1
Exhibit 10.1
SENTINEL
CONTRACT MINING AGREEMENT
THIS CONTRACT MINING AGREEMENT (this "Agreement"), is made and entered
into on this 28th day of June, 2001, and shall be effective on the 1st day of
July, 2001 (the "Effective Date"), by and between ANKER WEST VIRGINIA MINING
COMPANY, INC., a West Virginia corporation ("AWVMC"), and RYANSTONE COAL,
L.L.C., a West Virginia limited liability company ("Independent Contractor").
WHEREAS, AWVMC owns and currently operates an underground coal mining
operation and related surface facilities in Barbour County, West Virginia, known
as the "Sentinel Mine"; and
WHEREAS, AWVMC desires to engage Independent Contractor as a contract
miner to perform Work (as defined herein) in accordance with and subject to the
terms and conditions set forth herein;
NOW, THEREFORE, 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, AWVMC and
Independent Contractor agree as follows:
ARTICLE I
Definitions
As used herein, the following terms shall have the following meanings
(all terms defined in this Article I or in other provisions of this Agreement in
the singular shall have the same meaning when used in the plural and vice
versa):
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"AWVMC" shall mean Anker West Virginia Mining Company, Inc., a West
Virginia corporation.
"AWVMC Property" shall mean all structures, facilities, assets and
equipment owned by AWVMC at the Sentinel Mine as of the Effective Date which are
identified and described on the attached Schedule I, including, without limit,
the conveyor belts and structures, belt drives, electric cables, pipes, rails
and other advance equipment identified on Exhibit B pursuant to Section 4.1 and
the Rebuilt Equipment.
"Clean Coal" shall mean or refer to the amount of Coal mined and
removed by Independent Contractor from the Premises under this Agreement and
shipped by AWVMC to customers, and meeting the specifications set forth in
Section 5.2.
"Clean Coal Conversion Factor" shall be used in calculating Estimate
Payments and shall be determined by the following formula:
C = 100 - (R + X)
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100
Where C = Clean Coal Conversion Factor
R = Average % dry ash present in the Coal delivered to the
Coal Stockpile Area
X = 7%
The factor "X" is the factor that allows for the loss of coal and other
operational inefficiencies inherent in the processing of coal. The parties have
agreed that this factor shall be 7%. In the event there are consistent and
material Payment Adjustments as a result of the use of the Clean Coal Conversion
Factor in determining Estimated Payments, the parties will negotiate in good
faith to adjust the "X" factor to ensure that future Estimated Payments more
closely estimate actual weights of Clean Coal and to minimize future Payment
Adjustments.
"Coal" shall mean the mineable and merchantable coal within and from
the Upper
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Kittanning seam of coal in, on and underlying the Premises.
"Coal Stockpile Area" shall mean the area within the Premises as
designated from time to time by AWVMC upon which Independent Contractor shall
stockpile the Coal mined and removed from the Premises under this Agreement.
"Contract Price" shall have the meaning set forth in Section 6.1 of
this Agreement.
"Delivery Schedule" shall have the meaning set forth in Section 5.2 of
this Agreement.
"Designated Monthly Clean Coal Quantity" shall have the meaning set
forth in Section 5.2 of this Agreement.
"Effective Date" shall mean July 1, 2001.
"Equipment" shall mean, collectively: (i) the AWVMC Property, (ii) the
Independent Contractor Equipment, and (iii) the Parts and Supplies.
"Estimated Payment" shall mean the estimated payment of the Contract
Price for Clean Coal for an applicable payment period as set forth in Section
6.2 based on weights calculated pursuant to Section 5.3.
"Event of Default" shall have the meaning set forth in Section 11.1 of
this Agreement.
"Fair Market Value" shall mean the value of property in its place at
the Sentinel Mine as of the date of determination, as determined by an
appraisal, the cost of which shall be borne equally by AWVMC and Independent
Contractor, conducted by a qualified and independent underground mining
equipment appraiser who is reasonably satisfactory to both AWVMC and Independent
Contractor. In determining Fair Market Value, there shall not be any deduction
for any cost or expense associated with moving, transporting or relocating the
property.
"Independent Contractor" shall mean Ryanstone Coal, LLC, a West
Virginia limited liability company.
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"Independent Contractor Equipment" shall mean all equipment, tools,
machinery, parts, supplies and other items obtained and utilized from time to
time by Independent Contractor to perform the Work, including, without
limitation, any and all equipment, tools, machinery, part, supplies or other
items which Independent Contractor purchases or otherwise acquires from AWVMC;
provided, however, it shall not include: (i) the AWVMC Property, or (ii) the
Parts and Supplies.
"Independent Contractor Equipment List" shall mean a written list of
the Independent Contractor Equipment and the related parts and supplies located
at the Sentinel Mine, including the make, model and serial number of each item
on the list.
"Information" shall have the meaning set forth in Section 8.7 of this
Agreement.
"John Deere " shall have the meaning set forth in Section 4.12 of this
Agreement.
"John Deere Financing" shall have the meaning set forth in Section 4.12
of this Agreement.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind.
"Monthly Designation" shall mean the amount of Clean Coal designated by
AWVMC or its designee to be delivered by Independent Contractor during the next
month. The Monthly Designation shall be included in the Delivery Schedules.
"Outside Coal " shall mean coal mined by a party other than
Independent Contractor from property other than the Premises.
"Parts and Supplies" shall have the meaning set forth in Section 4.3 of
this Agreement.
"Parts and Supplies Purchase Price" shall have the meaning set forth in
Section 4.3 of this Agreement.
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"Payment Adjustment" shall mean an adjustment to be made to the
Estimated Payments made with respect to previous payment periods as set forth in
Section 6.2 based either on railroad weights or truck scale weights as
determined pursuant to Section 5.3.
"Premises" shall have the meaning set forth in Section 2.3 of this
Agreement.
"Preparation Plant" shall mean the coal preparation plant owned by
AWVMC and located on the Premises.
"Rebuilt Equipment " shall have the meaning set forth in Section 4.12
of this Agreement.
"Records" shall have the meaning set forth in Section 8.5 of this
Agreement.
"Sentinel Mine" shall mean the underground coal mine owned by AWVMC on
the Premises.
"Shop" shall have the meaning set forth in Section 4.11 of this
Agreement.
"Termination Notice" shall have the meaning set forth in Section 11.9
of this Agreement.
"Termination Notice Date" shall mean the earlier of (i) the date a
party actually receives the Termination Notice, (ii) the date deposited if the
Termination Notice is sent by registered or certified United States mail,
postage prepaid, return receipt requested, or (iii) the date the Termination
Notice is transmitted by facsimile, provided that the Termination Notice is also
mailed on said date by registered or certified United States mail, postage
prepaid, return receipt requested.
"Three (3) Month Estimate" shall mean the estimate of the amount of
Clean Coal AWVMC will designate for delivery pursuant to this Agreement during
the next three (3) months. The Three (3) Month Estimate shall be included in the
Delivery Schedules for informational and planning purposes only and shall not be
binding on AWVMC or Independent Contractor.
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"Work" shall have the meaning set forth in Section 2.1 of this
Agreement.
