West Virginia-Harrison, Doddridge and Marion Counties Sublease - Dupech Inc., Reserve Coal Properties Co. and Patriot Mining Co. Inc.
SUBLEASE
THIS SUBLEASE is made and entered into as of the 10th day of April,
1997, by and between DUPECH, INC., a Delaware corporation herein referred to as
"Dupech", and RESERVE COAL PROPERTIES COMPANY, a Delaware corporation herein
referred to as "Reserve" (Dupech and Reserve are referred to collectively as
"Sublessor"), and PATRIOT MINING COMPANY, INC., a West Virginia corporation
having a business address of P.O. Box 4360, Star City, West Virginia 26504,
herein referred to as "Sublessee".
WHEREAS, by Agreement and Lease dated March 30, 1959, of record in
the office of the Clerk of the County Commission of Harrison County, West
Virginia in Deed Book No. 920, at page 49 (and also of record in the Marion
County Clerk's office in Deed Book No. 697, at page 98, and in the Doddridge
County Clerk's office in Deed Book No. 147, at page 318) (which Agreement and
Lease is hereinafter referred to as "the Original Lease", a copy of which has
been provided to Sublessee and is made a part hereof by this reference), Guy
Corporation, a West Virginia corporation, Virginia A. Tetrick, a widow, Willis
G. Tetrick, Jr. and Helen V. Tetrick, his wife, Margaret Anne Tetrick, single,
and Catherine Tetrick Sutton and M.Y. Sutton, her husband ("the Original
Lessors" who, together with their successors-in-interest, are sometimes referred
to collectively as "the Lessors") leased unto Consolidation Coal Company ("the
Original Lessee") certain tracts of the Pittsburgh or Nine Foot vein or seam of
coal situate in Harrison, Doddridge and Marion Counties, West Virginia ("the
Leased Premises"), all as more particularly described in the Original Lease;
WHEREAS, by virtue of various supplemental agreements and
assignments (including but not necessarily limited to those instruments
identified on Exhibit A, copies of
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which have been provided to Sublessee, which, together with the Original Lease,
are collectively referred to as "the Lease"), the Original Lease has been
expanded so as to include additional coal properties, and the leasehold estate
originally vested in the Original Lessee is now vested in Sublessor; and
WHEREAS, Sublessor and Sublessee have agreed to a sublease of a
portion of the Leased Premises and have entered into this Sublease in order to
memorialize their agreements.
NOW, THEREFORE, WITNESSETH: That for and in consideration of the
premises and other good and valuable consideration, Sublessor and Sublessee
hereby covenant and agree as follows:
1. GRANT. Subject to the receipt of written consent of the Lessors,
if such consent is required under the Original Lease as supplemented or amended,
(the responsibility for diligently pursuing and obtaining which is hereby
assumed by Sublessee) (which consent, if required under the Original Lease as
supplemented or amended, must be provided in writing to Sublessor within one
year from the date of this Sublease and which consent shall not be given by the
Lessors upon conditions which change or affect the Sublessor's rights or
obligations under the Original Lease as supplemented or amended or this
Sublease), Sublessor hereby grants, demises, subleases and sublets unto
Sublessee, for the term(s) hereinafter specified, all of Sublessor's right,
title and interest in and to the Pittsburgh seam or vein of coal which is
mineable and removable from those certain tracts or parcels of land containing
3694 acres, more or less, situate in Harrison County, West Virginia, ("the
Sublease Premises") and which are shown in yellow on the map attached hereto as
Exhibit B, together with any and all mining rights and privileges vested in
Sublessor pursuant to the Lease. Sublessor further grants to Sublessee the right
to transport through the Sublease Premises coal
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mined from other properties; provided that all wheelage payments owing to the
Lessors under the Lease for the exercise of such right shall be paid to
Sublessor by Sublessee, without right of recoupment.
