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CONTRACT MINING AGREEMENT
THIS CONTRACT MINING AGREEMENT (this "Agreement"), is made and entered
into as of the 9th day of April, 1999, and shall be effective as of April 12,
1999 (the "Effective Date"), by and between ANKER WEST VIRGINIA MINING COMPANY,
INC., a West Virginia corporation ("AWVMC"), and XXXXXX FUEL, INC., a Maryland
corporation ("Independent Contractor").
WHEREAS, AWVMC owns and operates an underground mining operation in the
Bakerstown seam of coal in Xxxxxxx County, Maryland, and known as the "Xxxxxx
Mine"; and
WHEREAS, AWVMC desires to engage Independent Contractor as a contract
miner for the Xxxxxx Mine;
NOW, THEREFORE, that for and in consideration of the strict and mutual
performance and observance of the
terms, conditions, covenants, stipulations, guarantees and agreements
hereinafter set forth, and intending to be legally bound, the parties agree as
follows:
ARTICLE I
Term and Nature of Mining
Section 1.1 -- Engagement of an Independent Contractor. AWVMC does
hereby engage Independent Contractor as an independent contractor upon the terms
and conditions hereinafter set forth, and Independent Contractor covenants and
agrees (i) to mine and remove, by usual and accepted underground mining methods,
and as otherwise herein specified, all of the mineable and merchantable coal
within and from the Bakerstown seam of coal in, on and underlying those certain
tracts or parcels of real property described in Section 1.3 of this Agreement
(the "Coal"), (ii) to screen the run of mine Coal on areas at or near the Xxxxxx
Mine; (iii) to stockpile the Coal and Refuse (as hereinafter defined) on areas
at or near the Xxxxxx Mine as designated by AWVMC from time to time, (iv) to
transport the Coal and Refuse as herein provided, and (v)
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maintain the Refuse Disposal Area(s) (as hereinafter defined) (all of said work
is hereinafter collectively referred to as the "Work"). Independent Contractor
expressly agrees to perform the Work in a diligent and professional manner and
in accordance with the terms and conditions of this Agreement and any and all of
the permits now or hereafter acquired for the Xxxxxx Mine, including, without
limitation, Maryland Bureau of Mine Permit Number DM-90-109, Maryland Department
of the Environment, Air and Radiation Management Administration, Permit Number
990128, and NPDES Permit Number XX0000000 (collectively, the "Permits").
Section 1.2 -- Term. This Agreement shall be effective as of
the Effective Date and shall continue in full force and effect until the earlier
of (i) December 31, 2002, (ii) the expiration or termination of the Mettiki
Agreement (as hereinafter defined) or (ii) the date on which all of the mineable
and merchantable Coal has been mined and removed from the Premises (the
"Termination Date"), unless sooner terminated as provided herein or under
applicable law. Prior to the Termination Date, the parties agree to discuss the
extension of the term of this Agreement and the other terms and conditions
hereof; provided, however, this term or other provisions shall not be amended
except upon terms and conditions mutually agreeable to the parties.
Notwithstanding anything herein to the contrary, AWVMC may terminate this
Agreement at any time for any reason or no reason upon ninety (90) days prior
written notice to Independent Contractor. In the event Independent Contractor is
experiencing problems in performing the Work or anticipates the it will be
unable to perform the Work with a reasonable level of profit, Independent
Contractor shall notify AWVMC thereof and identify the current or anticipated
problems facing Independent Contractor (the "Initial Notice"). During the 30-day
period following the Initial Notice, AWVMC and Independent Contractor shall meet
to discuss said current or anticipated problems and any potential solutions to
said problems. If at the end of said 30-day period AWVMC and Independent
Contractor have been unable to resolve the current
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or anticipated problems in a mutually satisfactory manner and Independent
Contractor is unable to perform the Work under this Agreement with a reasonable
level of profit, Independent Contractor shall have the right to terminate this
Agreement by providing written notification to AWVMC that it is electing to
terminate this Agreement (the "Termination Notice"). If Independent Contractor
provides the Termination Notice to AWVMC, this Agreement shall terminate upon
the 45th day following the date of receipt of such Notice by AWVMC. If requested
in writing by AWVMC at least 10 days prior to the effective date of the
termination of this Agreement as provided in the preceding sentence, Independent
Contractor shall continue to perform the Work under this Agreement following
said termination upon the same terms and conditions hereof for a period of up to
60 days, provided that AWVMC reimburses Independent Contractor for the losses it
incurs in performing the Work during such period. Independent Contractor shall
submit an invoice to AWVMC for reimbursement of such losses, together with
financial statements and other documentation which supports the request for
reimbursement. AWVMC shall reimburse Independent Contractor for such losses
within five days of its receipt of the request for reimbursement. AWVMC shall
have the right to inspect, audit and copy the books and records of Independent
Contractor to assist it in verifying the amount of losses claimed by Independent
Contractor. .
Section 1.3 -- Area Designated for Mining. The area to be
mined by Independent Contractor under this Agreement will be designated by AWVMC
in the Bakerstown seam of coal in or under those certain tracts or parcels of
land in Xxxxxxx County, Maryland, which are shown on the map attached hereto and
made a part hereof as Exhibit A and all subsequent revision map(s) (the
"Premises"). Exhibit A is not intended to indicate expressly or by implication
that all areas depicted on said map are hereby being designated or will
hereafter be designated by AWVMC for mining by Independent Contractor. In
addition, other areas may be added to the
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area to be mined, and the description and boundaries of the area to be mined by
Independent Contractor may otherwise be changed from time to time by attaching a
revised map or maps to this Agreement which have been mutually agreed upon by
both parties. This Agreement shall be applicable to such additional areas, if
any, as if the same were initially described herein, and such areas shall be
deemed a part of the Premises.
Section 1.4 -- Non-exclusive Right to Mine. Independent
Contractor acknowledges that AWVMC may engage one or more individuals or
entities in addition to Independent Contractor on a non-exclusive basis to mine
and deliver the Coal from the Premises and to utilize facilities located on or
adjacent to the Premises under separate agreements in which the financial terms
may vary in each case. Independent Contractor further acknowledges that neither
the designation by AWVMC of any particular area from which Independent
Contractor is to mine the Coal nor anything else contained in or done pursuant
to this Agreement shall imply or create any right, exclusive or otherwise, in
Independent Contractor to mine all of the Coal in such area, and Independent
Contractor shall have the right to mine only so much of the Coal as AWVMC may,
from time to time, direct or permit. It is expressly understood and agreed,
however, that AWVMC shall not exercise nor shall AWVMC have the right to
exercise any supervision or control whatsoever over the Work performed by
Independent Contractor under this Agreement.
ARTICLE II
Representations and Warranties
Section 2.1 -- Representations and Warranties of AWVMC. AWVMC MAKES NO,
AND HEREBY DISCLAIMS ANY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE QUANTITY, QUALITY OR CONDITION OF THE COAL LOCATED IN OR RECOVERABLE FROM
THE PREMISES OR THE EQUIPMENT TO BE USED BY
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OR LEASED TO INDEPENDENT CONTRACTOR. AWVMC ALSO MAKES NO, AND HEREBY DISCLAIMS
ANY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE DURATION,
ECONOMIC FEASIBILITY OR LIKELIHOOD OF SUCCESS OF THE WORK TO BE PERFORMED BY
INDEPENDENT CONTRACTOR UNDER THIS AGREEMENT. INDEPENDENT CONTRACTOR HEREBY
EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT THE DESIGNATION BY AWVMC OF ANY
AREA(S) TO BE MINED SHALL NOT CONSTITUTE ANY REPRESENTATION OR WARRANTY
WHATSOEVER BY AWVMC THAT THE AREA(S) SO DESIGNATED ARE SUITABLE FOR OR CONDUCIVE
TO MINING OR PRODUCING COAL OF A QUANTITY OR QUALITY REQUIRED UNDER THIS
AGREEMENT. INDEPENDENT CONTRACTOR FURTHER ACKNOWLEDGES THAT AWVMC HAS NOT MADE
ANY REPRESENTATION OR WARRANTY WITH REGARD TO ANY OF THE FOREGOING MATTERS OR
THE CONDITION OR EXISTENCE OF ANY SURFACE AREAS, PRIOR WORKINGS, COAL SEAMS,
WORK PLACES, REFUSE DISPOSAL AREAS, STRUCTURES, FACILITIES, FIXTURES, EQUIPMENT
OR OTHER MATTERS RELATING TO THE PREMISES, THE COAL, THE WORK OR THE XXXXXX
MINE.
