INDENTURE OF LEASE

 

Exhibit 10.3

 

Hibbing Taconite Company Mahoning January 1, 1979 Lease and Operating Agreement

and all subsequent amendments through January 1, 2006

 

 

INDENTURE OF LEASE

 

THIS INDENTURE OF LEASE, made as of this 1st day of January, 1979, by and between WILLIAM W. WATSON, LOUIS W. HILL, JR., HARRY L. HOLTZ and JOSEPH S. MICALLEF, as Trustees under that certain Trust Agreement executed December 7, 1906, by and between the Lake Superior Company, Limited, an association organized under the laws of the State of Michigan, and LOUIS W. HILL, JAMES N. HILL, WALTER J. HILL and EDWARD T. NICHOLS, which Trust is commonly known as Great Northern Iron Ore Properties, Parties of the First Part (hereinafter referred to as “Lessors”), and MAHONING ORE AND STEEL PARTNERSHIP, a Minnesota partnership, Party of the Second Part (hereinafter referred to as “Lessee”).

W I T N E S S E T H :

GRANTING
   CLAUSE   

That in consideration of the sum of One Dollar ($1.00) paid by the Lessee to the Lessors, the receipt of which is hereby acknowledged, in consideration of the covenants, agreements and conditions hereinafter contained, to be observed, kept and performed by the Lessee, and in further consideration of the execution simultaneously herewith and the full and complete performance by the Lessee of a certain Operating Agreement (hereinafter referred to as the “Agreement”) dated January 1, 1979, (which Agreement hereby is referred to and hereby is made a part hereof, as fully as if all the terms and conditions thereof were set forth in this Indenture of Lease), covering, among other things, the operation of the mining properties hereinafter particularly described, the Lessors have demised, leased and granted, and by these presents do demise, lease and grant to the said Lessee, its successors and assigns, upon the terms and subject

 

 

 

to the conditions herein and in the Agreement set forth, the tracts or parcels of land in Minnesota, more particularly described below, said Agreement and this Indenture of Lease being in substitution and in lieu of that mining lease dated April 1st, 1895, as subsequently modified, supplemented and amended, recorded in the Office of the Register of Deeds of St. Louis County, Minnesota in Book R of Agreements on Page 499, et seq. , and recorded in the office of the Register of Deeds of Itasca County, Minnesota, in Book 32, Miscellaneous Records, Page 118, et   seq. :

In St. Louis County;

Lots One (1), Two (2), Three (3) and Four (4) of Section One (1) and Lots One (1), Two (2), Three (3) and Four (4) of Section Two (2), (all of the foregoing described lots herein collectively referred to as “Tract 1”); the Northeast Quarter of the Southwest Quarter (NE¼-SW¼), the Southeast Quarter of the Southwest Quarter (SE¼-SW¼), the Northwest Quarter of the Southeast Quarter (NW¼-SE¼) and the North Half of the Southwest Quarter of the Southeast Quarter (N½-SW¼-SE¼) of Section Two (2); the Southeast Quarter of the Southeast Quarter (SE¼-SE¼) of Section Three (3); the Southwest Quarter of the Northeast Quarter (SW¼-NE¼), the Northwest Quarter of the Southeast Quarter (NW¼-SE¼) and the Southwest Quarter of the Southeast Quarter (SW¼-SE¼) of Section Eight (8); the Southwest Quarter of the Northeast Quarter (SW¼-NE¼) and the Southeast Quarter of the Northeast Quarter (SE¼-NE¼) of Section Nine (9); the Northeast Quarter of the Northeast Quarter (NE¼-NE¼), the Northeast Quarter of the Northwest Quarter (NE¼-NW¼), the Northwest Quarter of the Northwest Quarter (NW¼-NW¼), the Southwest Quarter of the Northwest Quarter (SW¼-NW¼), the Southeast Quarter of the Northwest Quarter (SE¼-NW¼) and the Northwest Quarter of the Southwest Quarter (NW¼-SW¼) of Section Ten (10), Township Fifty-Seven (57) North of Range Twenty-One (21) West, St. Louis County,

 

In Itasca County;

 

The Southeast Quarter of the Southwest Quarter (SE¼-SW¼), of Section Twenty-Seven (27); Township Fifty-Seven (57) North of Range Twenty-Two (22) West, Itasca County.

 

All of the foregoing premises, subject to legal highways, surface conveyances and easements, including but not limited to, rights of way and easements for railroads, electric power transmission lines, water lines, ditches, telegraph and telephone wires now of record (which premises, subject to the above-mentioned prior conveyances and encumbrances, are hereinafter

 

 

 

referred to as the “Premises”), are leased to Lessee for the purpose, among other things, of exploring for, mining, taking out and removing therefrom, and concentrating or otherwise treating and shipping any and all Merchantable Iron Ore, Concentratable Ore and Taconite as those terms are defined in the Agreement, which are or which may hereafter be found on, in or under the Premises or produced therefrom; and so long as Lessee shall pay the minimum royalty or rent as provided in the Agreement, nothing herein contained shall require Lessee to mine the Premises or exercise any or all of the rights herein granted except as it deems it desirable to do so.

Notwithstanding the foregoing grant, Lessee agrees that a grant of right-of-way rights on or over any of the Premises by Lessee to persons or entities not party to this Indenture of Lease for purposes of constructing a railroad or a power line shall require the written consent of Lessors, which consent shall not be unreasonably withheld. In addition, Lessors reserve unto themselves the right to grant rights-of-way and easements on or over any of the Premises, subject to the written consent of Lessee, which consent shall not be unreasonably withheld.

TO HAVE AND TO HOLD, the said Premises, together with all and singular the hereditaments and appurtenances thereunto belonging or in anywise appertaining, unto the Lessee, its successors and assigns, for the term of forty-eight (48) years from and after the date hereof, to and including December 31, 2026, for the purposes aforesaid, subject, however, to the conditions and reservations herein and in the Agreement set forth.

Lessors covenant and agree that Lessee, its successors or assigns, paying the yearly rents and taxes called for by the Agreement and fully performing the covenants and agreements herein contained to be performed, shall and may at all times peaceably and quietly hold and enjoy the Premises, subject to the above-mentioned prior conveyances and encumbrances, and shall

 

 

 

receive and take the profits thereof without any molestation, interruption and eviction by Lessors, or any other person or persons lawfully claiming or to claim the same by, through or under the Lessors.

