent (8%) of the
value of all coal severed and removed from the Leased Premises. For all coal sold
pursuant to an
arm’s-length contract, value shall be determined on the basis of the gross proceeds
received by
Lessee from the sale or disposition of such coal. Gross proceeds shall include all
bonuses,
allowances or other consideration of any nature received by Lessee for coal actually
produced.
For any coal that is sold or disposed of other than by an arms-length contract, or for
coal that is
used within the mine permit area containing the Leased Premises for generation of
electricity or
for gasification, liquefaction, in situ processing, or other method of extracting
energy from such
coal, the value of such coal shall be determined by Lessor with reference to (in order
of priority):
(i) comparable arms-length contracts or other dispositions of like-quality coal
produced in the
same coal field; (ii) prices reported for that coal to a public utility commission;
(iii) prices
reported to other governmental agencies; or (iv) other relevant information.
	 
	 	6.2	 	Allowable Deductions. It is expressly understood and agreed that none of
Lessee’s mining or
production costs, including but not limited to costs for materials, labor, overhead,
distribution,
transportation within the mine permit area prior to the point of sale, loading,
crushing, sizing,
screening, or general and administrative activities, may be deducted in computing
Lessor’s
royalty. All such costs shall be entirely borne by Lessee and are anticipated by the
rate of royalty
set forth in this Lease. In the event that the point of sale for coal produced from
this Lease is
located outside the mine permit area boundary, Lessee may deduct the reasonable,
actual costs of
transportation of such coal from the mine permit area boundary to the point of sale
from gross
proceeds in computing Lessor’s royalty; provided, however, that transportation
deductions for
coal transported by Lessee, Lessee’s affiliates, or by non-arm’s-length contract are
subject to
review and modification by Lessor. Lessee shall be allowed to deduct its actual,
reasonable
washing and treatment costs from gross proceeds in computing Lessor’s royalty;
provided,
however, that, upon Lessor’s request Lessee shall provide to Lessor appropriate
justification to
demonstrate that Lessee’s costs are reasonable.
	 
	 	6.3	 	Reference to Federal Regulations. It is the intent of Lessor and Lessee
that the calculation of the
value of coal for royalty purposes be consistent with federal coal regulations
governing the
valuation of coal, except where this Lease expressly provides otherwise. In no event
shall the
value of coal used for calculation of royalties under this Lease be less than the
value which would
be obtained were federal royalty valuation regulations applied.
	 
	 	6.4	 	Royalty Payment. For all coal severed and removed from the Leased Premises that is
used, sold, transported or otherwise disposed of during a particular month, Lessee shall pay
royalties to




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ML 51191-OBA-COAL





	 	 	 	Lessor on or before the end of the next succeeding month. Royalty payments shall be
accompanied by a verified statement, in a form approved by Lessor, stating the amount
of coal sold or otherwise disposed of, the gross proceeds accruing to Lessee, the
calculation of allowable deductions, and any other information reasonably required by
Lessor to verify production and disposition of the coal or coal products. In the event
that Lessee uses or disposes of coal pursuant to a non-arm’s-length contract, or uses
coal for generation of electricity or for gasification, liquefaction, in situ
processing, or other method of extracting energy from such coal, Lessee shall notify
Lessor of such use or disposal on or before the end of the next succeeding month
following such use or disposal, and shall pay royalties upon Lessee’s good faith
estimate of the value of such coal, subject to Lessor’s right to determine the value
of such coal pursuant to paragraph 6.1, Production Royalties. After reversion of the
Leased Premises to the United States pursuant to paragraph 1.4, Reversion of Leased
Premises to United States, Lessee shall report production and royalties monthly in
accordance with applicable federal regulations.
	 
	 	6.5	 	Royalty Valuation After Reversion. After reversion of the Leased Premises
to the United States
pursuant to paragraph 1.4, Reversion of the Leased Premises to the United States, the
Secretary
of the Interior may establish the reasonable value of post-reversion production for
royalty
purposes in the same manner and by the same methods as the United States establishes
value
under coal leases issued by the United States.
	 
	 	6.6	 	Suspension, Waiver or Reduction of Rents or Royalties. Lessor, to the
extent not prohibited by
applicable law, is authorized to waive, suspend, or reduce the rental or minimum
royalty, or
reduce the royalty applicable with respect to the entire Lease, whenever in Lessor’s
judgment it is
necessary to do so in order to promote development, or whenever in the Lessor’s
judgment the
Lease cannot be successfully operated under the terms provided herein.






	7.	 	RECORDKEEPING; INSPECTION; AUDITS.






	 	7.1	 	Registered Agent; Records. Lessee shall maintain a registered agent
within the State of Utah to whom any and all notices may be sent by Lessor and upon whom process may be served.
Lessee
shall also maintain an office within the State of Utah containing originals or copies
of all maps,
engineering data, permitting materials, books, records or contracts (whether such
documents are
in paper or electronic form) generated by Lessee that pertain in any way to coal
production, output
and valuation; mine operations; coal sales and dispositions; transportation costs; and
calculation
of royalties from the Leased Premises. Lessee shall maintain such documents for at
least seven
years after the date of the coal production to which the documents pertain.
	 
	 	7.2	 	Inspection. Lessor’s employees and authorized agents at Lessor’s sole
risk and expense shall
have the right to enter the Leased Premises to check scales as to their accuracy, and
to go on any
part of the Leased Premises to examine, inspect, survey and take measurements for the
purposes
of verifying production amounts and proper lease operations. Upon reasonable notice to
Lessee,






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ML 51191-OBA-COAL





Lessor’s employees and authorized agents shall further have the right to audit,
examine and copy (at Lessor’s expense) all documents described in paragraph 7.1,
Registered Agent; Records, whether such documents are located at the mine site or
elsewhere. Lessee shall furnish all conveniences necessary for said inspection,
survey, or examination; provided, however, that such inspections shall be conducted
in a manner that is in conformance with all applicable mine safety regulations and
does not unreasonably interfere with Lessee’s operations.




	 	7.3	 	Federal Inspections. Lessee agrees that, prior to reversion of the
Leased Premises to the United
States, employees and authorized agents of the Bureau of Land Management (“BLM”) may
conduct underground inspections of the Leased Premises, both independently and in
cooperation
with the State in its capacity as Lessor. After reversion, employees and authorized
agents of BLM
may conduct underground inspections of the Leased Premises under the authority of
applicable
federal laws and regulations.






	 	7.4	 	Geologic Information. In the event Lessee conducts core-drilling
operations or other geologic
evaluation of the Leased Premises, Lessor may inspect core samples, evaluations thereof, and
proprietary geologic information concerning the Leased Premises.
	 
	 	7.5	 	Confidentiality. Any and all documents and geologic data obtained by Lessor through the
exercise of its rights as set forth in paragraphs 7.2, Inspection., and 7.4, Geologic
Information.,
may be declared confidential information by Lessee, in which event Lessor and its
authorized
agents shall maintain such documents and geologic data as protected records under the
Utah
Governmental Records Access Management Act or other applicable privacy statute
(including
applicable federal law after reversion), and shall not disclose the same to any third
party without
the written consent of Lessee, the order of a court of competent jurisdiction
requiring such
disclosure, or upon termination of this Lease. Following reversion of the Leased
Premises to the
United States, the United States as Lessor shall treat such information as
confidential to the extent
permitted by federal law.






	8.	 	USE OF SURFACE ESTATE.






	 	8.1	 	Lessor-Owned Surface. If Lessor owns the surface estate of all or some
portion of the Leased Premises, by issuance of this Lease the Lessee has been granted the right to make use of such
lands to the extent reasonably necessary and expedient for the economic operation of the
leasehold. Lessee’s right to surface use of Lessor-owned surface estate shall include the right to
subside the surface. Such surface uses shall be exercised subject to the rights reserved to Lessor
as provided in paragraph 2, RESERVATIONS TO LESSOR, and without unreasonable
interference with the rights of any prior or subsequent lessee of Lessor.
	 
	 	8.2	 	Split-Estate Lands. If Lessor does not own the surface estate of any portion of the Leased
Premises, Lessee’s access to and use of the surface of such lands shall be determined
by





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ML 51191-OBA-COAL





applicable law governing mineral development on split-estate lands, including without
limitation applicable statutes governing access by mineral owners to split estate
lands, and reclamation and bonding requirements. Lessee shall indemnify, defend and
hold Lessor harmless for all claims, causes of action, damages, costs and expenses
(including attorney’s fees and costs) arising out of or related to damage caused by
Lessee’s operations to surface lands or improvements owned by third parties.




	9.	 	APPLICABLE LAWS AND REGULATIONS; HAZARDOUS SUBSTANCES






	 	9.1	 	Trust Lands Statute and Regulations. This Lease is issued pursuant to the
provisions of Title 53C,
Utah Code Annotated, 1953, as amended, and Lessee is subject to and shall comply with
all
current and future rules and regulations adopted by the School and Institutional Trust
Lands
Administration and its successor agencies until reversion of the Leased Premises to the
United
States pursuant to paragraph 1.4, Reversion of Leased Premises to United States.
	 