Section 2.2 -- Representations and Warranties of Independent
Contractor. As a material inducement for AWVMC to enter into this Agreement,
Independent Contractor represents and warrants to AWVMC as follows:
(a) Independent Contractor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland.
Independent Contractor has full power and authority to execute, deliver and
perform this Agreement. This Agreement has been duly authorized, executed and
delivered by Independent Contractor, is a valid and binding obligation of
Independent Contractor and is enforceable against Independent Contractor in
accordance with
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its terms, subject only to bankruptcy, insolvency and other laws affecting
creditors' rights generally. The execution, delivery and performance of this
Agreement by Independent Contractor will not, with or without the lapse of time
or the giving of any notice, or both, result in any breach, default or violation
by Independent Contractor of any law, rule, regulation or agreement or other
commitment to which Independent Contractor is a party or by which it is bound.
(b) Neither Independent Contractor nor any of its assets are subject to
any judgment, order, writ, decree, citation or injunction. Independent
Contractor is not a party to any judicial, administrative, investigative or
arbitration proceeding, now pending, or to the best of its knowledge,
threatened, which could have a material adverse impact on this Agreement or its
ability to perform the Work under this Agreement.
(c) Independent Contractor is in the business of underground coal
mining, has substantial experience as an underground coal mine operator, and has
personnel that are knowledgeable regarding and have substantial experience in
underground mining conditions similar to those in the Xxxxxx Mine.
(d) Independent Contractor has and will continue to have throughout the
term of this Agreement sufficient working capital, machinery, equipment and
skilled personnel to perform and complete the Work under this Agreement,
including, without limitation, the production of the monthly tonnages of Coal
from the Premises contemplated by this Agreement and in accordance with the
Specifications (as hereinafter defined).
(e) Independent Contractor has carefully inspected and examined and is
familiar with the Premises, all areas surrounding the Premises, and the
facilities, equipment, fixtures and workings of the Xxxxxx Mine, and has not
relied upon any oral or written statements or
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information made or furnished by AWVMC in determining whether or not to enter
into this Agreement.
(f) Independent Contractor has fully informed itself as to all existing
conditions and limitations of the Premises, all areas surrounding the Premises,
the facilities, equipment, fixtures and workings of the Xxxxxx Mine, and all
laws, ordinances, rules, regulations, dangerous conditions, prior mining,
location of old workings and latent dangers that may affect the Work to be
performed under this Agreement, and hereby accepts those conditions and
limitations and the risks associated therewith.
(g) All of the issued and outstanding shares of capital stock of
Independent Contractor are owned and held of record by Xxxxx Xxxxxxx.
ARTICLE III
Mining Operations
Section 3.1 -- Use of Existing Fixed Assets and Equipment. In the
performance of the Work hereunder, Independent Contractor shall have the right
to use, without payment of further rental, all of the existing fixed assets and
equipment that are in or on the Premises or the Xxxxxx Mine and which are
identified and described on Exhibit B (collectively, the "Existing Assets"). The
Existing Assets shall not include the Leased Equipment or the Parts and Supplies
(as such terms are hereinafter defined). Independent Contractor and AWVMC agree
that the map attached to Exhibit B (and marked Exhibit B-1) fairly and
accurately represents the location of and extent to which that portion of the
Existing Assets consisting of advancement items have been used in the Xxxxxx
Mine. The Existing Assets are and shall at all times remain the property of
AWVMC.
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Section 3.2 -- Lease of Equipment. AWVMC hereby leases to Independent
Contractor, and Independent Contractor hereby leases from AWVMC, the following
three items of equipment (hereinafter collectively the "Leased Equipment"):
Equipment Description Serial No. Monthly Equipment Rental
NMS 6 Wheel Personnel Car 15400100 [*](1)
Xxxxxxx Feeder Breaker 12233 [*](1)
Misc. Rail Equipment N/A [*](1)
Rebuilt Xxxxxxx Feeder 11462 [*](1)
The term of this equipment lease shall begin on the Effective Date and, unless
sooner terminated as provided herein or under applicable law, shall continue in
full force and effect until the Termination Date, at which time said equipment
lease shall expire. The monthly rental for the each item of Leased Equipment is
set forth above (the "Equipment Rental"). The Equipment Rental shall be paid by
Independent Contractor to AWVMC on the 10th day of each month for the use of
Leased Equipment for the immediately preceding calendar month. Independent
Contractor shall pay the Equipment Rental to AWVMC for each item of Leased
Equipment for so long as AWVMC is obligated to make payments on such Leased
Equipment to a third party or parties and until AWVMC has fully recovered any
and all amounts paid by it in respect of such Leased Equipment, including,
without limitation, amounts paid to purchase or buy such Leased Equipment. AWVMC
shall have the right to deduct the Equipment Rental from the payment of the
Contract Price under Section 5.2. The Equipment Rental shall be prorated for any
period of less than one month based on the number of days this equipment lease
is in effect for any such month and the number of days in such month. AWVMC
shall have the right to terminate this
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1 Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission (the
"Commission"). The omitted portions, marked by "[*]", have been filed separately
with the Commission.
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equipment lease in the event Independent Contractor fails to perform any
covenant set forth in this Agreement with respect to the Leased Equipment upon
ten (10) days written notice to Independent Contractor.
Section 3.3 -- Parts and Supplies. AWVMC has an inventory of parts and
supplies at the Xxxxxx Mine. AWVMC shall prepare a list of the unused parts and
supplies on the Effective Date (the "Parts and Supplies"). Independent
Contractor shall purchase the Parts and Supplies at their fair market value as
agreed upon by the parties (the "Parts and Supplies Purchase Price"). The Parts
and Supplies Purchase Price shall be paid by Independent Contractor to AWVMC in
six (6) equal, consecutive monthly installments beginning on the 25th day of the
month following the month of the Effective Date and continuing on the 25th day
of the next five succeeding months. AWVMC shall have the right to deduct each
installment of the Parts and Supplies Purchase Price from the payment of the
Contract Price under Section 5.2.
Section 3.4 -- Construction and Maintenance. Independent Contractor, at
its sole cost and expense, covenants and agrees with AWVMC that Independent
Contractor shall be solely responsible in all respects for the construction,
installation, inspection, maintenance and repair of all facilities, structures,
fixtures and equipment situate within, near or in the vicinity of the Premises
which are used by Independent Contractor in the performance of the Work under
this Agreement, including, without limitation, the Existing Assets and the
Leased Equipment. Independent Contractor shall obtain the prior written approval
of AWVMC before commencing construction of facilities, structures, fixtures,
roads or utilities on the Premises.
Section 3.5 -- Machinery, Equipment, Supplies and Tools. In addition to
the Existing Assets, the Leased Equipment and the Parts and Supplies,
Independent Contractor shall, at its sole cost and expense, furnish all of the
machinery, equipment, assets, parts, supplies, fuel and tools that may be
required to perform Work under this Agreement (the "Independent Contractor's
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Machinery and Equipment"). Independent Contractor agrees to at all times keep
and maintain its Machinery and Equipment, the Existing Assets and the Leased
Equipment in good and safe working order, condition and repair, ordinary wear
and tear excepted, and in compliance with all applicable warranties or
contractual obligations relating thereto and all federal, state, and local laws,
rules, regulations and ordinances. The obligation of Independent Contractor to
maintain and keep the aforementioned items in good working order, condition and
repair (ordinary wear and tear excepted) includes performing, at Independent
Contractor's sole cost and expense, all routine or scheduled maintenance
thereof. In the event any of the Existing Assets or the Leased Equipment must be
rebuilt to stay in service or for productivity or safety reasons, Independent
Contractor shall have the right to purchase the same from AWVMC at its fair
market value as agreed upon by AWVMC and Independent Contractor. If the parties
are unable to agree upon fair market value or Independent Contractor elects not
to purchase the Existing Asset or Leased Equipment, as the case may be,
Independent Contractor shall, at its sole cost and expense, remove the same from
the Xxxxxx Mine and purchase, lease or otherwise acquire substitute equipment.