The grants contained in this Indenture of Lease are subject , however , to the express condition that in case and as often as the Lessee shall make default in the performance of or by the violation of any of its several covenants, as set forth in the Agreement and in this Indenture, or shall breach any of the conditions thereof or hereof, and such default or breach shall continue uncorrected or unsatisfied by the Lessee for a period of sixty (60) days after written notice thereof shall be given to the Lessee by the Lessors, then and from thenceforward it shall be lawful for the Lessors to declare this Indenture of Lease terminated and the rights of Lessee hereunder forfeited, and the Lessors thereupon immediately, without notice or process of law, may enter upon the Premises by their officers, agents or representatives and resume and hold the sole and exclusive possession and ownership of the same against the Lessee and against all other persons claiming from, through or under it; provided , however , that in case of the termination in the manner aforesaid of such right, title and interest of the Lessee, nevertheless, the Lessors may demand, collect, sue for and recover all moneys at the time of such termination owing to it by the Lessee under and pursuant to the terms and provisions of this Indenture and of the Agreement; and provided , further , that if the Lessee shall perform such covenant or covenants or cure such breach during such period of sixty (60) days, such default or breach shall be deemed to have been cured, and the Lessors shall not have any rights, nor shall the Lessee be subject to any liability based upon such default or breach; and provided also, that if the Lessee shall deny any such default or breach claimed by the Lessors, and shall demand arbitration thereof in accordance with the arbitration provisions contained in the Agreement, the time required for such

 

 

 

arbitration shall not be deemed a part of such sixty (60) day period, and the Lessee shall have sixty (60) days after the decision of the arbitrators in which to correct any default or breach found by the arbitrators.

IN WITNESS WHEREOF, this Indenture of Lease has been executed by the parties hereto as of the day and year first above written.

 

 

 

 

 

 

STATE OF MINNESOTA	)
	:	SS.
COUNTY OF RAMSEY	)

 

On this 9th day of June, 1981, before me, a Notary Public within and for said County and State, personally appeared WILLIAM W. WATSON, Trustee under that certain Trust Agreement executed December 7, 1906, by and between Lake Superior Company, Limited, an association organized under the laws of the State of Michigan, and Louis W. Hill, James N. Hill, Walter J. Hill and Edward T. Nichols; which Trust is commonly known as Great Northern Iron Ore Properties; to me known to be the person described in and who executed the foregoing instrument and acknowledged that he executed the same as his free act and deed as such Trustee.

 

 

My commission expires June 26, 1987

 

 

STATE OF MINNESOTA	)
	:	SS.
COUNTY OF RAMSEY	)

 

On this 9th day of June, 1981, before me, a Notary Public within and for said County and State, personally appeared LOUIS W. HILL, JR., Trustee under that certain Trust Agreement executed December 7, 1906, by and between Lake Superior Company, Limited, an association organized under the laws of the State of Michigan, and Louis W. Hill, James N. Hill, Walter J. Hill and Edward T. Nichols; which Trust is commonly known as Great Northern Iron Ore Properties; to me known to be the person described in and who executed the foregoing instrument and acknowledged that he executed the same as his free act and deed as such Trustee.

 

 

My commission expires June 26, 1987

 

 

 

STATE OF MINNESOTA	)
	:	SS.
COUNTY OF RAMSEY	)

 

On this 9th day of June, 1981, before me, a Notary Public within and for said County and State, personally appeared HARRY L. HOLTZ, Trustee under that certain Trust Agreement executed December 7, 1906, by and between Lake Superior Company, Limited, an association organized under the laws of the State of Michigan, and Louis W. Hill, James N. Hill, Walter J. Hill and Edward T. Nichols; which Trust is commonly known as Great Northern Iron Ore Properties; to me known to be the person described in and who executed the foregoing instrument and acknowledged that he executed the same as his free act and deed as such Trustee.

 

 

My commission expires June 26, 1987

 

 

STATE OF MINNESOTA	)
	:	SS.
COUNTY OF RAMSEY	)

 

On this 9th day of June, 1981, before me, a Notary Public within and for said County and State, personally appeared JOSEPH S. MICALLEF, Trustee under that certain Trust Agreement executed December 7, 1906, by and between Lake Superior Company, Limited, an association organized under the laws of the State of Michigan, and Louis W. Hill, James N. Hill, Walter J. Hill and Edward T. Nichols; which Trust is commonly known as Great Northern Iron Ore Properties; to me known to be the person described in and who executed the foregoing instrument and acknowledged that he executed the same as his free act and deed as such Trustee.

 

 

My commission expires June 26, 1987

 

 

 

 

STATE OF PENNSYLVANIA	)
	:	SS.
COUNTY OF LEHIGH	)

 

On this 27 ^th day of July, 1981, before me, a Notary Public with and for said County and State, personally appeared R. M. McCann and R. G. Masters, to me personally known, who, being each by me duly sworn, did depose and say that they are respectively a Vice President and an Assistant Secretary of Bethlehem Steel Corporation, a general partner of Mahoning Ore and Steel Partnership, the partnership named in the foregoing instrument, and that said instrument was signed in behalf of the partnership by authority of its Management Committee and as the free act and deed of said partnership.

 

 

My commission expires January 7, 1985.

 

This instrument prepared by:

 

F. L. Hartman

Attorney at Law

1100 Superior Avenue

Cleveland, Ohio 44114

 

 

 

 

AMENDED MAHONING AGREEMENT

 

TABLE OF CONTENTS

 

 

 

 

MAHONING

OPERATING

AGREEMENT

 

THIS AGREEMENT, made as of this 1st day of January, 1979, by and between WILLIAM W. WATSON, LOUIS W. HILL, JR., HARRY L. HOLTZ and JOSEPH S. MICALLEF, as Trustees (hereinafter referred to as “Lessors”), under that certain Trust Agreement executed December 7, 1906, by and between the Lake Superior Company, Limited, an association organized under the laws of the State of Michigan, and LOUIS W. HILL, JAMES N. HILL, WALTER J. HILL and EDWARD T. NICHOLS, which Trust is commonly known as Great Northern Iron Ore Properties, (hereinafter called the “Trust”), and MAHONING ORE AND STEEL PARTNERSHIP, a Minnesota partnership (hereinafter referred to as “Lessee”).

W I T N E S S E T H

WHEREAS, under and by virtue of the mining lease dated April 1st, 1895, recorded in the Office of the Register of Deeds of St. Louis County, Minnesota in Book “R” of Agreements on Page 499, et seq., and recorded in the Office of the Register of Deeds of Itasca County, Minnesota, in Book 32 of Miscellaneous Records on Page 118, et seq. (which lease as heretofore supplemented, amended, and modified, is hereinafter called the “Mahoning Lease”), AMMI W. WRIGHT and others, as lessors, leased to the MAHONING ORE COMPANY, as Lessee, certain mineral and auxiliary lands for mining and related purposes then comprising the Mahoning Mine which now is as hereinafter described; and

WHEREAS, the Lessors have now become and are the owners by mesne transfers of the fee to the Mahoning Mine and the owners of all the right, title and interest of the Lessors and their successors under the Mahoning Lease; and

 

 

WHEREAS, the Lessee has succeeded to all the right, title and interest of the MAHONING ORE COMPANY, as Lessee, and is now the owner and holder of the Mahoning Lease and the leasehold estate created thereby; and

WHEREAS, the parties hereto wish to further amend, modify and extend the Mahoning Lease all upon the terms and subject to the provisions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and undertakings of the parties hereinafter set forth, the parties respectively mutually covenant and agree that effective from and after the date hereof, the Mahoning Lease shall be, and the same is, amended, supplemented, and modified so that each, all and singular the terms, provisions, conditions and agreements of the Mahoning Lease shall be those hereinafter set forth, which shall be and constitute, from and after the date hereof, the entire lease and agreement between the parties and in substitution and in lieu of the Mahoning Lease as heretofore supplemented, amended and modified.

