Exhibit 10.22
COAL SUPPLY AGREEMENT
THIS COAL SUPPLY AGREEMENT ("Agreement") is entered into effective the 1st
day of October, 2003 between Vectren Fuels, Inc., an Indiana corporation, whose
principal business address is 00 X. X. Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000
("Seller"), and Vectren Energy Delivery of Indiana, Inc. a/k/a Southern Indiana
Gas and Electric Company, an Indiana corporation, whose principal business
address is 00 X.X. Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("Buyer").
WITNESSETH, That:
WHEREAS, Buyer desires to secure to the extent of the quantities and for
the period hereinafter stated, a supply of bituminous coal or synfuel of the
quality hereinafter set forth, for use in Buyer's Xxxxxxx Plant Unit No. 4
("Plant");and
WHEREAS, Seller desires to sell coal or synfuel to Buyer and Buyer desires
to buy coal or synfuel from Seller, upon the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller agrees to sell and deliver coal or synfuel to Buyer and Buyer agrees to
purchase and accept delivery of coal or synfuel from Seller, pursuant to the
terms and conditions set forth as follows:
ARTICLE I
AGREEMENT OF SALE AND PURCHASE
1.1 Sale and Purchase; Source of Coal. Seller agrees to sell and Buyer
agrees to purchase, the quantity and quality of coal or synfuel (hereinafter
collectively referred to as "coal") specified herein, on the terms and subject
to the conditions hereinafter set forth. The source of coal to be supplied under
this Agreement shall be from the Xxxxxx County Mine located near Princeton, IN
("Mine"). Alternate Source Coal (as defined hereinafter) may be supplied by
Seller, subject to the provisions of Section 6.4 of this Agreement.
1.2 Title and Risk of Loss. The sale of coal under this Agreement shall
occur, and ownership and risk of loss shall pass from Seller to Buyer, upon
delivery of coal to the Plant.
ARTICLE II
TERM
2.1 Term. The term of this Agreement shall commence on October 1, 2003, and
shall continue until and including December 31, 2004 (the "Term"). No suspension
of an obligation under this Agreement by reason of Force Majeure shall extend
the Term of this Agreement, except upon mutual agreement of Seller and Buyer.
ARTICLE III
QUANTITY AND OPTION
3.1 Quantity. Seller shall sell and deliver, and Buyer shall purchase and
accept delivery of, coal at the Plant in the amount of 10,000 tons per month
during each month of the Term of this Agreement. Buyer may adjust the tonnage to
be delivered in any month to any amount within a range from 9,000 to 11,000 tons
per month with thirty ( 30) days' advance written notice to Seller.
3.2 Additional Quantity. Seller, in its sole discretion, may offer more
than 11,000 tons of coal per month that meets the quality specifications set
forth on Exhibit A. If additional coal is offered by Seller, Buyer shall have
the option to purchase all, or a portion of, such additional coal at the
pricing, terms and conditions set forth in this Agreement. Seller shall provide
reasonable prior written notice of any such additional coal that Seller may have
available for sale to Buyer. Within three (3) business days from Buyer's receipt
of Seller's notice offering additional coal, Buyer shall provide written notice
of its acceptance or rejection of any additional coal offered by Seller. Buyer's
failure to respond within three (3) business days from Buyer's receipt of
Seller's notice shall be deemed a rejection of any additional coal.
ARTICLE IV
PRICE AND ADJUSTMENT; INVOICING AND PAYMENT
4.1 Price. Effective October 1, 2003, the price of coal delivered to the
Plant shall be $1.1477 per million BTU's, plus $4.35 per ton for transportation
charges. The transportation charges specified herein shall be adjusted on a
monthly basis to adjust for fluctuations in the price of diesel fuel. The
adjustments made by Seller shall be identical to the adjustments made by
Seller's contract carrier under the contract carrier's Coal Hauling Contract
with Seller.