Section 3.6 -- Expense of Operations; Utilities. All costs, expenses
and liabilities accruing or resulting from the Work performed under this
Agreement shall be borne by Independent Contractor, and AWVMC shall have no
responsibility therefor. Independent Contractor shall, at its sole cost and
expense, obtain and supply to the Xxxxxx Mine all utilities necessary for the
performance of the Work.
Section 3.7 -- Diligence. Independent Contractor agrees to diligently
prosecute the Work in a skillful and workmanlike manner in accordance with
modern and approved mining methods, and to use only competent, skilled personnel
and management. Independent Contractor shall perform the Work so as to produce
and recover the maximum quantities of merchantable and
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mineable coal from the Bakerstown seam in, on and underlying the Premises.
Independent Contractor acknowledges and understands that AWVMC has the right to
mine the coal under and pursuant to the instruments identified and described on
Exhibit C attached hereto and made a part hereof (the "Instruments").
Independent Contractor acknowledges that AWVMC has provided Independent
Contractor with a copy of each of the Instruments, and represents that it has
reviewed and understands the terms and conditions in the Instruments.
Independent Contractor shall conduct the Work and all activities associated
therewith in accordance with the Instruments and the terms and conditions
therein.
Section 3.8 -- Notice of Suspended Operations. Independent Contractor
shall report promptly in writing to AWVMC any suspension, slowdown or
interference with any aspect of the Work, and shall specifically identify the
reasons therefor and the expected duration thereof.
Section 3.9 -- Engineering Services. The parties hereto agree that
AWVMC has the right, but not the duty, to furnish such engineering services as
may, in its judgment, be required to protect AWVMC's interest in the Coal and
the Premises.
Section 3.10 -- Purchase and Removal of Equipment. Upon the expiration
or termination of this Agreement, AWVMC shall have the right to purchase all or
any part of the Independent Contractor's Machinery and Equipment (other than
Machinery and Equipment used on the surface at the Xxxxxx Mine) at a price equal
to eighty percent (80%) of fair market value as determined in writing by an
appraiser mutually agreed upon by AWVMC and Independent Contractor, which
determination shall be final and binding upon the parties hereto (the "Machinery
and Equipment Purchase Price"). AWVMC shall exercise its rights hereunder by
providing written notice to Independent Contractor within thirty (30) days of
the expiration or termination hereof. AWVMC shall pay the Machinery and
Equipment Purchase Price to Independent Contractor upon delivery by Independent
Contractor of a xxxx of sale and
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assignment, reasonably acceptable to AWVMC, transferring the Independent
Contractor's Machinery and Equipment which AWVMC is purchasing under this
Section 3.10 free and clear of all liens and encumbrances. In the event AWVMC
does not exercise its option to purchase all of Independent Contractor's
Machinery and Equipment, Independent Contractor shall remove the Machinery and
Equipment not purchased hereunder within ninety (90) days of AWVMC's notice to
Independent Contractor.
Section 3.11 Water Sampling. AWVMC agrees to perform all water sampling
and related reporting required under the Permits. Independent Contractor shall
pay AWVMC the sum of $400.00 per month for such water sampling services. Said
fees shall be paid on the 10th day of each month for the water sampling services
provided in the previous month. AWVMC shall have the right to deduct said fees
from the payment of the Contract Price under Section 5.2.
ARTICLE IV
Production, Specifications and Transportation
Section 4.1 -- Source of Coal. Independent Contractor covenants and
agrees that (i) the Coal delivered to the Processing Plant pursuant to this
Agreement shall be produced solely from the Bakerstown seam in, on and
underlying the Premises, (ii) it shall not commingle any coal mined or removed
from other properties with the Coal mined and removed from the Premises, and
(iii) it shall not tender, deliver or sell any of the Coal mined from the
Premises to any person or entity without the prior written consent of AWVMC.
Section 4.2 -- Production and Specifications. During each calendar
month during the term of this Agreement, Independent Contractor shall produce
from the Premises and deliver to the coal processing plant owned and operated by
Mettiki Coal Corporation, a Delaware corporation ("Mettiki"), located at
Mettiki's mine near Oakland, Maryland (the "Processing
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Plant") between [*](2) and [*](2) tons (one ton equals 2,000 pounds) of Coal as
designated in writing by AWVMC to Independent Contractor at least five (5) days
prior to the beginning of such calendar month. AWVMC shall have the right, from
time to time during each calendar month, to increase or decrease the designated
tonnage amount based on amounts required to be delivered under the Mettiki
Agreement. Independent Contractor agrees that the Coal delivered hereunder shall
meet, based on an as-received analysis performed by Mettiki pursuant to that
certain Coal Processing and Transportation Agreement dated April 17, 1997,
between Mettiki, Anker Energy Corporation and AWVMC (the "Mettiki Agreement"),
the guaranteed quality specifications set forth on Exhibit D attached hereto and
made a part hereof (the "Specifications"). The method of sampling and resulting
analyses as set forth in and determined under the Mettiki Agreement shall be
final, conclusive and binding for all purposes of this Agreement.
Section 4.3 -- Annual and Monthly Volume Estimates. On or before
February 1 of each year during the term of this Agreement, Independent
Contractor shall provide to AWVMC a non-binding written forecast of the volumes
of Coal which Independent Contractor expects to produce pursuant to this
Agreement and deliver to the Processing Plant during the next twelve (12)
months. On or before the twentieth (20th) day of each month during the term of
this Agreement, Independent Contractor shall provide to AWVMC a written estimate
of the volumes of Coal which Independent Contractor will deliver to the
Processing Plant each day during the following month.
Section 4.4 -- Stockpiling and Transporting Coal. Independent
Contractor shall, at its sole cost and expense, stockpile the Coal mined under
this Agreement on areas within the Premises as designated by AWVMC (the "Coal
Stockpile Area"). Independent Contractor shall,
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2 Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission (the
"Commission"). The omitted portions, marked by "[*]", have been filed separately
with the Commission.
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at its sole cost and expense, load the Coal into trucks at the Coal Stockpile
Area and transport the Coal from the Coal Stockpile Area to the Processing
Plant. Independent Contractor shall have the right to engage an independent
contractor to truck the Coal from the Coal Stockpile Area to the Processing
Plant. In the event Independent Contractor elects to engage a contract trucking
company for such purpose, Independent Contractor shall require the contract
trucking company to agree to abide by the minimum trucking guidelines specified
on Exhibit E attached hereto and made a part hereof.
Section 4.5 -- Stockpiling and Trucking Refuse. Independent Contractor
shall stockpile all rock, slate, refuse or other material removed as part of the
Work performed under this Agreement (the "Refuse") on areas within the Premises
as designated by AWVMC (the "Refuse Stockpile Area"). Independent Contractor
shall, at its sole cost and expense, load the Refuse from the Refuse Stockpile
Area into trucks and transport and dispose of the Refuse on an area or areas
designated by AWVMC (the "Refuse Disposal Area"). Independent Contractor shall,
at its sole cost and expense, distribute the Refuse within the Refusal Disposal
Area and maintain such Area in accordance with all applicable federal and state
laws, rules, regulations, ordinances and permits, including, without limitation,
the Permits. Independent Contractor shall have the right to engage an
independent contractor to truck the Refuse from the Refuse Stockpile Area to the
Refuse Disposal Area and to maintain such Refuse Disposal Area. In the event
Independent Contractor elects to engage a contract trucking company for such
purpose(s), Independent Contractor shall require the contract trucking company
to agree to abide by the minimum trucking guidelines specified on Exhibit E
attached hereto and made a part hereof.