AMENDED MAHONING LEASE

ARTICLE I

GRANTING CLAUSE

LEASE OF PREMISES

Lessors, concurrently with the execution of this Agreement, by an indenture of Lease in the form of Exhibit A attached hereto and by this reference incorporated herein, do demise, lease, and grant unto Lessee, for the term of forty-eight (48) years from and after the date hereof, to and including December 31, 2026, those tracts or parcels of land situated in the State of Minnesota described as follows:

 

 

 

In St. Louis County :

Lots One (1), Two (2), Three (3) and Four (4) of Section One (1) and Lots One (1), Two (2), Three (3) and Four (4) of Section Two (2), (all of the foregoing described lots herein collectively referred to as “Tract 1”); the Northeast Quarter of the Southwest Quarter (NE¼-SW¼), the Southeast Quarter of the Southwest Quarter (SE¼-SW¼), the Northwest Quarter of the Southeast Quarter (NW¼-SE¼) and the North Half of the Southwest Quarter of the Southeast Quarter (N½-SW¼-SE¼) of Section Two (2); the Southeast Quarter of the Southeast Quarter (SE¼-SE¼) of Section Three (3); the Southwest Quarter of the Northeast Quarter (SW¼-NE¼), the Northwest Quarter of the Southeast Quarter (NW¼-SE¼) and the Southwest Quarter of the Southeast Quarter (SW¼-SE¼) of Section Eight (8); the Southwest Quarter of the Northeast Quarter (SW¼-NE¼) and the Southeast Quarter of the Northeast Quarter (SE¼-NE¼) of Section Nine (9); the Northeast Quarter of the Northeast Quarter (NE¼-NE¼), the Northeast Quarter of the Northwest Quarter (NE¼-NW¼), the Northwest Quarter of the Northwest Quarter (NW¼-NW¼), the Southwest Quarter of the Northwest Quarter (SW¼-NW¼), the Southeast Quarter of the Northwest Quarter (SE¼-NW¼) and the Northwest Quarter of the Southwest Quarter (NW¼-SW¼) of Section Ten (10), Township Fifty-Seven (57) North of Range Twenty-One (21) West, St. Louis County;

 

In Itasca County :

 

The Southeast Quarter of the Southwest Quarter (SE¼-SW¼) of Section Twenty-Seven (27), Township Fifty-Seven (57) North of Range Twenty-Two (22) West, Itasca County.

 

which tracts or parcels of land are hereinafter referred to as the “Premises.”

ARTICLE II

WARRANTY

Lessors covenant and agree that Lessee, its successors or assigns, paying the yearly rents and taxes called for herein and fully performing the covenants and agreement herein contained to be performed, shall and may at all times peaceably and quietly hold and enjoy the Premises, subject to the prior conveyances and encumbrances set out in Exhibit A hereto, and shall receive and take the profits thereof without any molestation, interruption and eviction by Lessors, or any other person or persons lawfully claiming or to claim the same by, through or under Lessors.

 

 

 

ARTICLE III

DEFINITIONS

The following terms, whenever used in this Agreement, shall have the respective meanings hereinafter set forth unless the context shall otherwise require:

(a)

“Concentratable Ore”: all iron ore not falling within the definition of Merchantable Iron Ore or Taconite, which under good mining practices ordinarily and customarily would be mined and treated prior to shipment.

 

(b)

“Concentrates”: the beneficiated products resulting from the treatment of Concentratable Ore by any process whatsoever.

 

(c)

“Mahoning Mine”: the Premises and including all estates, rights, privileges, interests and other property, real or personal, as the same are more particularly described, defined and limited herein and in that certain Indenture of Lease, a true copy of which is attached as Exhibit “A”.

 

(d)

“Merchantable Iron Ore”: iron ore which, in accordance with good engineering methods and in accordance with practices then prevailing in similar work and operations on the Mesabi Range, ordinarily and customarily would be mined and shipped in its natural condition without treatment other than dry screening.

 

(e)

“Oxide Pellets”: pellets in which the iron mineral is composed essentially of hematite (Fe 2 0 3 ), which pellets as of the date hereof are produced in the trade from ore containing hematite or magnetite, or any combination thereof.

 

(f)

“Reduced Pellets or Partially Reduced Pellets”: pellets in which the iron mineral is composed essentially of iron (Fe) and some iron oxide (Fe0).

 

 

 

(g)

“ship”, “shipped” and “shipment”: (i) when used with reference to Merchantable Iron Ore or Taconite, the removal of such ore from the Mahoning Mine for any purpose other than stockpiling, and, if stockpiled, the removal from stockpile for any purpose other than restockpiling; (ii) when used with reference to Concentratable Ore, the removal of such ore from the Mahoning Mine for any purpose other than stockpiling or treatment, and, if stockpiled, the removal from stockpile for any purpose other than treatment or restockpiling; and (iii) when used with reference to Concentrates, the removal of such Concentrates from the place of treatment for any purpose other than stockpiling;

 

(h)

“Taconite”: any ferruginous chert or ferruginous slate in the form of compact, siliceous rock, in which the iron oxide is so finely disseminated that substantially all the rock must be reduced to a size less than 20 mesh (Tyler) by fine grinding in order to obtain a marketable iron-bearing material. Whenever the term “Taconite” is used in this Agreement it shall mean Taconite in its natural state prior to any treatment.

 

(i)

“Taconite Concentrates”: the concentrated product resulting from the treatment of Taconite by any process whatsoever.

 

(j)

“Taconite Lands”: the Premises and all other lands in Townships 57, 58 and 59, Ranges 20, 21 and 22 owned or controlled by Lessee or any successors or successor thereto.

 

(k)

“ton”: the long ton of two thousand two hundred and forty (2,240) pounds avoirdupois.

 

 

 

(l)

“tract” or “tracts”: one or more parcels of land, respectively, described in accordance with the land subdivision system used by the United States Government in the survey of public lands, being either a government lot or one-quarter (¼) of a quarter section, according to the United States Government Survey of the government township in which the parcel is located.

 

(m)

“iron unit”: iron content expressed as a percent of total content e.g. one iron unit equals one percent (1%) of iron (Fe) or 22.4 pounds when referring to a ton.

ARTICLE IV

LESSEE’S COVENANTS

In consideration of the rights and privileges in the said Indenture of Lease and herein granted, Lessee hereby covenants and agrees to and with the Lessors, as follows:

Section 1.