There is expressly excepted from this Sublease, and reserved to
Sublessor, all of the coal and mining rights and other minerals, if any, not
specifically subleased herein ("the Reserved Minerals"), together with the right
to mine and remove the Reserved Minerals by operations which do not materially
interfere with Sublessee's mining operations to be performed hereunder. It is
understood and agreed by Sublessee that the rights and privileges hereby granted
to Sublessee shall be construed and limited to such rights and privileges as
Sublessor possesses and has the lawful right to sublease; and no other rights
and privileges are subleased or granted hereby.
2. SUBLESSEE'S OPERATIONS. Sublessee covenants and agrees that it
will, at its expense, apply for and diligently pursue all permits, licenses and
approvals required by law to mine and remove the coal hereby subleased; and,
subject to matters beyond the control of Sublessee, Sublessee will have secured
all requisite permits for such mining by the end of the Initial Term as
hereinafter provided. Once all requisite permits have been obtained, Sublessee
shall expeditiously commence and diligently conduct mining operations on and in
the Sublease Premises in a good and workmanlike manner and in such a manner as
will recover the maximum quantity of merchantable and mineable coal therefrom.
Sublessee's operations will, at all times, comply with the duties and
obligations of the lessee under the Lease. Subject to market conditions beyond
the control of Sublessee, Sublessee's mining operations will achieve a minimum
annual production of 250,000 tons of Pittsburgh coal from the Sublease Premises,
or from adjacent property owned, leased or controlled by Sublessee.
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Sublessee shall, prior to commencement of mining hereunder, submit
in triplicate to Sublessor for approval, which approval shall not be
unreasonably withheld, Sublessee's proposed mining plans. If no specific
objection to such proposed plan is made by Sublessor within 30 days, then the
plan shall be deemed to have been approved by Sublessor.
3. TERM. The term of this Sublease shall be for Five (5) years,
commencing upon the date of execution of this Sublease ("the Initial Term"),
subject to extension or termination as hereinafter provided. If, at the end of
the Initial Term, Sublessee has secured all requisite mining permits and has
commenced mining operations hereunder, or on adjacent property owned, leased or
controlled by Sublessee, but all merchantable and mineable coal contained in the
Sublease Premises has not been removed, and provided that Sublessee has achieved
and is maintaining a minimum annual production of 250,000 tons of Pittsburgh
coal, then Sublessee, at its option, may extend the term of this Sublease from
year to year thereafter ("the Extended Term") until all of the mineable and
merchantable Pittsburgh coal has been mined and removed from the Sublease
Premises, or until expiration of the Lease, whichever first occurs. If Sublessee
desires to extend this Sublease for an Extended Term, Sublessee shall give
notice in writing to Sublessor of its intent to extend at least sixty (60) days
prior to the expiration of the Initial Term or the then current Extended Term.
If Sublessee is unable to obtain all requisite mining permits within one year
from the date of execution of this Sublease, which requisite permits Sublessee
covenants and agrees to diligently pursue, and Sublessee notifies Sublessor in
writing of its intent to terminate this Sublease, then this Sublease shall
terminate.
4. ADVANCE MINIMUM ROYALTY PAYMENTS. During the Initial Term of this
Sublease, Sublessee shall pay to Sublessor a total recoupable Advance Minimum
Royalty of $1,500,000, payable as follows: a) upon execution of this Sublease,
the sum of
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$100,000; b) upon the first anniversary date of this Sublease, the sum of
$200,000; c) upon the second anniversary date of this Sublease, the sum of
$300,000; d) upon the third anniversary date of this Sublease, the sum of
$400,000; e) and upon the fourth anniversary date of this Sublease, the sum of
$500,000. Such recoupable Advance Minimum Royalty payments due during the
Initial Term shall not be delayed or avoided because of force majeure or
surrender or termination of the Sublease, unless this Sublease is terminated
pursuant to Section 3 above.
During the Extended Term of this Sublease, Sublessee shall pay unto
Sublessor, beginning on the first day of the Extended Term and continuing on
each anniversary date thereafter, an annual recoupable Advance Minimum Royalty
in the amount of $300,000 for each year of the Extended Term that this Sublease
continues in effect.
