EXHIBIT 10.4

 

Portions of this exhibit indicated by “******” have been omitted pursuant to a
request for

confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934,
as

amended, and the omitted material has been separately filed with the Securities
and

Exchange Commission.

 

AMENDED AND RESTATED EQUIPMENT LEASE AGREEMENT

(Existing Truck Unloading Facility)

 

THIS AMENDED AND RESTATED EQUIPMENT LEASE AGREEMENT (“Agreement”) is made on the
22nd day of June, 2005 effective as of the 1st day of January, 2007 (the
“Effective Date”), by and between Virginia Electric and Power Company, a
Virginia public service corporation with its principal office located in
Richmond, Virginia, trading in the Commonwealth of Virginia as “Virginia Power”
and in the State of North Carolina as “North Carolina Power” (hereinafter
referred to as “Virginia Power”), and Mettiki Coal, LLC, a Delaware limited
liability company which has its principal office located in Tulsa, Oklahoma and
which is the successor entity to Mettiki Coal Corporation (hereinafter referred
to as “Mettiki”). Virginia Power and Mettiki sometimes are referred to
hereinafter individually as a “party” and collectively as the “parties.”

 

RECITALS

 

WHEREAS, pursuant to the terms of that certain Lease Agreement effective January
15, 1996 (the “Existing Premises Lease Agreement”), Mettiki is the lessee of
certain real estate (the “Premises”) owned by Virginia Power and located at
Virginia Power’s Mt. Storm Power Station (the “Station”) located in Mt. Storm,
West Virginia; and

 

WHEREAS, Virginia Power and Mettiki are parties to that certain Equipment Lease
Agreement, effective as of January 15, 1996 (the “Existing Equipment Lease”),
pursuant to which Mettiki leases to Virginia Power that certain truck unloading
facility located on the Premises (the “Existing Truck Unloading Facility”); and

 

WHEREAS, the term of the Existing Equipment Lease is coterminous with the
Existing Premises Lease Agreement; and

 

WHEREAS, subject to the terms and conditions of the Existing Premises Lease
Agreement, the term of the Existing Premises Lease Agreement will expire at
11:59 p.m. on December 31, 2006 (the “Existing Premises Lease Expiration Time”);
and

 

WHEREAS, Alliance Coal, LLC, a Delaware limited liability company and the parent
entity of Mettiki (“Alliance Coal”), and Virginia Power have entered into that
certain Agreement for the Supply of Coal dated of even date (the “Coal Supply
Agreement”); and

 

WHEREAS, pursuant to the Coal Supply Agreement, the parties hereto have entered
into that certain Amended and Restated Lease Agreement dated of even date (the
“Amended and Restated Premises Lease Agreement”) pursuant to which the initial
term of the Existing Premises Lease Agreement will be extended on, and subject
to, the terms and conditions of the Amended and Restated Premises Lease
Agreement; and

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WHEREAS, subject to and the conditions set forth herein, Virginia Power and
Mettiki also desire to extend the initial term of the Existing Equipment Lease
after the Existing Premises Lease Expiration Time; and

 

NOW, THEREFORE, in consideration of the above Recitals, which are incorporated
herein, and for and in consideration of the mutual covenants and agreements set
forth below, the parties agree as follows:

 

1. Ownership and Title.

 

a. During the term of this Agreement, the Existing Truck Unloading Facility
shall remain the property of the Mettiki subject to any valid lien of Virginia
Power. Upon expiration or termination of this Agreement, the Existing Truck
Unloading Facility shall become the property of Virginia Power in accordance
with the terms of the Coal Supply Agreement and the Amended and Restated
Premises Lease Agreement.

 

2. Lease and Operation of Existing Truck Unloading Facility.

 

a. Subject to the terms and conditions hereof, Mettiki will rent and lease to
Virginia Power, and Virginia Power will rent and lease from Mettiki, the
Existing Truck Unloading Facility during the term hereof. Unless otherwise
agreed to by the parties, the Existing Truck Unloading Facility shall be used
and operated only for the purpose of unloading coal to be delivered to the
Station pursuant to the Coal Supply Agreement, and no other purpose.

 

b. Virginia Power shall lease the Existing Truck Unloading Facility on an “as
is” basis and Mettiki shall not be obligated to make any alterations or
improvements thereto prior to or after commencement of this Agreement.

