COAL FINES EXTRACTION AND BENEFICIATION AGREEMENT
AMONG
CRC NO. 1 LLC
CRC XX. 0 XXX
XXX XX. 0 XXX
XXX XX. 0 LLC
CRC NO. 5 LLC
CRC NO. 6 LLC
AND
XXXXX TECHNOLOGIES, INC.
June 24, 1998
TABLE OF CONTENTS
Page
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I RETENTION OF OPERATOR . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE III SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . .8
3.1 Responsibilities of Operator. . . . . . . . . . . . . . . . . .8
3.2 Personnel Matters . . . . . . . . . . . . . . . . . . . . . . .9
3.3 Compliance with the Lease . . . . . . . . . . . . . . . . . . 10
3.4 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Operating Records and Reports . . . . . . . . . . . . . . . . 10
3.6 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7. Responsibilities of the Company.. . . . . . . . . . . . . . . 11
ARTICLE IV ITEMS TO BE FURNISHED BY COMPANY. . . . . . . . . . . . . . . 11
4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Equipment and Supplies. . . . . . . . . . . . . . . . . . . . 11
4.3 Information . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Control of the Beneficiation Equipment. . . . . . . . . . . . 11
4.5 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Repairs, Maintenance, and Capital Improvements. . . . . . . . 12
ARTICLE V PROCEDURES, PLANS AND REPORTING . . . . . . . . . . . . . . . 12
5.1 Representatives . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.4 Officers' Certificate . . . . . . . . . . . . . . . . . . . . 14
5.5 Audits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Other Information . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Accounting Procedures . . . . . . . . . . . . . . . . . . . . 14
5.8 Millennium Bug Issues . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI LIMITATIONS ON AUTHORITY. . . . . . . . . . . . . . . . . . . 15
6.1 General Limitations . . . . . . . . . . . . . . . . . . . . . 15
6.2 Execution of Documents. . . . . . . . . . . . . . . . . . . . 16
6.3 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII COMPENSATION OF OPERATOR. . . . . . . . . . . . . . . . . 17
ARTICLE VIII TERM AND TERMINATION. . . . . . . . . . . . . . . . . . . 18
8.1 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Termination by the Company for Cause. . . . . . . . . . . . . 18
8.3 Termination by Operator for Cause; Resignation;
Deemed Offer to Resign. . . . . . . . . . . . . . . . . . . . 19
8.4 Termination if Briquetting Plant Moved. . . . . . . . . . . . 20
8.5 Termination upon Agreement. . . . . . . . . . . . . . . . . . 20
8.6 Demobilization Costs. . . . . . . . . . . . . . . . . . . . . 20
8.7 [Intentionally omitted] . . . . . . . . . . . . . . . . . . . 20
8.8 Termination Payment . . . . . . . . . . . . . . . . . . . . . 20
8.9 Continuation and Cooperation. . . . . . . . . . . . . . . . . 20
8.10 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Operator Policies . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . 22
ARTICLE X INDEMNIFICATION; DAMAGES. . . . . . . . . . . . . . . . . . . 22
10.1 Indemnification by Operator . . . . . . . . . . . . . . . . . 22
10.2 Indemnification by the Company. . . . . . . . . . . . . . . . 22
ARTICLE XI TITLE, DOCUMENTS, AND DATA. . . . . . . . . . . . . . . . . . 22
11.1 Materials and Equipment . . . . . . . . . . . . . . . . . . . 23
11.2 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XII ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . 23
12.1 Submission to Arbitration . . . . . . . . . . . . . . . . . . 23
12.2 Initiation of Arbitration and Selection of
Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.3 Arbitration Procedures. . . . . . . . . . . . . . . . . . . . 24
12.4 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.5 Fees and Costs. . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XIII MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . 25
13.1 Representations and Warranties. . . . . . . . . . . . . . . . 25
13.2 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.3 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.4 Construction of Agreement.. . . . . . . . . . . . . . . . . . 26
13.5 Integration; Amendment. . . . . . . . . . . . . . . . . . . . 27
13.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 27
13.7 Public Announcements. . . . . . . . . . . . . . . . . . . . . 27
13.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 27
13.9 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . 27
13.10 No Third Party Beneficiary Rights . . . . . . . . . . . . . . 27
13.11 Statement of Performance. . . . . . . . . . . . . . . . . . . 27
13.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 28
List of Schedules
Schedule 2.1 Beneficiation Equipment
Schedule 2.2 Leases
Schedule 2.3 Letter Rulings
Schedule 3.1(f) Annual Operating Plan Criteria
Schedule 4.2 Equipment to be Furnished by Company
Schedule 4.6 Spare Parts Inventory
Schedule 5.3 Form of Monthly Operations and Financial Report
COAL FINES EXTRACTION AND BENEFICIATION
AGREEMENT
THIS COAL FINES EXTRACTION AND BENEFICIATION AGREEMENT (this
"Agreement"), dated as of June 24, 1998, is among CRC XX. 0 XXX,
XXX XX. 0 XXX, XXX XX. 0 XXX, XXX XX. 0 XXX, XXX NO. 5 LLC, and
CRC NO. 6 LLC, each a Delaware limited liability company
(individually, a "Company" and collectively, the "Companies"),
and XXXXX TECHNOLOGIES, INC., an Oklahoma corporation
("Operator"). The Companies and Operator are collectively
referred to as the "Parties," and each is individually referred
to as a "Party."
Recitals
A. A coal briquetting facility (the "Briquetting Plant")
is being constructed for each Company on its Plant Site which is
adjacent to or near its Pond Site;
B. Each Company has separately retained Operator
(referred to herein in such capacity as "Xxxxx") to operate,
manage, and maintain the Briquetting Plant to produce Briquettes
pursuant to the terms and conditions of an Operation and
Maintenance Agreement dated as of June 24, 1998 (the "O&M
Agreement"); and
C. Each Company desires to retain Operator to extract
and beneficiate coal fines using the Beneficiation Equipment,
which Operator will lease from Xxxxx Mining, L.L.C. ("Xxxxx
Mining"), an Affiliate of Operator, and deliver the beneficiated
coal fines to the Briquetting Plant pursuant to the terms and
conditions of this Agreement, and Operator is willing to do so.
Agreement
For convenience, the Parties desire that all of the
Companies enter into this Agreement but that this Agreement be
construed and enforced as constituting six separate agreements,
each of which is between Operator and a different Company. Any
breach or default by a Company under its agreement with Operator
or by Operator under its agreement with any Company shall not
affect any of the agreements between Operator and the other
Companies except as expressly provided herein. References to the
"Company" or "the Company" shall be deemed to refer to the
applicable Company and references to the "Beneficiation
Equipment," "Briquetting Plant," "Company Representative,"
"Lease," "Letter Ruling," "Plant Site," "Pond Site," and other
defined terms shall be deemed to refer to the applicable
Company's Beneficiation Equipment, Briquetting Plant, Company
Representative, Lease, Letter Ruling, Plant Site, Pond Site, or
other defined term applicable to the applicable Company.
In consideration of the foregoing, the mutual benefits to
the Parties under this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE I
RETENTION OF OPERATOR
The Company hereby retains Operator as an independent
contractor to recover, excavate, dredge, extract, and remove Mine
Waste contained in the Impoundment using the Beneficiation
Equipment; operate, manage, make approved modifications to and
maintain the Beneficiation Equipment for the processing,
beneficiation, washing, and drying of Mine Waste to produce coal
fines that Operator will deliver to Xxxxx for further processing
by Xxxxx to produce Briquettes pursuant to the O&M Agreement; and
to operate, manage, and maintain the Pond Site; all according to
the terms and conditions of this Agreement. Nothing in this
Agreement shall be construed to create a joint venture,
partnership, mining partnership, or any other similar arrangement
between the Company and Operator, nor to authorize either Party
to act as agent for the other Party, except as expressly set
forth in this Agreement. Operator hereby accepts such engagement
and responsibilities and agrees that it shall perform the
obligations and duties described herein as an independent
contractor in accordance with the authority granted to Operator
herein and the terms and conditions of this Agreement.
ARTICLE II
DEFINITIONS
The following defined terms have the meanings specified in
this Article II:
"AAA" means the American Arbitration Association.
"Affiliate" means, with respect to any designated Person,
any other Person that, directly or indirectly, controls, or is
controlled by or is under common control with, such designated
Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of the Person,
whether through the ownership of voting securities or by contract
or otherwise.