ARTICLE II
Engagement, Term and Nature of Mining
Section 2.1 -- Engagement of Independent Contractor. AWVMC hereby
engages Independent Contractor as an independent contractor in accordance with
and subject to the terms and conditions hereinafter set forth, and Independent
Contractor hereby covenants and agrees to perform the following obligations
(collectively, the "Work"): (i) to mine and remove the Coal by usual and
accepted underground mining methods and in accordance with the mining plans and
projections described in Section 8.3 of this Agreement, and as otherwise herein
specified, (ii) to deliver the Coal to AWVMC on the raw coal belt at the breaker
building at the Sentinel Mine, and (iii) to perform all of the other duties,
responsibilities and obligations required of Independent Contractor under this
Agreement. 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 and governmental approvals now
or hereafter required for the performance of the Work, including, without
limitation, West Virginia Division of Environmental Protection Permit Number
U-15-83.
Section 2.2 -- Term. This Agreement shall be effective as of the
Effective Date and shall continue in full force and effect until December 31,
2003, unless sooner terminated as provided herein or under applicable law;
provided, however, this Agreement shall automatically renew from year to year
after December 31, 2003, unless either party provides the other with written
notice of its intent to terminate on or before October 1, 2003, or October 1 of
the then current one year renewal term as the case may be.
Section 2.3 -- Area Designated for Mining. The area to be mined by
Independent
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Contractor under this Agreement will be designated by AWVMC in the Upper
Kittanning coal seam in or under those certain tracts or parcels of land in
Barbour County, West Virginia, which are shown on the map attached hereto and
made a part hereof as Exhibit A and all subsequent revision map(s) (the
"Premises"). The initial area to be mined by Independent Contractor is shown on
Exhibit A, and subsequent areas will be deemed designated for mining upon
approval by AWVMC of the mining plans submitted by Independent Contractor
pursuant to the terms of this Agreement. Independent Contractor acknowledges and
agrees that Exhibit A is not intended to indicate expressly or by implication
that all areas depicted therein are or will be designated or approved by AWVMC
for mining by Independent Contractor, nor is Exhibit A intended to indicate
expressly or by implication that AWVMC owns or otherwise has the right to mine
all of the coal within the Premises. In addition, other areas may be added to
the 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 the
mutual written agreement of the 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.
ARTICLE III
Representations and Warranties
Section 3.1 -- Representations and Warranties of AWVMC.
(a) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
SUBSECTION 3.1(b) BELOW, 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 OR LEASED TO INDEPENDENT
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CONTRACTOR PURSUANT TO THIS AGREEMENT. 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 AGREES 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, EXCEPT AS SET FORTH IN
SUBSECTION 3.1(b) BELOW, 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, STRUCTURES, FACILITIES,
FIXTURES, EQUIPMENT OR OTHER MATTERS RELATING TO THE PREMISES, THE COAL, THE
EQUIPMENT, THE WORK OR THE SENTINEL MINE.
(b) AWVMC hereby represents and warrants to Independent Contractor as
follows:
(i) AWVMC is a corporation duly organized, validly existing and in good
standing under the laws of the State of West Virginia. AWVMC has full power and
authority to execute, deliver and perform this Agreement. This Agreement has
been duly authorized, executed and delivered by AWVMC, is a valid and binding
obligation of AWVMC and is enforceable against it in accordance with its terms,
subject only to bankruptcy, insolvency and other laws affecting
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creditors' rights generally. The execution, delivery and performance of this
Agreement by AWVMC 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 AWVMC of any
law, rule, regulation or agreement or other commitment to which AWVMC is a party
or by which it is bound.
(ii) Neither AWVMC nor any of its assets are subject to any judgment,
order, writ, decree, citation or injunction. AWVMC 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 its obligations hereunder.
(iii) There are no material outstanding violations of any federal,
state or local law relating to the Sentinel Mine and that, to the best of
AWVMC's knowledge, there is no condition that would result in the issuance of
any material notice of violation relating to the Sentinel Mine.
(iv) AWVMC owns, leases or otherwise controls the property on which the
Preparation Plant and other surface facilities serving the Sentinel Mine are
located, has the right to use the Preparation Plant and the other facilities as
they are presently being used, and has the right to load coal through its coal
loading facilities located on the Premises. AWVMC is in the business of, among
other things, processing coal at the Sentinel Mine; has substantial experience
in processing the coal mined from the Sentinel Mine; has personnel that are
knowledgeable regarding the same; and the Preparation Plant is in good working
condition and has the capacity to process the Coal to be mined pursuant to this
Agreement, including, but not limited to, the capacity, as of the Effective
Date, to process up to approximately [*]1 raw tons of Coal per
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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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month.
(v) AWVMC has and will continue to have during the term of this
Agreement sufficient working capital, machinery, equipment and skilled personnel
to process the Coal to be mined by Independent Contractor pursuant to this
Agreement.
Section 3.2 -- 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 limited liability company duly
organized, validly existing and in good standing under the laws of the State of
West Virginia. 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 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.
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(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 Sentinel 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.
(e) Independent Contractor has carefully inspected and examined and is
familiar with the Premises, all areas surrounding the Premises, the AWVMC
Property, the Parts and Supplies, and the facilities, equipment, fixtures and
workings of the Sentinel Mine.
(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 Sentinel 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 voting units or voting securities
of Independent Contractor are owned and held of record as follows: [*]2
ARTICLE IV
Equipment; Parts and Supplies; Mining Operations
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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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Section 4.1 -- AWVMC Property. In performing the Work, and so long as
Independent Contractor is in compliance with the terms and conditions of this
Agreement, Contractor shall have the right to use the AWVMC Property. In
consideration for AWVMC's agreement to provide Independent Contractor with the
use of the AWVMC Property, Independent Contractor hereby covenants and agrees:
(i) to pay, or reimburse AWVMC for the payment of, all personal property taxes
that may be assessed against or with respect to the AWVMC Property and the Shop
from and after the Effective Date and during the term of this Agreement in
accordance with Section 9.4, (ii) to pay, or reimburse AWVMC for the payment of,
all premiums to obtain and maintain all-risk physical damage insurance and
comprehensive general liability insurance in such amounts as AWVMC shall
reasonably determine with respect to the AWVMC Property and the Shop, and (iii)
to pay, or reimburse AWVMC for the payment of, all deductibles for claims made
under its insurance policies covering the AWVMC Property during the term of this
Agreement as a result of or in connection with AWVMC's agreement to provide
Independent Contractor with use of the AWVMC Property and the Shop. In the event
Independent Contractor fails to pay or reimburse AWVMC as provided above, AWVMC
shall have the right to deduct the payments or other amounts described in this
Section 4.1 from the payment of the Contract Price under Section 6.2.
Underground mining operations have been conducted at the Sentinel Mine
prior to the Effective Date. In connection with such activities, various
structures and facilities have been installed at the Sentinel Mine, including,
without limitation, conveyor belts and structures, belt drives, electric cables,
pipes, rails, etc. For the purposes of this Agreement only, all such structures
and facilities identified on Schedule I and Exhibit B are included within the
definition
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of "AWVMC Property", and Independent Contractor shall, pursuant to the terms and
conditions hereof, have access to and use of such structures and facilities. The
parties acknowledge and agree that the map attached hereto and made a part
hereof as Exhibit B, accurately depicts the location and extent of the mining
operations conducted at the Sentinel Mine prior to the Effective Date,
including, without limitation, the location of the conveyor belts and belt
drives.
Title to the AWVMC Property shall, at all times, be vested in AWVMC.