Operations

All operations of the Lessee under this Agreement which involve the mining and removal of any ores or materials from the Premises shall be conducted in a good and workmanlike manner and in accordance with good engineering practices, then in effect on the Mesabi Range and Lessee shall furnish to Lessors from time to time upon their request, (i) one copy of Lessee’s mine maps and cross sections (with the results of drilling shown thereon), (ii) reports of the tonnage of all Taconite shipped to any concentrating plant and the results of any operations involving Taconite in the said concentrating plant, and (iii) statements of the estimated tonnage of all Merchantable Iron Ore, Concentrates, Taconite, Concentratable Ore and any other iron-bearing materials mined from the Premises and stockpiled thereon or elsewhere, it being understood that all such information shall be such as the Lessee customarily obtains for its own records and Lessee shall not be required to compile special reports or statements for such

 

 

 

purposes; provided, however, that, subject to the above requirements, the Lessee may, from time to time and when and as it deems it desirable, use and employ such methods of mining, treating, concentrating or beneficiating any or all of the ores and iron-bearing materials in or derived from the Premises as it may desire or find most profitable or economical.

Section 2.

Royalty

The Lessee shall on the 20th day of January, April, July and October of each and every year, herein referred to as “quarter days”, or on or before the day ensuing if that day falls on Sunday or a holiday, so long as this Agreement continues in force, pay to the Lessors in the following name and address: Trustees, Great Northern Iron Ore Properties, W-2081 First National Bank Building, St. Paul, Minnesota 55101, or such other place in the United States as Lessors shall from time to time designate in writing, for all Merchantable Iron Ore, Concentrates and Taconite derived from the Premises which shall be by the Lessee shipped as herein provided, during the three (3) months preceding the first day of the month in which such payment is to be made as aforesaid (each such period being herein called the “calendar quarter”), royalty at the following respective rates per ton:

A.

For each ton of Merchantable Iron Ore or Concentrates, a sum equal to    ***    , which amount shall be subject to increase in the same proportion that the Producer Price Index for All Commodities (with 1967 equal to 100 as a base), published by the Bureau of Labor Statistics of the U.S. Department of Labor, formerly referred to as the Wholesale Price Index (hereinafter called the “Index”) or any successor Federal agency publishing such Index increases for the first month of the calendar quarter (i.e., for January, April, July or October, as the case

 

 

 

may be) in which Merchantable Iron Ore or Concentrates are shipped exceeds the January, 1977 Wholesale Price Index level of 188.0;

B.

For each ton of Taconite, a sum calculated as follows:

 

(1)

The base royalty, except as provided in subparagraph (2) below of this Paragraph B shall be    ***    per ton of Oxide Pellets as increased by    ***    of the sum of the additional amounts per ton determined in accordance with subparagraphs (a) and (b) below.

 

(a)

Reference shall be made to the Producer Price Index for All Commodities (with 1967 equal 100 as a base), published by the Bureau of Labor Statistics of the United States Department of Labor, or any successor Federal agency publishing such index (hereinafter called “the Index”), for the second month in such calendar quarter (i.e., for February, May, August or November, as the case may be). If the Index for such month shall exceed the January, 1977 Wholesale Price Index of 188.0, the excess shall be computed and the result multiplied by    ***    . For example, if the Index increased to 210.4 for August, 1978, the additional amount for the calendar quarter of July, August, and September of 1978 would be computed as follows:

***

(b)

If the prevailing Lake Erie market price per iron unit of Lake Superior District Oxide Pellets of type, grade and character similar to those being produced in the trade as of the date hereof delivered

 

 

 

to rail of vessel at Cleveland, Ohio, as published in Iron Age or as otherwise provided in Paragraph C below of this Section 2, shall exceed the price of $    ***    per unit of iron, an additional amount shall be determined, which shall be the difference between $    ***    multiplied by 64 (deemed iron content per ton), and said prevailing Lake Erie market price multiplied by 64, and the difference, if any, multiplied by    ***    . For example, if such prevailing Lake Erie market price at Cleveland, Ohio, was increased to $    ***    per unit, the amount would be computed as follows:

 

 

 

						Difference
						$	***
							***
						$	***
						x	***
						$	***

 

(2)

Anything hereinabove contained to the contrary notwithstanding, for the period of this Agreement prior to January 1, 1992, the base royalty with respect to each ton of Oxide Pellets produced from Taconite shipped from   ***   (hereinafter called “initial base royalty”) shall be   ***   plus   ***   of the amount by which the base royalty determined as provided in subparagraph 2 B(1) exceeds   ***   . If, prior to 1992,    ***    is economically exhausted by the shipment of Taconite producing less than

 

 

 

***    tons of Oxide Pellets, determined in accordance with subparagraph 2 B(3) hereof, then the foregoing initial base royalty shall apply to shipments of Taconite from any of the Premises until January 1, 1992 or   ***    tons of Oxide Pellets are produced, whichever occurs first.

(3)

The base royalty pursuant to subparagraph (1) or the initial base royalty pursuant to subparagraph (2) above shall be converted to a Taconite basis as follows:

For each quarter year in which Taconite is mined hereunder, the conversion factor shall be based upon Lessee’s plant operations in such quarter year and shall be a ratio determined by dividing the total number of tons of Oxide Pellets produced from the plant or plants in which Taconite from the Premises is concentrated by the total number of tons of Taconite from the Taconite Lands processed in such plant or plants to produce such tonnages of Oxide Pellets during such quarter year. For purposes of the foregoing sentence, tonnages of Oxide Pellets shall include Taconite Concentrates produced but not pelletized, the tonnages of which shall be the number of tons of Oxide Pellets which could be expected to result from the pelletizing of such Taconite Concentrates, provided, however, that Taconite Concentrates making up customary in-plant surge piles shall be excluded. The conversion factor multiplied by the base royalty or the initial base royalty, as the case may be, shall be the royalty on Taconite for the quarter year. If the final figures required to make the computations necessary to compute the royalty in each quarter

 

 

 

on the above basis are not available, the most reasonable figures available shall be used and such royalty shall be adjusted to the final tonnages and recovery at the end of each calendar year and an appropriate adjustment based on such information made to the Lessors not later than January 20th of the next calendar year with the royalty statement required by such date.

C.            In the event some period other than 1967 is used as a base of 100 in determining the Index for the purpose of computing the escalation amount, such Index shall be adjusted so as to be in correct relationship to such 1967 base. In the event such Index is changed or is not published by any Federal agency, the index to be used as aforesaid shall be that index published, which, after necessary adjustment, if any, provides the most reasonable substitute for the Index during any period subsequent to March, 1978, it being intended to substitute an index which most accurately reflects fluctuations in the prices of all commodities in the manner presently reported by the Index. If the parties hereto cannot agree upon a substitute index which accomplishes this purpose, such question shall be determined by arbitration in the manner hereinafter provided.

If the prevailing Lake Erie market price of Lake Superior District iron ore pellets published in Iron Age shall change in various issues of Iron Age published during a calendar quarter, such market price as published in the last issue of that calendar quarter shall be employed for the purpose of making the royalty adjustment provided herein for such calendar quarter. If prices quoted in such last issue of Iron Age indicate there is in effect more than one bona fide Lake Erie market price, then the arithmetical average of all of the prices quoted by all

 

 

 

of the companies shown as quoting a price in such issue as being in effect at that time shall be deemed the prevailing Lake Erie market price.

