DEED OF GROUND LEASE
THIS DEED OF GROUND LEASE (this "Lease"), dated as of the 5th day of
May, 1998, between UPSHUR PROPERTY, INC., a Delaware corporation (the
"Landlord") and COVOL TECHNOLOGIES, INC., a Delaware corporation (the "Tenant"),
recites and provides:
RECITALS:
The Landlord is the owner of certain coal related property located in
Upshur County, West Virginia, described on Exhibit A attached hereto. The
Landlord wishes to lease the Premises, an approximately ten (10) acre parcel, to
the Tenant for the purposes of Tenant owning and operating a synthetic fuel
manufacturing plant (the "Facility" as defined herein), and the Tenant wishes to
lease the Premises from the Landlord, upon completion of the Facility. The
Tenant intends to own and operate the Facility on the Premises for producing
solid synthetic fuel.
ARTICLE 1
Definitions
The following terms shall have the indicated meanings:
"Adjoining Property" means the property currently owned by the Landlord
adjoining the Premises.
"Covol" means Covol Technologies, Inc., its successors and assigns.
"Easements" means all those access, utility and other easements, rights
of way, licenses and permits which Landlord has the ability to grant to Tenant
and which are reasonably necessary or appropriate (1) for passage of personnel,
materials and equipment to and from the Facility and the Premises, (2) for
construction, operation, maintenance and demolition of the Facility, and (3) for
the provision of utility services to the Premises. To the best of Landlord's
knowledge, Landlord has the
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ability to grant to Tenant such of the foregoing easements as are reasonably
necessary for Tenant's intended use of the Premises and Easements.
"Event of Default" means any of the events described in Section 9.1.
"Facility" means those facilities, buildings, structures and other
improvements located on or to be located upon the Premises for producing
synthetic fuel, using a process patented by Tenant, together with those
facilities, buildings, structures and other improvements also located or to be
located on the Premises, for washing coal and coal fines in preparation for
processing, if any, and all plant equipment, apparatus, machinery and fixtures
of every kind and nature forming part of such facilities, buildings, structures
and other improvements which are the subject of that certain Asset Purchase
Agreement of even date herewith, between Covol and Mountaineer.
"Leased Surface Property" means that certain tract of surface property
identified as the Leased Surface Property on the map attached hereto and made a
part hereof as Exhibit A which may be surveyed by Tenant hereafter.
"Mountaineer" means Mountaineer Synfuel, L.L.C., a Delaware limited
liability company.
"Permitted Encumbrances" means (i) liens and other encumbrances now or
hereafter recorded in the Office of the Clerk of the County Commission of Upshur
County, West Virginia; and (ii) unrecorded rights of way, easements, or
restrictions granted by Landlord to Tenant or to a third party in connection
with the operation of the Facility.
"Premises" means (i) the Leased Surface Property, (ii) the subsurface
of the Leased Surface Property up to and including a depth of five (5) feet, and
(iii) the Easements.
"Rent" means the rental required to be paid pursuant to Section 2.2 and
all other amounts required to be paid hereunder by the Tenant to the Landlord.
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"Taxes" means all personal and real property, rental, excise, gross
receipts, business, occupation and other taxes and assessments of every kind and
nature whatsoever, levied or assessed against the Premises or the Facility, as
well as those taxes arising from the use, occupancy or operation of the Facility
or the activities of the Tenant or any person or entity claiming by, through or
under the Tenant, the non-payment of which would adversely affect the Landlord
or the Premises.
"Term" shall mean, unless terminated earlier pursuant to the terms and
conditions of this Lease, the term described in Section 2.3.
ARTICLE II
Lease of Premises; Rent; Term
Section 2.1 Lease. The Landlord hereby demises and leases the Premises
to the Tenant and the Tenant takes and leases the Premises from the Landlord for
the purpose of Tenant owning and operating the Facility, subject to and in
accordance with the provisions hereof, and together with the further rights and
obligations contained in Section 2.7 hereof. Landlord hereby expressly excepts
and reserves, and the grant of lease set forth in this Section 2.1 above is made
subject to, the right and privilege of Landlord to transport, or permit the
transport of, coal, coal by-products, goods, equipment and personnel over,
across and through the Premises, so long as such use does not unreasonably
interfere with Tenant's use and occupancy of the Premises.