	 	9.2	 	Regulation Upon Reversion. After reversion of the Leased Premises to the
United States pursuant
to paragraph 1.4, Reversion of Leased Premises to United States, Lessee will be subject
to the
requirements of the Mineral Leasing Act, 30 U.S.C. 181 et seq. (the “MLA”), and to the
royalty,
operating, and administrative procedure rules and regulations of the Department of
Interior, the
Minerals Management Service, and the Bureau of Land Management, and to any other
federal
laws and regulations generally applicable to coal leases issued under the MLA to the
same extent
as if the Lease were a federally-issued lease. Notwithstanding the foregoing, to the
extent that the
State, as Lessor, approves a significant operational decision prior to reversion, and
Lessee makes
a substantial economic commitment based upon that approval, Lessee may continue to rely
upon
that approval after reversion; provided, however, that no such approval shall act to
limit the
liability of Lessee, if any, under CERCLA, RCRA, the Clean Water Act, 33 U.S.C. 1251 et
seq
or other applicable environmental law. Upon reversion, nothing in this paragraph
shall be
deemed to require that the Leased Premises be included in the calculation of acreage
held by
Lessee for the purposes of the acreage limitation provisions of the MLA and associated
regulations.
	 
	 	9.3	 	Other Applicable Laws and Regulations. Lessee shall comply with all
applicable federal, state
and local statutes, regulations, and ordinances, including without limitation the Utah
Coal Mining
and Reclamation Act, applicable statutes and regulations relating to mine safety and
health, and
applicable statutes, regulations and ordinances relating to public health, pollution
control,
management of hazardous substances and environmental protection.
	 
	 	9.4	 	Hazardous Substances. Lessee [or other occupant pursuant to any agreement
authorizing mining]
shall not keep on or about the premises any hazardous substances, as defined under 42
U.S.C.
9601(14) or any other Federal environmental law, any regulated substance contained in
or
released from any underground storage tank, as defined by the Resource Conservation and
Recovery Act, 42 U.S.C. 6991, et seq, or any substances defined and regulated as
“hazardous” by





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ML 51191-OBA-COAL





applicable State law, (hereinafter, for the purposes of this Lease, collectively referred to
as “Hazardous Substances”) unless such substances are reasonably necessary in Lessee’s
mining operations, and the use of such substances or tanks is noted and approved in the
Lessee’s mining plan, and unless Lessee fully complies with all Federal, State and local
laws, regulations, statutes, and ordinances, now in existence or as subsequently enacted or
amended, governing Hazardous Substances. Lessee shall immediately notify Lessor, the Bureau
of Land Management, the surface management agency, and any other Federal, State and local
agency with jurisdiction over the Leased Premises, or contamination thereon, of (i) all
reportable spills or releases of any Hazardous Substance affecting the Leased Premises, (ii)
all failures to comply with any applicable Federal, state or local law, regulation or
ordinance governing Hazardous Substances, as now enacted or as subsequently enacted or
amended, (iii) all inspections of the Leased Premises by, or any correspondence, order,
citations, or notifications from any regulatory entity concerning Hazardous Substances
affecting the Leased Premises, (iv) all regulatory orders or fines or all response or
interim cleanup actions taken by or proposed to be taken by any government entity or private
Party concerning the Leased Premises.




	 	9.5	 	Hazardous Substances Indemnity. Lessee [or other occupant pursuant to any agreement
authorizing mining] shall indemnify, defend, and hold harmless Lessor and the United States (as
successor Lessor or owner pursuant to reversion or as owner of surface estate) its agencies,
employees, officers, and agents with respect to any and all damages, costs, liabilities, fees
(including attorneys’ fees and costs), penalties (civil and criminal), and cleanup costs arising out
of or in any way related to Lessee’s use, disposal, transportation, generation, sale or location
upon or affecting the Leased Premises of Hazardous Substances, as defined in paragraph 9.4 of
this Lease. This indemnity shall extend to the actions of Lessee’s employees, agents assigns,
sublessees, contractors, subcontractors, licensees and invitees. Lessee shall further indemnify,
defend and hold harmless Lessor and the United States from any and all damages, costs,
liabilities, fees (including attorneys’ fees and costs), penalties (civil and criminal), and cleanup
costs arising out of or in any way related to any breach of the provisions of this Lease concerning
Hazardous Substances. This indemnity is in addition to, and in no way limits, the general
indemnity contained in paragraph 16.1 of this Lease.
	 
	 	9.6	 	Waste Certification. The Lessee shall provide upon abandonment, transfer of operation,
assignment of rights, sealing-off of a mined area, and prior to lease relinquishment,
certification
to the Lessor and the Bureau of Land Management that, based upon a complete search of all
the
operator’s records for the Lease, and upon its knowledge of past operations, there have been
no
reportable quantities of hazardous substances as defined in 40 C.F.R. 302.4, or used oil as
defined
in Utah Administrative Code R315-15, discharged (as defined at 33 U.S.C. 1321(a)(2)),
deposited
or released within the Leased Premises, either on the surface or underground, and that all
remedial
actions necessary have been taken to protect human health and the environment with respect
to
such substances. Lessee shall additionally provide to Lessor and the Bureau of Land
Management
a complete list of all hazardous substances, hazardous materials, and their respective
Chemical





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ML 51191-OBA-COAL





Abstracts Service Registry Numbers, and oil and petroleum products used or stored on,
or delivered to, the Leased Premises. Such disclosure will be in addition to any
other disclosure required by law or agreement.




	10.	 	BONDING.






	 	10.1	 	Lease Bond Required. At the time this lease is executed, Lessee shall
execute and file with the
Lessor a good and sufficient bond or other financial guarantee acceptable to Lessor in
order to:
(a) guarantee Lessee’s performance of all covenants and obligations under this Lease,
including
Lessee’s obligation to pay royalties; and (b) ensure compensation for damage, if any, to the
surface estate and any surface improvements. The Lease Bond shall meet all federal mineral lease
bond requirements as described in 43 C.F.R. Subpart 3474. The Lease Bond shall further provide
that upon forfeiture after reversion of the Leased Premises to the United States, the Lease Bond
shall be payable to the Secretary of the Interior.
	 
	 	10.2	 	Reclamation Bonding. The bond filed with the Utah Division of Oil, Gas and Mining
(“UDOGM”) in connection with the issuance of a mine permit which includes the Leased
Premises shall be deemed to satisfy Lessor’s bonding requirements with respect to
Lessee’s
reclamation obligations under this Lease; provided, however, upon notice to Lessee and
a public
hearing with respect to the basis for its decision, the Lessor may, in its reasonable
discretion,
determine that the bond filed with UDOGM is insufficient to protect Lessor’s
interests. In such
an event the Lessor shall enter written findings as to the basis for its calculation
of the perceived
insufficiency and enter an order establishing the amount of additional bonding
required. Lessee
shall file any required additional bond with Lessor within thirty (30) days after
demand by Lessor.
Lessor may increase or decrease the amount of any additional bond from time to time in
accordance with the same procedure. Lessee may combine any additional bond required
under
this paragraph with the original lease bond filed under Paragraph 10.1, Lease Bond
Required.
	 
	 	10.3	 	Release of Additional Bond. Any additional bond required by Lessor
pursuant to Paragraph 10.2,
Reclamation Bonding, may be released by Lessor at any time and shall be released no
later than
the time of final bond release by UDOGM with respect to the Leased Premises.






	11.	 	WATER RIGHTS.






	 	11.1	 	Water Rights in Name of Lessor. If Lessee files to appropriate water
for coal mining operations on the Leased Premises, the filing for such water right
shall be made by Lessee in the name of Lessor at no cost to Lessor, and such water
right shall become an appurtenance to the Leased Premises, subject to Lessee’s right to
use such water right at no cost during the term of this Lease.





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ML 51191-OBA-COAL





	 	11.2	 	Option to Purchase. If Lessee purchases or acquires an existing water
right for coal mining operations on the Leased Premises, Lessor shall have the option
to acquire that portion of such water right as was used on the Leased Premises upon
expiration or termination of this Lease. The option price for such water right shall be
the fair market value of the water right as of the date of expiration or termination of
this Lease. Upon expiration or termination of this Lease, Lessee shall notify Lessor in
writing of all water rights purchased or acquired by Lessee for coal mining operations
on the Leased Premises and its estimate of the fair market value of such water right.
Lessor shall then have forty-five (45) days to exercise its option to acquire the water
by payment to Lessee of the estimated fair market value. If Lessor disagrees with
Lessee’s estimate of fair market value, Lessor shall notify Lessee of its disagreement
within the 45 day option exercise period. The fair market value of the water right
shall then be appraised by a single appraiser mutually acceptable to both parties,
which appraisal shall be final and not subject to review or appeal. If the parties
cannot agree upon the choice of an appraiser, the fair market value of the water right
shall be determined by a court of competent jurisdiction. Conveyance of any water right
pursuant to this paragraph shall be by quit claim deed.
	 
	 	11.3	 	Reversion. Upon reversion of the Leased Premises to the United
States, the United States shall succeed to the interests of the State of Utah pursuant
to this article 11.