Independent Contractor may not, voluntarily or involuntarily, subject the AWVMC
Property to any Liens, and, except as provided in Section 11.6, Independent
Contractor may not, without the prior express written consent of AWVMC, remove
or permit the removal of any of the AWVMC Property from the Premises.
Section 4.2 -- Independent Contractor Equipment. Independent Contractor
shall be required to furnish all of the equipment, tools, machinery, parts,
supplies and other items that may be required from time to time to perform the
Work. Independent Contractor acknowledges and agrees that it shall be free to
use or not to use all or any item of the AWVMC Property in performing the Work
pursuant to the terms and conditions of this Agreement. Independent Contractor
further acknowledges and agrees that it shall be solely responsible for
determining the fitness, suitability, type and amount of equipment, tools,
machinery, parts, supplies and other items that may be required from time to
time to perform the Work. Independent Contractor further acknowledges and agrees
that even if it elects to utilize all of the AWVMC Property, Independent
Contractor will be required to obtain and utilize the Independent Contractor
Equipment.
Section 4.3 -- Parts and Supplies. The parties acknowledge and agree
that an inventory of parts and supplies exists at the Sentinel Mine. Independent
Contractor has tagged or otherwise
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identified that portion of the parts and supplies inventory at the Sentinel Mine
that it desires to purchase (collectively, the "Parts and Supplies"). The
parties agree that the Parts and Supplies have a value of [*]3 (the "Parts and
Supplies Purchase Price"). Independent Contractor shall pay AWVMC the Parts and
Supplies Purchase Price in six (6) equal, consecutive monthly installments
beginning on August 25, 2001, and continuing on the 25th day of the next five
(5) succeeding months. In the event Independent Contractor fails to pay when due
an installment of the Parts and Supplies Purchase Price, 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 6.2.
Section 4.4 -- No Warranties; Use of Equipment. Independent Contractor
hereby acknowledges and agrees that the AWVMC Property and the Parts and
Supplies have been or will be furnished to it "as is" and "where is" without any
representations or warranties of any kind by or on behalf of AWVMC. AWVMC, not
being the manufacturer of any of the AWVMC Property or the Parts and Supplies,
nor manufacturer's agent, makes no warranty or representation, either express or
implied, as to the fitness, quality, design, condition, capacity, suitability,
merchantability or performance thereof or of the material or workmanship with
respect thereto, it being agreed that all risks, as between AWVMC and
Independent Contractor, are to be borne by Independent Contractor at its sole
risk and expense. Independent Contractor accordingly agrees not to assert any
claim whatsoever against AWVMC based thereon. AWVMC shall have no obligation to
install, erect, test, adjust or service any of the Equipment. Independent
Contractor shall be solely responsible for determining the suitability and
fitness of all items of
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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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Equipment that may be utilized under this Agreement and for developing and
training its employees in safe and proper use and operating procedures with
respect to each item of the Equipment.
Section 4.5 -- Maintenance of Equipment. Subject to placing the
Equipment in service as set forth below, Independent Contractor covenants and
agrees to at all times keep and maintain the 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.
Independent Contractor further covenants and agrees to keep and maintain
accurate maintenance programs and schedules with respect to the Equipment. The
obligation of Independent Contractor to maintain and keep the Equipment 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 order that AWVMC may be able to determine that
Independent Contractor is in compliance with the maintenance and repair
requirements of this Agreement, Independent Contractor shall, upon AWVMC's
request: (i) permit the Equipment to be inspected by AWVMC or its designee, and
(ii) permit AWVMC or its designee to inspect and copy all maintenance records
and any other records that may pertain to the Equipment. Certain Equipment
designated on Schedule I will not be initially used or placed in service by
Independent Contractor, and until said Equipment is used or placed in service by
Independent Contractor, Independent Contractor shall not have any obligation to
repair or maintain the same under this Section 4.5.
Section 4.6 -- Expense of Operations; Utilities. All costs, expenses
and liabilities accruing or resulting from the Work performed under this
Agreement shall be borne by
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Independent Contractor, and AWVMC shall have no responsibility therefor.
Independent Contractor shall, at its sole cost and expense, obtain in its name
all utilities necessary for the performance of the Work. The electricity for the
underground facilities and the surface facilities are separately metered. With
respect to the utilities for the Shop and any other surface facility used by
Independent Contractor, the parties shall work together to ensure that the
electricity bills are properly divided based on electricity usage.
Section 4.7 -- Diligence. Independent Contractor hereby covenants and
agrees to (i) diligently prosecute the Work in a skillful and workmanlike manner
in accordance with the terms and conditions of this Agreement and modern and
approved mining methods, (ii) use only competent, skilled personnel and
management in performing the Work, and (iii) perform the Work so as to produce
and recover the maximum quantities of merchantable and mineable coal from the
Upper Kittanning seam in, on and underlying the Premises consistent with modern
and efficient mining practices and the mining conditions in the Sentinel Mine,
and provided that Independent Contractor is able to produce and recover the coal
and make a profit.
Section 4.8 -- 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 Independent Contractor shall
specifically identify the reasons therefor and the expected duration thereof.
Section 4.9 -- Engineering Services. Independent Contractor shall be
solely responsible for obtaining all engineering services that are or may be
required (i) to prepare the mining plans and projections required pursuant to
Section 8.3, (ii) to protect AWVMC's interest in the Coal, the Premises and the
Equipment, and (iii) to perform the Work pursuant to the terms and conditions of
this Agreement.
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Section 4.10 -- Purchase and Removal of Independent Contractor
Equipment. Upon the expiration of this Agreement, or upon the termination of
this Agreement pursuant to Section 11.2, AWVMC shall have the right to purchase
all or any part of the Independent Contractor Equipment and all related parts
and supplies owned by Independent Contractor and used at the Sentinel Mine for
the Fair Market Value of such Independent Contractor Equipment and related parts
and supplies as of the effective date of the expiration or termination. At least
sixty (60) days before the expiration of this Agreement, or, in the case of a
termination pursuant to Section 11.2, upon Independent Contractor's receipt of
the notice of default pursuant to Section 11.2, Independent Contractor shall
provide AWVMC with the Independent Contractor Equipment List. AWVMC shall
exercise its right to purchase under this Section 4.10 by providing written
notice of its intent to purchase to Independent Contractor on or before the
later of (i) thirty (30) days prior to the expiration date, or (ii) thirty (30)
days after AWVMC's receipt of the Independent Contractor Equipment List. AWVMC
shall pay for the Independent Contractor Equipment and the parts and supplies
upon delivery by Independent Contractor of a bill of sale and assignment,
reasonably acceptable to AWVMC, transferring title to the Independent Contractor
Equipment and the parts and supplies which AWVMC is purchasing under this
Section 4.10 free and clear of all Liens. Independent Contractor hereby
covenants and agrees to deliver such bill of sale and assignment immediately
upon AWVMC's request. In the event AWVMC does not exercise its option to
purchase all of the Independent Contractor Equipment and the parts and supplies,
Independent Contractor shall remove the Independent Contractor Equipment and the
parts and supplies not purchased by AWVMC hereunder from the Premises within
sixty (60) days of AWVMC's notice. AWVMC shall not be responsible for any damage
to or loss in respect of the Independent Contractor Equipment during such 60-day
period, including, without limit, damage
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or loss caused by roof falls. Title to all of the Independent Contractor
Equipment and part and supplies not purchased by AWVMC hereunder not removed
from the Premises within such sixty (60) day period shall automatically revert
to AWVMC or its designee, and Independent Contractor hereby covenants and agrees
to take, promptly upon the request of AWVMC, all action that may be necessary to
cause title to such Independent Contractor Equipment and parts and supplies to
be transferred to AWVMC or its designee.