Section 2.2 Rent. Tenant shall pay to the Landlord, as ground rent
hereunder, for each year during the Term, One Thousand Dollars ($1,000) per
annum payable in advance on the tenth day of each such year commencing upon the
Commencement Date.
Section 2.3 Term. Unless sooner terminated as provided herein, the term
of this Lease shall commence on the date hereof (the "Commencement Date") and
shall expire on July 1, 2008 (the "Termination Date") unless extended or
terminated pursuant to the provisions hereof.
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Section 2.4 Quiet Enjoyment. Except as otherwise expressly set forth in
Section 2.1 above, so long as no Event of Default exists hereunder and is
continuing beyond any applicable grace or cure period, the Landlord covenants
that the Tenant shall lawfully and quietly hold, occupy and enjoy the Premises
in accordance with the terms of this Lease, without interference from Landlord
or anyone claiming by or through Landlord. To the best knowledge of Landlord,
Landlord is vested with good and marketable fee simple title to the Premises and
no third party has an interest in the Premises superior to that of Landlord. The
Premises are demised and leased subject to (a) Permitted Encumbrances, (b) all
zoning regulations, restrictions, rules and ordinances, building restrictions
and other laws and regulations now in effect or hereafter adopted by any
governmental authority having jurisdiction over the Premises, and (c) all
federal, state and local laws, rules and regulations directly or indirectly
affecting or relating to the Premises, including, without limitation, permits
relating to the Premises. So long as no Event of Default exists hereunder and is
continuing beyond any applicable grace or cure period, the Landlord covenants
that the Tenant shall enjoy non-exclusive use of the Easements, together with
only Landlord, and Covol if this Lease is assigned by Tenant to a party other
than Covol. Landlord represents and warrants that to the best of its knowledge
none of the Permitted Encumbrances shall adversely interfere with Tenant's use
and enjoyment of the Premises or the Easements. Tenant may, at its expense,
obtain a title insurance policy insuring Tenant's interest in the Premises
pursuant to this Lease, and Landlord agrees to use commercially reasonable
efforts to assist Tenant in the same.
Section 2.5 Ownership of Facility. The Facility shall at all times
remain the property of the Tenant unless Tenant notifies Landlord, at least
three (3) months prior to the expiration of the Term or within ten (10) days
following any other termination, that the Facility shall remain on the Premises
upon the expiration or termination of this Lease and that Tenant does not intend
to relocate the same;
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if Tenant provides such notice, upon such termination or expiration the Facility
shall become the property of Landlord. If Tenant does not give such notice,
Tenant shall remove the Facility from the Premises within six (6) months
following the expiration or termination of this Lease and reclaim the Premises
to the approximate condition that existed immediately before the Facility was
placed on the Premises. All such reclamation shall be in accordance with and to
the extent required by all applicable federal, state and local laws, rules, and
regulations including mining laws. If Tenant fails to remove the Facility within
said six-month period, Tenant shall forfeit any and all rights to the Facility
and the same shall become the property of Landlord. In that event, Landlord
shall have the right, but not the obligation, to remove the Facility and reclaim
the Premises to the approximate condition that existed immediately before the
Facility was placed on the Premises. Tenant shall promptly reimburse Landlord
for all reasonable costs and expenses associated with the removal of the
Facility and reclamation of the Premises.
Section 2.6 Use. The Premises shall be used only for the operation and
maintenance of the Facility and the use thereof in the business of producing
solid synthetic fuel from coal fines and other waste fuel and related
activities. Tenant shall not use the Premises in any way that interferes with or
adversely impacts Landlord's use or occupancy of the Adjoining Property.
Section 2.7 Additional Space. The Rent has been calculated to include
additional rental for, and Landlord hereby agrees to lease to Tenant (at no
additional cost to Tenant except as stated above), additional space which
contains not less than five (5) acres and no more than ten (10) acres, and which
is contiguous to the Premises, for use by Tenant for stockpiles and ancillary
purposes on the terms and conditions substantially similar hereto, the location
of which additional space shall be determined by Tenant with the Landlord's
consent, not to be unreasonably withheld. Such additional space leased to Tenant
shall be considered a part of the Premises for all purposes of this Lease.