	12.	 	ASSIGNMENT OR SUBLEASE; OVERRIDING ROYALTIES.






	 	12.1	 	Consent Required. Lessee shall not assign or sublease this Lease in whole
or in part, or otherwise
assign or convey any rights or privileges granted by this Lease, including, without
limitation,
creation of overriding royalties or production payments, without the prior written
consent of
Lessor. Any assignment, sublease or other conveyance made without prior written
consent of
Lessor shall have no legal effect unless and until approved in writing by Lessor.
Exercise of any
right with respect to the Leased Premises in violation of this provision shall
constitute a default
under this Lease.
	 
	 	12.2	 	Binding Effect. All of the terms and provisions of this Lease shall be
binding upon and shall
inure to the benefit of their respective successors, assigns, and sublessees.
	 
	 	12.3	 	Limitation on Overriding Royalties. Lessor reserves the right to
disapprove the creation of an
overriding royalty or production payment that would, in Lessor’s reasonable
discretion, constitute
an unreasonable economic burden upon operation of the Lease. In exercising its
discretion to
disapprove the creation of an overriding royalty, Lessor shall consult with Lessee
and any third
parties involved and shall prepare findings to evidence the basis of its decision.
Cumulative
overriding royalties of 2% or less shall be deemed presumptively reasonable unless
special
circumstances are shown by Lessor to exist.





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ML 51191-OBA-COAL





	13.	 	OPERATIONS.






	 	13.1	 	Permitting. Before Lessee commences exploration, drilling, or mining
operations on the Leased
Premises, it shall have obtained such permits and posted such bonds as may be required
under
applicable provisions of the Utah Coal Mining and Reclamation Act, the Surface Mining
Control
and Reclamation Act, and associated regulations, together with applicable regulations
of the
surface management agency. Lessee shall maintain any required permits in place for the
duration
of mining operations and reclamation. Upon request, Lessee shall provide Lessor with a
copy of
all regulatory filings relating to permitting matters.
	 
	 	13.2	 	Plan of Operations. Prior to the commencement of any underground mining
operations on the
Leased Premises, Lessee shall obtain Lessor’s approval of a plan of operations for the
Leased
Premises. The plan of operations shall contain all information required to be
contained in a
federal Resource Recovery and Protection Plan, as described in 43
C.F.R. •
3482. l (b) and (c)
(1998). Lessor may modify the proposed plan of operations as is needed to insure that
there is no
waste of economically recoverable coal reserves contained on the Leased Premises. In
this
context “waste” shall mean the inefficient utilization of, or the excessive or improper
loss of an
otherwise economically recoverable coal resource. Lessor shall notify Lessee in writing
of its
approval or modifications of the plan of operations. The plan of operations submitted
by Lessee
shall be deemed approved by Lessor if Lessor has not otherwise notified Lessee within
sixty (60)
days of filing.
	 
	 	13.3	 	Plan of Operations – Modification. In the event that material changes are
required to the plan of
operations during the course of mining, Lessee shall submit a modification of the plan
of
operations to the Lessor. Routine adjustments to the plan of operations based upon
geologic
circumstances encountered during day-to-day mining operations do not require the
submission of
a modification. If the proposed changes require emergency action by Lessor, then the
Lessee shall
so notify the Lessor at the time of submission of the modification and the parties
shall use their
best efforts to meet the Lessee’s time schedule regarding implementation of the
changes.
Non-emergency modifications will be reviewed promptly by Lessor to insure that there is
no
waste of economically recoverable coal reserves pursuant to the plan of operations, as
modified,
and Lessor shall notify lessee in writing of its approval or modification of the
proposed
modification. Prior to reversion, modifications shall be deemed approved by Lessor if
Lessor has
not otherwise notified Lessee within thirty (30) days of filing. After reversion,
modifications
shall be approved in accordance with applicable federal regulations.
	 
	 	13.4	 	Mine Maps. Lessee shall maintain at the mine office clear, accurate, and
detailed maps of all
actual and planned operations prepared and maintained in the manner prescribed by 43
C.F.R.
3482.3 (1998). Lessee shall provide copies of such maps to Lessor upon request.
	 
	 	13.5	 	Good Mining Practices. Lessee shall conduct exploration and mining
operations on the Leased
Premises in accordance with standard industry operating practices, and shall avoid
waste of





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ML 51191-OBA-COAL





economically recoverable coal. Lessee shall comply with all regulations and
directives of the Mine Safety and Health Administration or successor agencies for the
health and safety of employees and workers. Lessee shall further comply with the
performance standards for underground resource recovery set forth at 43 C.F.R.
3484.1(c) (1998); provided, however, that Lessor may waive such standards from time
to time in its reasonable discretion, upon request by Lessee. Coal shall be mined
from this Lease by underground methods only.




	 	13.6	 	Mining Units. Lessor may approve the inclusion of the Leased Premises
in a mining unit with federal, private or other non-state lands upon terms and
conditions that it deems necessary to protect the interests of the Lessor, including
without limitation segregation of production, accounting for commingled coal
production, and minimum production requirements or minimum royalties for the Leased
Premises.






	14.	 	EQUIPMENT; RESTORATION.






	 	14.1	 	Equipment. Upon termination of this Lease, Lessee shall remove, and
shall have the right to
remove, all improvements, equipment, stockpiles, and dumps from the Leased Premises
within
six (6) months; provided, however, that Lessor may, at Lessor’s sole risk and expense,
and
subject to Lessee’s compliance with requirements imposed by UDOGM and MSHA, require
Lessee to retain in place underground timbering supports, shaft linings, rails, and
other
installations reasonably necessary for future mining of the Leased Premises. All
improvements
and equipment remaining on the Leased Premises after six (6) months may be deemed
forfeited to
Lessor upon written notice of such forfeiture to Lessee. Lessee may abandon
underground
improvements, equipment of any type, stockpiles and dumps in place if such abandonment
is in
compliance with applicable law, and further provided that Lessee provides Lessor with
financial
or other assurances sufficient in Lessor’s reasonable discretion to protect Lessor
from future
environmental liability with respect to such abandonment or any associated hazardous
waste spills
or releases. Lessee shall identify and locate on the mine map the location of all
equipment
abandoned on the Lease Premises.
	 
	 	14.2	 	Restoration and Reclamation. Upon termination of this Lease, Lessee
shall reclaim the Leased
Premises in accordance with the requirements of applicable law, including mine permits
and
reclamation plans on file with UDOGM. Lessee shall further abate any hazardous
condition on or
associated with the Leased Premises. Lessee and representatives of all governmental
agencies
having jurisdiction shall have the right to re-enter the Leased Premises for
reclamation purposes
for a reasonable period after termination of the Lease.






	15.	 	DEFAULT






	 	15.1	 	Notice of Default; Termination. Upon Lessee’s violation of or
failure to comply with any of the terms, conditions or covenants set forth in this
Lease, Lessor shall notify Lessee of such default by






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ML 51191-OBA-COAL               





	 	 	 	registered or certified mail, return receipt requested, at the last address for Lessee
set forth in Lessor’s files. Lessee shall then have thirty (30) days, or such longer
period as may be granted in writing by Lessor, to either cure the default or request a
hearing pursuant to the Lessor’s administrative adjudication rules. In the event
Lessee fails to cure the default or request a hearing within the specified time
period, Lessor may cancel this Lease without further notice to or appeal by Lessee.
	 
	 	15.2	 	Effect of Termination. The termination of this Lease for any reason,
whether through expiration, cancellation or relinquishment, shall not limit the rights
of the Lessor to recover any royalties and/or damages for which Lessee may be liable,
to recover on any bond on file, or to seek injunctive relief to enjoin continuing
violations of the Lease terms. No remedy or election under this Lease shall be deemed
exclusive, but shall, wherever possible, be cumulative with all other remedies
available under this Lease, at law, or in equity. Lessee shall surrender the Leased
Premises upon termination; however, the obligations of Lessee with respect to
reclamation, indemnification and other continuing covenants imposed by this Lease
shall survive the termination.





16. MISCELLANEOUS PROVISIONS.





	16.1	 	Indemnity. Except as limited by paragraph 7.2, Inspection, Lessee shall
indemnify and hold
Lessor and the United States (as successor Lessor or owner pursuant to reversion or as
owner of
surface estate) harmless for, from and against each and every claim, demand,
liability, loss, cost,
damage and expense, including, without limitation, attorneys’ fees and court costs,
arising in any
way out of Lessee’s occupation and use of the Leased Premises, including without
limitation
claims for death, personal injury, property damage, and unpaid wages and benefits.
Lessee further
agrees to indemnify and hold Lessor harmless for, from and against all claims,
demands,
liabilities, damages and penalties arising out of any failure of Lessee to comply with
any of
Lessee’s obligations under this Lease, including without limitation attorneys’ fees
and court
costs.
	 
	16.2	 	Interest. Except as set forth in paragraph 4, BONUS BID, interest shall
accrue and be payable on
all obligations arising under this Lease at such rate as may be set from time to time
by rule
enacted by Lessor. Interest shall accrue and be payable, without necessity of demand,
from the
date each such obligation shall arise.
	 