If Iron Age shall cease publication, or shall cease to publish such prevailing market price of Lake Superior District iron ore pellets delivered to rail of vessel at Cleveland, Ohio, or shall be in error and such price shall be published by some other publication generally accepted in the trade as reliable, then quotations of such price as published by such other publication shall be accepted and employed for the purpose of making the royalty adjustment hereinabove provided. If, and for so long as, such prevailing price of iron ore pellets delivered at Cleveland as aforesaid shall not be published in Iron Age or in another publication accepted as aforesaid, then this agreement shall nevertheless continue in full force and effect, and the parties hereto shall determine by mutual agreement another method or formula to be used until such published price may again be available and which will produce as nearly as may be the same rates of royalty as would have prevailed under a continuation of such publication of such prices. If such published price ceases to be available and the parties hereto fail within a reasonable time to agree upon such new method or formula for the adjustment of royalty rates hereunder, the same shall be determined by arbitration in the manner hereinafter provided.

D.        Royalties paid on Taconite shipped hereunder include the value of tailings derived from such Taconite and any such tailings so derived shall be the property of Lessee, provided, however, that if any of such tailings shall be sold, Lessors will be paid    ***    of the proceeds of such sale, after deduction of all costs and expenses of Lessee attributable to such sale.

E.         If Lessee shall produce on the Taconite Lands Reduced Pellets or Partially Reduced Pellets rather than or in addition to Oxide Pellets from iron-bearing material mined from the Premises, or if Lessee shall encounter in the Premises mineral in economically

 

 

 

mineable quantities which Lessee wishes to remove and treat and for which no royalty rate is provided in this Agreement, Lessee shall notify Lessors thereof and the parties hereto shall promptly thereafter attempt to agree upon a base royalty for Reduced Pellets or Partially Reduced Pellets or a royalty rate for said mineral, as the case may be, but a failure to agree shall not be subject to arbitration, nor shall such a failure suspend or invalidate this Agreement nor the rights and privileges of Lessee herein.

Section 3.

Minimum Royalty

For each year during which this Agreement shall continue in effect and regardless of whether Lessee shall conduct on the Premises any mining or other operations, Lessee, subject to the provisions hereinafter contained, shall pay to Lessors as minimum royalty or rent for and with respect to such year for the Premises and the rights and privileges granted hereby, a minimum payment of a sum computed at the following rates:

A)

***    with respect to calendar year 1979; and

 

B)

***    with respect to each calendar year thereafter, subject to escalation as hereinafter provided.

The amount of minimum royalty payable with respect to each calendar year shall be escalated as to minimums to be paid commencing in 1981 by multiplying the minimum royalty payable by a fraction, the numerator of which is the base royalty on Oxide Pellets for the last calendar quarter of the year immediately preceding the year in which such minimum royalty is payable and the denominator of which is the base royalty for the last calendar quarter of 1979. For example, if the base royalty as of December 31, 1979 is $    ***   , and as escalated to the last quarter of 1980 is $   ***    , the amount of minimum royalty payable for the first quarter of 1981 and each of the three succeeding calendar quarters would be calculated as follows:

 

 

 

 

Base annual minimum for 1981			=	$    ***
Base quarterly minimum for 1981			=	$    ***
1981 quarterly escalated minimum			=
$    ***    x	$   ***	÷ 4 =
	$    ***		$    ***

 

If, at any time after the first calendar year of this Agreement, the accumulated tonnage of Taconite shipped plus the tonnage paid for in minimum royalty in excess of the minimum royalty used and applied in satisfaction of earned royalty hereunder shall exceed the equivalent of 40 million tons of Oxide Pellets, then commencing with the next full calendar quarter and for the remaining term hereof the minimum royalty payable hereunder shall be an amount equal to   ***    of the amount otherwise payable as minimum royalty as determined in accordance with the preceding two paragraphs. To determine the total number of tons of Oxide Pellets paid for by such excess minimum royalty, such excess minimum royalty shall be divided by the royalty rate on Oxide Pellets in effect in the calendar quarter for which such determination is made.

The annual minimum royalty or rent shall be paid in quarterly installments on the 20th day of January, April, July and October in each year, each installment being for the calendar quarter preceding the quarter in which such payment date falls.

The minimum royalty payment for the calendar quarter in which termination of this Agreement occurs, if such termination occurs other than on the last day of such quarter, shall be that proportion of the minimum royalty payment due for such quarter which the number of days from the first day of such quarter to the effective date of termination bears to the total number of days in such quarter.

When and if for any calendar year, Lessee shall have paid to Lessors as minimum royalty or earned royalty or both an amount equal to four times the minimum royalty payment due for

 

 

 

the first calendar quarter of such year, then and in that event there shall be no minimum royalty payment required for any subsequent calendar quarter of that year.

If earned royalty payable by Lessee for any calendar quarter shall be less than the amount of the minimum royalty payment for the calendar quarter, determined as hereinabove provided, Lessee shall pay Lessors on the quarter day immediately following such quarter, an additional sum equal to the difference between such earned royalty for such calendar quarter and the minimum royalty payment for such calendar quarter and such additional sum (hereinafter called “prepaid royalty”) shall be considered an advance or prepayment of earned royalty on subsequent shipments.

Lessee shall have the right to apply any prepaid royalty, including the prepaid royalty in the amount of    ***    existing on the date of this Agreement, in any subsequent calendar quarter of the same or any subsequent calendar year to the extent required or so far as the same will go in satisfaction of the amount of earned royalty payable by Lessee for any such quarter which is in excess of the minimum royalty payment for such calendar year. Notwithstanding anything to the contrary contained in the foregoing sentence, on the date on which the Trust shall terminate and cease existence, any prepaid royalty credit then existing hereunder shall be considered liquidated and cancelled, provided that any minimum royalty payable after such date shall continue to apply in satisfaction of any earned royalty payable hereunder during the balance of the term of this Agreement. In addition, during the three (3) calendar years immediately preceding the year in which the Trust shall terminate and cease existence, Lessee shall have the right to apply and credit any earned royalty paid hereunder during any of the said three (3) calendar years in excess of minimum royalty toward the satisfaction of any minimum royalty otherwise payable for the period commencing with the start of the said three (3) calendar years and ending on the date on

 

 

 

which the Trust shall so terminate and cease. For purposes of the immediately preceding sentence, minimum royalties payable during such period shall be calculated at the escalated minimum royalty rate applicable at the commencement of said period, and as of the date of the termination of the Trust minimum royalties payable thereafter shall be calculated as escalated in accordance with the second paragraph of this Section 3.

Section 4.