4.2 Invoicing. Seller shall invoice Buyer semi-monthly. Invoices, without
backup data, shall be telecopied to Buyer promptly after the last shipment of
the pertinent semi-monthly period and promptly thereafter the original invoice
shall be mailed along with appropriate backup data. As used herein,
"semi-monthly period" means the first fifteen (15) days of a calendar month or
the days remaining in a calendar month following the 15th day of the month.
4.3 Payment. Buyer shall mail payment within fifteen (15) days following
Buyer's receipt of Seller's semi-monthly invoices. In the event that Buyer does
not mail payment in accordance with the terms of this Agreement, then delinquent
payments shall bear interest at the prime rate of interest reported in the
"Money Rates" section of "The Wall Street Journal" (the "Prime Rate"), as of the
first day of any such delinquency.
4.4 Errors or Omissions. In the event that any Seller's invoice can be
demonstrated by Buyer to contain a material error or omission which unavoidably
delays Buyer's ability to process payment of such invoice in a timely manner,
Seller shall extend the payment due date for the portion of the invoiced amount
which is affected, by the same number of days (from the time Buyer first
notified Seller of the error or omission) as it takes Seller to provide the
corrected or additional data required by Buyer.
4.5 Disputed Amount. If Buyer disagrees with the amount of any invoice for
reasonable cause, Buyer shall promptly notify Seller by facsimile transmission,
followed promptly by written confirmation which shall set forth the basis for
such disagreement, so that the dispute may be resolved before the payment due
date. If any portion of an invoice is not reconciled prior to the payment due
date, the undisputed amount shall be paid when due and the disputed portion
shall be held in abeyance until the dispute is resolved. Buyer may, at its
option, pay the disputed portion of any invoice without thereby waiving its
right to contest such disputed portion of the invoice. Upon final resolution of
the dispute, any adjustment due either Buyer or Seller shall bear interest at
the Prime Rate in effect as of the date upon which Buyer notifies Seller of the
existence of a dispute.
ARTICLE V
QUALITY
5.1 Quality; Specifications. The coal supplied under this Agreement shall
meet the quality specifications set forth on Exhibit A on an "as received"
basis. If Moisture %, Ash% or SO2 lb/mmbtu monthly weighted averages specified
are not met for any reason, the Buyer shall impose penalties on the Seller as
outlined in Exhibit B. If the Seller is able to exceed these same monthly
averages specified, the Buyer shall pay a premium to the Seller as indicated in
Exhibit B. The term "as received" for purposes of this Agreement shall have that
meaning defined in specifications promulgated by the American Society for
Testing and Materials. The coal supplied under this Agreement shall be washed,
crushed to two (2) inch maximum top size, and shall be substantially free of
impurities, such as bone, slate, rock, wood, tramp metal, and mine debris. In
the event that the coal supplied hereunder fails to meet the quality
requirements specified herein , Seller shall indemnify, defend and hold harmless
Buyer from and against any and all claims, liabilities, damages, fines,
penalties, costs and expenses, including reasonable attorney fees, that Buyer
has incurred as a direct result of Seller's failure to deliver coal meeting the
quality specifications specified herein. Such indemnification shall include, but
shall not be limited to, any costs, fines and penalties associated with
environmental remediation incurred by Buyer. .
5.2 Weights. The weight of the coal delivered hereunder shall be determined
by Buyer on the basis of certified scales maintained at the Plant. Empty and
full truckload weights shall be ascertained for each truckload delivery of coal.
Buyer shall furnish to Seller the weight of each shipment of coal to be received
by Buyer within one (1) business day after delivery to the Plant.