	16.3	 	Suspension. In the event that Lessor in its reasonable discretion
determines that suspension is
necessary in the interests of conservation of the coal resource, or if Lessee has been
prevented
from performing any of its obligations or responsibilities under this Lease or from
conducting
mining operations by labor strikes, fires, floods, explosions, riots, any unusual
mining casualties
or conditions, Acts of God, government restrictions or orders, severe weather
conditions, or other
extraordinary events beyond its control, then the time for performance of this Lease
by Lessee





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ML 51191-OBA-COAL               





	 	 	shall be suspended during the continuance of such acts which prevent performance, excepting
any payments due and owing to Lessor.
	 
	16.4	 	Consent to Suit; Jurisdiction. Prior to reversion of the Leased Premises to the
United States: (i)
this Lease shall be governed by the laws of the State of Utah; (ii) Lessor and Lessee agree
that all
disputes arising out of this Lease shall be litigated only in the Third Judicial District
Court for
Salt Lake County, Utah; (iii) Lessee consents to the jurisdiction of such court; and (iv)
Lessee
shall not bring any action against Lessor without exhaustion of available administrative
remedies
and compliance with applicable requirements of the Utah Governmental Immunity Act.
Notwithstanding the foregoing, after reversion of the Leased Premises to the United States,
any
litigation between the United States as Lessor and the Lessee shall be governed by the laws
of the
United States otherwise applicable to federal coal leases.
	 
	16.5	 	No Waiver. No waiver of the breach of any provision of this Lease shall be construed
as a waiver
of any preceding or succeeding breach of the same or any other provision of this Lease, nor
shall
the acceptance of rentals or royalties by Lessor during any period of time in which Lessee is
in
default be deemed to be a waiver of such default.
	 
	16.6	 	Severability. The invalidity of any provision of this Lease, as determined by a court
of competent
jurisdiction, shall in no way affect the validity of any other provision hereof.
	 
	16.7	 	Entire Lease. This Lease, together with any attached stipulations, sets forth the
entire agreement
between Lessor and Lessee with respect to the subject matter of this Lease. No subsequent
alteration or amendment to this Lease shall be binding upon Lessor and Lessee unless in
writing
and signed by each of them.





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ML 51191-OBA-COAL               




     IN WITNESS WHEREOF, the parties have executed this Lease as of the date hereinabove first
written.



	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	THE STATE OF UTAH, acting by and through	 	 
	 

	 	 	 	 	 	the SCHOOL AND INSTITUTIONAL TRUST	 	 
	APPROVED AS TO FORM:	 	 	 	LANDS ADMINISTRATION (“LESSOR”)	 	 
	MARK L. SHURTLEFF	 	 	 	 	 	 
	ATTORNEY GENERAL	 	 	 	THOMAS B. FADDIES	 	 
	 

	 	 	 	 	 	DIRECTOR/MINERALS	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ ILLEGIBLE
 

	 	 
	 	/s/ Thomas B. Faddies
 

	 	 
	Date:

	 	1/18/08	 	 	 	 	 	 
	 

	 	 	 	 	 	School & Institutional Trust Lands Administration	 	 
	 

	 	 	 	 	 	LESSOR	 	 






	 	 	 	 	 	 	 
	 	 	ARK LAND COMPANY (“LESSEE”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ ILLEGIBLE
 

	 	 
	 

	 	Its:
	 	President	 	 






- 17 -









 





ML 51191-OBA-COAL               




	 	 	 	 	 	 	 
	STATE OF UTAH

	 	 	)	 	 	 
	 

	 	 	:	 	 	ss.
	COUNTY OF SALT LAKE

	 	 	)	 	 	 






     On the 18 day of January,  2008, personally appeared
before me
Thomas B. Faddies who being by me duly sworn did say that he is
Assistant Director  of the School and
Institutional Trust Lands Administration of the State of Utah and the signer of the above
instrument, who duly acknowledged that he executed the same.


Given
under my hand and seal this
18th day of January 2008.









	 	 	 	 	 	 	 
	 

	 	 	 	/s/ Alice K. Kearney
 

	 	 
	 

	 	 	 	Notary Public	 	 
	 

	 	 	 	Residing at:  
	 	 
	 
	My
commission expires: 5/25/2010

	 	 	 		 	 






	 	 	 	 	 	 	 
	STATE
OF MISSOURI

	 	 	)	 	 	 
	 

	 	 	:	 	 	ss.
	COUNTY
OF St. LOUIS

	 	 	)	 	 	 






     On the 21st day of January, 2008, personally appeared
before me
Steven E. McCordy, who being duly sworn did say that he is an officer of
 Ark Land Company and that said instrument was signed in behalf
of said corporation by resolution of its Board of Directors, and said that he acknowledged
to me that said corporation executed the same.


Given
under my hand and seal this 21st day of January, 2008.




	 	 	 	 	 	 	 
	 

	 	 	 	/s/ Carla A. Veizer
 

Notary Public
	 	 
	 

	 	 	 	Residing at:
 
	 	 
	 
	 

	 	 	 		 	 






My
commission expires: 10/28/2010





- 18 -












 







After recording, return to:

Wells Parker

Dorsey & Whitney LLP

136 South Main Street, Suite 1000

Salt Lake City, UT 84101







 

 

GRANT: School









UTAH STATE LEASE FOR COAL

ML 51192-OBA




COTTONWOOD COMPETITIVE LEASING UNIT

PARCEL #2 (NON-REVERSIONARY TRACT)




     THIS COAL MINING LEASE AND AGREEMENT (the “Lease”) is entered into and executed in
duplicate as of January 18, 2008 (the “Effective Date”) by and between the STATE OF UTAH, acting
by and through the SCHOOL AND INSTITUTIONAL TRUST LANDS ADMINISTRATION, 675 East 500 South,
Suite 500, Salt Lake City, Utah 84102 (“Lessor”), and



Ark Land Company

One CityPlace Drive — Suite 300

St. Louis, MO 63141






having a
business address as shown above (“Lessee”).







WITNESSETH:

















     That the State of Utah, as Lessor, in consideration of the rentals, royalties, and other
financial consideration paid or required to be paid by Lessee, and the covenants of Lessee set
forth below, does hereby GRANT AND LEASE to Lessee the exclusive right and privilege to explore
for, drill for, mine, remove, transport, convey, cross-haul, commingle, and sell the coal
located within the boundaries of the following-described tract of land (the “Leased Premises”)
located in Emery County, State of Utah:



Township
17 South, Range 6 East, SLB&M

Section 16: E2, SW4, S2NW4, NW4NW4




Containing 600.00 acres, more or less.



Together with the right and privilege to make use of the surface (but only to the extent owned
by Lessor) and subsurface of the Leased Premises for uses incident to the mining of coal by
Lessee on the Leased Premises or on other lands under the control of Lessee or mined in
connection with operations on the Leased Premises, including, but not limited to, conveying,
storing, loading, hauling, commingling, cross-hauling, and otherwise transporting coal;
excavating; removing, stockpiling, depositing and redepositing of surface materials; and the
subsidence, mitigation, restoration and reclamation of the surface.




     This Coal Mining Lease and Agreement is subject to, and Lessee hereby agrees to and
accepts, the following covenants, terms, and conditions:



1. LEASED MINERALS.




	 	1.1	 	Coal. This mineral lease covers coal, which shall mean and include
black or brownish-black solid fossil fuels that have been subjected to the natural processes of coalification,
and which fall within the classification of coal by rank as anthracitic,
bituminous, sub-bituminous, or lignitic,





 









 





ML 51192-OBA-COAL





together with closely associated substances which include, but are not limited to
other hydrocarbon substances physically contained within the same geologic strata as
the coal. In the event that minerals other than coal are discovered during lease
operations, Lessee shall promptly notify the Lessor.




	 	1.2	 	Coalbed Methane. To the extent that Lessor owns gas, coalbed methane
or coal seam gas (collectively “coalbed methane”) within the Leased Premises, Lessee may remove, vent,
flare or capture such coalbed methane from the coal strata being mined and any overlying
formations if such removal is necessary for safety reasons in the reasonable discretion of Lessee.
If Lessee captures or uses such coalbed methane, it shall pay Lessor royalties on the value of
such coalbed methane at the prevailing state royalty rate for natural gas, unless such royalties
are expressly waived by Lessor. In the event that Lessor does not own coalbed methane within the
Leased Premises, Lessee must obtain the consent of the owner of such coalbed methane prior to
removal or capture of such gas. Except as expressly granted herein, the right to extract gas,
coalbed methane and coal seam gas is not granted by this Lease.
	 
	 	1.3	 	No Warranty of Title. Lessor claims title to the mineral estate covered
by this Lease. Lessor does not warrant title nor represent that no one will dispute the title asserted by Lessor.
It is expressly agreed that Lessor shall not be liable to Lessee for any alleged deficiency in title
to the mineral estate, nor shall Lessee become entitled to any refund for any rentals, bonuses, or
royalties paid under this Lease in the event of title failure.