Section 4.6 -- Weights. For purposes of this Agreement, the weight of
the Coal delivered to the Processing Plant shall be the weight determined by the
truck scales located near the Processing Plant or such other scales or
engineering method or methods agreed upon by
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AWVMC and Mettiki pursuant to the Mettiki Agreement. The weight of the Coal so
determined shall be deemed valid, conclusive and binding for all purposes under
this Agreement. For a period of one year, AWVMC shall keep a record of the
weights of all Coal delivered by Independent Contractor. AWVMC shall use its
best efforts to enable Independent Contractor, during regular business hours,
and at Independent Contractor's expense, to observe, inspect and verify that the
accuracy of Mettiki's scales and records of weights.
Section 4.7 -- Tonnage Shortfall Penalties. Independent Contractor
acknowledges and understands that AWVMC is obligated to deliver certain minimum
tonnages of Coal to Mettiki under the Mettiki Agreement. For purposes of this
Agreement, "Tonnage Shortfall" shall mean the actual aggregate tons of coal
processed by Mettiki at the Processing Plant and delivered to the Mount Storm
Power Station less the actual aggregate tons of Coal delivered by AWVMC to
Mettiki under the Mettiki Agreement. Independent Contractor acknowledges and
understands that AWVMC is required to pay Mettiki [*](3) per ton for each ton by
which the Tonnage Shortfall, if any, exceeds [*](3) As of March 31, 1999, the
"Tonnage Shortfall" under the Mettiki Agreement equals approximately [*](3)
tons. Each month during the term of this Agreement, AWVMC shall notify
Independent Contractor of the current Tonnage Shortfall. As a material
inducement to AWVMC entering into this Agreement and in consideration for the
Contract Price to be paid by AWVMC to Independent Contractor, Independent
Contractor hereby agrees that it shall reimburse AWVMC one-half (1/2) of any
amounts that AWVMC is actually pays or incurs under the Mettiki Agreement with
respect to the Tonnage Shortfall. AWVMC shall have the right to such amounts
which Independent Contractor is required to pay AWVMC under this Section 4.7
from the payment of the Contract Price under Section 5.2.
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3 Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission (the
"Commission"). The omitted portions, marked by "[*]", have been filed separately
with the Commission.
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Section 4.8 - Failure to Meet Specifications. Independent Contractor
agrees to mine, produce and deliver to the Processing Plant Coal which meets the
Specifications. AWVMC reserves the right, at its expense, to keep and maintain
inspector(s) to inspect each shipment of the Coal, and AWVMC shall have the
right to reject or revoke its acceptance of all or any portion of any
unacceptable shipment of the Coal which such inspector determines has foreign
material, trash, excess moisture, slate, rock or other impurities and is not of
merchantable and saleable quality. If AWVMC determines, in its sole and absolute
discretion, that a shipment of Coal is unacceptable, then AWVMC shall have the
right to refuse or revoke its acceptance of all or any portion of the
unacceptable shipment, and AWVMC shall have no obligation to pay Independent
Contractor for any of the Coal for which AWVMC's acceptance is either refused or
revoked. In the event AWVMC refuses to accept or revokes its acceptance of any
Coal under this Agreement, Independent Contractor shall have the right to
purchase such unacceptable Coal from AWVMC, at the point of rejection, at a
price negotiated by Independent Contractor and AWVMC at the time of rejection.
Only upon purchase and payment therefor shall title to such Coal pass to
Independent Contractor. In the event any Coal delivered to the Processing Plant
is not accepted by AWVMC or Mettiki, Independent Contractor shall, at its sole
cost and expense, be responsible for loading and transporting such Coal from the
Processing Plant to the Xxxxxx Mine or such other location mutually agreed upon
by AWVMC and Independent Contractor.
In addition to the foregoing, if Coal delivered to the Processing Plant
over any ten (10) day period fails to meet the Specifications, AWVMC may provide
to Independent Contractor notice of such noncompliance and request that
Independent Contractor provide to AWVMC assurances satisfactory to AWVMC that
future Coal shipments will comply with the Specifications. Pending receipt of
such assurances, or in the event Independent Contractor provides assurances but
any subsequent shipments over any ten (10) day period fail to meet the
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Specifications, AWVMC may direct Independent Contractor to suspend further
shipments of Coal. Before permitting Independent Contractor to resume regular
shipments, AWVMC may insist that Independent Contractor demonstrate its ability
to perform in the future by shipping two (2) consecutive provisional shipments
(each not less 2,000 tons) which meet all of the Specifications. Shipments
suspended pursuant to this Section 4.8 may be made up at AWVMC's option.
Sampling, analysis and testing of the Coal in the provisional shipments shall be
conducted prior to shipment to the Processing Plant by an independent firm
acceptable to AWVMC and shall be in accordance with commercially reasonable
procedures acceptable to AWVMC. Independent Contractor shall bear the cost and
expense of such sampling, analysis and testing. Independent Contractor promptly
shall provide AWVMC with the written results of such analysis and tests. If the
results of the analysis and tests show that Coal in any of the provisional
shipments fails to comply with one or more of the Specifications, Independent
Contractor shall not ship any portion of such Coal to the Processing Plant and
AWVMC shall not be required to pay for such Coal.
In the event that (i) Independent Contractor fails or refuses to
provide the assurances requested pursuant to this Section 4.8 within three (3)
calendar days after receiving AWVMC's notice and request for such assurances,
(ii) Independent Contractor fails to ship two (2) consecutive provisional
shipments as provided above which meet all of the Specifications, or (iii)
during one of three (3) consecutive months following the month in which the
problem giving rise to the noncompliance is corrected, Coal delivered to the
Processing Plant fails to comply with any of the Specifications, AWVMC, in the
exercise of its sole judgment, may, in addition to and not in lieu of any other
remedy, (a) cancel and/or suspend receipt of further shipments of Coal to the
Processing Plant and/or (b) immediately terminate this Agreement. Independent
Contractor acknowledges and agrees that the exercise by AWVMC of its rights set
forth in this Section 4.8
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shall in no way reduce, alter or modify AWVMC's rights to receive sums under
Section 4.7 for a shortfall in Coal tonnage.
Section 4.9 -- Title to Coal, Depletion. Independent Contractor
acknowledges and agrees that title to all Coal mined under this Agreement shall
be vested in AWVMC and Independent Contractor shall have no right to dispose of
any of the Coal except after purchasing such Coal as provided in Section 4.8
above. Unless otherwise expressly provided herein, Independent Contractor shall
not acquire and shall not have an economic interest in any of the Coal and AWVMC
shall have the full right to claim depletion for income tax or other purposes
with respect to all of the Coal mined, produced and delivered hereunder.
Independent Contractor expressly acknowledges and agrees that it will make no
claim whatsoever to depletion for income tax or any other purposes with respect
to the Coal mined under this Agreement and acknowledge that AWVMC's exclusive
right to depletion for any and all purposes was taken into account by the
parties hereto in fixing the Contract Price under this Agreement.
Section 4.10 -- Premiums and Penalties. If AWVMC actually receives a
premium payment for any Coal delivered from the Premises to the Processing Plant
under the Mettiki Agreement, AWVMC shall pay to Independent Contractor an amount
equal to [*](4) of such premium payment within twenty (20) days of receipt of
the same by AWVMC. If AWVMC actually pays a penalty for any Coal delivered from
the Premises to the Processing Plant under the Mettiki Agreement, Independent
Contractor shall pay to AWVMC an amount equal to [*](4) of such penalty within
twenty (20) days of receipt by Independent Contractor of written notice of such
penalty from AWVMC. AWVMC shall have the right to deduct such amount from the
payment of the Contract Price under Section 5.2.
----------
4 Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission (the
"Commission"). The omitted portions, marked by "[*]", have been filed separately
with the Commission.