Section 4.11 -- Shop. In consideration for the performance of the Work,
during the term of this Agreement, Independent Contractor shall have the right
to use the shop building identified on Exhibit A (the "Shop") to perform repairs
on any equipment used in connection with performing the Work under this
Agreement. Independent Contractor shall keep the Shop and surrounding area in a
clean, orderly fashion, and shall not allow any trash, liter or debris to be
left in or around the Shop. Independent Contractor shall conduct all activities
in the Shop in accordance with all applicable federal, state and local laws
rules and regulations, including, without limitation, laws, rules and
regulations relating to the environment. Independent Contractor shall be
responsible for paying or reimbursing AWVMC for all costs and expenses for
utilities provided to and used in the Shop. In the event Independent Contractor
fails to so pay or reimburse AWVMC, AWVMC shall have the right to deduct such
costs and expenses from the payment of the Contract Price under Section 6.2.
Upon expiration or termination of this Agreement, Independent Contractor shall
immediately vacate the Shop and shall return possession of the Shop to AWVMC in
the same condition as it exists on the Effective Date, reasonable wear and tear
excepted.
Section 4.12 -- Equipment to be Rebuilt.
(a) The parties agree that certain items of the equipment included in
the AWVMC
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Property identified on Schedule I will be rebuilt at such times and in such a
manner as the parties shall agree, which items of equipment are identified on
Schedule II attached hereto and made a part hereof (collectively, the "Rebuilt
Equipment"). The cost to rebuild the Rebuilt Equipment will be jointly financed
by AWVMC and Independent Contractor through John Deere Credit ("John Deere") on
such terms and conditions as the parties shall mutually agree (the "John Deere
Financing"). The monthly or other periodic payments required to be made under
the John Deere Financing shall, at the option of John Deere, either be paid
directly to John Deere by Independent Contractor or deducted by AWVMC from the
payment of the Contract Price under Article VI and paid by AWVMC directly to
John Deere. In the event John Deere elects to have such payments made to it by
Independent Contractor under the immediately preceding sentence and Independent
Contractor fails to make any such payment, then AWVMC shall have the right to
deduct the amount of any such missed payments from the payment of the Contract
Price under Article VI and pay the same to John Deere.
(b) Upon the occurrence of any event or circumstance which will lead to
the expiration or termination of this Agreement without cause under Section
11.9, if there are any sums outstanding under the John Deere Financing, AWVMC
and Independent Contractor shall promptly engage a mutually acceptable appraiser
to determine the Fair Market Value of the Rebuilt Equipment no later than forty
(40) days prior to such expiration or termination. The cost of the appraiser
shall be paid equally by AWVMC and Independent Contractor. AWVMC shall use
commercially reasonable efforts to refinance the John Deere Financing itself or
to secure the release of Independent Contractor from the John Deere Financing.
If AWVMC is unable to refinance the John Deere Financing or secure the release
of Independent Contractor from the John Deere Financing on or before fifteen
(15) days prior to the expiration or termination of this
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Agreement under Section 11.9, then Independent Contractor shall have the right
to purchase the Rebuilt Equipment at the Fair Market Value as determined in
accordance with this Section 4.12 by providing notice to AWVMC on or before ten
(10) days prior to the expiration or termination of this Agreement. If
Independent Contractor does not exercise its right to purchase the Rebuilt
Equipment as providing in the preceding sentence, AWVMC and Independent
Contractor shall jointly market and sell the Rebuilt Equipment as soon as
possible for its Fair Market Value. Whether or not AWVMC is able to refinance
the John Deere Financing or secure the release of Independent Contractor from
the John Deere Financing and whether or not AWVMC and Independent Contractor are
able to sell the Rebuilt Equipment at Fair Market Value, AWVMC shall have the
right to continue using the Rebuilt Equipment and shall make all monthly or
periodic payments due under the John Deere Financing from and after the date of
expiration or the date of termination of this Agreement under Section 11.9.
Proceeds from the sale of the Rebuilt Equipment either to Independent Contractor
or a third party shall be applied first to the sums due and owing under the John
Deere Financing, second to the cost and expenses of selling the Rebuilt
Equipment, and the remaining sale proceeds, if any, shall be remitted to AWVMC.
Independent Contractor acknowledges and agrees that it shall not have any
interest or right to any of the proceeds from the sale of the Rebuilt Equipment
or any equity which may exist at any time in the Rebuilt Equipment as a result
of making the payments under the John Deere Financing or otherwise.
(c) Upon the occurrence of an event of default by AWVMC under Section
11.10 and the exercise of the right to terminate this Agreement following the
expiration of any applicable grace period, if there are any sums outstanding
under the John Deere Financing, Independent Contractor and AWVMC shall
immediately engage a mutually acceptable appraiser to determine
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the Fair Market Value of the Rebuilt Equipment as soon as possible. The cost of
the appraiser shall be paid equally by AWVMC and Independent Contractor.
Independent Contractor shall have the right to purchase the Rebuilt Equipment
from AWVMC at the Fair Market Value. If Independent Contractor elects not to
purchase the Rebuilt Equipment from AWVMC as provided in the preceding sentence,
AWVMC shall use commercially reasonable efforts to refinance the John Deere
Financing itself or secure the release of Independent Contractor from the John
Deere Financing. If AWVMC is unable to refinance the John Deere Financing or
secure the release of Independent Contractor from the John Deere Financing prior
to the date of termination under Section 11.10, AWVMC and Independent Contractor
shall jointly market and sell the Rebuilt Equipment as soon as possible for its
Fair Market Value. AWVMC shall not have the right to use the Rebuilt Equipment
at any time after the date of the termination of this Agreement under Section
11.10. Proceeds from the sale of the Rebuilt Equipment either to Independent
Contractor or a third party shall be applied first to the sums due and owing
under the John Deere Financing, second to any sums due and owing by AWVMC to
Independent Contractor under this Agreement, third to the cost and expenses of
selling the Rebuilt Equipment, and the remaining sale proceeds, if any, shall be
remitted to AWVMC. Except as provided in the preceding sentence, Independent
Contractor acknowledges and agrees that it shall not have any interest or right
to any of remaining proceeds from the sale of the Rebuilt Equipment or any
equity which may exist at any time in the Rebuilt Equipment as a result of
making the payments under the John Deere Financing or otherwise.