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Section 2.8 Removal of Feedstock and Product. Notwithstanding anything
herein to the contrary, upon the cancellation, expiration, or termination of
this Lease, Tenant shall remove all stockpiles of feedstock supplied for the
Facility and all stockpiles of Product produced by the
Facility. ARTICLE III
Taxes, Utilities and Easements
Section 3.1 Taxes. The Tenant shall pay, or cause to be paid, all Taxes
assessed on or relating to the Facility and the Premises on or before the due
date for such Taxes, but excluding any taxes arising from or relating to
Landlord's retained rights with respect to the Premises pursuant to Section 2.1
hereof.
Section 3.2 Utilities. The Tenant shall pay, or cause to be paid, all
costs and expenses required to provide utility service to the Facility
(including all professional and service charges, costs of connections to the
applicable utility systems and charges for the usage of utility services).
ARTICLE IV
Maintenance and Operation of Facility
Section 4.1 Tenant's Duty to Maintain. The Tenant shall be responsible,
at no cost to Landlord, for all maintenance, repair and upkeep as may be
necessary to keep the Premises and the Facility clean, safe and free from
deterioration, except that, to the extent Landlord exercises its right to cross
over the Premises as set forth in Section 2.1 hereof, Landlord shall pay its
proportionate share of such costs. Landlord and Tenant acknowledge that the
location of the Facility may impede Landlord's access (i) to its screening
building or refuse bin by the existing access road and (ii) to the existing
parking for Landlord's preparation plant. Upon Landlord's reasonable request,
Tenant shall, at its expense, provide Landlord (i) access to the Landlord's
screening building or refuse bin through the premises by moving any of Tenant's
improvements impeding the existing road or by building an
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alternate access road; and (ii) parking for Landlord's preparation plant by
either moving Tenant's feedstock stock pile or building a parking area at an
alternate location.
Section 4.2 No Additional Liens or Encumbrances. The Tenant shall not
create or cause to be created any liens or encumbrances of any kind whatsoever
with respect to the Premises. If any lien is filed or threatened to be filed
against the Premises as a result of any act or omission of the Tenant hereunder,
the Tenant shall, upon the written request of the Landlord, cause the same to be
bonded off or released of record at Tenant's election within a reasonable period
of time after the Tenant receives such written request.
Section 4.3 Landlord's Right to Inspect. The Landlord may enter the
Premises and the Facility at any time and for any lawful reason. Landlord shall
provide Tenant with reasonable prior notice of such entry under the
circumstances and if feasible, give a representative of Tenant an opportunity to
be present during such entry.
ARTICLE V
Ownership of Facility
Section 5.1 Title to Facility. Except as otherwise expressly set forth
herein, the Facility shall be owned by Tenant during the Term.
ARTICLE VI
Mortgage of Leasehold
Section 6.1 Right to Mortgage. The Tenant shall not grant, or cause to
be created, any deed of trust or other lien, encumbrance or security interest on
or in all or any part of this Lease or Tenant's interest in the Premises.
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ARTICLE VII
Insurance
Section 7.1 Insurance. The Tenant shall maintain, at its sole cost and
expense, and shall require any contractors, subcontractors, other entities or
individuals it may engage to enter or perform any work on the Premises to
maintain, at all times while on or performing work on the Premises, the
insurance coverages set forth below:
(a) Commercial general public liability and property damage
insurance with each underlying limit being not less than (i) One Million Dollars
($1,000,000) in respect of bodily injury to or death of one person, (ii) Five
Million Dollars ($5,000,000) in respect of bodily injury to or death of more
than one person in any one occurrence, and (iii) One Million Dollars
($1,000,000) in respect of damage to or destruction of property.
(b) Employer's liability insurance protecting against employee
claims for bodily injury, "Mandolidis" actions and all other employee claims
against employers with each underlying limit being not less than One Million
Dollars ($1,000,000) per person and Five Million Dollars ($5,000,000) for each
occurrence.
(c) Fire, property damage and extended coverage for the
Facility and all other buildings and structures on the Premises for the
replacement value of such buildings and structures.
(d) Automobile bodily injury liability insurance in the same
bodily injury liability limits as set forth in Section 7.1(a) above, and
automobile property damage liability insurance in an amount of not less than
Five Hundred Thousand Dollars ($500,000).