"Agreement" means this Coal Fines Extraction and
Beneficiation Agreement, as it may be amended, restated,
supplemented, or modified from time to time pursuant to its
provisions.
"Annual Operating Plan" has the meaning stated in
Section 3.1(f).
"Xxxxx" has the meaning stated in Recital B and includes the
successors and assigns of Xxxxx Technologies, Inc.
"Xxxxx Mining" has the meaning stated in Recital C and
includes the successors and assigns of Xxxxx Mining, L.L.C.
"Beneficiation Equipment" means the equipment owned by
Operator located on the Pond Site, including, without limitation,
the equipment described in Schedule 2.1 hereto, for dredging and
receiving Mine Waste from the Impoundment and processing,
beneficiating, washing, and drying Mine Waste to produce coal
fines for further processing to produce Briquettes pursuant to
the O&M Agreement.
"Briquettes" means briquettes, pellets, extrudates, and
other agglomerates produced from coal fines by the Briquetting
Plant.
"Briquetting Plant" has the meaning stated in Recital A.
"Business Day" means any day other than a Saturday, Sunday,
or other day on which banks are closed in the State.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 et seq.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time. Any reference herein to a specific section or
sections of the Code is deemed to include a reference to any
corresponding provision of future law.
"Company" and "Companies" have the meanings stated in the
preamble to this Agreement.
"Company Representative" has the meaning stated in Section
5.1(b).
"Costs" means all costs and expenses prudently incurred by
Operator, as agent for the Company, after the date of this
Agreement in the start-up, operation, management, approved
modification and maintenance of the Beneficiation Equipment and
the Pond Site, and the performance of the Services in accordance
with this Agreement (but not including Labor and G&A Costs),
including, but not limited to the following:
(a) [Intentionally omitted]
(b) All costs of Environmental Compliance;
(c) all costs for consultants and subcontractors and
other outside services reasonably necessary for the
performance of the Services;
(d) the cost of purchasing all materials, consumables,
and supplies used or consumed in the performance of
the Services;
(e) all costs of modifications or non-routine repairs of
the Beneficiation Equipment;
(f) all costs of utilities provided to the Beneficiation
Equipment and Pond Site or otherwise used in
connection with the performance of the Services;
(g) all ad valorem and personal property taxes imposed by
any political or taxing subdivision with respect to
the Beneficiation Equipment and the Pond Site or any
equipment owned or leased by or on behalf of Operator
and used in connection therewith;
(h) the costs of obtaining and maintaining any necessary
Permits, approvals and consents in connection with
the Services;
(i) insurance premiums paid by Operator for the insurance
maintained pursuant to Section 9.1 and in the event
of property damage or personal injury covered by such
insurance, applicable policy deductibles; and
(j) Equipment lease payments made by Operator to Xxxxx
Mining for the lease of the Beneficiation Equipment,
not to exceed in any calendar month an amount equal
to the portion of the amount of the scheduled monthly
payment of principal and interest for such month
required to be paid by Xxxxx Mining on or before
June 1, 1999 to MCNIC Pipeline & Processing Company,
a Michigan corporation ("MCNIC"), pursuant to section
2.3(b) of the Loan Agreement attributable to amounts
borrowed by Xxxxx Mining pursuant to the Loan
Agreement to pay the purchase price of the
Beneficiation Equipment for the Pond Site, but not
including (x) any payment of principal or interest
due on the Maturity Date (as such term is defined in
the Loan Agreement), and (y) any prepayments of
principal or interest under the Loan Agreement.
"Environmental Compliance" means all actions performed
during or after operations at the Pond Site to comply with the
requirements of Environmental Laws or commitments or obligations
related to reclamation of the Pond Site or compliance with
Environmental Laws.
"Environmental Laws" means Laws aimed at reclamation or
restoration of the Pond Site, abatement of pollution; protection
of the environment; protection of wildlife, including endangered
species; ensuring public safety from environmental hazards;
protection of cultural or historic resources; management,
storage, or control of hazardous materials and substances;
releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic, or hazardous substances or
hazardous wastes into the environment, including ambient air,
soil, surface water, and groundwater; and all other Laws relating
to the manufacturing, processing, distribution, use, treatment,
storage, disposal, handling or transport of pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances or wastes, including CERCLA and RCRA. As used
herein,"release" has the meaning specified in CERCLA, and
"disposal" or "disposed" has the meaning specified in RCRA
If CERCLA, RCRA, or any other applicable Environmental Law
is amended so as to broaden the meaning of any terms defined
thereby, such broader meaning shall apply subsequent to the
effective date of such amendment; and to the extent that the laws
of any state in which the Pond Site is located establish a
meaning for "hazardous substance," "release," "solid waste,"
"hazardous wastes," or "disposal" that is broader than that
specified in either CERCLA or RCRA, such broader meaning shall
apply.
"Hazardous Substances" means any and all (a) "hazardous
substances," as defined by CERCLA; (b) crude oil or any fraction
thereof, natural gas, natural gas liquids, liquefied natural gas,
or synthetic gas usable for fuel (or mixtures of natural gas and
such synthetic gas); (c) "solid wastes" and "hazardous wastes,"
as defined by RCRA; (d) any pollutant, contaminant or hazardous,
dangerous or toxic chemicals, materials or substances within the
meaning of any Environmental Law; (e) any radioactive material,
including any source, special nuclear, or by-product material as
defined by the Atomic Energy Act of 1954, as amended; and
(f) asbestos in any form or condition.
"Impoundment" means the coal slurry impoundment of Mine
Waste located on the Pond Site.
"Labor and G&A Costs" means (i) the actual wages and
salaries paid by Operator to its employees who perform the
Services, plus (ii) the cost of the health, unemployment,
retirement and other burdens actually incurred by Operator in
connection with such employees including, without limitation,
costs required to be incurred by Operator under the NBCWA of 1998
and costs incurred by Operator as a result of terminating any
employee (and Operator shall use its good faith efforts to
mitigate any such termination and post-termination costs)
(provided that the items described in "(i)" and "(ii)" with
respect to any employee who does not devote his full working time
to performance of the Services shall be pro rated to reflect the
portion of his time devoted to performing the Services), plus
(iii) a fairly allocable share of Operator's general office
administrative overhead as mutually agreed by the parties. The
aggregate of the amounts in "(ii)" and "(iii)" shall not exceed
[90%] of the amount in "(i)," and shall be substantiated by
Operator in a manner reasonably satisfactory to the Company;
provided, however, the Company shall consider in good faith a
request by Operator to increase such percentage if the Operator
can substantiate to the Company's reasonable satisfaction that
the costs in "(ii)" and "(iii)" reasonably exceed such percentage
of the amount in "(i)."
"Laws" means all applicable federal, state, and local laws
(statutory or common), rules, ordinances, regulations, grants,
concessions, franchises, licenses, orders, directives, judgments,
decrees, and other governmental restrictions, including Permits
and other similar requirements, whether legislative, municipal,
administrative, or judicial in nature.
"Lease" means the instrument indicated with respect to each
Company in Schedule 2.2 hereto. MCNIC Pipeline & Processing
Company will (i) grant its rights under the Lease, insofar as it
covers the Plant Site, to the Company and (ii) grant Operator
rights of access and the right to occupy the Pond Site to remove
Mine Waste from the Impoundment, to maintain Environmental
Compliance consistent with this Agreement and to perform its
other obligations and responsibilities provided in this
Agreement.
"Letter Ruling" means Internal Revenue Service Private
Letter Ruling indicated with respect to each Company in
Schedule 2.3 hereto.
"Loan Agreement" means the Loan Agreement of even date
between MCNIC Pipeline & Processing Company and Xxxxx Mining.
"Loan Documents" means the Loan Agreement and all documents
and instruments executed and delivered pursuant thereto,
including, without limitation, the documents and instruments
securing Xxxxx Mining's obligations under the Loan Agreement and
the related promissory note(s).
"Losses" means all claims, demands, suits, causes of action,
losses, damages, liabilities, fines and sanctions, punitive and
exemplary damages, costs and expenses (including reasonable
attorney's, consultant's and expert's fees and expenses and court
costs); provided, however, that "Losses" shall not include any
lost Tax Credits, lost profits, lost sales, business
interruption, lost business opportunities, or consequential
damages.