Weights

In the event that Merchantable Iron Ore, Concentrates or Taconite are shipped from the Premises by a common carrier railroad company, the Merchantable Iron Ore, Concentrates or Taconite so shipped shall (except as hereinafter provided) be weighed separately by the railroad company transporting the same, which weights shall determine the quantities as between the parties hereto. In the event that Merchantable Iron Ore, Concentrates or Taconite are shipped from the Premises, by means other than a common carrier railroad company, the weights of the Merchantable Iron Ore, Concentrates or Taconite so shipped shall (except as hereinafter provided) be determined separately by weighing upon belt scales or other weighing devices of standard design customarily used on the Mesabi Range in similar practices, or by such other means as may be mutually agreed upon between the parties hereto, and the weights so obtained shall be prima facie evidence between the parties hereto of the amounts so taken. If Taconite from the Premises is intermingled before weighing with Taconite from other lands, the tonnage shipped shall be determined by a count of uniformly loaded vehicles or units (which vehicles or units shall at all times be of uniform size, or in any event of a known capacity, so that accurate accounting of the quantity of material transported thereby can always be made) from the Premises and from said other lands and by allocation of the combined weights determined by such belt scales or other weighing devices upon the basis of such vehicle or unit count, or by

 

 

 

such other means as may be mutually agreed upon between the parties hereto. Lessors shall at any and all reasonable times have free access to and right of inspection of any such belt scales or other weighing devices, and may make such tests to verify the accuracy thereof as they may desire and any variance, discrepancy or inaccuracy discovered in such belt scales or other weighing devices shall be promptly corrected by Lessee and any differences arising therefrom shall be promptly adjusted and settled. Lessee shall as promptly as possible after the end of each calendar month supply Lessors with its statement as to all weights obtained by such belt scales or other weighing devices during the preceding calendar month, specifying separately the tonnage of Merchantable Iron Ore, Concentrates and Taconite. Lessee will cause any common carrier railroad company transporting any ore mined from the Premises promptly to furnish to Lessors the usual and customary written certificates showing the true weight of the various classifications of ore so transported over its lines of railroad and giving the number and weight of each car and the place from which shipped, so that Lessors may accurately determine the weights and identity of each grade of the various classes of said ore so produced and shipped from the Premises. Said written certificates, when properly certified by the agent of the railroad company furnishing the same shall be prima facie evidence of all facts therein stated.

Section 5.

Reports

The Lessee, at the time of each quarterly payment of royalty, shall transmit to the Lessors a true and accurate statement showing for the preceding calendar quarter the following, to-wit:

(a)

The tonnage and analysis of Merchantable Iron Ore and Concentrates, respectively, mined from the Premises and shipped during such quarter;

 

(b)

The tonnage and analysis of all Concentratable Ore mined from the Premises taken to any treating plant during such quarter and the results of any operations

 

 

 

involving the said ore in the said treating plant, including tonnage and iron unit recovery and analyses of Concentrates and tailings;

(c)

The total tonnage and classification of Taconite and iron-bearing material mined from the Premises and stockpiled or shipped during such quarter;

 

(d)

The indices, factors, tonnages and calculations essential to make the determinations specified in Section 2 of this Article IV.

The royalty statement transmitted for the fourth calendar quarter of each year shall include or be accompanied by an accurate statement of the total number of tons of Taconite processed in such year in the Lessee’s plant or plants from all sources and the total number of tons of Oxide Pellets (including the natural iron content thereof) produced from such Taconite in such year.

The Lessee will also furnish to the Lessors annually, if requested, an accurate statement and report of exploration and development work upon the Premises during the preceding year and at least a quarter-portion of all exploration samples, and, when requested by the Lessors in writing, a quarter-portion of mine or mill samples.

Section 6.

Taxes

The Lessee shall pay all lawful taxes and assessments, general and specific, ordinary and extraordinary which may be lawfully imposed, levied or assessed upon any and all of the Premises and on the Merchantable Iron Ore, Concentratable Ore, Concentrates, Taconite, Oxide Pellets and other iron-bearing material in which Lessors retain an interest taken or derived therefrom, and on all improvements and personal property thereon and on all royalty paid by it to the Lessors pursuant to this Agreement while this Agreement shall remain in force with respect thereto, but excluding any taxes upon or measured by the net income of Lessors, and shall

 

 

 

furnish the Lessors with duplicate receipts promptly after Lessee obtains them, showing the payment of all such assessments and taxes; provided, however, that the Lessee shall always have the right to contest in the courts or otherwise the validity of any such taxes or assessments in case the same shall be claimed to be unlawful, unjust, unequal or excessive, or to take such other steps or proceedings as may be necessary to secure a cancellation, reduction, readjustment or equalization thereof before the Lessee shall be required to pay and discharge the same or any part thereof; but provided further that the Lessee shall not permit or suffer the Premises or any part thereof or any Merchantable Iron Ore, Concentratable Ore, Concentrates, Taconite and Oxide Pellets from the Premises or any improvements or personal property thereon, to be sold at any time for any such taxes or assessments.

Section 7.

Liens

While this Agreement shall remain in force, the Lessee shall protect the Premises and all improvements thereon and iron-bearing material mined thereon or concentrates derived therefrom and not sold and disposed of in due course of business or shipped therefrom, from all mechanics’ and laborers’ liens and shall keep the title to the same free and clear from all clouds or encumbrances on account of, or in any manner arising from, the mining operations conducted hereunder or the use and occupancy hereunder of the Lessee or the agents, servants, or employees of the Lessee, and the Lessee shall protect, indemnify and save harmless the Lessors from claims, actions and liability of whatever kind, arising from the operations of the Lessee in its work or mining under the provisions of this Agreement.

Section 8.

Indemnity

Lessee shall do and perform, or refrain from doing, with respect to the Premises, whatever may be legally required to comply with all valid laws, ordinances, regulations, rules,

 

 

 

orders, and requirements (now existing or hereafter enacted, adopted, or made during the term hereof) of any and all federal, state, county, and municipal authorities having jurisdiction over the manner in which Lessee conducts its mining operations in, or use of, the Premises (including the use of other lands in connection therewith), including specifically, but not exclusively, mine land reclamation; control of stockpiling of surface overburden or iron formation materials, and of tailings basins (location, erosion, vegetation, terracing or other practical controls); stabilization of open pit embankments; and air, water, and solid waste pollution. The termination of this Agreement for any reason shall not release Lessee from any liability accrued prior to such termination, and the Lessee shall erect such proper fences or guard rails with respect to all shafts, pits, caves and other openings and excavations upon or encompassing the Premises as will be adequate and sufficient to prevent persons, vehicles and animals from falling into the same, and shall leave the surrendered Premises, as a result of its operations or business hereunder, in such condition as will not constitute a nuisance to persons and adjacent property, and as will fully comply with all valid laws, ordinances, regulations, rules, orders and requirements then existing of any and all governmental authorities having jurisdiction over the conditions in which lands are left at the termination of mining operations. Lessee agrees to defend and save harmless Lessors, except to the extent of Lessors’ negligence or contributory negligence, from expense for any liability for personal injury, property damage or orders or penalties imposed by governmental authority arising out of the acts or omissions of Lessee in its mining or use of the Premises. This indemnity shall expire five years from the date of the expiration or termination of this Agreement and during such five years, Lessors shall give Lessee reasonable written notice of any such alleged claims and an opportunity to contest same.

 

 

 

ARTICLE V

CONTROVERSY NOT TO SUSPEND RIGHTS

The uninterrupted right of the Lessee to the use of the Premises and to exercise the rights and privileges herein provided for shall continue unsuspended notwithstanding any controversy or disagreement between the parties hereto respecting the same, provided the Lessee shall duly pay all royalties which may accrue on shipments and minimum royalty or rent at the time or times and in the manner stipulated in and by this Agreement.