(e) Workers' compensation insurance, occupational diseases
insurance, including state and federal black lung coverage, unemployment
compensation and all other insurance coverages for occupational injury, disease
or hazards as required by the laws and regulations
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applicable to and covering employees of Tenant engaged in the
performance of work on the Premises.
(f) Environmental liability insurance with coverage of not
less than Five Million Dollars ($5,000,000).
The Tenant's obligation to obtain the insurance coverages as provided
in this Section 7.1 shall not in any way be construed so as to limit, amend or
otherwise modify its obligation to indemnify Landlord as provided elsewhere in
this Lease.
Section 7.2 Form of Insurance. All insurance coverages required under
Section 7.1 above shall be with a reputable insurer, licensed to do business in
the State of West Virginia, and Landlord shall have the right to approve such
insurer, such approval not to be unreasonably withheld. All policies or
certificates of insurance obtained by Tenant under this Lease shall name
Landlord as an additional insured and shall contain a provision for thirty (30)
days prior notice to Landlord of any proposed cancellation or substantial change
in coverage. Every insurance policy required under Section 7.1 above shall
contain a waiver of subrogation by the insurer against Landlord, its owners,
affiliates and subsidiaries. Each policy of insurance shall be written as an
"occurrence" contract unless the policy is available only on a "claims made"
basis, in which case Tenant shall continue such insurance policy for a period of
two (2) years after the expiration, termination or cancellation of this Lease.
Section 7.3 Proof of Insurance Coverage. The Tenant shall furnish to
Landlord copies of all certificates of insurance relating to the policies which
provide the insurance coverages required by Section 7.1 above, including, but
not limited to, copies of any bonds which may be required for such coverages,
prior to commencing any work on the Premises and thereafter upon request by
Landlord.
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Section 7.4 Payment of Premiums. The Tenant expressly agrees and
acknowledges that its inability, failure, neglect or refusal to carry, maintain
and keep current, at all times during the term of this Lease the insurance
coverages required hereunder and its inability, failure, neglect or refusal to
be and remain at all times during the term of this Lease a subscriber or
self-insurer in good standing with the West Virginia Worker's Compensation Fund,
state and federal black lung funds or any other occupational disease and
disability insurance fund, shall constitute an Event of Default. In addition,
Landlord shall have the right, for and on behalf of Tenant, to pay any premiums
for any insurance required hereunder to maintain such insurance coverage. Tenant
shall reimburse Landlord for all premiums within ten (10) days of Landlord's
request for the same.
ARTICLE VIII
Indemnification of Landlord and Tenant
Section 8.1 Indemnification of Landlord. The Tenant shall indemnify,
hold harmless and defend Landlord, its affiliates and its and their
stockholders, officers, directors, managers, employees and agents from and
against any and all suits, actions, liabilities, demands, losses, claims,
settlements, awards, damages, judgments, costs and expenses of every kind and
nature, including, without limitation, reasonable attorney's fees and related
costs incurred in enforcing this indemnity, arising out of or relating, directly
or indirectly, to any or all of the following: (i) the negligence or willful
misconduct of Tenant, its officers, employees, agents, representatives,
contractors, subcontractors or agents in connection with any of its activities
or operations at the Premises under this Lease, or (ii) a material breach by
Tenant of any covenant, representation, warranty or other term or condition of
this Lease, or (iii) any violation of any federal, state or local law, rule or
regulation by Tenant, including, without limitation, any Environmental Laws (as
hereinafter defined) and from any Hazardous Material (as hereinafter defined)
that exists on or is discharged from the Premises
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other than (a) Hazardous Material that existed on or was discharged from the
Premises prior to the Commencement Date or after the termination, expiration or
cancellation of this Lease, or (b) Hazardous Material from the Adjoining
Property, or (c) Hazardous Material brought onto or in the vicinity of the
Premises or the Adjoining Property by Landlord or an agent thereof. Tenant shall
defend the indemnified party, or, at Tenant's option, pay to have the
indemnified party defended, against all such suits, actions, liabilities,
demands, losses, claims, settlements, awards, damages, or judgments subject to
indemnification hereunder. The foregoing obligations of Tenant to indemnify,
hold harmless and defend Landlord shall be in addition to any other specific
agreements or obligations in other sections of this Lease, and shall survive the
expiration, termination or cancellation of this Lease without limitation.