5.3 Sampling and Analysis. Each daily shipment of coal shall be sampled for
the purpose of analysis prior to delivery to Buyer. Such analysis of the coal
shall be undertaken as a "quick analysis" by a mutually agreed to independent
laboratory. Seller shall furnish the results of such analysis to the Buyer , by
no later than three (3) business days after the day of delivery. Such analyses
shall govern for the purposes of determining compliance with the quality
specifications required under this Agreement, except as otherwise provided
herein below:
A. All sampling and analysis shall meet ASTM Standards, as they apply for
"quick analysis". All samples collected by Seller or its designated
representative shall be divided into four sample splits. One sample split shall
be sent to the initial mutually agreed to independent laboratory for initial
analysis and such analysis shall initially govern as to the quality of the coal
shipment as to which such sample pertains. The second sample split shall be
retained by Seller for its analysis. A third sample split shall be sent to Buyer
for Buyer's analysis. If either Buyer or Seller, based upon its analysis of its
sample split, disputes the initial analysis, they may request the fourth sample
split be sent for analysis to a second mutually agreeable independent laboratory
(the "Referee Lab"). If the results of the Referee Lab analysis are outside ASTM
reproducibility tolerance from the initial analysis, the Referee Lab analysis
shall be binding upon the parties. Notice of objection to analysis shall be
given within fifteen (15) days of receipt of the initial reported analysis.
Otherwise the initial reported analyses shall conclusively establish the
characteristics of the coal. All Referee Lab analytical charges associated with
a disputed analysis shall be paid by the party that requested such Referee Lab
analysis.
B. Sampling and analysis shall be performed on not greater than 750 ton
batches, unless otherwise mutually agreed.
C. Coal not complying with the quality specifications set forth herein will
not be accepted by Buyer unless authorized prior to delivery. At the option of
the Buyer, acceptance of non-conforming coal may be conditioned upon reductions
in price, which shall be agreed upon in writing prior to delivery of any such
non-conforming coal.
5.4 Limitation of Seller's Warranties. Seller agrees to fully meet the
quality specifications required herein for all coal provided pursuant to this
Agreement. Provided that Seller strictly complies with the quality
specifications required herein, then Buyer agrees that Seller makes no other
warranty, express or implied, including, but not limited to, warranties of
merchantability or of fitness for a particular purpose.
5.5 Buyer's Extraordinary Termination Rights. If Buyer is suffering
substantial damages at its Plant from (a) unit derating; (b) increased forced
outage rates; or (c) other abnormal operating conditions, solely due to
characteristics of the coal supplied by Seller, although the coal supplied by
Seller hereunder may be meeting the quality specifications set forth in Exhibit
A, Buyer shall notify Seller of the nature of the operating problem, and the
specific coal characteristic(s) that is (are) causing such problem. Buyer and
Seller shall promptly undertake good faith efforts to determine if there are
practical methods to eliminate or substantially mitigate any such problem and,
with mutual agreement by Buyer and Seller, shall take appropriate corrective
action. If, after a period of three (3) months from the date Buyer notifies
Seller of a problem with burning the coal of the quality being supplied, the
parties have not reached agreement and executed a document defining a mutually
acceptable way to eliminate or mitigate such problem, which agreement and
execution shall not be unreasonably withheld, Buyer shall have the option of
terminating this Agreement by giving written notice to Seller, with such
termination to be effective two (2) months after the giving of such notice.
ARTICLE VI
DELIVERY
6.1 Deliveries. Coal conforming to Buyer's specifications shall be supplied
to Buyer at the Plant. Delivery will normally be between the hours of 7:30 A.M.
and 6:00 P.M., Monday thru Friday, except during periods when the Plant is
closed due to scheduled vacations, holidays, or periods of Force Majeure, unless
special restricted or extended hours are mutually agreeable to Buyer and Seller.
The monthly quantity of coal, as established pursuant to the provisions of
Article III, shall be delivered under a mutually agreed to schedule in
substantially equal daily quantities. All Buyer's Trucks will be scheduled by
Buyer and coordinated with Seller for the shipment of coal in accordance with
this Agreement. Buyer shall obtain all applicable tariffs or transportation
contracts for the truck movement of coal hereunder. Seller agrees to provide
reasonable assistance as requested by Buyer.