Upon commencement of mining operations hereunder, Sublessee shall
have the right to reimburse itself, from the applicable Earned Royalty (but not
from wheelage payments due to the Lessors under the Lease), for all such
recoupable Advance Minimum Royalty payments theretofore accumulated and carried
forward, by mining free from Earned Royalty, a sufficient quantity of coal so as
to recoup all such Advance Minimum Royalty payments. It is understood that
Sublessee shall not be entitled to a refund of Advance Minimum Royalty payments
if for any reason Sublessee does not exhaust its credit for Advance Minimum
Royalty hereunder.
If, at any time prior to the expiration or termination of this
Sublease, Sublessee shall have paid unrecouped Advance Minimum Royalty in an
aggregate amount which exceeds the Earned Royalty which would be due on the
merchantable and mineable Pittsburgh coal then remaining in place in the
Sublease Premises, then Sublessee shall be relieved from the obligation of
continuing to make Advance Minimum Royalty payments for so long as the aggregate
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unrecouped Advance Minimum Royalty payments exceed the Earned Royalty due, at
their applicable rates, on the remaining unmined merchantable and mineable
Pittsburgh coal.
5. EARNED ROYALTY PAYMENTS. Sublessee also agrees to pay, or credit
against Advance Minimum Royalty payments made, to Sublessor for all coal mined
and removed by Sublessee from the Sublease Premises: (a) an Earned Royalty of
Three and One-Half percent (3.5%) of the gross sales price per ton, F.O.B. mine;
and (b) the earned royalty payable by Sublessor to the successors-in-interest of
the Original Lessors under the Lease (which earned royalty is equal to
twenty-five cents (25(cent)) per ton prior to January 1, 2003, and thrEe percent
(3.0%) of the gross sales price per ton thereafter). Sublessor and Sublessee
covenant and agree that the term "gross sales price", as used in this Sublease,
shall have the same meaning as it has in the Lease. Sublessor and Sublessee
agree that neither Sublessor, Consolidation Coal Company nor any subsidiary may
purchase any coal mined hereunder or control the operations of Sublessee
hereunder. If Sublessor gives notice to Sublessee in writing that, in
Sublessor's reasonable judgment, a particular purchaser is not a bona fide
purchaser of coal mined by Sublessee from the Sublease Premises, Sublessor may
elect to substitute for the gross selling price reported by Sublessee the
prevailing market price of such coal, F.O.B. mine, based upon recent sales by
Sublessee of coat of comparable quality to bona fide purchasers. For any coal
consumed on or off the premises without sale by Sublessee, the gross selling
price for the purpose of computing the royalty shall be the prevailing market
price, F.O.B. mine, as described above, of such coal at the time of shipment
from the Sublease Premises, or, if used on the Sublease Premises, at the time of
use.
6. PAYMENT OF EARNED ROYALTY.Earned Royalty shall be accounted for
and paid to Sublessor (50% to Dupech and 50% to Reserve as provided below)
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without the necessity for previous demand therefor on or before the twenty-fifth
(25th) day of the month next following the calendar month during which the coal
was mined and removed by Sublessee. Interest shall accrue at the rate of 1-1/2%
per month on each late payment of Earned Royalty and Advance Minimum Royalty due
to Sublessor hereunder; provided that in no event shall the interest rate
applicable to late payments exceed the maximum rate permissible by law.
