CONTRACT MINING AGREEMENT
THIS
CONTRACT MINING
AGREEMENT (this "Agreement"), is made and entered into on
this 31st day of July,
2007 (the "Effective Date"), by and between ONE WORLD ENERGY
CORPORATION, a Nevada corporation ("OWEC"), and XXXXX XXXXX & SON,
INC., a Pennsylvania corporation ("Independent
Contractor").
WHEREAS,
OWEC owns
the mineral rights and currently operates a surface coal mining operation and
related surface facilities in Conemaugh Township, Indiana County, Pennsylvania,
known as the “Nowrytown No.1 Mine”;
WHEREAS,
OWEC
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; and
WHEREAS,
OWEC and
Independent Contractor have agreed that Independent Contractor will begin to
perform the Work as of the Effective Date.
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, OWEC 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):
"OWEC
Property" shall mean
all structures, facilities, assets and equipment owned by OWEC at the Nowrytown
No.1 Mine as of the Effective Date.
"Coal"
shall mean the
mineable and merchantable coal within and from the seam of coal in, on and
underlying the Nowrytown No.1 Mine.
“Equipment”
shall
have the
meaning set forth in Section 4.3 of this Agreement.
"Event
of Default" shall
have the meaning set forth in Section 11.1 of this Agreement.
"Information"
shall have the
meaning set forth in Section 8.7 of this Agreement.
"Lien"
shall mean any
mortgage, lien, pledge, charge, security interest or encumbrance of any
kind.
“Net
Profit” shall mean
gross revenues minus all mining costs and related administrative
costs.
"Records"
shall have the
meaning set forth in Section 8.5 of this Agreement.
"Termination
Notice" shall
have the meaning set forth in Section 11.9 of this Agreement.
"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. OWEC 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 as follows: (i) to mine and remove the Coal by usual and accepted
surface mining methods, and as otherwise herein specified, and (ii) to perform
all of the other duties, responsibilities and obligations required of
Independent Contractor under this Agreement (all of said work is
hereinafter collectively referred to as the "Work"). Independent
Contractor expressly agrees to begin to perform the Work on the
Effective Date and thereafter to continue 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.
Section
2.2 -- Term. This Agreement
shall be effective as of the Effective Date and shall continue in full
force and effect until the Nowrytown No.1 Mine is depleted, unless sooner
terminated as provided herein or under applicable law.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Section
3.1 -- Representations
and Warranties of OWEC. OWEC 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 NOWRYTOWN NO.1 MINE
OR
THE EQUIPMENT TO BE USED BY INDEPENDENT CONTRACTOR PURSUANT TO THIS AGREEMENT.
OWEC ALSO MAKES NO, AND HEREBY DISCLAIMS ANY, REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE DURATION, ECONOMIC FEASIBILITY OR LIKELIHOOD
OF
SUCCESS OF THE WORK TO BE PERFORMED BY INDEPENDENT CONTRACTOR UNDER THIS
AGREEMENT. INDEPENDENT CONTRACTOR HEREBY EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS
THAT OWEC 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 COAL, THE EQUIPMENT,
THE WORK OR THE NOWRYTOWN NO.1 MINE.
Section
3.2 -- Representations and
Warranties of Independent Contractor. As a material inducement for OWEC to
enter into this Agreement, Independent Contractor represents and warrants to
OWEC as follows:
(a)
Independent Contractor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Pennsylvania. 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.
(c)
Independent Contractor is in the
business of surface coal mining, has substantial experience as a surface
coal mine operator, and has personnel that are knowledgeable regarding and
have substantial experience in surface mining conditions similar to those in
the
Nowrytown No.1 Mine.
(d)
Independent Contractor has
carefully inspected and examined and is familiar with the Nowrytown No.1
Mine, all areas surrounding the Nowrytown No.1 Mine, and the OWEC
Property.