 

c. Virginia Power’s right to use and operate the Existing Truck Unloading
Facility as permitted herein may only be exercised by (i) Virginia Power and its
employees, and (ii) Virginia Power agents, contractors, and subcontractors who
have been approved in writing by Mettiki, such approval not to be unreasonably
withheld, delayed or conditioned.

 

d. This Agreement shall in no way assign, encumber, lease, sublease or set over
either party’s estate, interests or rights under the Existing Premises Lease
Agreement or the Amended and Restated Premises Lease Agreement, as appropriate.

 

e. Mettiki shall operate the Existing Truck Unloading Facility as contemplated
by the parties in the Coal Supply Agreement and the Ancillary Services Agreement
attached as Attachment 1 to the Coal Supply Agreement.

 

f. Virginia Power shall be responsible for all direct costs and expenses to
repair damage to the Existing Truck Unloading Facility caused by the negligence
or intentional acts or omission(s) of Virginia Power and its affiliates and
their respective employees, agents, contractor’s or subcontractors.

 

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3. Term Of Lease.

 

The term of this Agreement shall be coterminous with the term of the Amended and
Restated Premises Lease Agreement.

 

4. Termination.

 

Notwithstanding any other provision of this Agreement to the contrary, this
Agreement shall automatically terminate upon the expiration, cancellation, or
termination of the Coal Supply Agreement or the Amended and Restated Premises
Lease Agreement.

 

5. Rental and Fee.

 

Virginia Power agrees to pay to Mettiki a fixed rental fee of $****** per month
(the “Fixed Monthly Fee”) for the lease to Virginia Power of the Existing Truck
Unloading Facility through ******. The Fixed Monthly Fee shall be payable on the
first day of each month during the term hereof commencing on the Effective Date.
The invoicing and payment of the Fixed Monthly Fee will be effected in
accordance with Article 6 of the Coal Supply Agreement. After ******, and
continuing through the remaining term hereof, the Fixed Monthly Fee shall be
zero.

 

6. Default.

 

Any default under this Agreement will constitute a default under the Coal Supply
Agreement.

 

Except as otherwise provided herein, if Mettiki materially fails to comply with
any of the provisions of this Agreement, and shall fail within thirty (30) days
after written notice from Virginia Power to correct such noncompliance, Virginia
Power may terminate this Agreement by giving written notice of termination to
Mettiki. Such termination shall be effective as specified in the termination
notice but not earlier than one (1) business day following Mettiki’s receipt of
such notice. If Virginia Power terminates this Agreement for Mettiki’s default
pursuant to this paragraph, Alliance Coal shall be deemed to be in material
breach of the Coal Supply Agreement as of the date of such termination of this
Agreement and Virginia Power may with respect to the Coal Supply Agreement
exercise all remedies available to it at law, in equity or under the Coal Supply
Agreement, including Virginia Power’s operation of the Existing Truck Unloading
Facility as provided in the Coal Supply Agreement. Termination pursuant to the
provisions of this paragraph shall not constitute a waiver of any other right or
remedy Virginia Power may have under this Agreement.

 

Except as otherwise provided herein, if Virginia Power materially fails to
comply with any of the provisions of this Agreement, and shall fail within
thirty (30) days after written notice from Mettiki to correct such
noncompliance, Mettiki may terminate this Agreement by giving written notice of
termination to Virginia Power. Such termination shall be effective as specified
in the termination notice but not earlier than one (1)

 

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business day following Virginia Power’s receipt of such notice. If Mettiki
terminates this Agreement for Virginia Power’s default pursuant to this
paragraph Mettiki may exercise all remedies available to it at law, in equity or
under the Coal Supply Agreement. Termination pursuant to the provisions of this
paragraph shall not constitute a waiver of any other right or remedy Mettiki may
have under this Agreement.

 

7. Virginia Power’s Agent.

 

By written notice to Mettiki, Virginia Power may designate an agent for the
purposes of administering this Agreement on its behalf.

 

8. Limitation of Liability.

 

Article 10 of the Coal Supply Agreement is hereby incorporated into this
Agreement. In addition, except as expressly otherwise provided in this Agreement
or the Coal Supply Agreement, Virginia Power shall not be liable to Mettiki for
injury or death of persons or damage to property arising on account of any
latent or patent defects in the Existing Truck Unloading Facility. Virginia
Power shall not be liable for any losses, claims or liabilities for loss of or
damage to the Existing Truck Unloading Facility as the result of the negligence
or willful misconduct of Mettiki, its agents, contractors, or subcontractors.