	2.	 	RESERVATIONS TO LESSOR. Subject to the exclusive rights and privileges granted to
Lessee under this Lease, and further provided that Lessor shall refrain from taking actions
with respect to the Leased Premises that may unreasonably interfere with Lessee’s
operations, Lessor hereby excepts and reserves from the operation of this Lease the following
rights and privileges (to the extent that Lessor has the right to grant such rights and
privileges):






	 	2.1	 	Rights-of-Way and Easements. Lessor reserves the right, following
consultation with the Lessee, to establish rights-of-way and easements upon, through or over the Leased Premises,
under terms and conditions that will not unreasonably interfere with operations under this Lease,
for roads, pipelines, electric transmission lines, transportation and utility corridors, mineral
access, and any other purpose deemed reasonably necessary by Lessor.
	 
	 	2.2	 	Other Mineral Leases. Lessor reserves the right to enter into mineral
leases and agreements with third parties covering minerals other than coal, under terms and conditions that will
not unreasonably interfere with operations under this Lease in accordance with Lessor’s
regulations, if any, governing multiple mineral development.
	 
	 	2.3	 	Use and Disposal of Surface. To the extent that Lessor owns the surface
estate of the Leased Premises and subject to the rights granted to the Lessee pursuant to this Lease,
Lessor reserves the





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ML 51192-OBA-COAL





right to use, lease, sell, or otherwise dispose of the surface estate or any part
thereof. Lessor shall notify Lessee of any such sale, lease, or other disposition of
the surface estate.




	 	2.4	 	Previously Authorized Improvements. If authorized improvements have been
placed upon the
Leased Premises by a third party prior to the commencement of this Lease, Lessee shall
allow the
owner of such improvements to remove them within ninety (90) days after the Lease term
commences. Nothing in this paragraph shall authorize Lessee to remove surface
improvements
where Lessor does not own the surface estate.
	 
	 	2.5	 	Rights Not Expressly Granted. Lessor further reserves all rights and
privileges of every kind and
nature, except as specifically granted in this Lease.






	3.	 	TERM OF LEASE; READJUSTMENT.






	 	3.1	 	Primary Term. This Lease is granted for a “primary term” of ten (10)
years commencing on the
Effective Date and for a “secondary term” of an additional ten (10) years, subject to
Lessee’s
compliance with the requirements of paragraph 3.3, Diligent Operations; Minimum
Royalty.
	 
	 	3.2	 	Extension Beyond Secondary Term. Subject to Lessee’s compliance with the
other provisions of
this Lease, this Lease shall remain in effect beyond the secondary term and for as
long thereafter
as coal is produced in commercial quantities from the Leased Premises, or from lands
constituting
either (i) a logical mining unit approved by the Bureau of Land Management containing
the
Leased Premises, or (ii) a mining unit, in which the recoverable coal reserves can be
developed in
an efficient, economical and orderly manner as a unit with due regard to the
conservation of
recoverable coal reserves. The second type of mining unit requires a determination by
the Lessor
that the criteria set forth in item (ii) have been satisfied. The satisfaction of
either (i) or (ii) above
shall mean that the Lease is contained within an “approved mining unit”. For the
purposes of this
Lease, production of coal in commercial quantities shall mean production during each
lease year
of at least one per cent (1%) of the recoverable coal reserves within the Leased
Premises or within
lands constituting an approved mining unit which includes the Leased Premises, as such
recoverable coal reserves are determined by Lessor after consultation with Lessee,
subject to
adjustment from time to time based upon reasonable justification from the Lessee.
	 
	 	3.3	 	Diligent Operations; Minimum Royalty. In the absence of actual
production in commercial
quantities as set forth in paragraph 3.2, Extension Beyond Secondary Term, this Lease
shall
remain in effect beyond the primary term only if the Lessee is engaged in diligent
operations,
exploration, research, or development activity (which development activity shall
include, but not
be limited to, pursuit of required permits and approvals) which in Lessor’s
reasonable discretion
is calculated to advance development or production of coal from the Leased Premises or
lands
constituting an approved mining unit which includes the Leased Premises, and Lessee
pays an
annual minimum royalty in advance on or before the anniversary date of the Effective
Date. The





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ML 51192-OBA-COAL





minimum royalty shall be calculated by determining the production royalty that would
be payable upon production of one per cent (1%) of the recoverable coal reserves
within the Leased Premises, as such recoverable coal reserves are determined by
Lessor after consultation with Lessee, subject to adjustment from time to time based
upon reasonable justification from the Lessee. The unit value of the recoverable
coal reserves for purposes of determining the minimum royalty shall be determined by
Lessor using the methodology set forth in 43 C.F.R. 3483.4(c)(l)-(3) (1998).
Minimum royalties paid by Lessee pursuant to this paragraph may be credited against
production royalties accruing during the term of this Lease.




	 	3.4	 	Expiration; Cessation of Production. This Lease may not be extended
pursuant to paragraph 3.3,
Diligent Operations; Minimum Royalty, beyond the end of the twentieth year after the
Effective
Date except by the actual production of coal in commercial quantities from the Leased
Premises
or from lands constituting an approved mining unit which includes the Leased Premises.
After
expiration of the secondary term, this Lease will expire of its own terms, without the
necessity of
any notice or action by Lessor, if Lessee ceases production of coal in commercial
quantities for
an entire lease year, unless the Lease is suspended pursuant to paragraph 16.3,
Suspension.
	 
	 	3.5	 	Readjustment. At the end of the primary term and at the end of each
period of ten (10) years
thereafter, Lessor may readjust the terms and conditions of this Lease (including
without
limitation rental rates, minimum royalties, royalty rates and valuation methods, and
provisions
concerning reclamation). If within thirty (30) days after submission of the readjusted
lease terms
to the Lessee, the Lessee determines that any or all of the proposed readjusted terms
and
conditions are unacceptable, then Lessee shall so notify Lessor in writing and the
parties shall
attempt to resolve the objectionable term or condition. If the parties are unable to
resolve the
matter and agree upon the readjusted terms and conditions submitted by Lessor at the
end of such
ten (10) year period, Lessee shall forfeit any right to the continued extension of
this lease, and the
lease shall automatically terminate, provided that nothing herein shall be deemed to
preclude
Lessee from appealing any readjustment by Lessor pursuant to applicable law
	 
	 	3.6	 	Relinquishment. Lessee may relinquish all or portions of this Lease
at any time by filing a
written notice of relinquishment with Lessor. Lessor may disapprove any
relinquishment if
Lessee has failed to pay all rentals, royalties, and other amounts due and owing to
the Lessor, if
the lease is otherwise not in good standing, or if relinquishment would in Lessor’s
reasonable
determination cause waste of economically recoverable coal. Lessee may not relinquish
parcels
smaller than a quarter-quarter section or surveyed lot. Upon approval,
relinquishment shall
relieve the Lessee of all future rental obligations as to the relinquished lands
effective as of the
date of filing of the relinquishment, but shall not relieve Lessee from other
obligations to the
extent provided in paragraph 15.2, Effect of Termination.






	4.	 	BONUS BID. Lessee agrees to pay Lessor, an initial bonus bid in the sum of
$3,545,714.00 as partial consideration for Lessor’s issuance of this Lease, payable in five
equal annual installments of $709,142.80. The first annual installment shall be due with
Lessee’s application to lease and the unpaid





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balance of the bonus bid shall be paid in equal installments on or before the next four
successive anniversaries of the Effective Date of the lease. The bonus bid shall not bear
interest; provided, however, that if this Lease is relinquished or otherwise terminated prior
to the payment in full of the bonus bid, or if Lessee fails to make any bonus bid payment
when due, the entire unpaid balance of the bonus bid shall immediately become due without
regard to such relinquishment or termination, and such balance shall thereafter bear interest
as provided in paragraph 16.2, Interest. Lessor may require Lessee to submit a bond or other
sufficient surety to secure Lessee’s obligation to pay the unpaid balance of the bonus bid.
The initial bonus bid may not be credited against any other bonus payments, annual rentals or
royalties accruing under the lease.




	5.	 	RENTALS. Lessee agrees to pay Lessor an annual rental of three dollars ($3.00) for
each acre and
fractional part thereof within the Leased Premises. Lessee shall promptly pay annual rentals
each year in
advance on or before the anniversary date of the Effective Date. Lessee may not credit
rentals against
production royalties or against minimum royalties payable pursuant to paragraph 3.3, Diligent
Operations;
Minimum Royalty.
	 
	6.	 	ROYALTIES.






	 	6.1	 	Production Royalties. Lessee shall pay Lessor a production royalty of
eight per cent (8%) of the
value of all coal severed and removed from the Leased Premises. For all coal sold
pursuant to an
arm’s-length contract, value shall be determined on the basis of the gross proceeds
received by
Lessee from the sale or disposition of such coal. Gross proceeds shall include all
bonuses,
allowances or other consideration of any nature received by Lessee for coal actually
produced.
For any coal that is sold or disposed of other than by an arms-length contract, or for
coal that is
used within the mine permit area containing the Leased Premises for generation of
electricity or
for gasification, liquefaction, in situ processing, or other method of extracting
energy from such
coal, the value of such coal shall be determined by Lessor with reference to (in order
of priority):
(i) comparable arms-length contracts or other dispositions of like-quality coal
produced in the
same coal field; (ii) prices reported for that coal to a public utility commission;
(iii) prices
reported to other governmental agencies; or (iv) other relevant information.
	 