"Mine Waste" means all coal, coal slurry, coal fines, coarse
coal and other coal materials, and all other minerals of
whatsoever nature mixed with or contained in the foregoing that
have been mined and deposited in the Impoundment.
"MSHA" means the Mine Safety and Health Act, as amended,
30 U.S.C. Section 801 et seq.
"NBCWA of 1998" has the meaning stated in Section 3.2.
"Non-Company Indemnified Parties" has the meaning stated in
Section 10.2.
"Non-Operator Indemnified Parties" has the meaning stated in
Section 10.1.
"O&M Agreement" has the meaning stated in Recital B.
"Operating Profit" has the meaning stated in Article VII.
"Operation and Maintenance Procedures Manual" means a manual
prepared by Operator, subject to the review and approval by the
Company, providing operation and maintenance procedures for the
Beneficiation Equipment and the Pond Site (which, unless
otherwise approved by the Company, shall in all respects be
consistent with manufacturer s operation and maintenance
procedures). These procedures include information regarding:
(a) equipment operating procedures;
(b) maintenance programs;
(c) safety, OSHA, and MSHA programs;
(d) Environmental Compliance and mitigation
programs;
(e) Permit operating and reporting requirements;
(f) programs for complying with reporting
requirements contained in this Agreement; and
(g) other applicable regulatory reporting
requirements.
"Operator" has the meaning stated in the preamble to this
Agreement.
"Operator Representative" has the meaning stated in Section
5.1(a).
"OSHA" means the Occupational Safety and Health Act, as
amended, 29 U.S.C. Section 651 et seq.
"Penalty" means any final, nonappealable environmental or
regulatory civil penalty, criminal penalty, fine, or similar
assessment imposed by any governmental authority that did not
result from any Pre-Existing Condition at the Premises and
(a) either (i) relates to Operator's operation of the
Beneficiation Equipment or the Pond Site or (ii) arises by reason
of Operator's conduct and (b) is levied against the Company or
Operator.
"Permits" means all licenses, permits, orders, approvals,
and consents of governmental authorities that are required to
operate the Beneficiation Equipment in accordance with this
Agreement.
"Person" means an individual, natural person, corporation,
joint venture, partnership, limited partnership, limited
liability company, trust, estate, business trust, association,
governmental authority, or any other entity.
"Plant Site" means that portion of the area covered by the
Lease that MCNIC Pipeline & Processing Company assigns or
subleases to the Company and on which the Plant will be located.
"Pond Site" means the area covered by the Lease, less and
except the Plant Site, on which the Impoundment is located and
the Beneficiation Equipment will be located.
Pre-Existing Condition means any condition, circumstance
or matter at, on, under or affecting the Pond Site or any
adjoining lands prior to the date that Operator obtains
operational control of the Pond Site.
"RCRA" means the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Sections 6901 et seq.
"Section" refers to a section in this Agreement, unless
specifically stated otherwise.
"Services" means the services to be rendered by Operator
under this Agreement.
"State" means the State where the Pond Site is located.
"Tax Credits" means the credit against federal income tax
under section 29 of the Code available to the Company (and its
members) attributable to the production and sale of Briquettes
from the Briquetting Plant that constitute "qualified fuel" under
section 29 of the Code.
ARTICLE III
SERVICES
3.1 Responsibilities of Operator. Operator shall:
(a) operate and maintain the Beneficiation Equipment and
the Pond Site in accordance with the Annual Operating
Plan in a clean, safe, and efficient manner,
consistent with the Operation and Maintenance
Procedures Manual, the operating and maintenance
manuals for the Beneficiation Equipment and the Pond
Site, all applicable manufacturer's warranties, and
normal and customary industry standards for
industrial facilities similar to the Beneficiation
Equipment and the Pond Site so as, to the extent
possible using the Beneficiation Equipment, to supply
timely the Briquetting Plant with all of its coal
fines requirements for testing and start-up of the
Briquetting Plant and, thereafter, for commercial
operation of the Briquetting Plant at its maximum
optimum capacity, as such requirements may change
from time to time, and maintain sufficient
inventories of coal fines to ensure an uninterrupted
supply of the requirements of the Briquetting Plant,
and beneficiate the Mine Waste such that the
resulting coal fines supplied to the Briquetting
Plant, when processed by the Briquetting Plant, will
satisfy the chemical change conditions of the Letter
Ruling in order for the Briquettes to constitute
"qualified fuels" pursuant to section 29(c)(1)(C) of
the Code;
(b) perform the Services in an efficient manner and in
accordance with the Lease and this Agreement;
(c) except as otherwise specified in this Agreement,
obtain and maintain all Permits and approvals
necessary or useful for the operation of the
Impoundment and the Beneficiation Equipment and for
Operator to do business in the jurisdictions where
the Services are to be performed;
(d) use generally accepted industry practices (including
accepted practices regarding the safety of personnel
and equipment) and technology for industrial
equipment similar to the Beneficiation Equipment and
the Pond Site with the objective of properly
discharging its obligations under this Agreement,
protecting workers, minimizing the Costs (to the
extent reasonable under the circumstances), complying
in all material respects with all applicable Laws and
Permits, and preserving the useful life of the
Beneficiation Equipment;
(e) furnish the Company with information relating to the
Beneficiation Equipment and the Pond Site as
requested by the Company;
(f) at least 120 days prior to the beginning of each
calendar year prepare and furnish to the Chairman of
the Management Committee of the Company a draft of a
proposed Annual Operating Plan consistent with the
criteria described in Schedule 3.1(f) and cooperate
as requested by the Chairman to assist the Chairman
in revising such proposed plan;
(g) operate the Beneficiation Equipment and Pond Site in
material compliance with its Permits and all
applicable Laws, including Environmental Laws, and
report to the Company immediately any violations of
Environmental Laws that could result in material
liability to the Company or the existence of any
conditions known to Operator that may lead to such a
violation;
(h) minimize the occurrence of lost time events;
provided, however, that Operator shall make a
diligent effort to have no down time events; and
(i) supply personnel facilities (offices, change rooms,
lunch rooms, etc.); potable water; sanitation
facilities; and storage facilities; prior to
acquiring any capital item that will be included in
Costs or otherwise paid for by the Company and that
will cost in excess of $25,000, Operator shall obtain
the Company's prior written consent. The Parties
contemplate that to the extent possible such items
will be leased from third parties, and the Parties
will agree on such arrangements prior to the
acquisition or lease of such items.
3.2 Personnel Matters. On or before June 25, 1998,
Operator shall use its best efforts to employ, subject in all
respects to Article II of the National Bituminous Coal Wage
Agreement of 1998 (the "NBCWA of 1998"), labor and professional,
supervisory, and managerial personnel necessary to perform the
Services. Operator shall use reasonable efforts to ensure that
all such personnel shall be qualified when employed to perform
the duties to which they are assigned, without requiring any
training to perform such duties. All individuals engaged by
Operator to assist in performance of the Services shall, to the
extent reasonably practicable, be employees of Operator or its
Affiliates. Operator may, with the Company's prior written
consent, retain subcontractors to perform portions of the
Services, but retention of a subcontractor shall not relieve
Operator of any of its duties, liabilities, or obligations under
this Agreement. Operator shall comply in all material respects
with all applicable Laws relating to employment or health and
safety of workers, including OSHA, MSHA, and similar State and
local Laws, and shall exercise control over labor relations in a
reasonable manner consistent with this Agreement. Operator will
have sole authority, control, and responsibility with respect to
labor matters in connection with the performance of the Services.
3.3 Compliance with the Lease. Operator has reviewed the
Lease and, in addition to its other obligations hereunder, shall
comply with all terms and conditions of the Lease applicable to
the operation and maintenance of the Beneficiation Equipment and
the Pond Site while performing the Services.
3.4 Permits. In connection with performing the Services,
Operator shall:
(a) comply in all material respects with all applicable
Laws containing or establishing compliance
requirements for the Beneficiation Equipment and the
Pond Site;
(b) secure in the name of Operator and comply in all
material respects with, and thereafter maintain, as
appropriate, all Permits and nongovernmental
approvals (and renewals of the same) necessary to
perform the Services, including those relating to
water and sewer use, storage, and disposal of
chemicals and waste (including storage and disposal
of Hazardous Substances), emission monitoring and
testing, and safety;
(c) initiate and maintain procedures necessary to comply
with applicable provisions of all Laws, and Permits,
and other requirements, including Environmental Laws;
and
(d) prepare and deliver to the applicable governmental
authority all reports required by the Permits for the
Beneficiation Equipment and the Pond Site.