(f)
Independent Contractor has fully
informed itself as to all existing conditions and limitations of the
Nowrytown No.1 Mine, all areas surrounding the Nowrytown No.1 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.
ARTICLE
IV
EQUIPMENT;
MINING OPERATIONS
Section
4.1 -- OWEC Property. In
performing the Work, and so long as Independent Contractor is in compliance
with
the terms and conditions of this Agreement, Independent Contractor shall have
the right to use the OWEC Property. Title to the OWEC Property shall, at all
times, be vested in OWEC. Independent Contractor may not, voluntarily or
involuntarily, subject the OWEC Property to any Liens, and Independent
Contractor may not, without the prior written consent of OWEC, remove or permit
the removal of any of the OWEC Property from the Premises.
Section
4.2 -- No Warranties;
Use of Equipment. Independent Contractor hereby acknowledges and agrees
that the OWEC Property has 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 OWEC. OWEC, not being the manufacturer of any of the OWEC Property,
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 OWEC 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 OWEC based thereon. Independent Contractor further agrees,
regardless of cause, not to assert any claim whatsoever against OWEC for loss
of
anticipatory profits or consequential damages. Independent Contractor shall
be solely responsible for developing and training its employees in safe and
proper use and operating procedures with respect to each item of the OWEC
Property.
Section
4.3 -- Maintenance of
Equipment. Independent Contractor covenants and agrees to at all times keep
and
maintain the equipment located on the OWEC Property (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 OWEC's sole cost and expense, all routine
or
scheduled maintenance thereof. In order that OWEC may be able to determine
that
Independent Contractor is in compliance with the maintenance and repair
requirements of this Agreement, Independent Contractor shall, upon OWEC's
request: (i) permit the Equipment to be inspected by OWEC or its designee,
and
(ii) permit OWEC or its designee to inspect and copy all maintenance records
and
any other records that may pertain to the Equipment.
Section
4.4 -- Expense of Operations;
Utilities. Subject to Section 4.1 above, all costs, expenses and liabilities
accruing or resulting from the Work performed under this Agreement shall be
borne by OWEC, and Independent Contractor shall have no responsibility
therefore. OWEC shall, at its sole cost and expense, obtain in its name all
utilities necessary for the performance of the Work.
Section
4.5 -- Diligence. Independent
Contractor agrees to begin to perform the Work on the Effective Date and
thereafter to 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, and Independent Contractor agrees to use only
competent, skilled personnel and management in performing the Work. Independent
Contractor shall perform the Work so as to produce and recover
the maximum quantities of merchantable and mineable coal from the Nowrytown
No.1
Mine.
Section
4.6 -- Notice of Suspended
Operations. Independent Contractor shall report promptly in writing to OWEC
any suspension, slowdown or interference with any aspect of the Work, and
Independent Contractor shall specifically identify the reasons therefore and
the
expected duration thereof.
Section
4.7 -- Engineering Services.
Independent Contractor shall be solely responsible for obtaining all engineering
services that are or may be required: (i) to protect OWEC's interest in the
Coal, and the OWEC Property, and (iii) to perform the Work pursuant to the
terms
and conditions of this Agreement. The cost of such services shall be
the responsibility of OWEC.
Section
4.8 -- Water Sampling. During
the term of this Agreement, OWEC agrees to perform or cause to be performed
all water sampling and related reporting required by any governmental permits
on
or with respect to the OWEC Property
ARTICLE
V
PRODUCTION
Section
5.1 -- Source of Coal.
Independent Contractor covenants and agrees that: (i) the Coal delivered to
OWEC pursuant to this Agreement shall be produced solely from the coal seam
in, on and underlying the Nowrytown No.1 Mine, (ii) it shall not commingle
any
coal mined or removed from other properties with the Coal mined and removed
from
the Nowrytown No.1 Mine, and (iii) it shall not tender, deliver or sell any
of
the Coal mined from the Nowrytown No.1 Mine to any person or entity without
the
prior written consent of OWEC.