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Section 4.11 -- Boundaries. Independent Contractor shall fully comply
with all federal, state and local laws, regulations, rules, ordinances and the
Permits regarding any matter relating to mining near the boundaries of the
Premises. Notwithstanding the foregoing, however, Independent Contractor shall
not, except with the prior written consent of AWVMC, mine any Coal within sixty
(60) feet of the outside boundaries of the Premises or within two hundred (200)
feet of any mine workings in or adjacent to the Premises, and Independent
Contractor shall not cut any boundary corner on the Premises except with the
prior written consent of AWVMC. In the event such consent is given by AWVMC,
Independent Contractor shall use such precautions as are necessary to preserve
and monument the location of such boundary corner as AWVMC may require.
ARTICLE V
Payment
Section 5.1 -- Contract Price. In consideration for the Work performed
by Contractor hereunder, AWVMC shall pay Independent Contractor the per ton
amount (the "Contract Price") for each ton of Coal which meets the
Specifications and is delivered to the Processing Plant during the periods set
forth below:
Period Contract Price
------ --------------
Effective Date thru December 31, 2000 [*](5)/ton of Coal
January 1, 2000 thru December 31, 2000 [*](5)/ton of Coal
January 1, 2001 thru December 31, 2001 [*](5)/ton of Coal
January 1, 2002 thru December 31, 2002 [*](5)/ton of Coal
In the event AWVMC receives a net positive benefit as a result of an inflation
adjustment under the Mettiki Agreement, the parties agree to discuss an
adjustment of the Contract Price such that
----------
5 Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Securities and Exchange Commission
(the "Commission"). The omitted portions, marked by "[*]", have been filed
separately with the Commission.
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a portion of the net positive benefit received by AWVMC is shared with or passed
on to Independent Contractor.
Section 5.2 -- Payment. For Coal delivered to the Processing Plant and
accepted by AWVMC between the 1st and 15th day of each calendar month during the
term of this Agreement, AWVMC shall pay Independent Contractor the Contract
Price for such Coal on or before the 10th day of the next succeeding calendar
month. For all Coal delivered to the Processing Plant and accepted by AWVMC
between the 16th and last day of each calendar month during the term of this
Agreement, AWVMC shall pay Independent Contractor the Contract Price for such
Coal on or before the 25th day of the next succeeding calendar month. Each
payment shall be accompanied with a statement showing the amount of Coal
delivered to the Processing Plant and accepted by AWVMC during the applicable
period and the deductions from the Contract Price.
Section 5.3 -- Sale of Refuse. AWVMC may, from time to time, attempt to
sell all or part of the Refuse from the Refuse Stockpile Area prior to it being
deposited in the Refuse Disposal Area. In the event AWVMC sells all or a part of
the Refuse from the Refuse Stockpile Area, Independent Contractor agrees to load
such Refuse from the Refuse Stockpile Area into trucks and AWVMC agrees to pay
Independent Contractor an amount equal to $1.50 per ton for each ton of Refuse
from the Refuse Stockpile Area sold by AWVMC. Independent Contractor
acknowledges and agrees that AWVMC has no obligation to market or sell, or
attempt to market or sell, any Refuse. The services provided by Independent
Contractor under this Section 5.3 shall be deemed a part of the Work hereunder.
ARTICLE VI
Relationship of Parties
Section 6.1 -- Independent Contractor. It is expressly agreed and
understood that Independent Contractor shall perform the Work specified in this
Agreement as an independent
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contractor. Subject to AWVMC's right to designate the areas to be mined, the
Coal and Refuse Stockpile Areas, and the mining plans to be used under this
Agreement, Independent Contractor shall exercise exclusive direction and control
over its work force and labor relations policies and direct the manner, method,
mode of performance and all other aspects of the Work. Independent Contractor
expressly agrees that it shall not represent or hold itself out as an affiliate,
subsidiary, partner, joint venturer, representative or agent of AWVMC, and
further agrees to indemnify, hold harmless and defend AWVMC against any claims,
of whatever kind, arising from any act or representation of it contrary to the
provisions of this Section 6.1. This covenant of indemnity shall survive the
termination or expiration of this Agreement.
Section 6.2 -- Employees. The employees of Independent Contractor shall
be its employees and not the employees of AWVMC. Independent Contractor shall
exercise complete and exclusive control over and responsibility for all aspects
of hiring, employment, supervision, direction, hours, working conditions,
compensation, discipline and discharge for all individuals engaged to perform
the Work under this Agreement. Independent Contractor shall comply with all
present and future federal, state and local laws, ordinances, rules and
regulations pertaining to the duties and obligations arising out of the
employer-employee relationship, including, without limitation, unemployment
compensation, Social Security, withholding taxes, State Workers' Compensation,
wage and hour laws, wage payment and collection laws, federal and state safety
laws, occupational disease compensation and all other applicable rules and
regulations promulgated thereunder. Independent Contractor shall maintain
accurate supporting records showing evidence of its compliance with the
requirements set out in this Section 6.2 and shall make these records available
to AWVMC for inspection upon request, and Independent Contractor shall certify
to AWVMC, on a quarterly basis, in writing, Independent Contractor's compliance
therewith on all Coal produced and tendered under this Agreement.
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ARTICLE VII
Inspection, Record Keeping and Reporting Requirements
Section 7.1 -- Contemporaneous Access to the Premises. Independent
Contractor acknowledges and agrees that AWVMC may place and install or cause to
be placed and installed on the Premises various structures, equipment and
materials, and may carry on, either directly or through other contractors, such
other operations as AWVMC may deem necessary or desirable for its own purposes
as long as it does not interfere with Independent Contractor's ability to
perform the Work under this Agreement.
Section 7.2 -- Inspection of the Premises. Independent Contractor
acknowledges and agrees that AWVMC may, at all reasonable times, enter upon,
inspect, map, sample, test and survey the Premises, the Coal and the Work being
performed under this Agreement, and any other aspect of Independent Contractor's
operations relating to this Agreement. Independent Contractor shall provide and
maintain safe access to the Premises and cooperate with AWVMC in inspecting all
portions of the Premises, the Coal and the Work performed hereunder.
Section 7.3 -- Mining Plans. For the purpose of allowing AWVMC to
coordinate the overall use and operations on the Premises, Independent
Contractor shall, on an annual basis beginning on the Effective Date, prepare
mining plans and projections for the next succeeding 12-month period and submit
such plans and projections to AWVMC for its written approval. Independent
Contractor shall not begin to perform Work in any area of the Premises unless
and until AWVMC approves, in writing, such mining plans and projections. Upon
approval of the mining plans and projections, Independent Contractor shall
diligently follow such plans and projections in performing the Work under this
Agreement. In the event Independent Contractor is unable to continue mining in
accordance with the approved mine plan, Independent Contractor shall immediately
notify AWVMC detailing the reasons why it cannot continue mining in
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accordance with such plans, and shall promptly submit a revised mine plan for
approval by AWVMC.
Independent Contractor shall employ a competent licensed land surveyor
or registered professional engineer to make surveys, plans and maps of its
operations within the Premises, and Independent Contractor shall furnish AWVMC
promptly with two (2) copies of all maps required by any federal, state or local
law, rule or regulation. In addition, on or before the 5th day of each month
during the term of this Agreement, Independent Contractor shall provide AWVMC
with an up-to-date mine map showing the advancement for the preceding month and
the mine plan for the next succeeding 1-month period.
Section 7.4 -- Safety. AWVMC and Independent Contractor recognize the
importance of safety procedures and safe working conditions. Independent
Contractor agrees to comply with all present and future federal, state and local
safety laws, ordinances, rules and regulations, and Independent Contractor shall
ensure that its employees are trained in safe working procedures and shall cause
its employees to abide by all safety and security rules in force on the
Premises. AWVMC shall have the right (but not the obligation) to review the
safety records of Independent Contractor on a quarterly basis. Independent
Contractor agrees to indemnify, hold harmless and defend AWVMC against any
claims, of whatever kind, arising from any act or omission to act by Independent
Contractor contrary to the provisions of this Section 7.4. This covenant of
indemnity shall survive the termination or expiration of this Agreement.