 

9. Insurance.

 

Mettiki shall obtain and maintain, and require its contractors and
subcontractors to obtain and maintain, all policies and coverage’s of insurance
as required under Section 12.10 of the Coal Supply Agreement and Section 12 of
the Amended and Restated Premises Lease Agreement during the term of this
Agreement.

 

10. Indemnity.

 

The parties each agree to indemnify the other as set forth in Section 12.11 of
the Coal Supply Agreement, the terms of which are hereby incorporated into this
Agreement. Nothing contained in this Agreement shall be construed to require
either party to indemnify the other against the other party’s willful misconduct
or negligence.

 

11. Compliance with Laws.

 

Virginia Power and Mettiki each shall comply with all federal, state and local
laws, rules, regulations, orders and ordinances applicable to its performance
hereunder. If fines, penalties or legal costs are assessed against a party by
any government agency or court due to the other party’s noncompliance with such
laws, rules, regulations or ordinances, the non-complying party shall indemnify
and hold harmless the other party against any and all losses, liabilities,
damages, claims and costs suffered or incurred because of the failure of the
non-complying party to comply therewith. The non-complying party shall reimburse
the other party for any and all legal or other expenses, including attorneys’
fees through the appellate level, reasonably incurred by the party in connection
with such losses, liabilities, damages or claims.

 

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12. Assignment.

 

a. The provisions of Section 12.1 of the Coal Supply Agreement shall apply to
this Agreement with regard to assignment and the parties recognize that such
assignment shall not alter the rights and obligations of the assigned party with
respect to this Agreement and the Coal Supply Agreement.

 

b. Nothing herein shall be construed to restrict the right of Virginia Power to
freely convey, assign, or otherwise dispose of or encumber its title, rights,
and interests in the Premises. Any assignment made as provided herein shall not
relieve Mettiki of any responsibility for the due and faithful performance
hereof. Mettiki shall be liable for all acts and omissions of its assignee.

 

13. Subordination.

 

This Agreement is and shall be subject, subordinate to, and inferior to any lien
or encumbrance now or hereafter placed on the Existing Trust Unloading Facility
by Mettiki, all advances made under any such lien or encumbrance, the interest
payable on any such lien or encumbrance, and any and all renewals or extensions
of such liens or encumbrances.

 

14. Notices.

 

Any notice required or permitted to be given in writing hereunder shall be
executed in the manner set forth under Article 13 of the Coal Supply Agreement.
The reference to “Seller” in such Article 13 shall mean “Mettiki” for purposes
of this Agreement.

 

15. Regulatory Changes.

 

In the event that a governmental agency has authority to regulate the charges
for, and conditions of, the leasing of the Existing Truck Unloading Facility as
described in this Agreement, or acquires such authority subsequent to the
effective date of this Agreement, then this Agreement shall be subject to
regulation by such governmental agency (“Regulatory Change”). In such event,
this Agreement shall be modified but only to the extent necessary to comply with
such regulations. Any provisions of this Agreement not subject to regulation
shall remain in full force and effect.

 

16. Regulatory Prohibition.

 

Both parties recognize that governmental or regulatory authorities having
jurisdiction over Virginia Power or the activities contemplated by this
Agreement may take action which prevents Virginia Power from performing its
obligations under this Agreement. If any court, governmental or regulatory
authority for any reason substantially prevents Virginia Power from performing
its obligations under this Agreement, Virginia Power may, by written notice to
Mettiki, immediately terminate this Agreement without obligation or liability to
Mettiki, except for obligations and liabilities arising from any prior
performance or breach of this Agreement. Such termination shall be effective
upon the date specified in Virginia Power’s notice, but in no event earlier than
Mettiki’s receipt of Virginia Power’s notice or if permitted by said court,
governmental or regulatory

 

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authority thirty (30) days after Mettiki’s receipt of Virginia Power’s notice.
Termination of this Agreement as described in this Section shall not be cause
for termination of the Coal Supply Agreement.

 

17. Miscellaneous.

 

  a. Governing Law.

 

This Agreement and the rights of the parties hereunder shall be governed by,
construed and enforced in accordance with the laws of the State of West
Virginia. This Agreement shall be deemed to have been executed in West Virginia
regardless of the actual place of signing or the actual place of performance.

 

  b. Non-Waiver of Rights.

 

The failure of either Mettiki or Virginia Power to demand strict performance of
the terms of, or to exercise any right conferred in, this Agreement shall not be
construed as a waiver or relinquishment of its right to assert or rely upon any
such term or right in the future, or a consent to any continuing or subsequent
failure or breach.