Sublessee shall also furnish to each Sublessor or Sublessor's agent,
with each payment of Earned Royalty, a report showing (i) the quantity of coal
mined from the Sublease Premises during the preceding calendar month, using
certified scale weights or such other method acceptable to Sublessor, (ii) the
gross sales price received by Sublessee for such coal, and (iii) such other
documentation that may be reasonably requested by Sublessor to confirm any
payment or calculation hereunder. The additional methods used to calculate
weights may include, but are not limited to, determining by planimeter tonnage
from 6 month mine maps as submitted by Sublessee, or measurements by Sublessee
using prudent engineering practices for areas mined, volume displacement,
surveys of coal pits, measurements of coal density, and sales books and accounts
of the Sublessee. Sublessor shall have the right, at its expense and risk,
during normal business hours to audit such books or records of Sublessee as
necessary to confirm the accuracy of such Earned Royalty payments. All such
books and records which are made available to Sublessor by Sublessee shall be
maintained as confidential by Sublessor. Sublessee shall not be required to pay
Earned Royalty to Sublessor with respect to any portion of the Sublease Premises
which a court of last resort determines is owned or controlled by a third party
rather than Sublessor.
In the event any party (exclusive of the Lessor or a party claiming
under the Lessor asserts any claim or title to the Sublease Premises superior to
Sublessor, the Sublessor
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shall cooperate with Sublessee in Sublessee's prosecution of an action to quiet
title until resolution thereof. The Sublessee may pay all royalties into an
escrow account jointly established by Sublessor and Sublessee until such
resolution is confirmed. Any sums paid in escrow by Sublessee together with any
interest earned shall be deemed payment of royalties or other sums due
hereunder. In the event that the Sublessor's ownership interest in Sublease
Premises is less than the interest represented, then the actual interest owned
shall be used to calculate the royalties; and the Sublessor shall reimburse
Sublessee for any amount previously paid which exceeds the amount which would
have been paid had the royalties been based on the actual interest.
All payments of Advance Minimum Royalty, Earned Royalty and wheelage
payments due from Sublessee to Sublessor hereunder shall be made to Sublessor as
follows:
(a) Fifty percent (50%) to Dupech at
P. O. Box 371508M
Pittsburgh, PA 15251
and
(b) Fifty percent (50%) to Reserve at
Dept L1088P
Pittsburgh, PA 15264-1088
Copies of all payments, reports and accountings made to either
Sublessor shall be contemporaneously furnished to Supervisor of Leased Mineral
Resources, Consol Inc., 1800 Washington Road, Pittsburgh, Pennsylvania 15241.
7. RECLAMATION OF PREMISES. Sublessee shall reclaim the Sublease
Premises in such a manner as shall satisfy the laws of the State of West
Virginia, as well as the laws of the United States of America, in force at the
time of termination of the mining; and,
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Sublessor also shall comply with any specific reclamation requirements of the
Lease and this Sublease.
8. PAYMENT OF TAXES.Upon commencement of the Initial Term, and
thereafter for the duration of the Sublease, Sublessee shall pay all real estate
taxes on the Sublease Premises, and all taxes on its equipment and facilities on
the Sublease Premises, as well as all other taxes, assessments, impositions or
charges incurred by Sublessee as a result of its mining operations hereunder.
Sublessee shall reimburse to Sublessor, within ten (10) days of receipt of an
invoice for same, all real estate taxes paid by Sublessor on the Sublease
Premises for periods which include any portion of the term of this Sublease.
9. SURVEY AND MAPPING. Sublessee shall have a survey of the mine
workings made by or under the supervision of a registered professional mining
engineer promptly as the work progresses; and Sublessee shall keep an accurate
and complete map of the Sublease Premises and mine workings, which map shall be
on a scale of 1 inch = 100 feet and shall conform in all respects with the
requirements of the mining laws of the State of West Virginia. Such map shall
show all property lines. Such map, certified to accuracy by a registered
professional engineer or licensed surveyor, shall at all times be accessible to
Sublessor, its agents or representatives, for inspection; and a true, complete
and correct copy of the same, clearly showing the mining progress during the
preceding three-month period, shall be furnished in duplicate each three months
to Sublessor without demand. Such map shall also include such additional
information which Sublessor may require.
10. PRESERVATION OF RECORDS. Sublessee shall keep and preserve, for
a period of two (2) years from and after the mining, books and accounts of the
mining, selling and shipping of coal mined hereunder, and said books shall be
open at all reasonable times for
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the inspection of the authorized agent of the Sublessor for the purpose of
comparing and verifying the reports rendered by Sublessee.