Section 7.5 -- Testing and Reports. Independent Contractor shall
maintain accurate records regarding the mining conditions encountered, drill
cores, tests and sampling (the "Records"), and provide AWVMC or its
representatives with copies thereof. Upon the termination or expiration of this
Agreement, Independent Contractor shall promptly deliver to AWVMC all of such
records.
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Section 7.6 -- Books of Account and Records. Independent Contractor
shall at all times maintain accurate books and records of account covering the
Work performed under this Agreement in accordance with generally accepted
accounting principles. AWVMC shall have the right, within five (5) days of
written request by AWVMC, to inspect, audit and copy Independent Contractor's
books and records for the purpose of verifying compliance with all terms,
conditions and provisions of this Agreement. Independent Contractor shall keep
and preserve such books and records for at least five years after the
termination or expiration of this Agreement.
Section 7.7 -- Confidentiality of Information. Independent Contractor
acknowledges that in performing the Work under this Agreement it will have
access to proprietary information and trade secrets of a confidential nature
pertaining to AWVMC, its affiliates and their businesses, the Premises and the
Xxxxxx Mine. Independent Contractor agrees that it shall treat all maps, plans,
data, reports, drilling logs, core samples, leases and other information
relating to AWVMC and its business, the Premises or the Xxxxxx Mine (the
"Information") as confidential, and it shall not divulge, transmit or otherwise
disclose any of the Information to any person, firm, corporation or other entity
unless at the time of disclosure to Independent Contractor, the information was
public knowledge or becomes public knowledge through no act of Independent
Contractor. Upon the termination or expiration of this Agreement for any cause
whatsoever, Independent Contractor shall promptly deliver to AWVMC all of the
Information given to Independent Contractor.
ARTICLE VIII
Observance of Laws, Regulations and Other Legal Requirements
Section 8.1 -- Conformity with Laws. Independent Contractor agrees that
in performing the Work under this Agreement, particularly in the actual mining
process and in regard to its
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responsibility for the construction, installation, inspection, maintenance and
removal, if necessary, of all facilities, structures, and equipment used in or
about the Premises, it shall be familiar with and shall fully obey and comply
with all applicable federal, state and local laws and ordinances, and with all
applicable rules, regulations, orders and directives of any federal, state or
local official, agency or department relating to such mining operations and
activities or to such facilities, structures, land areas, utilities, equipment
and including, without limitation, all such laws, ordinances, rules,
regulations, orders and directives now in effect or hereafter made, promulgated,
enacted or issued.
Section 8.2 -- Permits and Bonds. Following the execution of this
Agreement, Independent Contractor shall diligently seek to obtain all approvals
and consents from any federal, state or local governmental agency to Independent
Contractor performing the Work on the Permits, including, without limitation, an
operator reassignment of the Permits with the Maryland Bureau of Mines or other
applicable state or federal agency. Upon termination of this Agreement,
Independent Contractor shall surrender or relinquish the operator reassignment
with the Maryland Bureau of Mines. Independent Contractor shall comply with all
permits, including, without limitation, the Permits, required to perform the
Work, and Independent Contractor shall perform all remedial or abatement work
and pay all fines and assessments related to its failure to comply therewith.
Independent Contractor shall not be responsible for violations of the Permits
prior to the Effective Date. Copies of all applications made to and of all
licenses, permits, bonds, amendments, modifications, inspection reports and
compliance, non-compliance or other orders issued by any governmental authority,
and any plans and maps or other information compiled, made and filed by
Independent Contractor with or furnished to any governmental authority or
communication had therewith concerning any of the foregoing shall be made
available to AWVMC before they are filed with or furnished to the governmental
authority or immediately
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upon receipt from any governmental authority. Independent Contractor shall
indemnify, hold harmless and defend AWVMC and its affiliates from and against
all claims, costs and expenses, including reasonable attorneys' fees, in
connection with or arising out of these documents or any dispute relating to
these documents that may occur during the term of this Agreement. This covenant
of indemnity shall survive termination or expiration of this Agreement.
Section 8.3 -- Citations or Penalties. Independent Contractor shall be
solely responsible and liable for the complete and timely payment of any and all
citations, assessments, penalties or fines imposed by any federal, state or
local agency for the violation of any federal, state or local law, ordinance,
rule or regulation arising out of or relating, directly or indirectly, to the
Work performed under the Agreement. Independent Contractor shall not jeopardize
any of the Permits or any other permit held, if any, by AWVMC, Independent
Contractor, or its and their affiliates, contractors or lessees. Independent
Contractor shall be totally and solely responsible for and shall hold harmless,
indemnify and defend AWVMC from and against any and all liability for any
citations, assessments, fines, damages, withdrawal orders or civil and criminal
penalties assessed against either Independent Contractor or AWVMC which are
caused, directly or indirectly, in whole or in part, by the actions or omissions
of Independent Contractor, its employees, agents, contractors or
representatives. In the event that AWVMC or Independent Contractor is assessed,
fined or penalized for any violation arising out of Independent Contractor's
conduct, or the conduct of its agents, contractors or representatives, AWVMC
may, in its sole direction, settle or pay such assessment, fine or penalty
without Independent Contractor's prior approval, and AWVMC may deduct and
withhold from any monies due or which shall become due in the future to
Independent Contractor for Work performed under the Agreement an amount
sufficient to cover any such assessments, fines and penalties, together with
expenses, including reasonable attorneys' fees, incurred. If, regardless of the
reason, such citations or assessments should go
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unresolved and any of AWVMC's mining related permits are canceled, revoked,
suspended, terminated or withdrawn, Independent Contractor shall be liable to
AWVMC for all costs, expenses, losses and damages, including, without
limitation, attorneys' fees, directly or indirectly, incurred by such permit
cancellation, revocation, suspension, termination or withdrawal. Independent
Contractor reserves the right to lawfully contest any such fine or assessment
provided it does not jeopardize the mining operations contemplated under this
Agreement.
Section 8.4 -- Drainage and Grading. Independent Contractor shall be
solely responsible for draining and grading all surface areas related to the
Permits and shall control surface run-off as required by the Permits and any
federal, state or local law, rule or regulation, or as reasonably required by
AWVMC.
Section 8.5 -- Fees and Taxes. Except as expressly provided in Section
8.6 below, Independent Contractor shall make complete and timely payment of all
federal, state and local fees and taxes which may be imposed or assessed against
it, its operations hereunder, the Existing Assets, the Leased Equipment,
Independent Contractor's Machinery and Equipment or the Premises in connection
with the Work performed under this Agreement, including, without limitation, all
payments or benefits arising from the Black Lung Benefits Reform Act of 1977, as
amended, the workers' compensation fund or similar benefit program under the
laws of the State of Maryland, personal property taxes, employment taxes, and
income taxes. Personal property taxes shall be prorated on a calendar year basis
for any period during this Agreement which is less than one calendar year. In
the event Independent Contractor fails to pay any of such fees or taxes, AWVMC
shall be entitled, at its option, to pay said fees or taxes and to recover the
amount of such payment by deducting sufficient funds from sums due or which
shall become due to Independent Contractor for Work performed under this
Agreement.
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Section 8.6 - Excise, Reclamation and Severance Taxes. In addition to
the Contract Price set forth in Section 5.1 above, AWVMC shall pay real property
taxes assessed against the Premises, the federal excise tax payable under 26
U.S.C. Section 4121 with respect to the Black Lung Disability Trust Fund, the
federal reclamation fees payable to the Office of Surface Mining and the
severance taxes assessed by the State of Maryland on the Coal mined hereunder by
Independent Contractor.
Section 8.7 -- Liens. In the event any employee of Independent
Contractor or any third party files a notice of intent to claim a lien upon any
asset of AWVMC or any other property or interest of AWVMC as the result of
Independent Contractor's non-payment of wages or other monies due to third
parties, and in the event such lien or filing is demonstrated to be legally
valid or enforceable, then AWVMC may, at its option, pay such employees or third
parties directly and deduct the amount of such payment from any monies due or to
become due to Independent Contractor under this Agreement. This provision shall
not be construed as a promise for the benefit of any employee of Independent
Contractor or any third party and shall not constitute an agreement by AWVMC to
pay any such employee or third party.