6.2 Rejection. Buyer shall have the right to reject coal which does not
conform to the specifications set forth in Exhibit A, on a per shipment basis. A
"shipment" is the quantity of coal delivered to Buyer on a given day, upon which
ASTM sampling and analysis have been performed. A shipment shall not exceed 750
tons, unless Buyer shall agree to the delivery of quantities in excess thereof.
Any shipments rejected by Buyer shall be returned to Seller, at Seller's
expense, and shall be credited against Buyer's purchase requirements hereunder.
6.3 Redirection of Deliveries. Buyer shall have the right to redirect
the delivery of coal purchased under this Agreement to any destination other
than the Plant, so long as Buyer agrees to reimburse Seller for any additional
transportation or handling costs incurred by Seller to effectuate such
redirected deliveries.
6.4 Alternate Supply Source. The source of coal subject to this Agreement
shall be from the Mine. Seller, with Buyer's prior written approval , may
deliver to Buyer coal conforming to the specifications set forth in Exhibit A,
from an alternate source ("Alternate Source Coal"). Buyer shall retain the right
to revoke such approval at Buyer's discretion upon providing Seller with seven
(7) days' prior written notification.
ARTICLE VII
7.1 Reserved.
ARTICLE VIII
FORCE MAJEURE
8.1. Definition. The term "Force Majeure", as used herein, shall mean any
causes beyond the control of the party affected thereby which arise through no
fault, error or omission of the party asserting Force Majeure; and to the extent
covered by this definition, include, but are not limited to, acts of God; acts
of the public enemy; insurrections; riots; strikes; labor disputes; fires;
explosions; floods; roof falls, roof and floor intrusions, geologic pressure
which traps equipment, underground flooding, aquifers, build up of methane gas
or any other mining conditions which cause unusual or material dangers or unsafe
working conditions at the Mine; breakdown of or damage to plants, equipment, or
facilities ; accidents of navigation; interruptions to transportation;
embargoes; orders or acts of military or civil authority (executive, judicial,
or legislative), including, but not limited to, any regulation, direction,
order, or request (whether valid or invalid) made by any governmental authority
or person acting therefor, which is complied with in good faith; or other such
causes of a similar or dissimilar nature which wholly or partly prevent the
delivering, and/or loading of the coal by Seller, or the receiving, transporting
and/or delivering of the coal by the carrier of the coal, or the accepting,
utilizing and/or unloading of the coal by Buyer.
8.2 Excuse of Performance. If, because of Force Majeure, either party
hereto is reasonably prevented from performing its obligations under this
Agreement, or Seller is reasonably prevented form transporting coal to be
supplied under this Agreement and if such party promptly gives to the other
party notice of the Force Majeure, the obligations of the party giving such
notice shall be excused as of the commencement of the Force Majeure event to the
extent affected by the Force Majeure and its continuance, provided the effect of
such Force Majeure is eliminated insofar as possible with all reasonable
dispatch. Any deficiencies in deliveries of coal hereunder, which are excused by
Force Majeure, shall not be made up except by mutual written consent of the
parties. Nothing herein shall be construed as requiring either party, to settle
any labor dispute or as requiring Buyer, to treat or alter the characteristics
of the coal or blend the coal with any other fuel including other coal, or to
change Seller's then existing arrangements for transportation. A reduction in
electrical demand or a reduction in coal supply demand or a change in market
conditions shall not constitute a basis for claiming force majeure by either
party.
8.3 Notice. Notice of a Force Majeure event must be confirmed in writing
within fifteen (15) days of the commencement of the Force Majeure event, and
shall specify the nature of the event and include a good-faith estimate of the
period of time for which, and the degree to which, performance will be affected.
During the estimated period of time, the other party may make other arrangements
to sell or purchase the estimated quantity of coal so affected for the estimated
time period.
ARTICLE IX
RIGHT TO TERMINATE AGREEMENT
9.1 Non-Exclusive Remedy. The rights of one party or the other, or of both,
to terminate this Agreement without liability, which are specifically stated in
this Article and other parts of this Agreement, are not exclusive, but are in
addition to any other rights recognized at law or in equity which may accrue to
one party or the other by reason of circumstances and conditions not dealt with
in these specific provisions.