Section 8.2 Indemnification of Tenant. The Landlord shall indemnify,
hold harmless and defend Tenant, its affiliates and its and their stockholders,
officers, directors, managers, employees and agents from and against any and all
suits, actions, liabilities, demands, losses, claims, settlements, awards,
damages, judgments, costs and expenses of every kind and nature, including,
without limitation, reasonable attorneys' fees and related costs incurred in
enforcing this indemnity, arising out of or relating, directly or indirectly, to
(i) the negligence or willful misconduct of Landlord, its officers, employees,
agents or representatives in connection with any of its activities or operations
on the Premises, including without limitation those contemplated by Section 2.1
hereof, and any of its activities or operations on any Adjoining Property, (ii)
a material breach or default by Landlord of any covenant, representation,
warranty or other term or condition of this Lease, (iii) violations of
Environmental Laws and from any Hazardous Material that existed on or was
discharged from the Premises prior to the Commencement Date or on or from any
Adjoining Property at any time, or (iv) violations of Environmental Laws and
from any Hazardous Material on
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or about the Premises or Adjoining Property which arise from any action or
inaction or Landlord or an agent thereof. Landlord shall defend the indemnified
party, or, at Landlord's option, pay to have the indemnified party defended,
against all such suits, actions, liabilities, demands, losses, claims,
settlements, awards, damages, or judgments subject to indemnification hereunder.
"Hazardous Material" means any hazardous or toxic material, substance or waste
which is defined by those or similar terms or is regulated as such under any
Environmental Laws. "Environmental Laws" means any statute, law, ordinance, rule
or regulation of any local, county, state or federal authority having
jurisdiction over the Premises, the Adjoining Property or any portion thereof or
its use as the same may be amended from time to time, including but not limited
to: (i) the Federal Water Pollution Contract Act (33 U.S.C. Section 1317) as
amended; (ii) the Federal Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) as amended; (iii) the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) as amended; (iv)
the Toxic Substance Control Act (15 U.S.C. Section 2601 et seq.) as amended; and
(v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) as amended. The foregoing
obligations of Landlord to indemnify, hold harmless and defend Tenant shall be
in addition to any specific agreements or obligations in other sections of this
Lease, and shall survive the expiration, termination or cancellation of this
Lease without limitation.
ARTICLE IX
Default, Remedies, Waiver
Section 9.1 Default. The occurrence of any of the following shall
constitute an Event of Default:
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(a) Failure to pay Rent when due; provided, however, that no
Event of Default shall occur if the Rent is paid within ten (10) days of
Landlord's written notice to Tenant that Tenant failed to pay the Rent when due.
(b) The failure of the Tenant to observe or perform any
provision of this Lease required to be observed or performed by the Tenant if
such failure continues for thirty (30) days after written notice thereof from
the Landlord to the Tenant; provided, however, that if the default cannot be
cured within such thirty (30) day period, no Event of Default shall be deemed to
exist, for a maximum period of ninety (90) days, if the Tenant shall within such
thirty (30) day period commence such cure and thereafter diligently prosecute
the same to completion.
(c) The Tenant (1) admits in writing its inability to pay its
debts generally as they become due, (2) commences or becomes the subject of an
insolvency proceeding or any similar proceeding for liquidation, reorganization
or arrangement under any bankruptcy or insolvency law in any jurisdiction and
fails to discharge the same within sixty (60) days, (3) makes a general
assignment for the benefit of its creditors, (4) consents to the appointment of
a custodian, receiver, trustee or other officer with similar powers with respect
to itself or with respect to any substantial part of its property, or (5) takes
corporate or comparable action for the purpose of any of the foregoing.
(d) Failure of Tenant to operate the Facility for six (6)
consecutive months.
(e) Abandonment of the Premises by Tenant or relocation
or removal of the Facility from the Premises..
(f) Mountaineer fails to exercise its option to purchase the
Facility and to require Tenant to assign this Lease to Mountaineer prior to
September 1, 1998.