	 	6.2	 	Allowable Deductions. It is expressly understood and agreed that none of
Lessee’s mining or
production costs, including but not limited to costs for materials, labor, overhead,
distribution,
transportation within the mine permit area prior to the point of sale, loading,
crushing, sizing,
screening, or general and administrative activities, may be deducted in computing
Lessor’s
royalty. All such costs shall be entirely borne by Lessee and are anticipated by the
rate of royalty
set forth in this Lease. In the event that the point of sale for coal produced from
this Lease is
located outside the mine permit area boundary, Lessee may deduct the reasonable,
actual costs of
transportation of such coal from the mine permit area boundary to the point of sale
from gross
proceeds in computing Lessor’s royalty; provided, however, that transportation
deductions for
coal transported by Lessee, Lessee’s affiliates, or by non-arm’s-length contract are
subject to





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review and modification by Lessor. Lessee shall be allowed to deduct its actual,
reasonable washing and treatment costs from gross proceeds in computing Lessor’s
royalty; provided, however, that, upon Lessor’s request Lessee shall provide to
Lessor appropriate justification to demonstrate that Lessee’s costs are reasonable.




	 	6.3	 	Reference to Federal Regulations. It is the intent of Lessor and Lessee
that the calculation of the
value of coal for royalty purposes be consistent with federal coal regulations
governing the
valuation of coal, except where this Lease expressly provides otherwise. In no event
shall the
value of coal used for calculation of royalties under this Lease be less than the
value which would
be obtained were federal royalty valuation regulations applied.
	 
	 	6.4	 	Royalty Payment. For all coal severed and removed from the Leased
Premises that is used, sold,
transported or otherwise disposed of during a particular month, Lessee shall pay
royalties to
Lessor on or before the end of the next succeeding month. Royalty payments shall be
accompanied by a verified statement, in a form approved by Lessor, stating the amount
of coal
sold or otherwise disposed of, the gross proceeds accruing to Lessee, the calculation
of allowable
deductions, and any other information reasonably required by Lessor to verify
production and
disposition of the coal or coal products. In the event that Lessee uses or disposes
of coal pursuant
to a non-arm’s-length contract, or uses coal for generation of electricity or for
gasification,
liquefaction, in situ processing, or other method of extracting energy from such
coal, Lessee shall
notify Lessor of such use or disposal on or before the end of the next succeeding
month following
such use or disposal, and shall pay royalties upon Lessee’s good faith estimate of
the value of
such coal, subject to Lessor’s right to determine the value of such coal pursuant to
paragraph 6.1,
Production Royalties.
	 
	 	6.6	 	Suspension, Waiver or Reduction of Rents or Royalties. Lessor, to the
extent not prohibited by applicable law, is authorized to waive, suspend, or reduce
the rental or minimum royalty, or reduce the royalty applicable with respect to the
entire Lease, whenever in Lessor’s judgment it is necessary to do so in order to
promote development, or whenever in the Lessor’s judgment the Lease cannot be
successfully operated under the terms provided herein.






	7.	 	RECORDKEEPING; INSPECTION; AUDITS.






	 	7.1	 	 Registered Agent; Records. Lessee shall maintain a registered agent
within the State of Utah to whom any and all notices may be sent by Lessor and upon
whom process may be served. Lessee shall also maintain an office within the State of
Utah containing originals or copies of all maps, engineering data, permitting
materials, books, records or contracts (whether such documents are in paper or
electronic form) generated by Lessee that pertain in any way to coal production, output
and valuation; mine operations; coal sales and dispositions; transportation costs; and
calculation of royalties from the Leased Premises. Lessee shall maintain such documents
for at least seven years after the date of the coal production to which the documents
pertain.





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	 	7.2	 	Inspection. Lessor’s employees and authorized agents at Lessor’s sole
risk and expense shall
have the right to enter the Leased Premises to check scales as to their accuracy, and
to go on any
part of the Leased Premises to examine, inspect, survey and take measurements for the
purposes
of verifying production amounts and proper lease operations. Upon reasonable notice to
Lessee,
Lessor’s employees and authorized agents shall further have the right to audit,
examine and copy
(at Lessor’s expense) all documents described in paragraph 7.1, Registered Agent;
Records,
whether such documents are located at the mine site or elsewhere. Lessee shall
furnish all
conveniences necessary for said inspection, survey, or examination; provided, however,
that such
inspections shall be conducted in a manner that is in conformance with all applicable
mine safety
regulations and does not unreasonably interfere with Lessee’s operations.
	 
	 	7.3	 	Geologic Information. In the event Lessee conducts core-drilling
operations or other geologic
evaluation of the Leased Premises, Lessor may inspect core samples, evaluations thereof, and
proprietary geologic information concerning the Leased Premises.
	 
	 	7.4	 	Confidentiality. Any and all documents and geologic data obtained by Lessor through the
exercise of its rights as set forth in paragraphs 7.2, Inspection., and 7.4, Geologic
Information.,
may be declared confidential information by Lessee, in which event Lessor and its
authorized
agents shall maintain such documents and geologic data as protected records under the
Utah
Governmental Records Access Management Act or other applicable privacy statute and
shall not
disclose the same to any third party without the written consent of Lessee, the order
of a court of
competent jurisdiction requiring such disclosure, or upon termination of this Lease.






	8.	 	USE OF SURFACE ESTATE.






	 	8.1	 	Lessor-Owned Surface. If Lessor owns the surface estate of all or some
portion of the Leased
Premises, by issuance of this Lease the Lessee has been granted the right to make use of such
lands to the extent reasonably necessary and expedient for the economic operation of the
leasehold. Lessee’s right to surface use of Lessor-owned surface estate shall include the right to
subside the surface. Such surface uses shall be exercised subject to the rights reserved to Lessor
as provided in paragraph 2, RESERVATIONS TO LESSOR, and without unreasonable
interference with the rights of any prior or subsequent lessee of Lessor.
	 
	 	8.2	 	Split-Estate Lands. If Lessor does not own the surface estate of any portion of the Leased
Premises, Lessee’s access to and use of the surface of such lands shall be determined
by
applicable law governing mineral development on split-estate lands, including without
limitation
applicable statutes governing access by mineral owners to split estate lands, and
reclamation and
bonding requirements. Lessee shall indemnify, defend and hold Lessor harmless for all
claims,
causes of action, damages, costs and expenses (including attorney’s fees and costs)
arising out of






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or related to damage caused by Lessee’s operations to surface lands or improvements
owned by third parties.




	9.	 	APPLICABLE LAWS AND REGULATIONS; HAZARDOUS SUBSTANCES






	 	9.1	 	Trust Lands Statute and Regulations. This Lease is issued pursuant to the
provisions of Title 53C, Utah Code Annotated, 1953, as amended, and Lessee is subject to and shall comply with
all
current and future rules and regulations adopted by the School and Institutional Trust
Lands
Administration and its successor agencies.
	 
	 	9.2	 	Other Applicable Laws and Regulations. Lessee shall comply with all
applicable federal, state and local statutes, regulations, and ordinances, including without limitation the Utah
Coal Mining
and Reclamation Act, applicable statutes and regulations relating to mine safety and
health, and
applicable statutes, regulations and ordinances relating to public health, pollution
control,
management of hazardous substances and environmental protection.
	 
	 	9.3	 	Hazardous Substances. Lessee [or other occupant pursuant to any agreement
authorizing mining] shall not keep on or about the premises any hazardous substances, as defined under 42 U.S.C.
9601(14) or any other Federal environmental law, any regulated substance contained in or
released from any underground storage tank, as defined by the Resource Conservation and
Recovery Act, 42 U.S.C. 6991, et seq, or any substances defined and regulated as “hazardous” by
applicable State law, (hereinafter, for the purposes of this Lease, collectively referred to as
“Hazardous Substances”) unless such substances are reasonably necessary in Lessee’s mining
operations, and the use of such substances or tanks is noted and approved in the Lessee’s mining
plan, and unless Lessee fully complies with all Federal, State and local laws, regulations, statutes,
and ordinances, now in existence or as subsequently enacted or amended, governing Hazardous
Substances. Lessee shall immediately notify Lessor and any other Federal, State and local agency
with jurisdiction over the Leased Premises, or contamination thereon, of (i) all reportable spills or
releases of any Hazardous Substance affecting the Leased Premises, (ii) all failures to comply
with any applicable Federal, state or local law, regulation or ordinance governing Hazardous
Substances, as now enacted or as subsequently enacted or amended, (iii) all inspections of the
Leased Premises by, or any correspondence, order, citations, or notifications from any regulatory
entity concerning Hazardous Substances affecting the Leased Premises, (iv) all regulatory orders
or fines or all response or interim cleanup actions taken by or proposed to be taken by any
government entity or private Party concerning the Leased Premises.
	 