9.2 Force Majeure. If a Force Majeure event prevents the delivery or
purchase of more than fifty percent (50%) of the minimum tons of coal to be
supplied or received during a continuous three (3) month period or longer, then
the party not suffering the Force Majeure, may, on ninety (90) days written
notice terminate this Agreement; provided, that if the event of Force Majeure on
which the right of termination was based is eliminated prior to the effective
date of termination, the termination right is voided.
9.3 Reserved.
9.4 Default. Subject to the provisions of Article XX, in the event of the
failure of either party to comply with any material obligation of this
Agreement, either party shall have the right to terminate this Agreement at any
time by giving to the other thirty (30) days' notice in writing of its intention
to so terminate, specifying in reasonable detail the nature of the default. At
the expiration of said thirty (30) days, unless the party in default shall have
cured such default, the party not in default shall have the right at its
election to terminate this Agreement forthwith. Such right to terminate shall be
in addition to any other remedies at law or equity that the non-defaulting party
may have against the defaulting party.
ARTICLE X
INDEMNIFICATION
10.1 Scope. The Seller agrees to indemnify, defend and hold harmless the
Buyer, its affiliates, and their agents and employees from any claims, demands,
loss, cost, damages, expense or liability of any kind or nature, including
attorneys' fees, resulting from the negligence or willful misconduct of Seller
during the performance of this Agreement.
10.2 Effect of Release. If the Seller obtains a release from any person for
damages resulting from the performance of this Agreement, it shall not affect
the Buyer's rights nor the Seller's obligations herein.
10.3 Notice. The Seller agrees to immediately notify the Buyer in the event
any accident, injury, or damage occurs during the course of performance of this
Agreement, or in the event that anyone makes any claim for damages alleged to
have resulted from the performance or nonperformance of this Agreement, or from
the negligence of the Seller, its agents, or employees.
ARTICLE XI
11.1 Reserved
ARTICLE XII
NOTICES
12.1 Notices. Any official notice, request for approval or other document
required to be given under this Agreement shall be in writing, unless otherwise
provided herein, and shall be deemed to have been sufficiently given (i) on the
date of delivery in person or transmitted by facsimile or other electronic
media, (ii) one business day after delivery to an established mail service for
overnight delivery, or (iii) two (2) business days after dispatch in the United
States mail, postage prepaid, for mailing by , certified mail , return receipt
requested, and addressed as follows:
If the notice is to Buyer:
Xxx Xxxxxx
Vice President, Energy Generation
Vectren Energy Delivery of Indiana, Inc.
00 X.X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
With a copy to:
Xxxxxx X. Xxxxxxxxx
Executive Vice President, General Counsel and Secretary
Vectren Corporation
00 X.X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
If the notice is to Seller:
Xxxxx Xxxx, President
Vectren Fuels, Inc.
00 X. X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
ARTICLE XIII
GOVERNING LAW
13.1 Governing Law. This Agreement and any questions concerning its
validity, construction or performance shall be governed by the laws of the State
of Indiana without reference to any choice of law provisions.
ARTICLE XIV
RELATIONSHIP OF THE PARTIES
14.1 Relationship. The Seller, and any person or entity performing on its
behalf, shall not be an employee of the Buyer, but shall operate as and have the
status solely as that of a vendor. The Buyer shall not be required to withhold
or pay FICA tax, unemployment, workers' compensation, or other insurance or tax
on behalf of the Seller, its agents or employees. The Seller shall not at any
time hold itself out as an employee or agent of the Buyer. This Agreement does
not create, nor shall it be deemed to create, as between Seller and Buyer, or
any affiliate of either party, any relationship other than that of vendor and
purchaser.