Section
5.2 -- No Foreign Material,
Etc. Independent Contractor agrees
to
mine,
produce and deliver Coal which is free from foreign material, trash, excess
moisture, slate, rock, excessive out of seam dilution and other impurities
and
which is of merchantable and saleable quality.
Section
5.3 -- Title to Coal,
Depletion. Independent Contractor acknowledges and agrees that title to all
Coal mined under this Agreement shall be vested in OWEC and Independent
Contractor shall have no right to dispose of any of the Coal except as set
forth
in Section 5.4 below. Unless otherwise expressly provided herein, Independent
Contractor shall not acquire and shall not have an economic interest in any
of
the Coal and OWEC 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 OWEC's exclusive right to depletion for any and all purposes was taken
into
account by the parties hereto in fixing the amounts owed Independent
Contractor under Section 6.1 under this Agreement
Section
5.4 -- Independent
Contractor's Right to Sell Coal. In the event OWEC suspends its performance
of
this Agreement and refuses to accept Coal pursuant to Section 13.8 (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
OWEC has not
accepted pursuant to Section 13.8(b)(i); provided, however, Independent
Contractor shall not enter into any agreements for the sale of Coal pursuant
to
this Section 5.4 without the prior express written consent of OWEC, which
consent may be withheld by OWEC for any reason.
Section
5.5 -- 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 Nowrytown No.1 Mine.
Notwithstanding the foregoing, however, Independent Contractor shall not, except
with the prior written consent of OWEC, mine any Coal within sixty (60) feet
of
the outside boundaries of the Nowrytown No.1 Mine or within two hundred (200)
feet of any mine workings in or adjacent to the Nowrytown No. 1 Mine, and
Independent Contractor shall not cut any boundary corner on the Nowrytown No.1
Mine except with the prior written consent of OWEC. In the event such consent
is
given by OWEC, Independent Contractor shall use such precautions as are
necessary to preserve and monument the location of such boundary corner as
OWEC
may require.
ARTICLE
VI
NET
PROFIT; OPERATING CAPITAL
Section
6.1 Net Profit. In
consideration for the Work performed by Contractor hereunder, OWEC agrees
that Independent Contractor shall be entitled to forty percent (40%) of the
Net
Profit, including without limitation, expenses incurred under this Agreement,
debt service expenses and royalties, attributable to the Nowrytown No.1 Mine
during the term of this Agreement.
Section
6.2 Operating Capital. OWEC
further agrees to provide all operating capital and furnish all of the
Equipment, tools, machinery, parts, supplies and other items that may be required from time to time to perform
the
Work. OWEC shall reimburse Independent Contractor all reasonable
expenses incurred by Independent Contractor relating to the Nowrytown No.1
Mine.
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 work force and labor relations policies, and subject only
to
OWEC's right to designate the areas to be mined, Independent Contractor shall
direct the manner, method, mode of performance and all other aspects of the
Work. Independent Contractor expressly agrees that it shall not represent or
hold itself out as an affiliate, subsidiary, partner, joint venturer,
representative or agent of OWEC, and Independent Contractor further agrees
to
indemnify, hold harmless and defend OWEC 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 shall be its employees and not the
employees of OWEC. Independent Contractor shall exercise complete and exclusive
control over and responsibility for all aspects of hiring, employment,
supervision, direction, hours, working conditions, compensation, discipline
and
discharge for all individuals engaged to perform the Work under this Agreement.
Independent Contractor shall comply with all present and future federal, state
and local laws, ordinances, rules and regulations pertaining to the duties
and
obligations arising out of the employer-employee relationship, including,
without limitation, unemployment compensation, Social Security, withholding
taxes, State Workers' Compensation (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 OWEC for inspection upon request, and Independent Contractor
shall certify to OWEC, on a quarterly basis, in writing, Independent
Contractor's compliance therewith on all Coal produced and tendered under this
Agreement. Any expense incurred by Independent Contractor under this Section
7.2
shall be reimbursed by OWEC.