ARTICLE VI

INSPECTION BY LESSORS

Lessors, or their duly authorized agents and employees, shall at all times have the right to enter upon the Premises or stockpile grounds to inspect or survey the same, provided they shall not thereby unnecessarily or unreasonably hinder or interrupt the operation of the Lessee.

Lessors or their representative(s), as Lessors shall authorize in writing to Lessee, shall have the right to enter any plant of the Lessee in which ore or Taconite from the Premises is beneficiated for the purpose of inspection of operations in such a manner as will not unreasonably interfere with said operations and as will comply with mine safety laws and regulations.

ARTICLE VII

TERMINATION BY LESSORS

If the royalties or the minimum royalty or rent provided for remain unpaid after the time above specified, or if the Lessee shall fail to keep any of the other conditions and covenants herein expressed to be performed or observed by the Lessee, and if either such failure shall continue for sixty (60) days after the receipt by the Lessee of written notice from the Lessors,

 

 

 

specifying any such failure, then and from thenceforward it shall be lawful for the Lessors to declare this Agreement terminated and the rights of the Lessee hereunder forfeited; provided, however, that if the Lessee shall deny the failure alleged by the Lessors and shall demand arbitration thereof in the manner hereinafter provided, the period required for the hearing and determination of such matter by the arbitrators shall not be deemed a part of said sixty (60) days hereinbefore referred to; and if the contention of the Lessors be sustained by the arbitrators, the Lessee shall have sixty (60) days after the issuance of the decision by the arbitrators in which to correct the failure complained of.

ARTICLE VIII

NOTICES

All payments, reports, statements, and notices required or permitted to be made and transmitted to the Lessors by the Lessee may be made or given by depositing the same in the United States mail, postage prepaid, addressed to the Lessors at their address hereinbefore referred to, or at such other address as the Lessors may from time to time designate in writing, and all notices and communications authorized to be given by the Lessors to the Lessee shall be addressed to the Lessee at 1100 Superior Avenue, Cleveland, Ohio, 44114, or at such other address as the Lessee may from time to time designate in writing; but any notice of termination or default shall be effective only on actual delivery by certified mail or otherwise.

ARTICLE IX

TERMINATION BY LESSEE

The Lessee shall have the right at any time, and from time to time, upon one year’s notice in writing, to terminate this Agreement in its entirety, such notice to be given in the manner provided in Article VIII above; and in such case this Agreement shall terminate in its entirety

 

 

 

one (1) year after the giving of such notice by the Lessee, provided that all of the covenants, agreements and conditions hereof obligatory upon the Lessee, including payment of all minimum royalty or rent and the royalties, if any, and other sums that may have accrued and become payable hereunder (except current taxes required to be paid by the Lessee but not then due and payable, which must and will be paid by the Lessee within ten (10) days after they become due and payable), shall have been fully kept, observed and performed by the Lessee; and upon any such surrender or termination of this Agreement, the Lessee may, and upon the written request of the Lessors shall, promptly execute and record, in any public office where the aforementioned indenture of lease may have been filed or recorded, an appropriate form of release and discharge.

ARTICLE X

SURRENDER AND REMOVAL

Upon the termination of this Agreement, by expiration of time, or otherwise, the Lessee shall peacefully surrender possession of the Premises to the Lessors; and thereafter the Lessee shall have six (6) months in which to remove all engines, tools, machinery, railway tracks, shaft houses, buildings, dwellings or structures and all other property of every nature and description erected or placed by it upon the Premises so surrendered, except any and all supports placed in any shafts, drifts, or openings upon the Premises, or any timber or framework necessary to the use and maintenance of shafts or approaches to mines or tramways within mines, none of which shall be so removed by the Lessee; provided always, however, that none of said property may be so removed by the Lessee unless all payments of taxes (except taxes not then due and payable), royalties and other amounts payable hereunder shall have been made and all other covenants, agreements and conditions hereof obligatory upon the Lessee shall have been fully and faithfully observed and performed. Any such property not removed within the six (6) month period shall

 

 

 

become the property of Lessors, or Lessors may remove the same and be reimbursed by Lessee for the cost thereof, provided such removal is completed and such reimbursement is requested of Lessee within twelve (12) months after the expiration of Lessee’s six (6) month period of removal.

ARTICLE XI

LIEN OF LESSORS

The Lessors shall at all times have and hold a lien upon all iron ore and iron-bearing material (or any concentrates or products thereof) mined from the Premises but not shipped, and upon all improvements placed upon the Premises by the Lessee, as security for any unpaid balance of money due hereunder, and as security for the performance by the Lessee of each and all of the covenants and conditions hereof obligatory upon the Lessee. Nothing herein contained with reference to the creation of a lien as above described shall prevent the sale and removal of said iron ore, iron-bearing material, concentrates or products in the usual course of Lessee’s business, nor the removal of any other property at any time when said Lessee shall not be in default; and the above referred to lien shall not, in case of sales of ore, concentrates or products to third parties, be deemed to follow the ore, concentrates or products as against such third parties.

ARTICLE XII

CROSS MINING RIGHTS

In the conduct of mining operations on the Premises, the Lessee shall have the right, if it so desires, to mine and remove any of the iron ore or iron-bearing material existing upon the Premises, on, over or through, any adjoining or other property, and may, in accordance with good engineering practices then in effect on the Mesabi Range, place or store the iron ore and

 

 

 

iron-bearing material (or any concentrates or products thereof) from the Premises upon any other property owned or controlled by the Lessee. The Lessee may also, if it so desires, use the Premises, or any part thereof, and any shafts, openings, pits, plants and stockpile grounds sunk or made thereon, for the mining, removal, treatment and storing of any iron ore or iron-bearing material (or any concentrates or products thereof) from any adjoining or other property, or for any purpose or purposes connected therewith. The removal of iron ore or iron-bearing material (or any concentrates or products thereof) from the Premises under the provisions of this Article shall not be treated as a mining and shipment to require the payment of royalty thereon, and royalty thereon shall accrue only when the same are weighed and shipped from such other property; provided, however, that until such weighing and shipment, the rights and liens of the Lessors in and to such iron ores, iron-bearing material (or any concentrates or products thereof), including but not limited to the right of ingress to and egress from the lands on which iron ore and iron-bearing material (or concentrates or products thereof) is stored, shall be preserved and protected by the recognition thereof by the owners of such other property to which same may be removed for a period of at least five (5) years after the termination of the leasehold rights of the Lessee in and to such other property; and the Lessors hereby agree to and do and will recognize for a period of five (5) years after the termination of this Agreement with respect to the Premises so used, the rights and liens of the owners of such other lands in and upon any ores, concentrates or products therefrom which may be handled over, or placed, or stored upon any part of the Premises. Should any iron ore or iron-bearing material (or any concentrates or products thereof) of Lessors be stored upon lands in Lessee’s possession, Lessee shall, to the extent the Lessee has title thereto, before conveying or otherwise transferring any of such lands to other parties or at the termination of this Agreement, transfer title to any of such lands to Lessors or shall give to

 

 

 

the Lessors in writing the right to enter upon the lands and to remove its material so long as any such material is stored thereon.