3.5 Operating Records and Reports. Operator shall
maintain operating logs, records, and reports documenting the
operation and maintenance of the Beneficiation Equipment and Pond
Site, consistent with customary industry standards for industrial
facilities similar to the Beneficiation Equipment and the Pond
Site, to the extent and as required to operate and maintain the
Beneficiation Equipment and the Pond Site, and maintain such
records as the Company may request Operator to keep and maintain
from time to time. The originals of such operating logs,
records, and reports shall be the property of the Company, as
provided in Section 11.2, and the Company shall have the right at
any time to obtain the originals (unless the originals are
required by Law to remain at the Beneficiation Equipment or the
Pond Site) or, at the Company's discretion, photocopies thereof.
3.6 Access. The Company and its representatives shall
have access to the Beneficiation Equipment and the Pond Site at
all reasonable times and upon reasonable notice to Operator, to
all documents, materials, records, and accounts relating to the
operation of the Beneficiation Equipment and the Pond Site for
purposes of inspection and review. During any such inspection or
review of the Beneficiation Equipment, the Company and its
representatives shall comply with all Operator's safety and
security procedures, and the Company and its representatives
shall conduct such inspections and reviews in such a manner as to
cause minimum interference with Operator's activities.
3.7. Responsibilities of the Company. The Company shall
use its reasonable efforts under applicable circumstances to:
(a) cooperate with Operator to facilitate and expedite
Operator s operation and maintenance of the
Beneficiation Equipment in accordance with Section
3.1 of this Agreement, and Operator s performance of
the Services in accordance with this Agreement; and
(b) provide Operator with full and complete access to all
pertinent records, instruments, drawings, schematics,
documents and other information in the Company s
possession or under the Company s control concerning
the Pond Site or the Beneficiation Equipment
reasonably necessary for Operator to perform the
Services.
ARTICLE IV
ITEMS TO BE FURNISHED BY COMPANY
4.1 General. The Company shall furnish to Operator, at
the Company's expense, the information, services, materials, and
other items described below in this Article IV. All such items
shall be made available at the times and in the manner reasonably
required for the expeditious and orderly performance of the
Services by Operator.
4.2 Equipment and Supplies. The Company shall furnish
or cause to be furnished to Operator the items of equipment
described in Schedule 4.2, and the Company shall furnish or cause
to be furnished to Operator (in such quantities and of such
quality as reasonably required by Operator to perform the
Services and operate and maintain the Beneficiation Equipment in
accordance with the terms of this Agreement) electricity, process
water, natural gas and diesel fuel reasonably necessary to
operate the Beneficiation Equipment, and process additives and
shall provide the initial stock of maintenance spare parts and
inventory.
4.3 Information. The Company shall make available for
Operator s inspection and copying all technical, operational, and
other information in its possession or to which it has access
relating to the Pond Site and necessary for performance of the
Services. Operator will maintain the confidentiality of all
information relating to the Beneficiation Equipment and the Pond
Site and all financial, sales, and production information in
accordance with Section 13.12.
4.4 Control of the Beneficiation Equipment. Operator
shall cause the Beneficiation Equipment to be in place and ready
for service as soon as reasonably possible and, subject to the
design limitations of the Beneficiation Equipment, so as to be
capable of supplying timely and continuously the coal fines
requirements of the Briquetting Plant for testing and start-up of
the Briquetting Plant and for commercial operation of the
Briquetting Plant at its maximum optimum capacity.
4.5 Permits. The Company shall provide Operator with a
completed Operator Information Mining Permit and shall
cooperate with Operator in securing and use its reasonable
efforts to secure all Permits necessary for operation of the
Beneficiation Equipment and the Pond Site.
4.6 Repairs, Maintenance, and Capital Improvements.
Subject to Section 5.2, the Company shall pay or reimburse
Operator for the cost of all necessary repairs, modifications and
maintenance of the Beneficiation Equipment and the Pond Site in
accordance with this Agreement. If Operator determines that
repairs, modifications or capital improvements are necessary,
Operator shall notify the Company in writing of the need for any
such repairs or maintenance, make written recommendations, and
shall receive the prior written consent of the Company to any
such required work for which the Company will be obligated to
reimburse Operator, and Operator shall be excused from any
failure to perform hereunder to the extent such failure is caused
by the Company's refusal to authorize requested repairs,
modifications or capital improvements. Operator shall at all
times maintain a reasonable spare parts inventory, a list of
which shall be developed by the Company and Operator and
subsequently attached to this Agreement as Schedule 4.6.
ARTICLE V
PROCEDURES, PLANS AND REPORTING
5.1 Representatives.
(a) Operator Representative. Operator shall appoint from
time to time an individual representative ("Operator
Representative") coincident with the execution of
this Agreement, who shall be authorized to act for
Operator on all matters concerning this Agreement and
the Services. Operator shall be bound by the written
communications, directions, requests, and decisions
made by the Operator Representative. Operator shall
notify the Company in writing before employment of
the Operator Representative (or any new Operator
Representative), informing the Company of his or her
identity and his or her qualifications to operate the
Beneficiation Equipment. Until the Company receives
notice of removal of the Operator Representative and
appointment of a new Operator Representative, the
Company may treat the appointed Operator
Representative as the authorized Operator
Representative.
(b) Company Representative. The Company shall appoint
from time to time an individual representative
("Company Representative") coincident with the
execution of this Agreement, who shall be authorized
to act for the Company on all matters concerning this
Agreement and the Services. The Chairman of the
Management Committee of the Company shall be the
initial Company Representative. The Company shall be
bound by the written communications, directions,
requests, and decisions made by the Company
Representative. The Company shall notify Operator in
writing of any new Company Representative. Until
Operator receives notice of removal of the Company
Representative and appointment of a new Company
Representative, Operator may treat the appointed
Company Representative as the authorized Company
Representative.
5.2 Expenditures.
(a) Non-Budgeted Items. Operator shall not incur any
single expenditures not budgeted for (on a line item
basis) in the Annual Operating Plan approved by the
Company in excess of $5,000 without the prior written
consent of the Company.
(b) Overruns. Operator shall not incur expenditures in
excess of 110% of the amount budgeted for the
expenditures (on a line item basis) in the Annual
Operating Plan, without the prior written consent of
the Company.
(c) Emergency Expenditures. Notwithstanding any
provision to the contrary in this Agreement, in an
emergency Operator may take any action it deems
reasonably necessary to protect life or property, to
protect the Beneficiation Equipment and the Pond Site
or to comply with Laws. Operator shall promptly
notify the Company of the emergency and shall be
entitled to reimbursement for all reasonable Costs of
responding to the emergency.
5.3 Reports. Operator shall submit to the Company the
following reports, in form and substance reasonably acceptable to
the Company, concerning operation and maintenance of the
Beneficiation Equipment:
(a) Monthly Reports. Within five days after the end of
each calendar month, Operator shall submit to the
Company an operations and financial report in the
form of Schedule 5.3 (a) attached hereto, covering
operations and maintenance conducted during the
calendar month in reasonable detail.
(b) Other Reporting. Promptly after an executive officer
of Operator obtains knowledge of any of the
following, Operator shall notify the Company of:
(i) any litigation or any material claims,
disputes, or actions, threatened or filed,
concerning the Beneficiation Equipment, the
Pond Site, or the Services;
(ii) any refusal of any governmental authority or
third party to grant, renew, or extend any
Permit, approval, authorization, or consent
concerning the Beneficiation Equipment, the
Pond Site, or the Services;
(iii) any significant dispute with any governmental
authority concerning the Beneficiation
Equipment, the Pond Site, or the Services;
(iv) any material damage to or destruction of the
Beneficiation Equipment or the Pond Site;
(v) death or serious injury of any employee or
other person at the Beneficiation Equipment
or the Pond Site or otherwise in connection
with the Services;
(vi) any equipment failure at the Beneficiation
Equipment or the Pond Site that would result
in a production disruption at the
Beneficiation Equipment of more than
12 consecutive hours;
(vii) any other production disruption at the
Beneficiation Equipment of more than
12 consecutive hours;
(viii) three successive days of production at the
Beneficiation Equipment that is 50% or less
than targeted levels; and
(ix) any release or threatened release of any
Hazardous Substance that would violate any
Law (including any Environmental Law) or any
Permit maintained by the Company or Operator
in connection with the Beneficiation
Equipment that could reasonably be expected
to subject the Company or Operator to any
liability or Penalty under any Environmental
Law.