(d) Upon the occurrence of an Event of Default by Independent
Contractor and the exercise of the right to terminate this Agreement following
the expiration of any applicable grace period, if there are any sums outstanding
under the John Deere Financing, AWVMC shall use
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commercially reasonable efforts to refinance the John Deere finance itself or
secure the release of Independent Contractor from the John Deere Financing. In
addition, AWVMC and Independent Contractor shall engage a mutually acceptable
appraiser to determine the Fair Market Value of the Rebuilt Equipment, the cost
of which shall be paid equally by AWVMC and Independent Contractor. If AWVMC is
unable to refinance the John Deere Financing or secure the release of
Independent Contractor from the John Deere Financing prior to the date of
termination under Section 11.10, AWVMC and Independent Contractor shall jointly
market and sell the Rebuilt Equipment as soon as reasonably possible for its
Fair Market Value. Whether or not AWVMC is able to refinance the John Deere
Financing or secure the release of Independent Contractor from the John Deere
Financing, and whether or not AWVMC and Independent Contractor are able to sell
the Rebuilt Equipment for its Fair Market Value, AWVMC shall have the right to
continue using the Rebuilt Equipment and shall make all monthly or periodic
payments due under the John Deere Financing from and after the date of the
termination of this Agreement. Proceeds from the sale of the Rebuilt Equipment
shall be applied first to the sums due and owing under the John Deere Financing,
second to the cost and expenses of selling the Rebuilt Equipment, and the
remaining sale proceeds, if any, shall be remitted to AWVMC. Independent
Contractor acknowledges and agrees that it shall not have any interest or right
to any of the proceeds from the sale of the Rebuilt Equipment or any equity
which may exist at any time in the Rebuilt Equipment as a result of making the
payments under the John Deere Financing or otherwise.
ARTICLE V
Production, Specifications and Transportation
Section 5.1 -- Source of Coal. Independent Contractor covenants and
agrees that (i) the Coal delivered to AWVMC pursuant to this Agreement shall be
produced solely from the Upper
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Kittanning coal 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 5.2 -- Production and Delivery of the Designated Monthly Clean
Coal Quantity; Delivery Schedules. From the Effective Date until December 31,
2001, Independent Contractor shall produce a sufficient amount of Coal from the
Premises to deliver the following amounts of Clean Coal to AWVMC in the
following months: July 2001 = [*]4; August 2001 = [*]4; September 2001 = [*]4;
October 2001 = [*]4; November 2001 = [*]4; and December 2001 = [*]4. During each
calendar month thereafter, Independent Contractor shall produce a sufficient
amount of Coal from the Premises to deliver [*]4 tons of Clean Coal (the
"Designated Monthly Clean Coal Quantity") to AWVMC. All Clean Coal shall, after
processing at the Preparation Plant, have a minimum heat content of [*]4 Btus
and shall have an ash content between [*]4 and [*]4 (on an as received basis).
AWVMC shall process the Coal in the Preparation Plant to produce Clean Coal
meeting the specifications set forth in the immediately preceding sentence and
which is saleable under AWVMC's then existing contracts for the sale of the
Coal. AWVMC shall have the right to unilaterally increase or decrease the
Designated Monthly Clean Coal Quantity by twenty percent (20%); provided,
however, that Monthly Designation for any month during the term of this
Agreement (i) shall not decrease by more than 20% of the Monthly Designation for
the immediately preceding month and (ii) shall not increase by more than the
greater of (A) 20% of the Monthly Designation for the immediately preceding
month or (B) the
- --------
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.
- 23 -
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amount so that the Monthly Designation for the month in question equals the
Monthly Designation for the month prior to the immediately preceding month. On
or before the 15th day of each month, AWVMC or its designee shall provide
Independent Contractor with a written schedule (the "Delivery Schedule") showing
the Monthly Designation for the next succeeding month and the Three (3) Month
Estimate. Said Monthly Designation shall include the increase or decrease in the
Designated Monthly Clean Coal Quantity as provided above. Independent Contractor
hereby covenants and agrees to comply with the Monthly Designations.
Section 5.3 -- Weights. For purposes of calculating an Estimated
Payment, the weight of the Clean Coal shall equal the weight of the raw Coal as
measured by the raw coal belt scales at the Preparation Plant times (ii) the
Clean Coal Conversion Factor. For purposes of calculating a Payment Adjustment,
the weight of all Clean Coal shipped by railroad shall be governed by the
railroad weights and the weight of all Clean Coal shipped by truck shall be
governed by the weights measured on the truck scales located on the Premises.
AWVMC shall engage an independent contractor who shall be reasonably
satisfactory to both AWVMC and Independent Contractor to calibrate the raw coal
belt scales at the Preparation Plant and the truck scales to their normal
accuracy levels on an as-needed basis. AWVMC shall take all reasonable steps to
ensure that only the independent contractor so engaged shall have the ability to
calibrate the raw coal belt scales and the truck scales. The weight of the Clean
Coal determined by railroad weights or truck scales, as the case may be, shall
be deemed valid, conclusive and binding for the determination of a Payment
Adjustment under this Agreement. For a period of one year after the weights are
ascertained, AWVMC shall keep a record of the weights of all Clean Coal.
Independent Contractor shall, at its expense, be permitted during regular
business hours to
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observe, inspect and verify the accuracy of the raw coal belt scales and the
truck scales and records of weights.
Section 5.4 -- No Foreign Material, Etc. Independent Contractor agrees
to mine, produce and deliver Coal which is free from foreign material and trash,
and does not contain excess moisture, slate, rock, out of seam dilution or other
impurities, and, which is, after washing at the Preparation Plant, of
merchantable and saleable quality.
Section 5.5 -- 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. 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 5.6. Independent Contractor's Right to Sell Coal. In the event
AWVMC suspends its performance of this Agreement and refuses to accept Coal
pursuant to Section 13.9 (b)(i) for more than 30 consecutive days, Independent
Contractor shall have the right to attempt to sell Coal that it has produced but
that AWVMC has not accepted pursuant to Section 13.9(b)(i); provided, however,
Independent Contractor shall not enter into any agreements for the sale of Coal
pursuant to this Section 5.6 without the prior express written consent of AWVMC,
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which consent may be withheld by AWVMC for any reason unless AWVMC is paid an
amount equal to all of its processing, loading, stockpiling, general and
administrative, and other costs and expenses associated with such Coal plus [*]5
per ton of such Clean Coal.
Section 5.7 -- Boundaries. Independent Contractor shall fully comply
with all federal, state and local laws, regulations, rules, ordinances and the
governmental 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.
Section 5.8 -- Outside Coal. AWVMC shall have the right to purchase
Outside Coal, to process Outside Coal in the Preparation Plant, and to blend
Outside Coal (whether processed or not) with the Coal mined and produced by
Independent Contractor. Except as provided in the last sentence of this Section
5.8, in the event AWVMC purchases Outside Coal and blends the same with the Coal
mined and produced by Independent Contractor, the weight of the Outside Coal as
measured on the truck scales located on the Premises shall be deducted from the
railroad or truck scale weights used in calculating any Payment Adjustment. In
the event AWVMC purchases
- --------
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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Outside Coal on a raw basis, processes the Outside Coal in the Preparation
Plant, and blends the processed Outside Coal with the Coal mined and produced by
Independent Contractor, (i) the weight of the Outside Coal shall equal the
weight as measured on the truck scales located on the Premises times the Clean
Coal Conversion Factor (as applied to the Outside Coal) and (ii) such weight
shall be deducted from the railroad or truck scale weights used in calculating
any Payment Adjustment.
ARTICLE VI
Payment
Section 6.1 -- Contract Price. In consideration for the Work performed
by Contractor hereunder, AWVMC shall pay Independent Contractor [*]6 per ton of
Clean Coal (the "Contract Price").
Section 6.2 -- Payment. For all Clean Coal delivered to and accepted by
AWVMC during each seven (7) day period beginning on Sunday and continuing
through the following Saturday, AWVMC shall make an Estimated Payment to
Independent Contractor by wire transfer by no later than 12:00 o'clock noon on
the following Tuesday. Each such Estimated Payment will provide for (i)
Estimated Payments for the applicable payment period and (ii) Payment
Adjustments, if any, for any previous payment periods for which the Payment
Adjustments have not applied. Each Estimated Payment shall be accompanied by a
payment remittance showing the calculation of the Estimated Payment and any
Payment Adjustments.