The Lessee may also deposit any stripping or waste material from the Premises upon any adjoining or other lands and may deposit any stripping or waste material from any adjoining or other lands upon the Premises, but only at a location on the Premises approved by Lessors and in such manner as will not interfere with any future mining operations on the Premises.

ARTICLE XIII

BENEFICIATION

Taconite and Concentratable Ore upon which royalty may accrue or be payable hereunder, may be treated on or off the Premises. If Lessee desires to treat Taconite on the Premises, it may construct at a convenient and proper location as mutually agreed upon the Premises a suitable plant or plants for properly treating such Taconite. Lessee shall also have the right, at its election, and when and in any manner it sees fit, to wash, jig, screen, sinter or otherwise treat, beneficiate or concentrate any Concentratable Ore taken from the Premises and for that purpose such Concentratable Ore may be removed to a plant or plants established or maintained either upon the Premises or elsewhere upon lands owned or controlled by Lessee, and iron ore or iron-bearing material from adjoining or other property may be beneficiated, concentrated or otherwise treated in any such plant or plants as may be established or maintained on the Premises.

With respect to tailings resulting from the concentration, beneficiation or treatment of Concentratable Ore, Lessee shall have and is hereby granted the right to commingle in common deposit tailings resulting from the concentration or treatment of Concentratable Ore from the Premises with tailings resulting from the concentration or treatment of Concentratable Ore

 

 

 

removed from any adjoining or other property, it being understood and agreed, however, that Lessors shall have no right, title or interest in tailings which have been produced from the treatment of Taconite on which Lessee shall have paid the royalties herein provided. Lessee shall keep accurate track and record separately of the quantities before concentration or treatment of all such Concentratable Ores either by weighing the same upon belt scales or other weighing devices of standard design customarily used on the Mesabi Range in similar practices, or by the use of uniformly sized cars or other containers or measuring devices uniformly filled or by such other mutually agreed methods, and the tailings commingled in any tailings basin as hereinbefore provided shall be divided and allocated among the parties contributing thereto on the basis of the quantities of the Concentratable Ores from the various properties contributing thereto. Lessee, upon termination of this Agreement, shall, by a good and sufficient instrument, grant and convey to the Lessors their respective ownership in the aggregate of such tailings from Concentratable Ore deposited in any such tailings basin, together with a perpetual easement for the removal thereof, reserving to itself, however, all such proportions, if any, as may be owned by it and the right to continue to deposit in such tailings basin tailings resulting from the treatment of ores removed from other lands.

It is further understood and agreed that in order to facilitate the operations of the Lessee in any such plant or plants so established or operated either upon the Premises or other lands owned or leased by the Lessee, the Lessee may, if it so desires, mix any Taconite or Concentratable Ore from the Premises with Taconite or Concentratable Ore of a similar character from any other property or properties within the Taconite Lands now or hereafter owned or leased by Lessee prior to the beneficiation, concentration or treatment thereof; provided, however, that in case and so long as the Lessee shall exercise such rights to mix such materials it

 

 

 

shall, as to Taconite or Concentratable Ore going into each such plant or plants, keep accurate track and record separately of the quantity of the Taconite or Concentratable Ore from the Premises going into such mixture, and of the quantity of Taconite or Concentratable Ore from other properties going into such mixtures, either by weighing the same before mixing, or by the use of uniform-sized cars or other containers or measures or other mutually agreed methods; and in such event the Concentrates resulting from the treatment of such Concentratable Ore shall be conclusively deemed to have been derived from the Premises and from such other lands in the proportion in which the quantity of Concentratable Ore from the Premises used in such mixture bears to the total quantity of Concentratable Ore contained in such mixture.

If Taconite is to be commingled after having been weighed, but before shipment, the Lessee shall cause the quantity and character thereof to be carefully and accurately determined so that the respective interests of Lessors in such commingled material shall at all times be ascertainable and shall at all times be protected to the end that Lessors shall receive when due, the same amount of royalty for its proportion of such commingled material, as nearly as possible, as it would have received if such material had not been commingled and had been beneficiated, stockpiled and shipped separately.

For any quarter year in which the Lessee shall have exercised its rights to so mix Taconite or Concentratable Ore from the Premises with those from other lands prior to the completion of their beneficiation, concentration or shipment, the report by the Lessee to the Lessors, for such quarter, as required by Section 5 of Article IV, shall also show separately, and for each classification of ores upon which royalty is to be paid, the following:

(a)

The total weight of the Concentrates or Oxide Pellets made from such mixed ores or materials in such quarter; and

 

 

 

(b)

The weight or measured units (i.e., number of cars) of –

 

(1)

the Taconite or Concentratable Ore derived from the Premises; and

 

(2)

the Taconite or Concentratable Ore derived from other lands, so going into the production of such Concentrates or Oxide Pellets; and

 

(c)

The weight or amount of such Concentrates assigned as derived from the Premises as provided in this Article.

ARTICLE XIV

MATERIALS FROM PRIOR OPERATIONS

Iron-bearing material resulting from the treatment of Concentratable Ore and lean ore deposited in stockpiles and tailings basins on the Premises or parts thereof pursuant to the Mahoning Lease prior to this Agreement are included under this Agreement for the term hereof. Certain tonnages of iron ore derived from the Premises are, as of the date hereof, in stockpile on the North Half of the North Half of the Southwest Quarter (N½-N½-SW¼) of Section Thirty-Five (35), the North Half of the Northeast Quarter of the Southeast Quarter (N½-NE¼-SE¼) of Section Thirty-Four (34), the Northwest Quarter of the Southeast Quarter (NW¼-SE¼) of Section Thirty-Five (35), Township Fifty-Eight (58) North, Range Twenty-One (21) West, and the Northwest Quarter of the Northeast Quarter (NW¼-NE¼) of Section Ten (10), Township Fifty-Seven (57) North, Range Twenty-One (21) West, Minnesota. The agreement dated May 20, 1913 between West Missabe Land Co. and Lessee, the agreement dated May 19, 1947 between Grant Iron Mining Company and Lessee, and the agreement dated December 1, 1950 between Grant Iron Mining Company and Lessee, all of which govern such stockpiles on the above lands, are terminated and superseded by the provisions hereof. The provisions hereof shall also govern that stockpile situated on the Northeast Quarter of the Southwest Quarter

 

 

 

(NE¼-SW¼) and the Northwest Quarter of the Southeast Quarter (NW¼-SE¼), both in Section Thirty-Four (34), Township Fifty-Eight (58) North, Range Twenty-One (21) West, known as the “Midget Dump.”

Lessee shall have the right to remove such iron ore from stockpile and the removal and commingling thereof shall be included as being within the ordinary course of mining or grading out for the purposes of this Agreement.

ARTICLE XV

ARBITRATION

In case any disagreement or controversy shall arise between the parties hereto relative to the observance or fulfillment of