5.4 Officers' Certificate. In connection with delivery
of the monthly report for the last month of each calendar quarter
pursuant to Section 5.3(a), Operator shall deliver a letter
addressed to the Company signed by the Chief Financial Officer of
Operator certifying whether any condition, act, or event has
occurred and is continuing that constitutes a violation, breach,
or default under this Agreement or the Lease to his or her best
knowledge and belief after due inquiry.
5.5 Audits. At the Company's option, the Company at its
expense may once during each calendar year conduct an operational
audit of the operations of the Beneficiation Equipment and the
Pond Site and of Operator's performance under this Agreement.
Generally, such an audit shall review operating, accounting,
safety, environmental, and personnel matters related to the
Beneficiation Equipment and the Pond Site and Operator's
compliance with, and level of performance under, this Agreement
and the Lease. The audit shall be conducted in such a manner as
to cause minimum interference with Operator s performance of the
Services.
5.6 Other Information. Operator shall promptly submit to
the Company any material information concerning new or
significant aspects of the operation of the Beneficiation
Equipment and the Pond Site and, as requested by the Company,
shall promptly submit any other information concerning the
Beneficiation Equipment, the Pond Site or the Services. Operator
shall permit representatives of the Company to have full access
to the records relating to the Beneficiation Equipment and the
Pond Site during normal business hours. Any review of such
records shall be conducted in such a manner as to cause minimum
interference with Operator's activities.
5.7 Accounting Procedures.
(a) Third Party Invoices. Operator shall receive,
examine, and, if acceptable, approve all invoices for
costs payable to third parties by the Company
relating to the operation and maintenance of the
Beneficiation Equipment and the Pond Site and the
other Services provided by Operator pursuant to this
Agreement. If Operator reasonably determines that
any amounts shown on these invoices are Costs,
Operator will submit such invoices to the Company for
payment in a timely fashion such that the Company has
a reasonable period of time in which to review the
invoices and underlying costs and pay all costs prior
to the time such invoices will become delinquent.
The Parties recognize that Operator will submit
invoices as received from third parties from time to
time and not on a fixed cycle. Operator shall
prepare and submit with the invoices a summary of all
the invoices submitted that identifies which items
are capital account items, expense items and other
categories requested by the Company using a format
acceptable to the Company.
(b) Labor and G&A Costs and Fees. Each month Operator
will invoice the Company for the amounts owed for
Labor and G&A Costs and the Operating Profit for the
preceding month. Each invoice will itemize in
reasonable detail the amounts owed and the total
amount due, and will be accompanied by information
reasonably sufficient for the Company to determine
the accuracy of the invoice. Invoices received by the
Company under this Section 5.7(b) shall be due and
payable to Operator within 15 days after the date
received by the Company, but no earlier than the last
day of the month in which the invoice is received.
5.8 Millennium Bug Issues. The computer problem known
as the millennium bug or the year 2000 problem," which can
arise because computer software, hardware, or other equipment may
recognize the year 2000 to be the year 1900, shall not be deemed
to be an act of force majeure or other excuse for nonperformance
under this Agreement. Operator represents and warrants to the
Company that its computer systems are designed to be used prior
to, during and after the calendar year 2000, and that such
computer systems will operate, and all data will be processed,
during each such time period without error. Operator
acknowledges that the Company has entered into this Agreement in
reliance on Operator s representations, warranties, and abilities
to perform the services described herein. The Company
acknowledges that Operator has entered into this Agreement in
reliance upon the Company's representations, warranties, and
abilities to perform its obligations described herein.
ARTICLE VI
LIMITATIONS ON AUTHORITY
6.1 General Limitations. Operator shall not take any of
the following actions without the prior written approval of the
Company:
(a) Disposition of Assets. The sale, lease, pledge,
mortgage, conveyance, license, exchange, or other
transfer or disposition of any property or assets of
the Company, including any tangible personal property
acquired by Operator on the Company s behalf under
this Agreement.
(b) Contracting. Making, entering into, executing,
amending, waiving any rights under, modifying, or
supplementing any contract or agreement on behalf of,
binding upon, or in the name of the Company, except
for contracts relating to approved Costs to be
incurred or expenditures provided for in this
Agreement.
(c) Lawsuits and Settlements. The settling,
compromising, assigning, pledging, transferring,
releasing, or consenting to the same, of any claim,
suit, debt, demand, or judgment against or due by the
Company or Operator on behalf of the Company, or
submitting any such material claim, dispute, or
controversy to arbitration or judicial process, or
stipulating to a judgment, or consent to do the same.
The Company shall retain control of any such claim,
suit, debt, or demand, and any other litigation
regarding the Beneficiation Equipment, except as to
Operator's individual liability.
(d) Transactions on Behalf of the Company. Engaging in
any other transaction on behalf of the Company,
except as set forth in this Agreement or the O&M
Agreement.
(e) Permits. Agreeing to waive compliance with any
Permit held in the name of the Company or agreeing to
any Penalty to be paid or charged to the Company for
violation of any Permit.
(f) No Assumption of Obligations Outside Authority.
Operator has no authority to act for or to assume any
obligation or liability on behalf of the Company
except for such authority or assumption as is
expressly conferred upon Operator by this Agreement
or the O&M Agreement or by the Company pursuant to
this Agreement or the O&M Agreement or by any other
written direction or authorization from the Company
to Operator; and Operator shall indemnify and hold
the Company, the Members, their respective successors
and assigns, and their respective directors,
officers, employees, and agents harmless from and
against any and all losses, claims, damages, and
liabilities arising out of any unauthorized act or
assumption of any obligation or liability by Operator
on behalf of the Company in bad faith or in
circumstances constituting willful misconduct by
Operator.
6.2 Execution of Documents. Any agreement, contract,
notice, approval, or other document that is permitted under this
Agreement to be executed for the Company by Operator shall be
executed by the Operator Representative. No other employee,
representative, or agent of Operator shall have signature
authority for purposes of binding the Company pursuant to this
Agreement, unless otherwise provided in writing from the Company
to Operator.
6.3 Affiliates. All Services performed by Affiliates of
Operator on behalf of Operator shall have been approved in
advance by the Company and shall be invoiced at rates and total
charges to the Company no higher than the Costs (without any
profit component) that would have been chargeable to the Company
if Operator had performed such Services.
ARTICLE VII
COMPENSATION OF OPERATOR
Operator's compensation for acting as Operator shall
be limited to (i) actual Costs incurred by Operator (provided
that Costs payable to third parties are, where possible, expected
to be paid by the Company directly to the third parties to which
such Costs are owed pursuant to Section 5.7 and the Operator
shall not receive such amounts so paid), plus (ii) Labor and G&A
Costs, plus (iii) 18% of the Labor and G&A Costs (excluding any
extraordinary costs incurred by Operator in connection or as a
result of the termination of any employee, required to be
incurred by Operator under the NBCWA of 1998, or otherwise, that
would otherwise constitute Labor & G&A Costs under this
Agreement) (the Operating Profit ). In addition to the
Operating Profit provided for in "(iii)," the Company shall pay
Operator each month a "Minimum Profit Payment" equal to the
amount, if any, by which (x) the number of months for which
Operator (and the operator designated under the O&M Agreement)
has rendered invoices during the calendar year that includes the
month covered by the most recent invoice multiplied by $16,666.66
is greater than (y) the total Operating Profit, plus the
Operating Profit under the O&M Agreement, previously paid or
payable by the Company in that calendar year including the most
recent invoice; provided that if this Agreement terminates before
the close of business on the last day of a calendar month, the
Minimum Profit Payment for that partial month shall be
proportionately reduced to reflect the ratio of the number of
days this Agreement was in effect during that month to the total
number of days in that month. Minimum Profit Payments shall be
paid half to Operator and half to the operator designated under
the O&M Agreement. If for any calendar year the aggregate
Operating Profits plus the Operating Profits under the O&M
Agreement plus the Minimum Profit Payments (collectively, the
"total payments") exceeds $200,000 (provided that in the case of
a partial year in the event this Agreement is terminated before
the end of a calendar year, this $200,000 figure shall be reduced
to an amount equal to $547.95 multiplied by the number of days
this Agreement is in effect during such calendar year), then
Operator shall refund to the Company the Minimum Profit Payments,
but not an amount in excess of the Minimum Profit Payments, to
the extent necessary to cause the total payments after giving
effect to such refund to equal $200,000 (or in the case of a
partial year, the reduced amount described above). It is the
intent of the parties that the Operating Profit and the Minimum
Profit Payments in the amount provided for above be paid by each
of the Companies with respect to the Plant Site owned by such
Company.