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Section 9.2 Remedies Upon Default. Upon an Event of Default, the
Landlord, without further notice to the Tenant, shall have each of the following
remedies at the Landlord's election:
(a) Without barring later election of any other remedy and
without terminating the Tenant's right to possession of the Premises, the
Landlord may require strict performance of all covenants and obligations herein
as the same shall accrue or become due.
(b) The Landlord may, at the Landlord's election, terminate
this Lease by giving the Tenant written notice of termination. Upon the giving
of such notice, subject to the Tenant's rights under Section 2.5 hereof, all of
the Tenant's rights in the Premises shall terminate except Tenant's rights to
remove the Facility as set forth herein. Promptly after notice of termination,
subject to Section 2.5 hereof, the Tenant shall surrender and vacate the
Premises as set forth in Section 2.5 hereof. Termination hereunder shall not
relieve the Tenant of any obligation under the Lease or from any claim for
damages previously accrued or then accruing against the Tenant.
(c) The Landlord shall have the right but not the obligation
to perform any obligation hereunder that the Tenant fails to perform (after
notice and expiration of the applicable cure period referenced above) at the
cost and expense of the Tenant. The Tenant shall immediately reimburse the
Landlord for all such costs and expenses (including reasonable attorneys' fees
and related legal expenses) incurred by the Landlord.
(d) If this Lease is terminated, the Landlord shall be
entitled to collect all Rent which is due and owing as of the termination date
of the Lease but not any accelerated or future Rent, and Landlord shall be
entitled to its reasonable attorneys' fees in connection with collecting the
same.
Section 9.3 Equitable Relief. Nothing contained herein shall affect,
change or waive any rights of the Landlord to obtain equitable relief.
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Section 9.4 Cumulative Remedies. The remedies of the Landlord hereunder
are cumulative and in addition to, rather than exclusive of, any other remedy of
the Landlord herein given or that may be permitted by law. Any reentry as
provided for herein shall not make the Landlord liable in damages or guilty of
trespass because of any such reentry.
Section 9.5 No Waiver. No waiver by the Landlord at any time of any of
the terms, conditions, covenants or agreements of this Lease shall be deemed or
taken as a waiver at any time thereafter of the same or any other term,
condition, covenant or agreement herein contained, nor of the strict and prompt
performance thereof by the Tenant. No delay, failure or omission of the Landlord
to reenter the Project or to exercise any right, power, privilege, remedy or
option arising from any Event of Default shall impair any such right, power,
privilege, remedy or option, or as a relinquishment thereof, or acquiescence in
such Event of Default. No right, power, privilege, remedy or option of the
Landlord shall be construed as being exhausted or discharged by the exercise
thereof in one or more instances. Each and all of the rights, powers,
privileges, remedies and options given to the Landlord by this Lease are
cumulative and no one of them is exclusive of the other or exclusive of any
remedies provided by any applicable law.
Section 9.6 Investor Cure Rights. Notwithstanding anything herein to
the contrary, following any assignment by Tenant of its rights under this Lease
to Mountaineer, and provided notice of the same has been given to Landlord, no
Event of Default shall exist hereunder until Landlord has notified each investor
in Mountaineer whose identity and mailing address have been given to Landlord,
and such parties have failed to cure (or cause Mountaineer to cure) the action
or inaction which would result in such Event of Default within twenty (20) days
or such longer period as Tenant has or would have in which to cure such action
or inaction.
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ARTICLE X
Landlord's Default
The Landlord's failure to perform or observe any of its Lease
obligations shall constitute a Landlord event of default ("Landlord Default")
under this Lease. The Tenant shall notify the Landlord of all Landlord Defaults
and the Landlord shall have thirty (30) days from its receipt of such notice to
cure (or, if a Landlord Default cannot reasonable be cured within such
thirty-day period, to commence and prosecute a good faith effort to cure the
Landlord Default, with such extended cure period not to exceed ninety (90)
days). Upon notice to Landlord by the Tenant of the occurrence of a Landlord
Default and the failure of Landlord to cure such Landlord Default within the
applicable notice and cure period, Tenant may, in addition to all other rights
and remedies provided in this Lease, at law or in equity: (a) terminate this
Lease and recover all damages to which the Tenant is entitled under law, or (b)
cure the Landlord Default at the Landlord's expense, including with respect to
reasonable attorneys' fees incurred by Tenant in connection therewith. No delay
by Tenant in the enforcement of the provisions of this Lease shall constitute a
waiver of any Landlord Default and the pursuit by Tenant of one or more remedies
shall not constitute an election of remedies to the exclusion of any other
remedy. Notwithstanding the foregoing, any breach of Section 2.4 by Landlord
shall constitute an immediate Landlord Default.