ARTICLE
VIII
INSPECTION,
RECORD KEEPING AND REPORTING REQUIREMENTS
Section
8.1 -- Contemporaneous Access
to the OWEC Property. Independent
Contractor
acknowledges and agrees that OWEC or its designee may place and install or
cause
to be placed and installed on the OWEC Property various structures, equipment
and materials, and OWEC may carry on, either directly or through its designee,
such other operations on the OWEC Property as OWEC 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.
OWEC shall ensure that all activity on the OWEC Property by OWEC or its designee
shall be conducted in accordance with all applicable laws, rules and
regulations, including, without limitation, all Mine Safety and Health
Administration (“MSHA”) requirements.
Section
8.2 -- Inspection of the OWEC
Property and Equipment. Independent Contractor acknowledges and agrees that
OWEC and its designees may, upon notice to Independent Contractor, enter
upon, inspect, map, sample, test and survey the OWEC Property, the Nowrytown
No.1 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. Independent Contractor shall provide OWEC and its designees
with safe access to the OWEC Property, the Nowrytown No.1 Mine and the
Equipment, and cooperate with OWEC and its designees in carrying out such
inspection.
Section
8.3 -- Safety. OWEC 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 are trained in safe working procedures and shall
cause
its employees to abide by all safety and security rules in force on the
OWEC Property. OWEC and its designees shall have the right (but not the
obligation) to review the safety records of Independent Contractor on a
quarterly basis. Independent Contractor agrees to indemnify, hold harmless
and
defend OWEC against any claims, of whatever kind, arising from any act or
omission to act by Independent Contractor contrary to the provisions of this
Section 8.3. This covenant of indemnity shall survive the termination or
expiration of this Agreement.
Section
8.4 -- 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 OWEC or its designee with copies thereof. Upon the
termination or expiration of this Agreement, Independent Contractor shall
promptly deliver to OWEC or its designee all of such records.
Section
8.5 -- 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. OWEC 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. Independent Contractor shall keep and preserve such
books and records for at least five years after the termination or expiration
of
this Agreement.
Section
8.6 -- 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 OWEC, its affiliates
and their businesses, the OWEC Property, the Coal and the Nowrytown No.1 Mine.
Independent Contractor agrees that it shall treat all maps, plans, data,
reports, drilling logs, core samples, leases and other information relating
to
OWEC and its business, the OWEC Property, the Coal or the Nowrytown No.1
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 OWEC 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 OWEC Property, 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, OWEC shall diligently seek to
obtain all approvals and consents from any federal, state or local governmental
for the performance of the Work on the OWEC Property. OWEC shall secure,
maintain and comply with all permits required to perform the Work, and OWEC
shall perform all remedial or abatement work and pay all fines and assessments
related to its failure to comply therewith.
Section
9.3 -- Citations or
Penalties. Subject to Section 9.2 above, 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 OWEC, 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 OWEC 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 OWEC 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 OWEC 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, OWEC may, in its sole
direction, settle or pay such assessment, fine or penalty without Independent
Contractor's prior approval, and OWEC 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 OWEC's mining related permits are
canceled, revoked, suspended, terminated or withdrawn, Independent Contractor
shall be liable to OWEC for all costs, expenses, losses and damages, including,
without limitation, attorneys' fees, directly or indirectly, incurred by such
permit cancellation, revocation, suspension, termination or withdrawal.
Independent Contractor reserves the right to lawfully contest any such fine
or assessment provided it does not jeopardize the mining operations contemplated
under this Agreement.
Section
9.4 --Haulroads, Drainage and
Grading. Independent Contractor shall be solely responsible for the maintenance
and upkeep of the haulroads on the OWEC Property and for draining and grading
all surface areas and for controlling all surface run-off on or with respect
to
the OWEC Property as required by any federal, state or local law, rule,
regulation or permit, or as reasonably required by OWEC.