- --------
6 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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ARTICLE VII
Relationship of Parties
Section 7.1 -- Independent Contractor. It is expressly agreed and
understood that Independent Contractor shall perform the Work specified in this
Agreement as an independent contractor. Independent Contractor shall exercise
exclusive direction and control over its employees and shall be responsible for
its work force and labor relations policies, and subject only to AWVMC's right
to designate the areas to be mined, adjust the Designated Monthly Clean Coal
Quantity pursuant to Section 5.2, and approve the mining plans and projections
pursuant to Section 8.3, Independent Contractor shall be responsible for 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 Independent Contractor 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 7.1. This
covenant of indemnity shall survive the termination or expiration of this
Agreement.
Section 7.2 -- Employees. The employees of Independent Contractor or
any subcontractor of Independent Contractor shall be employees of the
Independent Contractor or subcontractor, as the case may be, and shall not be,
nor be deemed to be for any purpose, the employees of AWVMC. Independent
Contractor, or its permitted subcontractors, as the case may be, 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 (collectively, the "Workers"). Independent
Contractor and its subcontractors shall comply with
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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 or the contractual agreement involving Workers,
including, without limitation, unemployment compensation, Social Security,
withholding taxes, State Workers' Compensation, (including the Black Lung
component), 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 7.2 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.
ARTICLE VIII
Inspection, Record Keeping and Reporting Requirements
Section 8.1 -- Contemporaneous Access to the Premises. Independent
Contractor acknowledges and agrees that AWVMC or its designee may place and
install or cause to be placed and installed on the Premises various structures,
equipment and materials, and AWVMC may carry on, either directly or through its
designee, such other operations on the Premises 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. AWVMC shall
ensure that all activity on the Premises by AWVMC or its designee shall be
conducted in accordance with all applicable laws, rules and regulations,
including, without limitation, all MSHA requirements. AWVMC shall indemnify,
defend and hold harmless Independent Contractor from and against any and all
damages, claims, liabilities and losses incurred by
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Independent Contractor as a result of AWVMC's failure to comply with the
immediately preceding sentence.
Section 8.2 -- Inspection of the Premises and Equipment. Independent
Contractor acknowledges and agrees that AWVMC and its designees may, upon notice
to Independent Contractor, enter upon, inspect, map, sample, test and survey the
Premises, the Sentinel Mine, the Equipment, the Coal and the Work being
performed under this Agreement, and any other aspect of Independent Contractor's
operations relating to this Agreement, except for the financial statements of
Independent Contractor. Independent Contractor shall provide and maintain safe
access to the Premises, the Sentinel Mine and the Equipment and cooperate with
AWVMC and its designees in carrying out such inspection.
Section 8.3 -- Mining Plans. For the purpose of allowing AWVMC to
protect its economic interest in and to the Premises, the Sentinel Mine, the
Coal and the Equipment, Independent Contractor shall, beginning on or before the
Effective Date and continuing thereafter on or before January 1 and July 1 of
each year during the term of this Agreement, prepare mining plans and
projections for the next succeeding 6-month period and submit such plans and
projections to AWVMC for its written approval; provided, however, the proposed
mining plans and projections submitted on or before the Effective Date shall
show plans and projections to December 31, 2001. The mining plans and
projections shall take into consideration the amount of Coal which Independent
Contractor is or may be required to deliver to AWVMC and the entire area
proposed to be mined by Independent Contractor, and the mining plans and
projections shall make suitable provisions for the reasonable and proper removal
of all of the mineable and merchantable coal from the Premises using modern and
efficient mining practices. Independent Contractor shall not begin to perform
Work in any area of the Premises unless and until
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AWVMC approves, in writing, such mining plans and projections so that AWVMC may,
among other things, verify its title to or right to mine Coal from the areas of
the Premises which may be subject to the proposed 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 performing
Work in accordance with the approved mining plans and projections, Independent
Contractor shall immediately notify AWVMC in writing of its inability to
continue and set forth in reasonable detail the reasons therefore. Independent
Contractor shall submit revised mining plans and projections for approval by
AWVMC as soon as possible.
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 working 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 8.4 -- Safety. AWVMC and Independent Contractor recognize the
importance of safety procedures and safe working conditions. Before commencing
any Work under this Agreement, Independent Contractor must obtain an MSHA
identification number. 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 and
Workers are trained in safe working procedures and shall cause its employees and
Workers to abide by all safety and security rules in force on the Premises.
AWVMC and its designees shall
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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 8.4. This covenant of indemnity shall survive the
termination or expiration of this Agreement.
Section 8.5 -- Testing and Reports. Independent Contractor shall
maintain accurate records regarding the mining conditions encountered, drill
cores, tests and sampling with respect to the Premises, the Coal and the Work
(the "Records"), and Independent Contractor shall provide AWVMC or its designee
with copies thereof. Upon the termination or expiration of this Agreement,
Independent Contractor shall promptly deliver to AWVMC or its designee all of
such records.
Section 8.6 -- 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 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;
provided, however, the AWVMC shall not have the right to inspect, audit or copy
Independent Contractor's financial statements. Independent Contractor shall keep
and preserve such books and records for at least five years after the
termination or expiration of this Agreement.
Section 8.7 -- Confidentiality of Information. Independent Contractor
acknowledges that in performing the Work under this Agreement it may have access
to proprietary information and trade secrets of a confidential nature pertaining
to AWVMC, its affiliates and their businesses, the Premises, the Coal and the
Sentinel Mine. Independent Contractor agrees that it shall treat all
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maps, plans, data, reports, drilling logs, core samples, leases and other
information relating to AWVMC and its business, the Premises, the Coal or the
Sentinel 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 IX
Observance of Laws, Regulations and Other Legal Requirements
Section 9.1 -- 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 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, directives, permits and
bonds now in effect or hereafter made, promulgated, enacted or issued.
Section 9.2 -- 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
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the Premises, including, without limitation, an operator reassignment of all
applicable mining and mining related permits. Upon the expiration or termination
of this Agreement, Independent Contractor shall surrender or relinquish all such
approvals, permits and operator reassignments. Independent Contractor shall
secure, maintain and comply with all 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 any governmental permits
that occurred prior to the Effective Date, but if Independent Contractor is
required or compelled by the relevant regulatory authority to remedy any such
violation or pay any fine or assessment with respect thereto, the costs of
remedial work and payment of fines and assessments, including attorney's fees,
shall be reimbursed by AWVMC. 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 upon receipt from any governmental authority. Except
for claims, costs and expenses incurred or caused by the actions or inactions of
AWVMC or its agents or contractors prior to the Effective Date, 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.
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Section 9.3 -- 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 governmental permits 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, subject to
Independent Contractor's right to lawfully and in good faith contest such fine,
assessment or penalty, 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 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'
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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 9.4 -- Fees and Taxes. Except as expressly provided in Section
9.5 below, Independent Contractor and its subcontractors shall make complete and
timely payment of all federal, state and local fees and taxes which may be
imposed or assessed against it, its or their operations hereunder, or the
Equipment 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 West Virginia, 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.
Section 9.5 -- Excise, Reclamation and Severance Taxes. In addition to
the Contract Price set forth in Section 6.1 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 and state reclamation fees assessed by the State of West
Virginia on the Coal mined hereunder by Independent Contractor.