11. LESSEE INDEPENDENT; EMPLOYEES OF SUBLESSEE. Sublessee shall mine
coal under this Sublease according to its own means and methods. It is
understood and agreed that Sublessee is an independent lessee and that all
persons working for Sublessee in connection with its mining operations shall be
its employees subject only to its orders and supervision and shall be paid
directly by Sublessee. Sublessee shall be responsible in all respects for the
hiring, employment and working conditions of all individuals engaged to carry on
the operations herein contemplated. Neither Sublessor nor any of its agents,
servants or employees shall have the right to direct, supervise or control the
manner or methods in which the work is to be performed, or the manner or method
in which the assets or resources of Sublessee are dedicated, used or spent;
provided, however, that Sublessor reserves the right unto itself and its agent
or representative to inspect, at its and their risk, at all reasonable times the
mining operations of Sublessee on the Sublease Premises for the purpose of
determining whether it is being done in conformity with this Sublease and the
mine plan provided to the Sublessor, to sample the coal, to check the weights,
measures, accounts and methods of Sublessee in order to verify the accuracy of
the payments made by Sublessee hereunder. Sublessee agrees to pay persons
employed by it in accordance with the requirements of the Fair Labor Standards
Act of 1938, as amended, and to keep all such records as are required by said
Act. Sublessee shall pay all social security and unemployment insurance taxes,
black lung benefits and other compensatory assessments in respect of its work
force, and shall comply with all State and Federal laws and regulations, and any
other applicable laws and regulations pertaining to employment in the coal
mining industry (including without limitation the obligations owed to
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Sublessee's employees under Title IV of the Federal Coal Mine Health and Safety
Act of 1969, as amended.)
12. INDEMNIFICATION OF SUBLESSOR; INSURANCE.
(A) Sublessee agrees to and shall hold Sublessor harmless
from, and shall defend and indemnify Sublessor against, any and all claims,
damages, actions, liabilities, loss, cost or expense arising out of or in
connection with Sublessee's operations under this Sublease, including the
performance of Sublessee's covenants and obligations hereunder. This indemnity
shall include, but not be limited to, indemnity against liability by reason of
any injuries (including death) sustained by servants, agents or employees of
Sublessee or of Sublessor or by other persons or for damage done to property
(including loss of the use thereof) of Sublessee or of Sublessor or of other
persons in the performance of this Sublease or in connection with anything
incidental thereto, caused by the negligence of Sublessee or of the servants,
agents or employees of Sublessee or by the negligence of other persons under the
control of Sublessee, and whether said loss, damage or injury was sustained by
Sublessee or by Sublessor or by the servants, agents or employees of Sublessee
or of Sublessor or by both Sublessee and Sublessor or by other persons; and in
the event that any suits, actions or proceedings shall be brought in any court
against Sublessor to enforce any liability, or alleged liability arising
hereunder, Sublessee shall defend said suits, actions and proceedings, and, if
any judgments shall be rendered therein against Sublessor, Sublessee shall
satisfy and discharge the same and all the costs and expenses thereof, including
reasonable attorneys' fees, to the full and complete exoneration of Sublessor.
Sublessee shall not be responsible for any damages resulting from the negligence
of Sublessor, its servants, agents or employees.
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(B) Sublessee shall carry comprehensive General Liability
Insurance in bodily injury limits of not less than Two Million Dollars each
person and Three Million Dollars each occurrence, and Property Damage Liability
in limits of not less than Two Million Dollars per occurrence. This insurance
shall include Comprehensive Automobile Liability Insurance, including both owned
and non-owned automobiles and trucks, premises and operations, including
completed operations and contractual liability coverage. Sublessee shall furnish
to Sublessor, before the operations or work herein contemplated is commenced,
certificates showing such insurance coverage, and evidence that such coverage
will not be cancelled without notice to Sublessor.