Section
9.5 -- Fees and
Taxes. OWEC shall make complete and timely payment of all federal, state
and local fees and taxes which may be imposed or assessed against it, its
operations hereunder, the Equipment, or the Nowrytown No.1 Mine 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 Pennsylvania, personal property taxes, employment
taxes, and income taxes.
Section
9.6 -- Excise, Reclamation
and Severance Taxes. In addition to the amounts set forth in Section 6.1
above, OWEC 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, and the federal reclamation fees payable
to
the Office of Surface Mining.
Section
9.7 -- Liens. In the event
any employee of Independent Contractor or any other third party files a
notice of intent to claim a Lien upon any asset of OWEC or any other property
or
interest of OWEC 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 OWEC's reasonable opinion legally valid or
enforceable, then OWEC 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 OWEC
to pay any such employee or third party.
Section
9.8 -- Reclamation. OWEC
shall be responsible, at its sole cost and expense, for performing all
reclamation of the OWEC Property as required by any applicable federal, state
and local laws, rules, regulations and permits. OWEC 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 OWEC Property. 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 OWEC, its
affiliates and its and their officers, directors, managers and employees from
and against any and all suits, actions, liabilities, demands, losses, claims,
awards, damages, fines, penalties, judgments, settlements, costs and expenses
of
every kind and nature (including, without limitation, 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 OWEC Property 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) a breach or default by Independent Contractor of any
covenant, section, representation, warranty or other term or condition of this
Agreement, 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, or, at the option of the indemnified party,
pay to have the indemnified party defended, against all such suits,
actions, liabilities, demands, losses, claims, awards, damages, fines,
penalties, judgments, settlements, costs and expenses, whether groundless or
not. The foregoing obligations shall be in addition to 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 OWEC’s 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 $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, 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 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 Pennsylvania, and
OWEC shall have the right to approve such insurer. All policies or certificates
of insurance obtained by Independent Contractor under this Agreement shall
name
OWEC as an additional insured and shall contain a provision for notice to OWEC
of any overdue or unpaid insurance premium and thirty (30) days advance notice
to OWEC 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 OWEC, 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 OWEC 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 OWEC. Independent Contractor
shall also provide satisfactory written evidence to OWEC that, if required
by the laws of the State of Pennsylvania, 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.
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.
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 OWEC and Independent
Contractor which is not cured within ten (10) days of Independent Contractor's
receipt of written notice thereof from OWEC;
b.
If any
action by Independent Contractor in performing the Work under this
Agreement, complying with any of the terms under this Agreement, or the presence
of any agent, employee, contractor or representative of Independent Contractor
upon the OWEC Property, or the execution of this Agreement by it
shall cause interference with or disrupt or threaten to interfere with or
disrupt OWEC's operations in any manner or the operations of any of OWEC's
affiliates, subsidiaries or any other contractor(s), at any location whatsoever,
for any reason, and if such interference, disruption or threat continues for
ten
(10) days after Independent Contractor's receipt of written notice from
OWEC;
c.
In the
event Independent Contractor is adjudicated bankrupt or insolvent, whether
through involuntary or voluntary proceedings, or if any receiver, trustee,
assignee or other person or persons are appointed by any court to take charge
of
Independent Contractor's assets; or
d.
If any
order, decree, judgment or directive is issued by any regulatory authority,
tribunal or court revoking, suspending, terminating or withdrawing any of its
mining related permits or bonds, whether secured in connection with mining
on
the OWEC Property or not, or requiring Independent Contractor to cease mining
operations for a period of more than ten (10) days, or if two such directives
are issued in any calendar year, regardless of their duration.
Section
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, OWEC 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. If
Independent Contractor is in breach or default of any of the terms or
conditions of this Agreement, whether or not said breach or default gives rise
to an Event of Default, OWEC 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, OWEC 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. OWEC's right to cure Independent
Contractor's default or breach as described in this Section 11.3 shall not
imply any obligation on the part of OWEC to make any payment or to perform
any act required of Independent Contractor, and the exercise of such right
by
OWEC shall not constitute a release or waiver of any default or breach by
Independent Contractor.