Company and Operator agree that solely for purposes of
determining Operator's compensation hereunder, this Agreement
shall be deemed to have been effective April 1, 1998 and Operator
shall be entitled to compensation in accordance with this
Agreement for the months of April, May and June, 1998.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term. Unless sooner terminated as provided herein,
the term of this Agreement shall commence on the effective date
of this Agreement and shall expire on December 31, 1998 (the
"Initial Term"), which term shall be automatically extended for
unlimited successive one year periods, unless it is terminated
during the Initial Term or any such subsequent period by one
party furnishing the other with written notice, at least 60 days
prior to the expiration of the period, of an intent to terminate
this Agreement upon the expiration of the period.
8.2 Termination by the Company for Cause.
(a) This Agreement may be terminated by the Company at
any time for good cause. For purposes hereof,
"good cause" shall mean any of the following:
(a) Operator s repeated negligence; (b) Operator s
unremedied negligence; (c) Operator s willful
misconduct; (d) Operator s material breach of the
standards of operation contained in Section 3.1; or
(e) Operator s material failure to perform its
obligations under this Agreement. For purposes
hereof, "repeated negligence" shall occur if
(i) Operator is negligent in performing any of its
material obligations under this Agreement;
(ii) Operator receives a notice in writing from the
Management Committee specifying that the Management
Committee has reasonably determined that Operator has
failed to perform its duties as Operator, the basis
for such determination by the Management Committee,
and the action necessary to be undertaken by Operator
to remedy such failure; and (iii) Operator receives
such written notices more than two times in any six
month period (provided that after issuing a written
notice with respect to a failure by Operator to
perform, the Company shall not issue a second such
notice with respect to the same underlying
circumstances within a six-month period unless the
Operator fails to promptly commence and continue
diligent efforts to cure such failure). For purposes
hereof, "unremedied negligence" shall occur if
(i) Operator is negligent in performing any of its
material obligations under this Agreement;
(ii) Operator receives a notice in writing from the
Management Committee specifying that the Management
Committee has reasonably determined that Operator has
been negligent in the performance of its duties under
this Agreement as Operator, the basis for such
determination by the Management Committee, and the
action necessary to be undertaken by Operator to
remedy such failure; and (iii) Operator has not
remedied, or commenced diligent efforts to cure or
remedy within such period, its negligence within
seven calendar days after its receipt of the written
notice and does not continues to pursue such diligent
efforts until such matters are cured or remedied
after its receipt of the Management Committee's
notice.
(b) Termination of this Agreement as to any Company
pursuant to Section 8.2(a) or any other section of
this Agreement shall not in and of itself terminate
this Agreement as between Operator and any other
Company; provided, however, that each such other
Company shall have the right to terminate its
Agreement with Operator upon 30 days' notice to
Operator if it gives such notice within 60 days after
effective date of the termination by another Company
under Section 8.2(a).
8.3 Termination by Operator for Cause; Resignation;
Deemed Offer to Resign. This Agreement may be terminated by
Operator for cause if (i) the Company fails to perform its
obligations under this Agreement in any material respect, (ii)
the Company receives a notice in writing from Operator specifying
that Operator has reasonably determined that the Company has
failed to perform its obligations under this Agreement in any
material respect and the basis for such determination, and (iii)
the Company does not remedy or commence diligent efforts to
remedy its failure within seven calendar days after its receipt
of the written notice and continue to pursue such diligent
efforts until the failure is remedied. In any other event,
Operator may resign upon not less than 120 days prior notice to
the Company. If any of the following shall occur, Operator shall
be deemed to have resigned upon the occurrence of the event
described in each of the following subsections:
(a) A receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for a substantial
part of Operator s assets is appointed and the
appointment is neither made ineffective nor
discharged within 60 days after the making thereof;
(b) Operator fails to pay or contest in good faith its
bills and business debts as they become due and such
failure would reasonably be expected to have a
material adverse effect on (i) the condition
(financial or otherwise), business, assets or results
of operations of Operator, or (ii) the ability of
Operator to perform its obligations under this
Agreement;
(c) Operator commences a voluntary case under any
applicable bankruptcy, insolvency, or similar Law now
or hereafter in effect; or consents to, requests, or
acquiesces in the entry of an order for relief in an
involuntary case under any such Law or to the
appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee,
sequestrator, or other similar official of any
substantial part of its assets; or makes a general
assignment for the benefit of creditors; or takes
corporate or other action in furtherance of any of
the foregoing; or
(d) A judgment, decree, or order for relief is entered
against Operator that materially affects its ability
to perform the Services in accordance with the terms
of this Agreement by a court of competent
jurisdiction in an involuntary case commenced under
any applicable bankruptcy, insolvency, or other
similar Law of any jurisdiction now or hereafter in
effect.
Under Subsections (b), (c), or (d) above, the appointment of a
successor Operator shall be deemed to pre-date the event causing
the deemed resignation.
8.4 Termination if Briquetting Plant Moved. This
Agreement shall terminate if the Company moves the Briquetting
Plant off the Plant Site, unless the Parties otherwise agree in
writing.
8.5 Termination upon Agreement. This Agreement may be
terminated at any time upon mutual written agreement of the
Parties.
8.6 Demobilization Costs. If this Agreement is
terminated pursuant to Section 8.1 or 8.4, or by Operator
pursuant to the first sentence Section 8.3, the Company shall
reimburse Operator for costs reasonably incurred in connection
with the demobilization, including, without limitation, costs of
Environmental Compliance; provided, however, in no circumstances
shall the Company be liable or obligated for any amounts due
under the Loan Documents.
8.7 [Intentionally omitted]
8.8 Termination Payment. In the event of a termination
of this Agreement by either Party for cause, the terminating
Party shall be entitled to recover any damages or Penalties it
incurs as a result of any breach or violation by the other Party.
8.9 Continuation and Cooperation. Operator shall
cooperate fully with the Company and any new Operator appointed
by the Company during the transition period from receipt of a
termination notice hereunder to the termination of this
Agreement, including training any new Operator appointed by the
Company. Operator will be entitled to the compensation provided
in Article VII of this Agreement and reimbursement for all
reasonable out-of-pocket expenses incurred during the transition
period. Operator shall also continue performing its duties
hereunder after the termination date until a new Operator assumes
its duties to operate the Beneficiation Equipment. During such
post-termination period Operator will be entitled to the
compensation provided at Article VII of this Agreement.
8.10 Force Majeure.
(a) Definition. "Force Majeure" means any cause
reasonably beyond the control of a Party that, wholly
or in substantial part, prevents the performance of
its obligations under this Agreement or the Lease.
Examples of Force Majeure are the following: acts of
God; acts of the public enemy; insurrections; riots,
strikes; labor disputes; work stoppages; fires;
explosions; floods; electric power failures;
breakdowns of or damage to the Beneficiation
Equipment; interruptions to or contingencies of
transportation; embargoes; and orders or acts of
civil or military authority (including a city or
county ordinance, an act of a state legislature, or
an act of the United States Congress); provided,
however, that for purposes of this Agreement, Force
Majeure shall not include, and neither Party shall be
excused from performance because of, the development
or existence of economic conditions that may
adversely affect the anticipated profitability of the
Party's activities hereunder, acts or omissions of
the Party that constitute mismanagement or fraud on
its part, or reduced productivity of labor employed
by that Party in its activity hereunder.
(b) Effect. If because of an event of Force Majeure
either Party is unable to carry out its obligations
under this Agreement, and if the affected Party gives
the other Party notice of the Force Majeure, the
obligations and liabilities of the affected Party and
the corresponding obligations of the other Party
shall be suspended to the extent made necessary by
and during the continuance of the Force Majeure;
provided, however, that the disabling effects of the
Force Majeure shall be eliminated as soon as and to
the extent possible.
ARTICLE IX
INSURANCE
9.1 Operator Policies. Operator shall obtain, on its own
behalf, and keep in force during the term of this Agreement, at
least the following types and amounts of insurance:
(a) Workers' Compensation Insurance for statutory
requirements, including Occupational Disease
Insurance, covering location of all work places.