	 	9.4	 	Hazardous Substances Indemnity. Lessee [or other occupant pursuant to any agreement authorizing mining] shall indemnify, defend, and hold harmless Lessor its agencies,
employees,
officers, and agents with respect to any and all damages, costs, liabilities, fees
(including
attorneys’ fees and costs), penalties (civil and criminal), and cleanup costs arising
out of or in any
way related to Lessee’s use, disposal, transportation, generation, sale or location
upon or




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affecting the Leased Premises of Hazardous Substances, as defined in paragraph 9.4 of
this Lease. This indemnity shall extend to the actions of Lessee’s employees, agents
assigns, sublessees, contractors, subcontractors, licensees and invitees. This
indemnity is in addition to, and in no way limits, the general indemnity contained
in paragraph 16.1 of this Lease.




	 	9.5	 	Waste Certification. The Lessee shall provide upon abandonment,
transfer of operation, assignment of rights, sealing-off of a mined area, and prior to
lease relinquishment, certification to the Lessor, based upon a complete search of all
the operator’s records for the Lease, and upon its knowledge of past operations, there
have been no reportable quantities of hazardous substances as defined in 40 C.F.R.
302.4, or used oil as defined in Utah Administrative Code R315-15, discharged (as
defined at 33 U.S.C. 1321(a)(2)), deposited or released within the Leased Premises,
either on the surface or underground, and that all remedial actions necessary have been
taken to protect human health and the environment with respect to such substances.
Lessee shall additionally provide to Lessor a complete list of all hazardous
substances, hazardous materials, and their respective Chemical Abstracts Service
Registry Numbers, and oil and petroleum products used or stored on, or delivered to,
the Leased Premises. Such disclosure will be in addition to any other disclosure
required by law or agreement.






	10.	 	BONDING.






	 	10.1	 	Lease Bond Required. At the request of Lessor, at or at the time or
anytime after this lease is executed, Lessee shall execute and file with the Lessor a good and sufficient bond or
other
financial guarantee acceptable to Lessor in order to: (a) guarantee Lessee’s
performance of all
covenants and obligations under this Lease, including Lessee’s obligation to pay
royalties; and
(b) ensure compensation for damage, if any, to the surface estate and any surface
improvements.
	 
	 	10.2	 	Reclamation Bonding. The bond filed with the Utah Division of Oil, Gas
and Mining (“UDOGM”) in connection with the issuance of a mine permit which includes the Leased
Premises shall be deemed to satisfy Lessor’s bonding requirements with respect to
Lessee’s
reclamation obligations under this Lease; provided, however, upon notice to Lessee and
a public
hearing with respect to the basis for its decision, the Lessor may, in its reasonable
discretion,
determine that the bond filed with UDOGM is insufficient to protect Lessor’s
interests. In such
an event the Lessor shall enter written findings as to the basis for its calculation
of the perceived
insufficiency and enter an order establishing the amount of additional bonding
required. Lessee
shall file any required additional bond with Lessor within thirty (30) days after
demand by Lessor.
Lessor may increase or decrease the amount of any additional bond from time to time in
accordance with the same procedure. Lessee may combine any additional bond required
under
this paragraph with the original lease bond filed under Paragraph 10.1, Lease Bond
Required.




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	 	10.3	 	Release of Additional Bond. Any additional bond required by Lessor
pursuant to 10.2, Reclamation Bonding, may be released by Lessor at any time and shall
be released no later than the time of final bond release by UDOGM with respect to the
Leased Premises.






	11.	 	WATER RIGHTS.






	 	11.1	 	Water Rights in Name of Lessor. If Lessee files to appropriate water
for coal mining operations on the Leased Premises, the filing for such water right shall be made by Lessee in the
name of
Lessor at no cost to Lessor, and such water right shall become an appurtenance to the
Leased
Premises, subject to Lessee’s right to use such water right at no cost during the term
of this
Lease.
	 
	 	11.2	 	Option to Purchase. If Lessee purchases or acquires an existing water
right for coal mining operations on the Leased Premises, Lessor shall have the option to acquire that
portion of such
water right as was used on the Leased Premises upon expiration or termination of this
Lease. The
option price for such water right shall be the fair market value of the water right as
of the date of
expiration or termination of this Lease. Upon expiration or termination of this Lease,
Lessee shall
notify Lessor in writing of all water rights purchased or acquired by Lessee for coal
mining
operations on the Leased Premises and its estimate of the fair market value of such
water right.
Lessor shall then have forty-five (45) days to exercise its option to acquire the
water by payment
to Lessee of the estimated fair market value. If Lessor disagrees with Lessee’s
estimate of fair
market value, Lessor shall notify Lessee of its disagreement within the 45 day option
exercise
period. The fair market value of the water right shall then be appraised by a single
appraiser
mutually acceptable to both parties, which appraisal shall be final and not subject to
review or
appeal. If the parties cannot agree upon the choice of an appraiser, the fair market
value of the
water right shall be determined by a court of competent jurisdiction. Conveyance of
any water
right pursuant to this paragraph shall be by quit claim deed.






	12.	 	ASSIGNMENT OR SUBLEASE; OVERRIDING ROYALTIES.






	 	12.1	 	Consent Required. Lessee shall not assign or sublease this Lease in whole
or in part, or otherwise assign or convey any rights or privileges granted by this Lease, including, without
limitation,
creation of overriding royalties or production payments, without the prior written
consent of
Lessor. Any assignment, sublease or other conveyance made without prior written
consent of
Lessor shall have no legal effect unless and until approved in writing by Lessor.
Exercise of any
right with respect to the Leased Premises in violation of this provision shall
constitute a default
under this Lease.
	 
	 	12.2	 	Binding Effect. All of the terms and provisions of this Lease shall be
binding upon and shall inure to the benefit of their respective successors, assigns, and sublessees.




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	 	12.3	 	Limitation on Overriding Royalties. Lessor reserves the right to disapprove the
creation of an overriding royalty or production payment that would, in Lessor’s reasonable
discretion, constitute an unreasonable economic burden upon operation of the Lease. In
exercising its discretion to disapprove the creation of an overriding royalty, Lessor shall
consult with Lessee and any third parties involved and shall prepare findings to evidence
the basis of its decision. Cumulative overriding royalties of 2% or less shall be deemed
presumptively reasonable unless special circumstances are shown by Lessor to exist.






	13.	 	OPERATIONS.






	 	13.1	 	Permitting. Before Lessee commences exploration, drilling, or mining
operations on the Leased Premises, it shall have obtained such permits and posted such bonds as may be
required under applicable provisions of the Utah Coal Mining and Reclamation Act, the
Surface Mining Control and Reclamation Act, and associated regulations, together with
applicable regulations of the surface management agency. Lessee shall maintain any
required
permits in place for the duration of mining operations and reclamation. Upon request,
Lessee
shall provide Lessor with a copy of all regulatory filings relating to permitting
matters.
	 
	 	13.2	 	Plan of Operations. Prior to the commencement of any underground mining
operations on the Leased Premises, Lessee shall obtain Lessor’s approval of a plan of operations
for the
Leased Premises. The plan of operations shall contain all information required to be
contained in a federal Resource Recovery and Protection Plan, as described in 43
C.F.R. •
3482. l (b) and (c) (1998). Lessor may modify the proposed plan of operations as is
needed to
insure that there is no waste of economically recoverable coal reserves contained on
the
Leased Premises. In this context “waste” shall mean the inefficient utilization of,
or the
excessive or improper loss of an otherwise economically recoverable coal resource.
Lessor
shall notify Lessee in writing of its approval or modifications of the plan of
operations. The
plan of operations submitted by Lessee shall be deemed approved by Lessor if Lessor
has not
otherwise notified Lessee within sixty (60) days of filing.
	 
	 	13.3	 	Plan of Operations - Modification. In the event that material changes
are required to the plan of operations during the course of mining, Lessee shall
submit a modification of the plan of operations to the Lessor. Routine adjustments to
the plan of operations based upon geologic circumstances encountered during day-to-day
mining operations do not require the submission of a modification. If the proposed
changes require emergency action by Lessor, then the Lessee shall so notify the Lessor
at the time of submission of the modification and the parties shall use their best
efforts to meet the Lessee’s time schedule regarding implementation of the changes.
Non-emergency modifications will be reviewed promptly by Lessor to insure that there
is no waste of economically recoverable coal reserves pursuant to the plan of
operations, as modified, and Lessor shall notify lessee in writing of its approval or
modification of the proposed modification.




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	 	13.4	 	Mine Maps. Lessee shall maintain at the mine office clear,
accurate, and detailed maps of all actual and planned operations prepared and
maintained in the manner prescribed by 43 C.F.R. 3482.3 (1998). Lessee shall
provide copies of such maps to Lessor upon request.
	 
	 	13.5	 	Good Mining Practices. Lessee shall conduct exploration and mining
operations on the Leased Premises in accordance with standard industry operating practices, and shall avoid
waste of
economically recoverable coal. Lessee shall comply with all regulations and directives
of the
Mine Safety and Health Administration or successor agencies for the health and safety
of
employees and workers. Lessee shall further comply with the performance standards
for
underground resource recovery set forth at 43 C.F.R. 3484.1 (c) (1998); provided,
however, that
Lessor may waive such standards from time to time in its reasonable discretion, upon
request by
Lessee. Coal shall be mined from this Lease by underground methods only.
	 