Section
11.4 -- Waiver of Performance
or Default. The failure of either OWEC 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 OWEC 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 of OWEC set forth in this Agreement shall not be exclusive,
but shall be taken and construed as cumulative and in addition to any and all
other rights and remedies accorded to OWEC at law or equity.
Section
11.6 -- Removal of Property.
In the event of an Event of Default, and for so long as the Event of
Default shall continue, Independent Contractor shall not remove or permit to
be
removed or taken from the OWEC Property any of the Equipment.
Section
11.7 -- Condition of the
Premises. Upon the expiration or termination of this Agreement, for any
reason, at the option of OWEC, Independent Contractor shall leave the OWEC
Property and the Nowrytown No.1 Mine, in the same normal working condition,
under which the Work was being performed.
Section
11.8 -- Termination by OWEC
Without Cause. Beginning on the second anniversary of the Effective Date of
this
Agreement, OWEC shall have the right to terminate this Agreement for any reason
and at any time by providing Independent Contractor with at least 180 days'
prior written notice (the "Termination Notice").
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 without obtaining the prior written
consent of OWEC, which consent may be withheld by OWEC 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 without the prior written consent of
OWEC, which consent may not be unreasonably withheld.
Section
12.3 -- Waiver of Consent. In
the event OWEC 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.
Section
12.4 -- Transfer of OWEC's
Interest in the OWEC Property. OWEC may not sell or otherwise transfer its
leasehold interest in the OWEC Property if such sale or other transfer
would have a material adverse effect on Independent Contractor's interest in
the
Agreement unless: (i) Independent Contractor consents to such sale or other
transfer, or (ii) the buyer or transferee of OWEC's interest in the OWEC
Property agrees to be bound by the terms of this Agreement as if it were
OWEC.
ARTICLE
XII
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, 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 OWEC:
Xxxxxx
Xxxxxxxxxxx
One
World Energy
Corporation
0000
Xxxxx Xxxxx Xxxxxx Xxxxxxx,
Xxxxx 000
Xxxxxxxxx,
XX 00000
Ph:
000-000-0000
Fax:
000-000-0000
If
to Independent Contractor:
Xxxxx
X. Xxxxx,
President
0000
Xxxxx 000
Xxxxx,
XX 00000
Ph:
000-000-0000
Fax:
000-000-0000
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 accordance with the laws of
the State of Pennsylvania.
Section
13.5 -- 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
13.6 -- 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
13.7 -- Severability. In the
event that any provision of this Agreement conflicts with the laws of the
State of Pennsylvania 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
13.8 -- Force
Majeure.
(a)
If
OWEC or Independent Contractor is rendered wholly or partly unable to
perform its obligations under this Agreement by reason of a Force Majeure Event,
OWEC 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 Force Majeure Event
or
to lessen its effect and resumes performance at the earliest practicable
time.
(b)
In no
event will this Section 13.8 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
OWEC 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 OWEC 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, or any cause, whether of the same of 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
Independent Contractor to produce Coal 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 not be made up unless OWEC in its sole discretion elects to do
so.
(d)
The
term of this Agreement shall, in OWEC's sole discretion, be extended for a
period equal to the sum of all periods during which a Force Majeure prevented
either party from performing this Agreement.
IN
WITNESS WHEREOF,
the parties have caused their corporate names to be signed hereto
by their officers duly authorized.
ONE
WORLD ENERGY CORPORATION
/s/
Xxxxxx Xxxxxxxxxxx
By:
___________________________
Xxxxxx
Xxxxxxxxxxx, CEO & Director
XXXXX
XXXXX & SON, INC.
/s/
Xxxxx X. Xxxxx
By:
___________________________
Xxxxx
X.
Xxxxx, President