Section 8.8 Reclamation. AWVMC shall be responsible, at its sole cost
and expense, for performing all reclamation of the Premises as required by the
Permits and all applicable federal, state and local laws, rules and regulations.
AWVMC shall indemnify, hold harmless and defend Independent Contractor from and
against all claims, cost and expenses, including reasonable attorney's fees,
incurred by Independent Contractor in connection with the reclamation of the
Premises. This covenant of indemnity shall survive the expiration or termination
of this Agreement.
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ARTICLE IX
Indemnification and Insurance
Section 9.1 -- Indemnification. Independent Contractor shall
indemnify, hold harmless and defend AWVMC, its affiliates and its and their
officers, directors, managers and employees from and against any and all suits,
actions, liabilities, demands, losses, claims, awards, damages, fines,
penalties, judgments, settlements, costs and expenses of every kind and nature,
including, without limitation, the injury to or death of any person or persons,
damage to or loss of property, or mining outside the Premises or otherwise,
arising out of or relating, directly or indirectly, to (i) the acts or omissions
of Independent Contractor, its officers, employees, agents or representatives in
connection with any of its activities or operations under this Agreement, or
(ii) a breach or default by Independent Contractor of any covenant, section,
representation, warranty or other term or condition of this Agreement, together
with any and all costs and expenses, including reasonable attorneys' fees, that
may be incurred by an indemnified party in connection with its defense.
Independent Contractor shall defend the indemnified party, or, at the option of
the indemnified party, pay to have the indemnified party defended, against all
such suits, actions, liabilities, demands, losses, claims, awards, damages,
fines, penalties, judgments, settlements, costs and expenses, whether groundless
or not. The foregoing obligations shall be in addition to any other specific
agreements or obligations in other sections of this Agreement, and shall survive
the expiration or termination of this Agreement.
Section 9.2 -- Insurance. Independent Contractor shall maintain, at its
sole cost and expense, and shall require any subcontractors or other entities or
individuals it may engage to perform the Work under this Agreement to maintain,
at all times while performing the Work, and for a period of ninety (90) days
after the expiration or termination of this Agreement, the insurance coverages
set forth below with full policy limits applying, but not less than as stated:
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a. Commercial general public liability and property
damage insurance with each underlying limit being not
less than (i) One Million Dollars in respect of
bodily injury to or death of one person, (ii) Five
Million Dollars in respect of bodily injury to or
death of more than one person in any one occurrence,
and (iii) One Million Dollars in respect of damage to
or destruction of property.
b. Employer's liability insurance protecting against
employee claims for bodily injury, intentional tort
actions and all other employee claims against
employers with each underlying limit being not less
than One Million Dollars per person and Five Million
Dollars for each occurrence.
c. Automobile bodily injury liability insurance in the
same bodily injury liability limits as set forth in
Section 9.2.a. above, and automobile property damage
liability insurance in an amount of not less than
Five Hundred Thousand Dollars.
d. Workers' Compensation insurance, occupational disease
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
applicable to and covering employees of Independent
Contractor engaged in the performance of Work under
this Agreement.
Independent Contractor's obligation to obtain the insurance coverages as
provided in this Section 9.2 shall not in any way be construed so as to limit,
amend or otherwise modify its indemnity obligations as provided elsewhere in
this Agreement.
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Section 9.3 -- Form of Insurance. All insurance coverages required
under Section 9.2 above shall be with a reputable insurer, licensed to do
business in the State of Maryland, and AWVMC shall have the right to approve
such insurer. All policies or certificates of insurance obtained by Independent
Contractor under this Agreement shall name AWVMC as an additional insured and
shall contain a provision for notice to AWVMC of any overdue or unpaid insurance
premium and thirty (30) days advance notice to AWVMC of any proposed
cancellation or substantial change in coverage. Every insurance policy required
under Section 9.3 above shall contain a waiver of subrogation by the insurer
against AWVMC, 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 Independent Contractor shall continue
such insurance policy for a period of two years after the expiration or
termination of this Agreement.
Section 9.4 -- Proof of Insurance Coverage. Independent Contractor
shall furnish to AWVMC copies of all certificates and policies which provide the
insurance coverages required by Section 9.2 above, including, but not limited
to, copies of any bonds which may be required for such coverages, prior to
commencing the Work under this Agreement and thereafter upon request by AWVMC.
Independent Contractor shall also provide satisfactory written evidence to AWVMC
that, if required by the laws of the State of Maryland, it has entered into
appropriate trust or bonding arrangements setting aside or providing sufficient
funds to assure payments of accrued back wages and fringe benefits to
Independent Contractor's employees in the event Independent Contractor ceases
operations under this Agreement.
Section 9.5 -- Payment of Premiums. AWVMC shall have the right, in its
sole discretion, to pay any overdue premium for the insurance coverages required
of Independent Contractor under this Agreement, or to take out and maintain such
insurance coverages, and AWVMC is
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hereby authorized to collect the cost of obtaining and maintaining any such
insurance coverages from monies due to or to become due to Independent
Contractor under the terms of this Agreement. Independent Contractor 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
Agreement, any of the insurance coverages required under this Agreement, and its
inability, failure, neglect or refusal to be and remain at all times during the
term of this Agreement a subscriber or self-insurer in good standing with the
Maryland workers' compensation fund or other similar fund, state and federal
black lung funds or any other occupational disease and disability insurance fund
shall constitute a breach of this Agreement and give AWVMC the right, in its
discretion, to terminate this Agreement pursuant to Article XI below.
9.6 Reimbursement. AWVMC shall maintain property damage insurance
coverage during the term of this Agreement on that portion of the Existing
Assets and the Leased Equipment which is insured by AWVMC as of the Effective
Date. In consideration for maintaining such insurance, Independent Contractor
shall reimburse AWVMC a monthly amount which the parties shall agree upon as
soon as possible. AWVMC shall have the right to deduct such agreed upon amount
from the payment of the Contract Price as set forth under Section 5.2.
ARTICLE X
Default and Termination
Section 10.1 -- Default. Independent Contractor shall be in default of
this Agreement upon the occurrence of any of the following events (each an
"Event of Default"):
a. Any breach or violation of, or failure to perform, any term,
condition, provision, representation, warranty, covenant, stipulation or
agreement set forth herein which is not cured within ten (10) days of
Independent Contractor's receipt of written notice thereof from AWVMC;
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b. If any action by Independent Contractor in performing the Work under
this Agreement, complying with any of the terms under this Agreement, or the
presence of any agent, employee, contractor or representative of Independent
Contractor upon the Premises, or the execution of this Agreement by it shall
cause interference with or disrupt or threaten to interfere with or disrupt
AWVMC's operations in any manner or the operations of any of AWVMC's affiliates,
subsidiaries, or any other contractor(s), at any location whatsoever, for any
reason, and if such interference, disruption or threat continues for ten (10)
days after Independent Contractor's receipt of written notice from AWVMC;
c. In the event Independent Contractor is adjudicated bankrupt or
insolvent, whether through involuntary or voluntary proceedings, or if any
receiver, trustee, assignee or other person or persons are appointed by any
court to take charge of Independent Contractor's assets; or
d. If any order, decree, judgment or directive is issued by any
regulatory authority, tribunal or court revoking, suspending, terminating or
withdrawing any of its mining related permits or bonds, whether secured in
connection with mining on the Premises or not, or requiring Independent
Contractor to cease mining operations for a period of more than ten (10) days,
or if two such directives are issued in any calendar year, regardless of their
duration.
Section 10.2 -- Termination. In addition to and not in lieu of the
right to terminate this Agreement as provided in other sections of this
Agreement, AWVMC shall have the right to terminate this Agreement upon the
occurrence of an Event of Default by giving written notice to Independent
Contractor of such termination.