(C) Sublessee shall carry workmen's compensation insurance or
participate in a qualified self-insurance program approved by the appropriate
governmental authorities in, and occupational disease insurance and shall pay
all unemployment, social security, Black Lung, and reclamation taxes and all
other charges and taxes which may be levied or assessed because of its
operations hereunder.
13. RIGHTS OF THIRD PARTIES. Sublessee shall so conduct its
operations hereunder as not to violate any applicable rights of subjacent or
adjacent support and if there shall arise any question of damage to any such
person as a result of mining operations of Sublessee hereunder, Sublessee shall
and does assume all responsibility therefor, between the parties hereto, without
claim upon Sublessor except to its assistance in the property defense of its
title to the Sublease Premises.
14. DEFAULT AND TERMINATION. The Sublessee shall be held in default
under this Sublease when:
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i) Sublessee shall fail to make payments of the royalties,
taxes, or any other monies herein provided to be paid by
Sublessee when they are due and payable.
ii) Sublessee shall fail to keep, observe or perform any of
the covenants, agreements or conditions in this Sublease
contained by or on the part of said Sublessee to be
kept, observed or performed;
iii) Sublessee shall make an assignment for the benefit of
creditors;
iv) Sublessee shall be adjudicated a bankrupt or file an
application seeking bankruptcy; and/or
v) Sublessee shall suffer or permit a receivership of
Sublessee's property;
Upon the occurrence of one or more events of default, Sublessor may,
at its option, forthwith declare this Sublease forfeited and thereupon the same
shall be forfeited and all rights hereunder of Sublessee shall immediately cease
and determine; provided, however, that said option may only be exercised under
(i) and/or (ii) above if any such event(s) of default shall continue for a
period of ten (10) days after written notice from Sublessor requiring the curing
or remedying of such default. All of the rights and remedies of Sublessor shall
be cumulative, and shall not be deemed to exclude Sublessor from any other legal
or equitable remedy or remedies which it may have. Failure on the part of
Sublessor to enforce any of the rights herein reserved by it on default for a
period shall not operate as an estoppel or as a waiver against Sublessor or
prevent it at any subsequent time from electing to exercise all or any of such
rights for any subsequent default. Notwithstanding any provision in this
Sublease to the contrary, Sublessee shall be and at all times shall remain
liable for mine closing and reclamation costs, including the cost of any
perpetual or temporary treatment of water discharges; and Sublessee shall hold
Sublessor harmless therefrom.
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15. SUBLESSOR'S OBLIGATION TO MAINTAIN LEASE. Sublessor shall,
subject to faithful performance by Sublessee of its obligations hereunder, keep
and maintain the Lease in full force and effect insofar as, but only insofar as,
the Sublease Premises are concerned. Sublessor will not intentionally take or
fail to take any action which would constitute a default or surrender, or give
rise to a termination, of the Lease insofar as the Sublease Premises are
concerned. In the event Sublessor takes or fails to take any action required to
maintain the Lease in effect with respect to the Sublease Premises, which action
or inaction does not relate to an obligation of Sublessee hereunder, and the
Lessor declares the Lease is in default as a result of such action or inaction
on the part of Sublessor, then Sublessee may, at its option, if the default
continues longer than an applicable cure period in the Lease, cure such default
and deduct the expense of doing so from the Earned Royalty payments thereafter
due to Sublessor.