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Section 9.6 -- Liens. In the event any employee or Worker of
Independent Contractor or any other 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 such employee or other third party, and in the event such Lien or filing
is in AWVMC's reasonable opinion 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 9.7 -- Reclamation. AWVMC shall be responsible, at its sole
cost and expense, for performing all reclamation of the Premises as required by
any applicable federal, state and local laws, rules, regulations and permits.
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.
ARTICLE X
Indemnification and Insurance
Section 10.1 -- 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,
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without limitation, reasonable attorney's fees and related costs incurred by an
indemnified party in connection with its efforts to enforce this indemnity),
including, without limitation, the injury to or death of any person or persons,
damage to or loss of property, or mining outside the Premises (unless such
mining outside the Premises was performed in accordance with a mining plan
approved by AWVMC in accordance with the terms and conditions of this Agreement)
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 under or in connection with this Agreement, or (ii) an Event of
Default, or (iii) the use of any of the Equipment by Independent Contractor or
its employees, agents or representatives, 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 (with counsel reasonably acceptable to the
indemnified party) or 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 and not in limitation
of any other specific agreements or obligations in other sections of this
Agreement, and shall survive the expiration or termination of this Agreement.
Section 10.2 -- 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:
a. Comprehensive general liability insurance with minimum
limits of
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$5,000,000 per occurrence and $5,000,000 general aggregate
for bodily injury and property damage, which insurance shall
include coverage for (but not limited to) the following: (i)
Premises' operations, (ii) contractual liability, (iii)
cross-liability, (iv) products and completed operation, (v)
explosion collapse and underground property damage, (vi)
subsidence, (vii) waiver of subrogation, and (viii) punitive
damages.
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 including
owned, non-owned and hired vehicle coverage with limits of
liability of not less than $5,000,000 combined single limits
for bodily injury and property damage claims.
d. Workers' Compensation insurance coverage, 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.
e. Pollution liability insurance of not less than $500,000 per
incident.
Independent Contractor's obligation to obtain the insurance coverages
as provided in this Section 10.2 shall not in any way be construed so as to
limit, amend or otherwise modify its
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indemnity obligations as provided elsewhere in this Agreement.
Section 10.3 -- Form of Insurance. All insurance coverages required
under Section 10.2 above shall be with a reputable insurer, licensed to do
business in the State of West Virginia, 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 10.2 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 10.4 -- Proof of Insurance Coverage. Independent Contractor
shall furnish to AWVMC copies of all certificates and policies which provide the
insurance coverages required by Section 10.2 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 West Virginia, 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 10.5 -- Payment of Premiums. AWVMC shall have the right, in its
sole
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discretion, to pay any overdue premium for the insurance coverages required of
Independent Contractor under this Agreement, and, upon the failure of
Independent Contractor to maintain any such coverage, to take out and maintain
such insurance coverages, and AWVMC is 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 West Virginia 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.
ARTICLE XI
Default and Termination
Section 11.1 -- 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. Except as set forth in Section 11.1.b below, any breach or
violation of, or failure to perform, any term, condition, provision,
representation, warranty, covenant, stipulation or agreement set forth
herein or in any other written agreement by and between AWVMC and
Independent Contractor which is not cured within (i) ten (10) days of
Independent Contractor's receipt of written notice thereof from AWVMC
or (ii) if such breach, violation or failure to perform is not cureable
within said ten (10) day period,
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such additional time as is necessary to cure said breach, violation or
failure to perform, provided that Independent Contractor diligently and
continuously works to cure the same; provided, however, that the time
within which to cure such breach, violation or failure to perform shall
not in any case exceed thirty (30) days of Independent Contractor's
receipt of written notice from AWVMC;
b. Any failure by Independent Contractor to comply, for any
reason except a validly asserted Force Majeure Event, with the Monthly
Designations as set forth in the Delivery Schedules twice during any
six (6) consecutive month period;
c. 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, for any reason, and if such interference, disruption or
threat continues for ten (10) days after Independent Contractor's
receipt of written notice thereof from AWVMC;
d. 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;
e. 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
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period of more than ten (10) days, or if two such directives are issued
in any calendar year, regardless of their duration; or
f. If Independent Contractor is determined to be "permit
blocked" or is otherwise unable for any reason to obtain or maintain
mining or mining related permits in connection with any program
conducted by the Federal Office of Surface Mining (or its successor) or
any other state or federal agency or body.
Section 11.2 -- Termination Based Upon an Event of Default. In addition
to and not in limitation of its 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 11.3 -- Right to Cure. Upon the occurrence of 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 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 10.1 relating to indemnity. AWVMC's right to cure
Independent Contractor's Event of Default as described in this Section 11.3
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.
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Section 11.4 -- 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 11.5 -- Remedies. The rights and remedies 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 at law or equity.
Section 11.6 -- Removal of Property. In the event of an Event of
Default of Independent Contractor, and for so long as such Event of Default
shall continue, Independent Contractor shall not remove or permit to be removed
or taken from the Premises any of the Equipment; provided, however, that if
Independent Contractor purchases the Rebuilt Equipment in accordance with
Section 4.12, Independent Contractor shall have the right to remove the Rebuilt
Equipment from the Premises.
Section 11.7 -- 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 and the Sentinel Mine in the
same normal working condition, under which the Work
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was being performed.
Section 11.8 -- Termination or Transfer of Permits and Licenses. No
later than ten (10) days after the expiration or termination of this Agreement
for any reason whatsoever, 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.
Section 11.9 -- Termination Without Cause. At any time on or after the
Effective Date, each of AWVMC and Independent Contractor shall have the right to
terminate this Agreement for any reason and at any time by providing the other
party with at least sixty (60) days' prior written notice (a "Termination
Notice"). In the event AWVMC elects to terminate this Agreement pursuant to this
Section 11.9, AWVMC shall be required to purchase from Independent Contractor,
and Independent Contractor shall be required to sell to AWVMC, all of the
Independent Contractor Equipment and any related parts and supplies located in
the Sentinel Mine on the Termination Notice Date for its Fair Market Value.
Within ten (10) days of the Termination Notice Date applicable to a termination
by AWVMC, Independent Contractor shall provide AWVMC the Independent Contractor
Equipment List. AWVMC shall pay for the Independent Contractor Equipment and the
related parts and supplies upon delivery by Independent Contractor of a bill of
sale and assignment, reasonably acceptable to AWVMC, transferring title to the
Independent Contractor Equipment and the related parts and supplies which AWVMC
is purchasing under this Section 11.9 free and clear of all Liens. AWVMC shall
have the right to withdraw the Termination Notice for any reason within thirty
(30) days of its receipt of the Independent Contractor Equipment List.
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In the event Independent Contractor elects to terminate this Agreement
pursuant to this Section 11.9, AWVMC shall have the right, but not the
obligation, to purchase all or any part of the Independent Contractor Equipment
and any related parts and supplies located in the Sentinel Mine on the
Termination Notice Date for its Fair Market Value. Within ten (10) days of the
Termination Notice Date applicable to a termination by Independent Contractor,
Independent Contractor shall provide AWVMC the Independent Contractor Equipment
List. AWVMC shall pay for the Independent Contractor Equipment and the related
parts and supplies upon delivery by Independent Contractor of a bill of sale and
assignment, reasonably acceptable to AWVMC, transferring title to the
Independent Contractor Equipment and the related parts and supplies which AWVMC
is purchasing under this Section 11.9 free and clear of all Liens.