(b) Employer s Liability Insurance with limits of Five
Hundred Thousand Dollars ($500,000) covering location
of all work places.
(c) Comprehensive General Liability Insurance including
Products Completed Operations Coverage and Blanket
Contractual Coverage with Full Defense Coverage for
Company, with a Limit of not less than Ten Million
Dollars ($10,000,000) Combined Single Limit covering
injuries to or death of one or more persons and
property damage liability.
(d) Comprehensive Automobile Liability Insurance covering
owned, non-owned and hired vehicles with limits of
not less than One Million Dollars ($1,000,000)
Combined Single Limit covering injuries to or death
of one or more persons and property damage liability.
(e) Pollution liability insurance coverages in such
amounts as the parties shall reasonably agree on or
before June 30, 1998.
All such insurance of Operator shall specifically refer to and
cover Operator s liability under this Agreement, including
Section 10.1 and shall name the Company as an Additional Named
Insured. Operator shall deliver to the Company a certificate of
insurance evidencing the existence of all such insurance and,
upon request, the original or certified copy of each policy of
insurance and evidence. All policies providing coverage
hereunder shall contain provisions that no cancellation or
material changes in the policies shall become effective except on
30 days advance written notice thereof to the Company at its
offices in Detroit, Michigan.
9.2 Waiver of Subrogation. All insurance policies
maintained by a Party pursuant to Section 9.1 shall expressly
waive any right on the part of the insurer to assert any claims
against the other Party. The Parties agree that all policies
will include such waiver clause or endorsement, and each Party
waives any claims against the other Party for perils to be
insured against by such insurance policies, including any
deductible amounts unless such waiver is prohibited by the
policies or Law.
ARTICLE X
INDEMNIFICATION; DAMAGES
10.1 Indemnification by Operator. Operator shall defend,
indemnify, and save and hold harmless the Company and its
Affiliates, and their respective shareholders, directors,
members, managers, partners, officers, employees, agents,
contractors and operators (the "Non-Operator Indemnified
Parties") for, from, and against, and shall promptly reimburse
each Non-Operator Indemnified Party with respect to, any and all
Losses (including Losses arising in connection with violations of
Environmental Laws or for Environmental Compliance) paid,
incurred or suffered by such Non-Operator Indemnified Party, but
only to the extent the same arise from or are attributable to the
breach of any representation, warranty, covenant or agreement of
Operator contained in this Agreement or Operator's gross
negligence or willful misconduct in performing the Services and
its other obligations under this Agreement. The indemnification
by Operator pursuant to this Section 10.1 shall not include or
cover any Losses to the extent same are attributable to any Pre-
Existing Condition or the negligence, gross negligence or willful
misconduct of the Company.
10.2 Indemnification by the Company. The Company shall
defend, indemnify, and save and hold harmless Operator and its
Affiliates and their respective shareholders, directors, members,
managers, partners, officers, employees, agents, contractors and
operators (the "Non-Company Indemnified Parties") for, from, and
against, and shall promptly reimburse each Non-Company
Indemnified Party with respect to, any and all Losses (including
Losses arising in connection with violations of Environmental
Laws or for Environmental Compliance) paid, incurred, or suffered
by such Non-Company Indemnified Party, but only to the extent
that the same arise from or are attributable to (i) any Pre-
Existing Condition, (ii) the breach of any representation,
warranty, covenant or agreement of the Company contained in this
Agreement, or (iii) the breach by the Company (or by any Person,
other than Operator or an Affiliate of Operator, designated by
the Company to assume) any contract, agreement, Permit or other
obligation assumed by the Company or its designee pursuant to
Section 8.7, or (iv) any breakage cost obligation assumed by the
Company pursuant Section 8.7. The indemnification by the Company
pursuant to this Section 10.2 shall not include or cover any
Losses to the extent the same are attributable to the negligence,
gross negligence or willful misconduct of Operator.
ARTICLE XI
TITLE, DOCUMENTS, AND DATA
11.1 Materials and Equipment. Title to all materials,
equipment, supplies, consumables, spare parts, and other items
purchased or obtained by Operator and paid for by the Company
pursuant to Section 5.7 shall pass immediately to and vest in the
Company upon the passage of title from the vendor or supplier
thereof; provided, however, that such transfer of title shall in
no way affect Operator's obligations as set forth in the other
provisions of this Agreement.
11.2 Documents. All materials and documents prepared or
developed by Operator or its employees, representatives, or
contractors in connection with the Beneficiation Equipment or the
performance of the Services, including all manuals, data,
designs, drawings, plans, specifications, reports, and accounts,
will automatically become the property of the Company when
prepared or developed; provided, however, that any patentable
invention, process or system previously or hereafter developed by
Operator independently of the Beneficiation Equipment or the
performance of the Services, shall remain and be the property of
Operator and Operator shall use the same during the term of this
Agreement in connection with the operation of the Beneficiation
Equipment, any replacement or relocated Beneficiation Equipment
or performance of the Services at a reasonable charge to the
Company to be agreed upon by the Parties prior to any such use.
All these materials and documents, together with any materials
and documents furnished to Operator or to its contractors by the
Company, shall be delivered to the Company upon expiration or
termination of this Agreement and before final payment is made to
Operator; provided, however, that Operator may retain copies of
all such materials and documents, subject to the confidentiality
provisions hereof.
ARTICLE XII
ARBITRATION
12.1 Submission to Arbitration. The Parties hereby shall
submit all unresolved controversies, claims, and matters of
difference arising under this Agreement to binding arbitration.
Without limiting the generality of the foregoing, the following
shall be considered controversies for this purpose: (a) all
disputes relating to the interpretation or breach of this
Agreement or the Parties performance thereunder, (b) all
questions relating to any representations, negotiations, and
other proceedings leading to the execution hereof, and (c) all
disputes as to whether the right to arbitrate any such question
exists.
12.2 Initiation of Arbitration and Selection of
Arbitrators. The Party desiring arbitration shall so notify the
other party, identifying in reasonable detail the matters to be
arbitrated and the relief sought. Within 14 Business Days after
receipt of such notification, the parties shall attempt (acting
with the utmost good faith and commercial reasonableness) to
resolve the matters detailed and the relief sought in the notice.
If the Parties are unable to resolve the matters specified in the
notice, the matters shall be submitted for arbitration in
accordance with the terms hereof. Arbitration hereunder shall be
before a three-person panel of neutral arbitrators, consisting of
one person from each of the following categories: (1) an
attorney with at least ten years experience in mining law;
(2) an attorney with at least ten years experience in general
commercial law, including mining matters; and (3) a person with
at least ten years experience in the coal mining industry. The
AAA shall submit a list of persons meeting the criteria outlined
above for each category of arbitrator, and the Parties shall
select one person from each category in the manner established by
the AAA. If any Party or the arbitrators fail to select
arbitrators as required above, the AAA shall select such
arbitrators. The arbitrators shall be entitled to a fee
commensurate with their fees for professional services requiring
similar time and effort. If the arbitrators so desire, they
shall have the authority to retain the services of a neutral
judge or attorney (whose fees shall be treated as an arbitrator s
fees) to assist them in administering the arbitration and
conducting any hearings and taking evidence at such hearings or
otherwise.
12.3 Arbitration Procedures. All matters arbitrated
hereunder shall be arbitrated in Detroit, Michigan pursuant to
Michigan Law, and shall be conducted in accordance with the
Commercial Arbitration Rules of the AAA, except to the extent
such rules conflict with the express provisions of this Article
XII (which shall prevail in the event of such conflict);
provided, however, that all substantive law issues relating to
the rights and obligations of the parties under this Agreement
shall be governed by Section 12.4 below. The arbitrators shall
conduct a hearing no later than 45 days after submission of the
matter to arbitration, and a decision shall be rendered by the
arbitrators within 10 days of the hearing. At the hearing, the
Parties shall present such evidence and witnesses as they may
choose, with or without counsel. Adherence to formal rules of
evidence shall not be required, but the arbitration panel shall
consider any evidence and testimony that it determines to be
relevant, in accordance with procedures that it determines to be
appropriate. Any award entered in an arbitration shall be made
by a written opinion stating the reasons for the award made.