The Buyer, and any person or entity performing on its behalf, shall not be
an employee of the Seller, but shall operate as and have the status solely as
that of a purchaser. The Seller shall not be required to withhold or pay FICA
tax, unemployment, workers' compensation, or other insurance or tax on behalf of
the Buyer, its agents or employees. The Buyer shall not at any time hold itself
out as an employee or agent of the Seller. This Agreement does not create, nor
shall it be deemed to create, as between Seller and Buyer, or any affiliate of
either party, any relationship other than that of vendor and purchaser.
ARTICLE XV
ASSIGNMENT
15.1 Assignment. Either party may assign this Agreement and its rights
hereunder to its parent company, or any affiliate or subsidiary of its parent
company or of itself, and only to such a party, without the consent of the other
party. Otherwise, this Agreement may not be assigned wholly or in party by
either party without the written consent of the other party, which consent shall
not be unreasonably withheld. No assignment shall release the assignor from its
financial responsibility hereunder, unless expressly agreed to in writing by the
other party. Subject to the foregoing limitations, all of the provisions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their successors, and assigns. Nothing stated herein shall be construed to limit
Buyer's unilateral right to resell, transfer, pledge or assign the delivery
right to any coal delivered under this Agreement after Buyer takes title
thereto.
ARTICLE XVI
INSPECTION RIGHTS
16.1 Inspection. Each party and its duly authorized representatives shall
have the right during regular business hours to make reasonable inspections of
the other party's records pertaining to this Agreement, which shall include
records pertaining to the quantity and quality of the coal supplied hereunder,
along with shipping records relating to said coal. The party requesting an audit
and/or inspection shall provide the other party with reasonable notice before
exercising any of the foregoing audit and/or inspection rights. Notwithstanding
the forgoing provisions of this Section 16.1, neither party shall have the right
to review the operating costs and/or profits of the other party, unless there is
a claim made by one party to the other party on such basis.
ARTICLE XVII
COMPLETE AGREEMENT AND CONFIDENTIALITY
17.1 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto, and no alteration or modification thereof shall be binding
unless in writing and signed by Buyer and Seller. The titles of the Articles and
Sections in this Agreement have been inserted as a matter of convenience for
reference only and shall not control or affect the meaning or construction of
the terms and provisions thereof.
17.2 Confidentiality. Buyer and Seller agree to use reasonable efforts to
maintain this Agreement (including attachments) as confidential and not to
disclose, without the consent of the other party, the terms of this Agreement to
any third parties (other than affiliates , consultants, legal counsel, and
accountants retained by a party) except in response to or to avoid the issuance
of legal process; provided that the parties may, without the consent of the
other party, disclose this Agreement, with the request that it be treated as
confidential, in connection with securing or maintaining any permits or license,
in connection with any financing of securities, complying with reporting or
filing requirements with any local, state, or federal agencies, or responding to
any inquiries or requests by any state, local, or federal agencies.
ARTICLE XVIII
HEADINGS
18.1 Headings. The headings of the Articles and Sections of this Agreement
are included only as reference and shall not limit or alter the meaning or any
of the terms and conditions of this Agreement.
ARTICLE XIX
SEVERABILITY
19.1 Severability. The provisions of this Agreement are severable, and the
invalidity or unenforceability of any one or more provision shall not affect or
limit the validity of the remaining provisions. Should any particular provision
be held to be unreasonable or unenforceable for any reason, then such provision
shall be given effect and enforced to whatever extent would be reasonable and
enforceable under the applicable law.
ARTICLE XX
DISPUTE RESOLUTION
20.1 Moratorium on Actions. Except as otherwise specifically provided in or
permitted by this Agreement, all disputes, differences of opinion, or
controversies arising in connection with this Agreement shall be resolved first,
by the use in good faith for a period of ten (10) days, of mutual best efforts
to arrive at an agreeable resolution
IN WITNESS WHEREOF, Sellerand Buyer have caused this Agreement to be signed
in their respective corporate names by their respective proper corporate
officers.
Vectren Fuels, Inc.