 

  c. Survival.

 

Section 12.4 of the Coal Supply Agreement is hereby incorporated into this
Agreement.

 

  d. Relationship of the Parties.

 

This Agreement does not and shall not be construed to establish a partnership,
joint venture or other form of business association between Mettiki and Virginia
Power, and neither party shall have the authority to obligate the other without
the other’s prior written consent. Virginia Power shall not be considered an
employer, either individually or jointly with Mettiki, of any of Mettiki’s
personnel or the personnel of Mettiki’s contractors, subcontractors or
suppliers.

 

  e. Headings.

 

Article and paragraph headings contained herein are inserted for convenience and
shall have no effect on interpretation or construction of this Agreement.

 

  f. Publicity.

 

Subject to the provisions of subparagraph (h) above, no information relative to
this Agreement shall be released by Mettiki for publication, advertising or for
any other purpose without the prior written approval of Virginia Power.

 

  g. Successors and Assigns.

 

Section 12.3 of the Coal Supply Agreement is hereby incorporated into this
Agreement.

 

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  h. Confidentiality.

 

“Confidential Information” shall mean this Agreement or any part thereof and any
information obtained as a result of negotiation and performance of this
Agreement that either party identifies to the other as being confidential or
proprietary in nature. Virginia Power and Mettiki agree to refrain from
disclosing Confidential Information to any third party, except as may be
required by a court, government agency or proper discovery request. If either
party is so required to disclose Confidential Information, such party shall
promptly notify the other party in advance of disclosure and shall use its best
efforts to ensure that such disclosure is made on a confidential basis.

 

Notwithstanding the foregoing, state and federal regulatory agencies may require
either party to this Agreement to routinely report to such agencies certain
overall cost and physical property information related to this Agreement. A
party may make such report as required without notice to the other party and
without confidentiality restrictions, provided that such reporting does not
substantially disclose the terms of this Agreement or the substance of other
Confidential Information provided by the other party.

 

Nothing contained in subparagraph (g) above or this subparagraph (h) shall
prohibit Mettiki’s parent entity, Alliance Resource Partners, L.P., from making
any public disclosures regarding this Agreement and the transactions
contemplated hereby if such disclosure is required by applicable securities laws
or the rules of the Nasdaq National Market.

 

  i. Authority.

 

Each of the parties warrants and represents to the other that this Agreement and
the transactions contemplated hereby have been duly authorized by all required
corporate or limited liability company action, as the case may be.

 

  j. Severability.

 

Section 12.6 of the Coal Supply Agreement is hereby incorporated into this
Agreement.

 

18. Modification.

 

No amendment or modification of this Agreement shall be valid unless in writing
and executed by the duly authorized representatives of both parties.

 

19. Entirety.

 

This Agreement and the provisions of the Coal Supply Agreement that are
incorporated herein by reference embodies the entire agreement between the
parties with respect to the subject matter hereof and supersedes any prior or
contemporaneous agreement or understanding between the parties. The parties
shall not be bound by or be liable for any statement, representation, promise,
inducement or understanding of any kind or nature not set forth or provided for
herein. No prior course of dealing, usage of trade or course of performance
shall be used to supplement or explain any term, condition or instruction used
in this Agreement, nor be deemed to effect any amendment.

 

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20. Order of Precedence.

 

Notwithstanding any other term or provision of this Agreement, in the event of a
conflict between the terms and conditions of this Agreement, the Coal Supply
Agreement and the provisions of any Annex or Attachment to the Coal Supply
Agreement; the terms and conditions of the Coal Supply Agreement shall have
precedence over the conflicting provisions of the Annex or Attachment, and this
Agreement; and, the terms and conditions of the Annex or Attachment of the Coal
Supply Agreement shall have precedence over the conflicting provisions of this
Agreement. Except for the provisions of Section 5 of this Agreement, the parties
acknowledge and agree that, notwithstanding any other term or provision of this
Agreement, neither Virginia Power nor Mettiki will have any greater, reduced,
additional or changed obligation, liability or duty to the other than as
specified in the Coal Supply Agreement (including the Annexes and Attachments
thereto).

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, on the date and year
first above written.

 

VIRGINIA ELECTRIC AND POWER COMPANY By:  

/s/ C. Edward Roarty

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Name:   C. Edward Roarty Title:   Authorized Representative METTIKI COAL, LLC
By:  

/s/ George C. Tichnell

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Name:   George C. Tichnell Title:   Vice President Operations

 

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