16. BANKRUPTCY AND OTHER ACTION. If Sublessee becomes a debtor in a
bankruptcy or insolvency proceeding, or its business or assets are taken over by
an assignee for the benefit of the creditors or by a receiver or otherwise, then
Sublessor may at its option and without notice terminate this Sublease. Neither
this Sublease, the leasehold estate hereby created, nor the right of Sublessee
hereunder shall be subject to sale or disposition or possession thereof, in
whole or in part, by or under any judgment or decree of any court or by or
through any judicial process of law, equity or bankruptcy, except for the
purpose of enforcing, at the instance of Sublessor, its rights hereunder, in one
or more transactions during the term of this Sublease. This Sublease provides
Sublessor with the benefit of Sublessee's "personal services," a Sublessee whom
Sublessor considers to be uniquely competent and qualified to perform the
services required under this Sublease. Those services are essential to the
achievement of the
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maximum recovery of coal and of the highest gross sales price for such extracted
coal, both of which are necessary elements in allowing Sublessor the greatest
benefit of its bargain. Accordingly, in the event of Sublessee's bankruptcy, the
assignment of Sublessee's interest under this Sublease to another person or
entity which did not possess Sublessee's competence, qualification, skill,
credit, character and substance, would be extremely injurious to Sublessor.
Sublessor and Sublessee have therefore agreed that, except as may be otherwise
provided herein, this Sublease is not to be assigned, transferred or subleased.
If, notwithstanding such agreement, a bankruptcy court were to determine that
this Sublease is assignable, Sublessor and Sublessee acknowledge and agree that
there are certain elements which are essential to a determination of whether the
prospective assignee has provided adequate assurance of future performance.
These elements include the prospective assignee's ability to make the investment
necessary to mine the subleased coal, its record and reputation in the coal
mining industry, its Applicant Violator System history (including cure of
violations), its demonstrated competence to mine, and its experience in
Appalachian mining of coal of a magnitude, and under mining conditions, similar
to the mining operations conducted on the Sublease Premises. Sublessor and
Sublessee acknowledge and agree that the failure to consider such factors which
are clearly appropriate in the coal mining lease context, and the injudicious
application of an adequate assurance test, would result in substantial injury to
the Sublessor.
17. NOTICES. All deliveries, notices, demands, instructions,
communications and requests which may or are required to be given by either
party to the other party shall be in writing (except in the case of emergency,
in which case appropriate verbal communications shall be followed by confirming
written communications) and shall be deemed
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to have been properly given if sent by registered or certified United States
mail, postage prepaid, addressed as follows:
(a) If to Sublessor:
(i) To Dupech, Inc.
1800 Washington Road
Pittsburgh, PA 15241
ATTN: Supervisor Leased Mineral Resources
and
(ii) Reserve Coal Properties Company
1800 Washington Road
Pittsburgh, PA 15241
ATTN: Supervisor Leased Mineral Resources
or such other address as Sublessor may, from time to time, designate by notice
to Sublessee; and
(b) If to Sublessee, to:
Patriot Mining Company
2708 Cranberry Square
Morgantown, WV 26505
ATTN: Land Manager
or such other address as Sublessee may, from time to time, designate by notice
to Sublessor.
18. LANDLORD'S LIEN AND OTHER SECURITY. Sublessee shall remain
current with all its financial obligations in connection with improvements on
the Sublease premises or equipment used therein.
Sublessee grants to Sublessor a statutory landlord's lien to secure
the payment of all royalties or other monies of every character occurring or
becoming due at any time under the Sublease and the performance by Sublessee of
all its obligations hereunder.