Section 10.3 - Right to Cure. If Independent Contractor is in breach or
default of any of the terms or conditions of this Agreement, whether or not said
breach or default gives rise to an Event of Default, AWVMC shall have the right,
but not the duty, to make any payment or to perform any act or complete or
correct the Work required of Independent Contractor under this
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Agreement and, in exercising such right, to incur, for and on behalf of
Independent Contractor, necessary or incidental costs and expenses, including
reasonable attorneys' fees. In exercising the foregoing right, AWVMC may offset
and deduct all payments made and all costs and expenses incurred against such
sums of money, if any, due or to become due to Independent Contractor under this
Agreement and proceed against Independent Contractor under the provisions of
Section 9.1 relating to indemnity. AWVMC's right to cure Independent
Contractor's default or breach as described in this Section 10.3 shall not imply
any obligation on the part of AWVMC to make any payment or to perform any act
required of Independent Contractor, and the exercise of such right by AWVMC
shall not constitute a release or waiver of any default or breach by Independent
Contractor.
Section 10.4 -- Waiver of Performance or Default. The failure of either
AWVMC or Independent Contractor to insist in any one or more instances upon
strict performance of any of the covenants, terms or conditions imposed upon or
assumed by either party under this Agreement, or the failure of AWVMC or
Independent Contractor to exercise any particular option or right granted by the
Agreement, shall not be construed as a waiver or relinquishment for the future
performance of any such covenant, term or condition, or as to the exercise of
any such option or right. Moreover, a waiver by either party of a default or
breach hereunder must be in writing and shall not be deemed to be a waiver of
any subsequent default or breach, and any delay in asserting a right hereunder
shall not be deemed a waiver of such right. Nothing contained in this Agreement
shall be construed as a waiver of any applicable statute of limitations.
Section 10.5 -- Remedies. The rights and remedies of AWVMC set forth in
this Agreement shall not be exclusive, but shall be taken and construed as
cumulative and in addition to any and all other rights and remedies accorded to
AWVMC at law or equity.
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Section 10.6 -- Sale of Property. In the event of an Event of Default,
and for so long as the Event of Default shall continue, Independent Contractor
shall not remove or permit to be removed or taken from the Premises any of
Independent Contractor's Machinery and Equipment, and AWVMC shall have the right
to sell or otherwise dispose of the same to the extent necessary to recover the
amount of damages suffered by AWVMC as a result of the Event of Default.
Section 10.7 -- Condition of the Premises. Upon the expiration or
termination of this Agreement, for any reason, at the option of AWVMC,
Independent Contractor shall leave the Premises in the same normal working
condition, under which the Work was being performed.
Section 10.8 -- Termination or Transfer of Permits and Licenses. No
later than thirty (30) days after the expiration or termination of this
Agreement for any reason whatsoever, or at such other time as AWVMC may direct,
Independent Contractor shall release the licenses and permits required by law
for the performance of the Work under this Agreement, if any, and take all other
steps necessary to terminate such licenses or permits or, at AWVMC's option, to
assign, transfer and convey these licenses or permits to AWVMC or its designee.
ARTICLE XI
Assignment, Subcontracting and Transfer of Ownership
Section 11.1 -- Rights Personal to Independent Contractor. This
Agreement is personal to Independent Contractor requiring the exercise of its
own services, skills and judgment.
Section 11.2 -- Assignment and Subcontracting. Except for engaging a
contract trucking company to transport the Coal from the Coal Stockpile Area to
the Processing Plant, to transport the Refuse from the Refuse Stockpile Area to
the Refuse Disposal Area, and to maintain the Refuse Disposal Area, Independent
Contractor shall not assign, subcontract or otherwise transfer or delegate all
or any part of this Agreement, the Work, or any rights or interests herein
without obtaining the prior written consent of AWVMC, which may be withheld by
AWVMC in its sole
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discretion. Independent Contractor shall not assign any monies due or to become
due to it under this Agreement, nor shall it pledge, encumber or mortgage all or
any part of its interests in this Agreement without the prior written consent of
AWVMC, which may be withheld by AWVMC in its sole discretion.
Section 11.3 -- Transfer of Ownership Interest. Except as specifically
provided in this Section 11.3, without the prior written consent of AWVMC, which
may be withheld by AWVMC in its sole discretion, no holder of any capital stock
or other ownership interest in Independent Contractor shall sell, assign, give,
pledge or otherwise transfer, whether voluntarily or by operation of law, any
such capital stock or other ownership interest in Independent Contractor to any
other person or entity. Additionally, without the prior written consent of
AWVMC, which may be withheld by AWVMC in its sole discretion, Independent
Contractor shall not cause or permit to be issued any additional equity or other
ownership interest during the term of this Agreement. In the event AWVMC
consents to the sale, assignment, gift, pledge or other transfer of any such
capital stock or ownership interest, or to the issuance of any additional equity
or other ownership interest in Independent Contractor, then Independent
Contractor shall obtain the written agreement and consent of any such person or
entity to whom the interest shall be conveyed or issued to be bound by the
provisions of this Section 11.3. Notwithstanding the foregoing, Xxxxx Xxxxxxx
may transfer, assign or give shares of the capital stock of Independent
Contractor to Xxxxx Xxxxxxx, Xxxxx Xxxxxx Xxxxxxx and Xxxxx Xxxxxx Xxxxxxx
solely for estate planning purposes, provided that, after any such transfer,
assignment or gift, Xxxxx Xxxxxxx owns and controls throughout the term of this
Agreement a majority of the issued and outstanding capital stock of Independent
Contractor.
Section 11.4 -- Waiver of Consent. In the event AWVMC consents to one
or more assignments, subcontracts or other transfer of all or any part of this
Agreement, the Work, or any
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rights or interests herein, or a transfer of any ownership interest in
Independent Contractor, such consent shall not be construed as waiving the
requirement of obtaining written consent to additional assignments, subcontracts
or transfers, and no consent to assignment, subcontract or transfer shall
relieve Independent Contractor of any obligations specified in this Agreement.
ARTICLE XII
Miscellaneous
Section 12.1 -- Notices. Any and all notices, payments, reports,
consents or other communications between the parties shall be in writing and
deemed given and received on the date delivered personally, on the date
deposited if sent by registered or certified United States mail, postage
prepaid, return receipt requested, or on the date transmitted by facsimile,
provided the same is also mailed on said date by registered or certified United
States mail, postage prepaid, return receipt requested, to the parties at their
respective addresses as set forth below, which addresses shall remain in effect
until notice of change is given, in writing:
If to AWVMC: Anker West Virginia Mining Company, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: President
If to Independent Contractor: Xxxxxx Fuel, Inc.
P. O. Xxx 000
Xxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
Section 12.2 -- Integration. This Agreement contains the entire
understanding and agreement of the parties with regard to the transactions
contemplated hereunder and it supersedes all prior agreements, arrangements and
understandings between the parties relating to the subject matter of this
Agreement.
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Section 12.3 -- Modification. This Agreement shall not be modified,
changed or terminated, in whole or in part, except by written agreement, signed
by all parties hereto or their respective successors-in-interest.
Section 12.4 -- Choice of Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Maryland.
Section 12.5 -- Production is of the Essence. The time, quality and
quantities of Coal production set forth in Article IV hereof are of the essence
of this Agreement.
Section 12.6 -- Headings. The headings appearing in this Agreement are
for convenience of reference only and shall not be considered or construed as
affecting in any way the meaning of the provisions of this Agreement.
Section 12.7 -- Counterparts. This Agreement may, for convenience, be
executed in several counterparts, each of which shall be deemed an original and
all of which, taken together, shall constitute one Agreement.
Section 12.8 -- Severability. In the event that any provision of this
Agreement conflicts with the laws of the State of Maryland or any other
jurisdiction, or is held invalid by a court with jurisdiction over the parties
to this Agreement, such provision shall be deleted from the Agreement and the
Agreement shall be construed to give effect to its remaining provisions.
IN WITNESS WHEREOF, the parties have caused their corporate names to be
signed hereto by their officers duly authorized.
ANKER WEST VIRGINIA MINING
COMPANY, INC.
By: ___________________________________
Its: ___________________________________
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XXXXXX FUEL, INC.
By: ___________________________________
Its: ___________________________________
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