ARTICLE XI
Assignment and Subletting
Section 11.1 Assignment and Subletting. The parties acknowledge that
Covol is building the Facility for sale to (and with financing provided by)
Mountaineer, and that by an Asset Purchase Agreement of even date herewith,
Covol is granting to Mountaineer an option to acquire the Facility (and Covol's
leasehold hereunder) following completion of construction. Accordingly, the
parties
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agree that Covol may freely assign this Lease at any time to Mountaineer;
provided that Mountaineer executes and delivers to Landlord an agreement
assuming all of the obligations of Tenant hereunder. Other than with respect to
the foregoing, the Tenant may not assign this Lease (or any portion thereof),
sublease the Premises (or any portion thereof) or lease the Facility (or any
portion thereof) without the prior written consent of the Landlord, which
consent may not be unreasonably withheld.
ARTICLE XII
Condemnation
Section 12.1 Full Taking. If all or substantially all of the Facility
is taken as a result of the exercise of the power of eminent domain, this Lease
shall terminate as of the effective date of the taking. For purposes of this
Section 12.1, "substantially all of the Facility" shall be deemed to have been
taken if the untaken portion cannot be practically and economically used or
converted for use by Tenant as contemplated by this Lease, in Tenant's
reasonable judgment. Upon the occurrence of a full taking, the Landlord is
entitled to receive and retain the entire award, except as hereinafter set out
in Section 12.3. The termination of this Lease will not affect the right to this
award. In the event of a full taking, Tenant's obligation to pay Rent and
additional rent will be abated during the unexpired portion of this Lease,
effective as of the date the condemning authority takes the Premises.
Section 12.2 Partial Taking. If less than substantially all of the
Premises is taken as a result of the exercise of the power of eminent domain,
and if the Premises can at a reasonable expense (not to exceed any condemnation
award allocated with respect thereto) be repaired, restored or replaced, and is
sufficient for Tenant's purposes in Tenant's reasonable judgment, this Lease
shall not terminate but shall continue in full force and effect for the
remainder of the Term.
Section 12.3 Compensation for Personal Property and Relocation
Expenses. Tenant shall have the right to claim and recover from the condemning
authority any such compensation as may
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be awarded to Tenant for the value of the Facility, furniture, equipment and
other personal property owned by Tenant, removal of merchandise, moving and
relocation expenses, and damage to Tenant's business conducted at the Premises.
ARTICLE XIII
Miscellaneous
Section 13.1 Tenant's Option to Renew. So long as an Event of Default
is not then continuing beyond any applicable grace or cure period, Tenant shall
have the option to renew this Lease from year to year (but in any event not more
than five (5) such annual renewals) upon all the same terms and conditions
contained herein, including, without limitation, rent; provided, that Tenant
shall give Landlord written notice of its intent to exercise any such annual
renewal at least three (3) months prior to the expiration of the initial term or
any renewal term, as the case may be.
Section 13.2 Estoppel Certificates. The Landlord or the Tenant, upon
written request from the other, shall execute, acknowledge and deliver to the
other, a certificate stating (a) that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that this Lease is in full
force and effect as modified and stating the modifications), (b) the dates, if
any, by which obligations hereunder have been satisfied, (c) that , to the
knowledge of the certifying party, there are no existing offsets or defenses
against the enforcement of any term hereof (or, if so, specifying the same), (d)
that no notice has been given to the Landlord or the Tenant of any default
hereunder which with the giving of notice or the passage of time or both would
constitute an Event of Default, or a Landlord Default, and (e) such other
matters as may be reasonably requested.
Section 13.3 Binding Effect. The provisions of this Lease shall bind
and benefit the heirs, executors, administrators, successors and permitted
assigns of the parties hereto.
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Section 13.4 Memorandum or Short Form of Lease. Concurrently with the
execution of this Lease, the parties hereto shall execute and acknowledge a
memorandum or short form of lease for the purpose of recording the same in the
Office of the Clerk of the County Commission of Upshur County, West Virginia.