Section 11.10 -- Default by AWVMC; Termination by Independent
Contractor. AWVMC shall be in default of this Agreement upon the occurrence of
any of the following events:
a. The failure of AWVMC to pay Independent Contractor the
Contract Price in accordance with Section 6.2, which failure to pay is
not cured within ten (10) days of AWVMC's receipt of written notice
thereof from Independent Contractor;
b. If any action by AWVMC shall cause interference with or
disrupt or threaten to interfere with or disrupt Independent
Contractor's operations in any manner, for any reason, and if such
interference, disruption or threat continues for thirty (30) days after
AWVMC's receipt of written notice thereof from Independent Contractor;
or
c. In the event AWVMC 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 AWVMC's assets.
In addition to the right to terminate this Agreement as provided in Section 11.9
of this
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Agreement, Independent Contract shall have the right to terminate this Agreement
upon the default by AWVMC under Section 11.10(a), (b) or (c) above by giving
written notice to AWVMC of such termination.
ARTICLE XII
Assignment, Subcontracting and Transfer of Ownership
Section 12.1 -- Rights Personal to Independent Contractor. This
Agreement is personal to Independent Contractor requiring the exercise of its
own services, skills and judgment.
Section 12.2 -- Assignment and Subcontracting. Independent Contractor
may not assign, subcontract or otherwise transfer or delegate all or any part of
this Agreement, the Work, or any rights, duties, obligations or interests herein
(except the right to hire contract labor) without obtaining the prior written
consent of AWVMC, which consent may be withheld by AWVMC in its sole discretion.
Independent Contractor may not assign any monies due or to become due to it
under this Agreement, nor may it pledge, encumber or mortgage all or any part of
its interests in this Agreement unless the assignee, pledgee or mortgagee
executes and delivers to AWVMC an agreement, reasonably satisfactory to AWVMC,
pursuant to which such assignee, pledgee or mortgagee acknowledges the setoff
rights of AWVMC under Sections 4.1, 4.3, 4.11, 9.3, 9.4, 9.6 and 11.3 this
Agreement and agrees that the interest assigned, pledged or mortgaged to it is
subject to such setoff rights, and that such setoff rights shall be superior for
all purposes.
Section 12.3 -- Transfer of Ownership Interest. Without the prior
written consent of AWVMC, which consent may be withheld by AWVMC in its sole
discretion, no holder of any capital stock or other ownership interest in
Independent Contractor may sell, assign, give, pledge or otherwise transfer,
whether voluntarily or by operation of law, any such capital stock or other
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ownership interest in Independent Contractor to any other person or entity, and
any such sale, assignment, gift, pledge or transfer shall constitute a breach of
this Agreement. Additionally, without the prior written consent of AWVMC, which
consent may be withheld by AWVMC in its sole discretion, Independent Contractor
may not cause or permit to be issued any additional equity or other ownership
interest during the term of this Agreement, and any such issuance shall
constitute a breach 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 12.3.
Section 12.4 -- 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 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 XIII
Miscellaneous
Section 13.1 -- 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,
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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.
2708 Cranberry Square
Morgantown, WV 26508
Telecopy No.: (304) 594-3695
Attention: President
If to Independent Contractor: Ryanstone Coal, LLC
----------------------------------------
Philippi, WV
Attn: Jimmie Ryan
Telecopy No.: (304) _________________
With a copy to: Jean Pearson
P. O. Box 100
904 West Broadway
Spiro, OK 74959
Telecopy No.: (918) 962-6202
and
John DeBuys, Esquire
Burr & Forman
420 North 20th Street, Suite 3100
Birmingham, AL 35203
Telecopy No.: (205) 458-5100
Section 13.2 -- 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.
Section 13.3 -- 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 13.4 -- Choice of Law. This Agreement shall be governed and
construed in
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accordance with the laws of the State of West Virginia.
Section 13.5 -- Production is of the Essence. The time, quality and
quantities of Coal production set forth in Article V hereof are of the essence
of this Agreement.
Section 13.6 -- 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 13.7 -- 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 13.8 -- Severability. In the event that any provision of this
Agreement conflicts with the laws of the State of West Virginia 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.
Section 13.9 -- Force Majeure.
(a) If AWVMC or Independent Contractor is rendered wholly or partly
unable to perform its obligations under this Agreement by reason of a Force
Majeure Event, AWVMC or Independent Contractor, as the case may be, will be
excused from whatever performance is affected by the Force Majeure Event to the
extent so affected, provided that (i) the party relying on the Force Majeure
Event notifies the other as soon as practicable of the Force Majeure Event and
its cause; (ii) the suspension of performance is of no longer duration than is
required by the Force Majeure Event; (iii) no obligations of either party which
arose before the Force Majeure Event causing the suspension of performance are
excused as a result of the Force Majeure Events; and (iv) the non-performing
party exercises due diligence to remove the cause of the
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Force Majeure Event or to lessen its effect and resumes performance at the
earliest practicable time.
(b) In no event will this Section 13.9 be construed to relieve either
party of any obligations hereunder solely because of increased costs or other
adverse economic consequences that may be incurred through the performance of
such obligations of the parties. Notwithstanding the above, adverse economic
consequences from governmental actions will be considered a Force Majeure Event
if it results from an item listed in the definition of a Force Majeure Event.
For the purposes of this Agreement only, the term "Force Majeure Event" shall
mean or refer to any act or event that (i) prevents AWVMC or its coal sales
agent from selling any of the Coal at a reasonable profit or performing its
obligations under any other agreement for the sale or re-sale of Coal, and (ii)
any other act or event which is beyond the reasonable control of AWVMC or
Independent Contractor and which renders performance of this Agreement, in whole
or in part impossible. Such acts or events include, without limitation, an act
of God, nuclear emergency, explosion, fire, epidemic, landslide, lightning,
earthquake, flood or similar cataclysmic occurrence, an act of public enemy,
war, blockade, insurrection, strike, riot, civil disturbance, restrictions or
restraints imposed by law or by rule, regulation or order of governmental
authorities, whether federal, state or local, delays or interruptions in
transportation, major breakdown or other restrictions on the use of equipment,
unforeseen adverse geologic and mining conditions and roof failures, lack of
adequate ventilation due to events or circumstances which were not, wholly or
partially, the result of any act, omission or failure of Independent Contractor,
or any other event beyond the reasonable control of AWVMC or Independent
Contractor, whether of the same or a different nature, existing or future,
foreseen or unforeseen. Unless resulting from any of the events listed in the
preceding sentence, economic hardship or failure by
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Independent Contractor to produce Coal in such quantities as required under this
Agreement will not constitute a Force Majeure Event.
(c) No Force Majeure Event will invalidate this Agreement and, on
termination of the Force Majeure Event, deliveries of Coal will resume pursuant
to the terms and conditions hereof. Shipments not made or not accepted due to a
Force Majeure Event will be made up at the end of this Agreement, and the term
of this Agreement will be extended for an additional reasonable period of time
so that the shipments can be made up.
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: /s/ Gerald Peacock
------------------------------------
Gerald Peacock
President
RYANSTONE COAL, LLC
By: /s/ Jimmie R. Ryan
------------------------------------
Name: Jimmie Ryan
Its: Manager
----------------------------------
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