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Xxxxx X. Xxxx
Its: President
-----------------------------------------
(Printed Name and Title)
VECTREN ENERGY DELIVERY OF INDIANA, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
Its: Vice President, Power Supply for SIGECO
-----------------------------------------
(Printed Name and Title)
EXHIBIT A
COAL QUALITY SPECIFICATIONS
The following coal quality specifications ("Specifications") must be met with
respect to each shipment of coal prepared for daily shipment during the Term of
this Agreement. All of the following specifications are on an "as received"
basis.
Monthly Shipment
Weighted Rejection
COAL CHARACTERISTICS Specifications Average Limits
---------------------------------------------- --------------------- ----------------------------- -------------------------
Calorific value, as received Min. 10750 BTU/lb 11,000 BTU/lb <10,750 BTU/lb
% Moisture, as received Max. 16.0% 15.0% > 16.0%
% Ash, as received Max. 11% 10.0% > 11.0%
SO2 (lb/mmBTU) Max. 3.0 lb 1.60 lb SO2/mmbtu >3.0 lb SO2/mmbtu
SO2/mmbtu
Ash Fusion, softening, H=W red Min. 2100 deg, F 2,350 < 2100 deg, F
Xxxxxxxxx Grindability Index Min. 45 50 < 45
Slagging Index Max. 2.0 .20 > 2.0
Nominal Size Max. 2" x 0" 11/2" x 0" > 2" x 0"
Percent passing 1/4 inch screen Max. 60% 60% > 60%
Mineral Analysis of Ash: Max. 25% 10% > 25%
Ferric Oxide, Fe203
Coal Seam: Springfield #5
County coal mined in: Xxxxxx
The above coal quality specifications must be met with respect to each shipment
of coal prepared for daily shipment against this Agreement. Such daily shipment
shall not exceed 750 tons, unless otherwise mutually agreed to by the parties.
EXHIBIT B
Penalties:
------------------------------------- ----------------------------------- -----------------------------------
Penalty per Unit for Exceedance
Monthly Weighted Average Unit of Exceedance or any portion thereof (Penalty
per MMBTU)
------------------------------------- ----------------------------------- -----------------------------------
Moisture % 1% $.01
Ash % 1% $.01
SO2 lb/MMBTU .1 lb $.01
Premiums:
Penalty per Unit for
Monthly Weighted Average Unit of Overachievance Overachievance or any portion
thereof (Premium per MMBTU)
------------------------------------- ----------------------------------- -----------------------------------
Moisture % 1% $.01
Ash % 1% $.01
SO2 lb/MMBTU .1 lb $.01
EXAMPLE OF HOW PENALTIES WILL BE CALCULATED
1 - Moisture 2 - Ash 3 - SO2
----------------------- --------------------- -------------------- --------------------- --------------------
Hypothetical Monthly
Weighted Average A 15.4% 10.2% 1.8#
Monthly Weighted
Average per Exhibit A B 15.0% 10.0% 1.6#
Exceedance A - B .4% .2% .2#
# of Exceedance Units
or Portion Thereof C .4 .2 2
Penalty Per
Exceedance Units D .01 .01 .01
Penalty Per XXXXX
X x X .000 .000 .00
Xxxxxxx on 3,000
tons (assumes 11,000 $264.00 $132.00 $1,320.00
BTUs per lb)
EXAMPLE OF HOW PREMIUMS WILL BE CALCULATED
1 - Moisture 2 - Ash 3 - SO2
----------------------- --------------------- -------------------- --------------------- --------------------
Hypothetical Monthly
Weighted Average A 14.6% 9.8% 1.4#
Monthly Weighted
Average per Exhibit A B 15.0% 10.0% 1.6#
Overachievance B - A .4% .2% .2#
# of Overachievance
Units or Portion C .4 .2 2
Thereof
Premium Per
Overachievance Units D .01 .01 .01
Premium Per MMBTU
C x D .004 .002 .02
Premium on 3,000 tons
(assumes 11,000 BTUs $264.00 $132.00 $1,320.00
per lb)