The expense of recordation shall be borne by the party requesting such
recordation. Upon a termination of this Lease for any reason, both the Landlord
and the Tenant shall execute a document, in recordable form, confirming that
this Lease is null and void.
Section 13.5 Notices. Any notice required or permitted to be given
hereunder shall be in writing and shall be deemed properly given when delivered
in person to the party to be notified, by registered or certified mail postage
prepaid and return receipt requested by overnight courier, or by facsimile, and
shall be deemed to have been duly given, when delivered by hand or by overnight
courier, five (5) days after deposit in the mail, or when confirmation of the
receipt of the facsimile is received, as the case may be, and addressed as
follows:
If to Landlord: Upshur Property, Inc.
XX 00, Xxx 00
Xxxxxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
with a copy to: Upshur Property, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: Treasurer
Facsimile Number: (000) 000-0000
If to Tenant: Covol Technologies, Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx, Xxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
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with a copy to: Mountaineer Synfuel, L.L.C.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx, Xxxx 00000
Attention: Manager
Facsimile Number: (000) 000-0000
Section 13.6 Captions. The captions used herein are for convenience
only, are not a part of this Lease and do not in any way limit or amplify the
terms and provisions hereof. The words "herein," "hereof" and "hereunder" and
other words of similar import shall refer to this Lease as a whole and not a
particular Article, Section, Subsection or Paragraph.
Section 13.7 Governing Law; Interpretation. This Lease shall be
interpreted in accordance with and governed by the laws of the State of West
Virginia, without regard to principles of conflicts of laws. The language in all
parts of this Lease shall be interpreted according to its fair meaning and not
more strictly for or against the Landlord or Tenant.
Section 13.8 Entire Agreement. This Lease contains all covenants,
terms, provisions, and agreements between the Landlord and the Tenant relating
in any manner to the demise of the Premises or the rental, use and occupancy of
the same and other matters set forth in this Lease. No prior agreement or
understanding with respect to the same shall be valid or of any force or effect,
and no covenant, term, provision or agreement of this Lease may be altered,
changed, modified or deleted, except in a writing signed by the Landlord and the
Tenant. No representation, inducement, understanding or anything of any nature
whatsoever made, stated or represented on behalf of either party hereto, either
orally or in writing, has induced the other party to enter into this Lease,
except as expressly set forth in this Lease.
Section 13.9 Survival. All covenants which, by their terms, are not to
be performed before the expiration of the term or earlier termination of this
Lease shall survive such expiration or earlier termination.
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Section 13.10 Counterparts. This Lease may be executed in counterparts,
and if executed in counterparts, each such counterpart shall constitute one and
the same instrument.
Section 13.11 No Third-Party Beneficiaries. The provisions of this
Lease shall not give rise to any third-party beneficiary rights in any person or
entity other than the parties hereto.
Section 13.12 Incorporation of Exhibit. The Exhibit attached hereto is
hereby incorporated into this Lease and made a part hereof.
Section 13.13 Severability. If any provision of this Lease, or the
application thereof to any person or circumstance, shall to any extent be held
to be invalid or unenforceable, the remainder of this Lease and the application
of such provision to other person or circumstances shall not be affected
thereby.
Section 13.14 No Partnership. This Lease does not and shall not be
construed to create a partnership, joint venture or any other relationship
between the parties hereto except the relationship of lessor and lessee.
Section 13.15 Landlord's Lien. Except as may be expressly provided
herein, Landlord hereby subordinates any lien or interest Landlord may have in
any personal property of Tenant or any subtenant, assignee, licensee, or
concessionaire of Tenant, including but not limited to any inventory, machinery,
equipment, and trade fixtures of Tenant or any subtenant, assignee, licensee, or
concessionaire of Tenant, that may from time to time be located at or upon the
Leased Premises, to any and all purchase money financing of such property by
Tenant.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
executed by their duly authorized representative the day and year first above
written.
UPSHUR PROPERTY, INC.
a Delaware corporation
By: /s/ B. Xxxx Xxxxxxx
Name: B. Xxxx Xxxxxxx
Its: Secretary
COVOL TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Its: Vice President
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EXHIBIT A
Drawing of Leased Surface Property
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