	 	13.6	 	Mining Units. Lessor may approve the inclusion of the Leased Premises
in a mining unit with federal, private or other non-state lands upon terms and conditions that it deems
necessary to
protect the interests of the Lessor, including without limitation segregation of
production,
accounting for commingled coal production, and minimum production requirements or
minimum
royalties for the Leased Premises.






	14.	 	EQUIPMENT; RESTORATION.






	 	14.1	 	Equipment. Upon termination of this Lease, Lessee shall remove, and
shall have the right to remove, all improvements, equipment, stockpiles, and dumps from the Leased Premises
within six (6) months; provided, however, that Lessor may, at Lessor’s sole risk and
expense, and
subject to Lessee’s compliance with requirements imposed by UDOGM and MSHA, require
Lessee to retain in place underground timbering supports, shaft linings, rails, and
other
installations reasonably necessary for future mining of the Leased Premises. All
improvements
and equipment remaining on the Leased Premises after six (6) months may be deemed
forfeited to
Lessor upon written notice of such forfeiture to Lessee. Lessee may abandon
underground
improvements, equipment of any type, stockpiles and dumps in place if such abandonment
is in
compliance with applicable law, and further provided that Lessee provides Lessor with
financial
or other assurances sufficient in Lessor’s reasonable discretion to protect Lessor
from future
environmental liability with respect to such abandonment or any associated hazardous
waste spills
or releases. Lessee shall identify and locate on the mine map the location of all
equipment
abandoned on the Lease Premises.
	 
	 	14.2	 	Restoration and Reclamation. Upon termination of this Lease, Lessee shall
reclaim the Leased Premises in accordance with the requirements of applicable law, including mine permits
and reclamation plans on file with UDOGM. Lessee shall further abate any hazardous
condition on or
associated with the Leased Premises. Lessee and representatives of all governmental
agencies






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having jurisdiction shall have the right to re-enter the Leased Premises for
reclamation purposes for a reasonable period after termination of the Lease.




	15.	 	DEFAULT






	 	15.1	 	Notice of Default; Termination. Upon Lessee’s violation of or failure
to comply with any of the
terms, conditions or covenants set forth in this Lease, Lessor shall notify Lessee of
such default by
registered or certified mail, return receipt requested, at the last address for Lessee
set forth in
Lessor’s files. Lessee shall then have thirty (30) days, or such longer period as may
be granted in
writing by Lessor, to either cure the default or request a hearing pursuant to the
Lessor’s
administrative adjudication rules. In the event Lessee fails to cure the default or
request a hearing
within the specified time period, Lessor may cancel this Lease without further notice
to or appeal
by Lessee.
	 
	 	15.2	 	Effect of Termination. The termination of this Lease for any reason,
whether through expiration,
cancellation or relinquishment, shall not limit the rights of the Lessor to recover
any royalties
and/or damages for which Lessee may be liable, to recover on any bond on file, or to
seek
injunctive relief to enjoin continuing violations of the Lease terms. No remedy or
election under
this Lease shall be deemed exclusive, but shall, wherever possible, be cumulative with
all other
remedies available under this Lease, at law, or in equity. Lessee shall surrender
the Leased
Premises upon termination; however, the obligations of Lessee with respect to
reclamation,
indemnification and other continuing covenants imposed by this Lease shall survive the
termination.






	16.	 	MISCELLANEOUS PROVISIONS.






	 	16.1	 	Indemnity. Except as limited by paragraph 7.2, Inspection, Lessee shall
indemnify and hold
Lessor harmless for, from and against each and every claim, demand, liability, loss,
cost, damage
and expense, including, without limitation, attorneys’ fees and court costs, arising
in any way out
of Lessee’s occupation and use of the Leased Premises, including without limitation
claims for
death, personal injury, property damage, and unpaid wages and benefits. Lessee further
agrees to
indemnify and hold Lessor harmless for, from and against all claims, demands,
liabilities,
damages and penalties arising out of any failure of Lessee to comply with any of
Lessee’s
obligations under this Lease, including without limitation attorneys’ fees and court
costs.
	 
	 	16.2	 	Interest. Except as set forth in paragraph 4, BONUS BID, interest shall
accrue and be payable on
all obligations arising under this Lease at such rate as may be set from time to time
by rule
enacted by Lessor. Interest shall accrue and be payable, without necessity of demand,
from the
date each such obligation shall arise.





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ML 51192-OBA-COAL





	 	16.3	 	Suspension. In the event that Lessor in its reasonable discretion determines that
suspension is
necessary in the interests of conservation of the coal resource, or if Lessee has been
prevented
from performing any of its obligations or responsibilities under this Lease or from
conducting
mining operations by labor strikes, fires, floods, explosions, riots, any unusual mining
casualties
or conditions, Acts of God, government restrictions or orders, severe weather conditions, or
other
extraordinary events beyond its control, then the time for performance of this Lease by
Lessee
shall be suspended during the continuance of such acts which prevent performance, excepting
any
payments due and owing to Lessor.
	 
	 	16.4	 	Consent to Suit; Jurisdiction, (i) this Lease shall be governed by the laws of the
State of Utah;
(ii) Lessor and Lessee agree that all disputes arising out of this Lease shall be litigated
only in the
Third Judicial District Court for Salt Lake County, Utah; (iii) Lessee consents to the
jurisdiction
of such court; and (iv) Lessee shall not bring any action against Lessor without exhaustion
of
available administrative remedies and compliance with applicable requirements of the Utah
Governmental Immunity Act.
	 
	 	16.5	 	No Waiver. No waiver of the breach of any provision of this Lease shall be construed
as a waiver
of any preceding or succeeding breach of the same or any other provision of this Lease, nor
shall
the acceptance of rentals or royalties by Lessor during any period of time in which Lessee
is in
default be deemed to be a waiver of such default.
	 
	 	16.6	 	Severability. The invalidity of any provision of this Lease, as determined by a court
of competent
jurisdiction, shall in no way affect the validity of any other provision hereof.
	 
	 	16.7	 	Entire Lease. This Lease, together with any attached stipulations, sets forth the
entire agreement
between Lessor and Lessee with respect to the subject matter of this Lease. No subsequent
alteration or amendment to this Lease shall be binding upon Lessor and Lessee unless in
writing
and signed by each of them.





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ML 51192-OBA-COAL




     IN WITNESS WHEREOF, the parties have executed this Lease as of the date hereinabove first
written.



	 	 	 
	 

	 	THE STATE OF UTAH, acting by and through
	 

	 	the SCHOOL AND INSTITUTIONAL TRUST
	APPROVED AS TO FORM:

	 	LANDS ADMINISTRATION (“LESSOR”)
	MARK L. SHURTLEFF
	 	 
	ATTORNEY GENERAL

	 	THOMAS B. FADDIES
	 

	 	DIRECTOR/MINERALS






	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ ILLEGIBLE
 

	 	 
	 	/s/ Thomas B. Faddies
 

	 	 
	Date:

	 	 1/18/08	 	 	 	 	 	 
	 

	 	 	 	 	 	School & Institutional Trust Lands Administration - LESSOR






	 	 	 	 	 	 	 
	 	 	ARK LAND COMPANY (“LESSEE”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ ILLEGIBLE
 

	 	 
	 

	 	Its:
	 	President	 	 






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ML 51192-OBA-COAL




	 	 	 	 	 	 	 
	STATE OF UTAH

	 	 	)	 	 	 
	 

	 	 	:	 	 	ss.
	COUNTY OF SALT LAKE

	 	 	)	 	 	 






     On the 18 day of January, 2008, personally
appeared before me Thomas B. Faddies who being by me duly sworn did say that he is
Assistant Director of the School and
Institutional Trust Lands Administration of the State of Utah and the signer of the above
instrument, who duly acknowledged that he executed the same.



Given under my hand and seal this 18th  day of January 2008.




	 	 	 	 	 
	 

	 	/s/ Alice K. Kearney	 	 
	 	 	 
	 

	 	Notary Public	 	 
	 

	 	Residing at: 	 	 
	 

	 	 	 	 





	 	 	 
	My commission expires: 5/25/2010

	 	






	 	 	 
	STATE OF MISSOURI

	 	) 
	 

	 	: ss. 
	COUNTY OF St. LOUIS

	 	) 






     On the 21st day of January, 2008, personally appeared before me
Steven E. McCordy, who being duly sworn did say that he is an officer of
Ark Land Company and that said instrument was signed in behalf
of said corporation by resolution of its Board of Directors, and said that he acknowledged
to me that said corporation executed the same.


Given under my hand and seal this 21st day of January, 2008




	 	 	 	 	 
	 

	 	/s/ Carla A. Veizer	 	 
	 	 	 
	 

	 	Notary Public	 	 
	 

	 	Residing at:	 	 
	 

	 	 	 	 





	 	 	 
	My commission expires: 10/28/2010

	 	







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