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