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19. ASSIGNMENT. In recognition of the fact that Sublessor has relied
upon the business reputation and mining skills possessed by Sublessee in
entering into this Sublease, and in further recognition of the fact that
Sublessee's business reputation and mining skills constitute a portion of the
consideration for this Sublease, it is hereby agreed that Sublessee shall not
assign or transfer this Sublease nor sublease the Sublease Premises (nor any
rights therein, including, without limitation, the right to obtain future mining
permits for the Sublease Premises), except as provided hereinbelow, nor create,
suffer or permit any lien or encumbrance thereon, without the prior written
consent of Sublessor to such assignment, transfer or Sublease. Sublessor shall
be under no obligation to give such consent regardless of the reasonableness of
any request. If such consent be granted: (i) it shall not be construed to be a
waiver of the foregoing covenant as to any future assignment, transfer,
sublease, lien or encumbrance and each successive assignment, transfer, sublease
or instrument creating a lien or encumbrance shall so stipulate; and (ii) it
shall be a condition to the effectiveness of any such assignment or sublease
that Sublessee shall have first delivered to Sublessor a copy of such assignment
or sublease, together with a written and legally binding covenant made by the
assignee or sublessee, on behalf of itself and its heirs, personal
representatives, successors and assigns, in favor of Sublessor and its
successors and assigns, that such assignee or sublessee will faithfully keep and
perform all of the terms, obligations and conditions of this Sublease and of the
assignment or sublease. Unless the written consent of Sublessor thereto is first
had and obtained, any assignment, transfer, sublease, lien or encumbrance,
either voluntary, involuntary or by operation of law, of this Sublease or any
rights therein, shall cause, at the option of Sublessor, an immediate forfeiture
of this Sublease, and the rights and interests of Sublessee shall forthwith
cease and terminate. Any transfer of a controlling interest (a "Controlling
Interest") in
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Sublessee, whether such transfer is voluntary, involuntary or by operation of
law, unless such transfer is by reason of death, shall be deemed an assignment
of this Sublease. The term "Controlling Interest" shall mean the ownership or
control of 50% or more of the stock of Sublessee or the ownership or control of
substantially all of the assets of Sublessee.
Notwithstanding any provision of this section 19 to the contrary,
Sublessee may assign this Sublease to a subsidiary or affiliated corporation or
entity (a "Permitted Assignee") without obtaining the prior consent of
Sublessor, provided that Sublessee shall give Sublessor prompt written notice of
such assignment, and, provided further that no assignment to a Permitted
Assignee will relieve Sublessee of its obligations to Sublessor hereunder.
20. ACCEPTANCE OF PREMISES "AS-IS". Sublessee takes and accepts this
Sublease with the knowledge and understanding that coal may have been mined and
removed from the Sublease Premises, that Sublessor makes no guarantee or
warranty with respect to the quantity or quality of the coal hereby subleased,
and that the coal being subleased in its present condition and circumstances.
21. MEMORANDUM OF SUBLEASE. A memorandum of this Sublease will be
executed by the parties upon the execution of this agreement; and such
memorandum may be placed of record upon the commencement of the Initial Term.
22. GOVERNING LAW. This Sublease shall be governed by and construed
under the laws and judicial decisions of the State of West Virginia.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their corporate
name to be signed to duplicate originals hereof, by their property officers,
hereunto duly authorized, all as of the day and year first hereinabove written.
ATTEST: DUPECH, INC.
/s/ By /s/
----------------------------------- ---------------------
SECRETARY Its Vice President
ATTEST: RESERVE COAL PROPERTIES COMPANY
/s/ By /s/
----------------------------------- ---------------------
SECRETARY Its Vice President
ATTEST: PATRIOT MINING COMPANY
/s/ By /s/
----------------------------------- ---------------------
SECRETARY Its Treasurer
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EXHIBIT A
THE LEASE
- Agreement and Lease dated March 30, 1959, between Guy Corporation, et
als., and Consolidation Coal Co.
- Letter Agreement dated March 30, 1959 re: wheelage payments
- Letter Agreement dated March 30, 1959 re: Section 6 properties
- Supplemental Agreement and Lease dated November 2, 1960 between Guy
Corporation, et als., and Consolidation Coal Co. (Deed book 845, Page 135)
- Second Supplemental Agreement and Lease dated January 6, 1961 between Guy
Corporation, et als., and Consolidation Coal Co. (Deed Book 871, Page 354)
- Consent to Assignment and Covenant of Assumption dated June 30, 1966
between Continental Oil Co. and Guy Corporation, et als.
- Supplemental Agreement and Lease dated September 15, 1966 between Guy
Corporation, et als., and Consolidation Coal Co.
- Fourth Supplemental Agreement and Lease dated March 30, 1969 between Guy
Corporation, et als., and Consolidation Coal Company
- Fifth Supplemental Agreement and Lease dated November 20, 1978 between Guy
Corporation, et als., and Consolidation Coal Company
20