12.4 Enforcement. This submission and agreement to
arbitrate shall be specifically enforceable. Arbitration may
proceed in the absence of any Party if notice of the proceedings
has been given to such party. The Parties agree to abide by all
awards rendered in such proceedings. Such awards shall be final
and binding on all parties to the extent and in the manner
provided by Michigan Law. All awards may be filed with the clerk
of one or more courts, state, federal, or foreign, having
jurisdiction over the Party against which the award is rendered
or its property, as a basis of judgment and of the issuance of
execution for its collection. No Party shall be considered in
default hereunder during the pendency of arbitration proceedings
specifically relating to such default.
12.5 Fees and Costs. The arbitrators fees and other
costs of the arbitration and the reasonable attorney fees, expert
witness fees and costs of the prevailing Party shall be borne by
the non-prevailing Party. In its written opinion, the
arbitration panel shall, after comparing the respective positions
asserted in the arbitration claim and answer thereto, declare as
the prevailing party that Party whose position was closest to the
arbitration award (not necessarily the Party in favor of which
the award on the arbitration claim is rendered) and declare the
other Party to be the non-prevailing Party. The arbitration
award shall include an award of the fees and costs provided by
this Section 12.5 against the non-prevailing Party.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Representations and Warranties.
(a) Operator represents that it is a corporation
organized and validly existing in good standing under
the laws of [Oklahoma], is qualified to do business
in the State, and has full power and authority to
enter into this Agreement.
(b) Operator represents that the person executing and
delivering this Agreement on Operator's behalf is
acting pursuant to proper authorization and that this
Agreement is the valid and binding obligation of
Operator, enforceable in accordance with its terms,
subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium, and similar
laws for the protection of creditors, as well as to
general principles of equity, regardless of whether
enforceability is considered in a proceeding in
equity or at law.
(c) The Company represents that it is a limited liability
company organized and validly existing in good
standing under the laws of Delaware, is qualified to
do business in the State, and has full power and
authority to enter into this Agreement.
(d) The Company represents that the person executing and
delivering this Agreement on the Company's behalf is
acting pursuant to proper authorization and that this
Agreement is the valid and binding obligation of the
Company, enforceable in accordance with its terms,
subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium, and similar
laws for the protection of creditors, as well as to
general principles of equity, regardless of whether
enforceability is considered in a proceeding in
equity or at law.
(e) The Company represents that it has the lawful right
to occupy and operate, and to allow Operator to
occupy and operate the Pond Site and the Impoundment
for the purposes contemplated by this Agreement.
13.2 Notices. All notices and other required
communications hereunder shall be in writing, addressed as
follows:
If to the Company (specifying the applicable
Company):
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile Number: (000) 000-0000
If to Operator:
Xxxxx Technologies, Inc.
000 Xxxxxxx Xxxx Xxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile Number: (000) 000-0000
with copy to:
Xxxxx Technologies, Inc.
0000 Xxxxx Xxx Xxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxx, Xx.
Facsimile Number: (000) 000-0000
Notices shall be given (a) by personal delivery to the other
Party, (b) by facsimile, with confirmation sent by registered or
certified mail, return receipt requested, or (c) by registered or
certified mail, return receipt requested. All notices shall be
effective and deemed delivered (i) if by personal delivery, on
the date of delivery if during business hours, otherwise the next
business day, (ii) if by facsimile, on the date the facsimile is
received if received during business hours, otherwise the next
Business Day and (iii) if solely by mail, upon receipt by the
addressee. A Party may change its address by notice to the other
Party.
13.3 Assignment. Operator shall not assign all or any
portion of its interests under this Agreement without the prior
written consent of the Company; provided that Operator may assign
all of its rights hereunder to an Affiliate of Operator for so
long as such entity remains an Affiliate of Operator and on the
condition that the Guaranty of even date from Operator's parent
corporation guarantying the obligations of Operator under this
Agreement shall remain in effect. The Company shall be free to
assign its rights and interests under this Agreement to any
Person without the consent of Operator on the condition that the
Guaranty of even date from MCNIC Pipeline & Processing Company to
Operator guarantying the Companies' payment obligations under
Article VII shall remain in effect or be substituted by a
guaranty from an entity with a credit or debt rating of BBB+ or
better from Standard and Poor's or an equivalent rating from any
recognized rating agency.
13.4 Construction of Agreement. In construing this
Agreement:
(a) no consideration shall be given to the captions of the
Articles, Sections, subsections, or clauses, which are
inserted for convenience in locating the provisions of
this Agreement and not as an aid in its construction;
(b) no consideration shall be given to the fact or
presumption that one Party had a greater or lesser
hand in drafting this Agreement;
(c) examples shall not be construed to limit, expressly
or by implication, the matter they illustrate;
(d) the word "including" means including by way of
example and not by way of limitation;
(e) unless the context requires otherwise, the plural
shall be deemed to include the singular, and vice
versa; and
(f) unless the context requires otherwise, each gender
shall be deemed to include any other gender.
13.5 Integration; Amendment. This Agreement constitutes
the entire agreement of the Parties relating to the subject
matter hereof. There are no promises, terms, conditions,
obligations, or warranties made by the Parties other than those
contained herein that relate to the subject matter of this
Agreement. This Agreement supersedes all prior communications,
representations, and or agreements, verbal or written, among the
Parties relating to the subject matter hereof. This Agreement
may not be amended except in writing signed by the Parties.
13.6 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the
prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or
render the provision unenforceable in any other jurisdiction.
13.7 Public Announcements. Except as required by Law,
Operator shall not make any press release or other public
announcement or public disclosure relating to this Agreement, the
subject matter hereof, or performance of the Services without the
written consent of the Company, which consent shall not be
unreasonably withheld.
13.8 Governing Law. This Agreement shall in all respects
be governed by and construed in accordance with the Laws of the
State of Michigan, without regard to its choice of law rules.
13.9 Multiple Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, and it will not be necessary in making proof
of this Agreement or its terms to produce or account for more
than one of these counterparts, if the counterpart produced bears
the signature of the Party sought to be bound.
13.10 No Third Party Beneficiary Rights. Nothing in this
Agreement shall be deemed to grant any third party beneficiary or
similar rights to any Person not a signatory to this Agreement.
13.11 Statement of Performance. Upon request by the
Company, Operator shall deliver to the Company, for the benefit
of and which may be relied upon by the Company, its members, and
any potential purchaser of the Briquetting Plant, from time to
time within ten days after the Company's request therefor, a
statement certifying, to the extent such statements are true when
made, that:
(a) this Agreement is in full force and effect;
(b) this Agreement is unmodified or if modified, stating
any such modifications;
(c) to its knowledge, the Company is not in default
hereunder and no events or conditions then exist
which, with the passage of time or the giving of
notice, or both, would constitute a default on the
Company's part or specifying such defaults, events or
conditions if any are claimed;
(d) such further information about this Agreement as may
reasonably be requested by the Company.
13.12 Confidentiality. Operator shall keep confidential
and not use, reveal, provide or transfer to any third party any
Confidential Information it obtains or has obtained concerning
the Company, the Briquetting Plant, the Plant Site or the Pond
Site, or the terms of this Agreement, except as follows:
(a) to the extent that disclosure to a third party is
required by applicable law, court order, or
regulation, including those promulgated by the United
States Securities and Exchange Commission;
(b) to the extent disclosure is necessary or advisable,
to its employees, consultants or advisors, in each
case for the purpose of carrying out its duties
hereunder, or to its Lenders;
(c) to the extent necessary, disclosure to third parties
to enforce this Agreement;
provided, however, that in each case of disclosure pursuant to
(b) the persons to whom disclosure is made agree to be bound by
this confidentiality provision. The obligation of Operator not
to disclose Confidential Information except as provided herein
shall not be affected by the termination of this Agreement. As
used in this paragraph, the term "Confidential Information" shall
mean information concerning this Agreement the Company, the
Briquetting Plant, the Pond Site or the properties, operations,
business, trade secrets, technical know-how and other non-public
information and data of or relating to the Company.
EXECUTED by the duly authorized representatives of the
Parties as of the date first above written.
CRC NO. 1 LLC,
CRC XX. 0 XXX,
XXX XX. 0 XXX,
XXX XX. 0 LLC,
CRC NO. 5 LLC, and
CRC NO. 6 LLC,
each a Delaware limited liability
company
By: XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Chairman
XXXXX TECHNOLOGIES, INC.,
an Oklahoma corporation
By: XXXX XXX, XX.
Name: Xxxx Xxx, Xx.
Title: Vice President
