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EXHIBIT 10.15
CONFIDENTIAL TREATMENT REQUESTED
INTERIM COAL SUPPLY AGREEMENT
THIS AGREEMENT is effective the 1st day of May, 2000, by and between
SEMINOLE ELECTRIC COOPERATIVE, INC., a Florida corporation ("Seminole"), and
ALLIANCE COAL, LLC, a Delaware limited liability company ("Alliance").
WITNESSETH:
WHEREAS, Seminole and Alliance are parties to a Restated and Amended
Coal Supply Agreement dated as of February 1, 1986 and most recently amended by
Amendment No. 1 as of May 10, 1996 ("Restated Agreement"), between Seminole and
Alliance's predecessor in interest, MAPCO Coal, Inc. as agent for Xxxxxxx County
Coal, LLC and White County Coal, LLC, as successors-in-interest to Xxxxxxx
County Coal Corporation and White County Coal Corporation, respectively; and
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****** denotes confidential information with respect to which a separate
confidential treatment request has been filed with the Securities and Exchange
Commission. Please note that pages 19-24 have been redacted pursuant to the
confidential treatment request.
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WHEREAS, the term of the Restated Agreement extends through ******; and
WHEREAS, the parties desire to enter into this Agreement to establish
terms and conditions to govern certain purchases and sales of coal pursuant to
the Restated Agreement during the term hereof;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and other good and valuable consideration, including but not
limited to the concurrent execution of those certain Arbitration Agreement and
Agreement regarding the Terms and Conditions of Arbitration between Seminole and
Mt. Xxxxxx Transfer Terminal, LLC, a wholly-owned subsidiary of Alliance and
successor-in-interest to Mt. Xxxxxx Coal Transfer Company, dated as of April 12,
2000, respectively, the parties hereto do hereby agree as follows:
ARTICLE I
TERM OF AGREEMENT
The term of this Agreement shall commence as of May 1, 2000 and shall
expire at midnight on ****** (the "Term"); PROVIDED, HOWEVER, that the
provisions of Article VII, ******, shall be effective as of ******.
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ARTICLE II
RELATIONSHIP TO RESTATED AGREEMENT
2.1 Unless otherwise defined in this Agreement, capitalized terms used
herein shall have the same meaning as in the Restated Agreement.
2.2 Except as modified by or otherwise specifically provided in this
Agreement, the Restated Agreement shall continue in full force and effect, and
shall continue to apply to and govern the supply of coal by Alliance to Seminole
during the Term hereof.
ARTICLE III
PRICE REVIEW
3.1 Seminole and Alliance agree that the coal price review and
adjustment pursuant to Sections 8.1 through 8.5 of the Restated Agreement which
is scheduled to be effective as of January 1, 2001 shall be implemented as
follows:
(a) The new Base Price for coal from the Pattiki Mine shall be
determined by ****** the Current Price for such coal as of October 1, 2000 by
****** percent (******%).
(b) The new Base Price for coal from the Dotiki Mine shall be
determined by ****** the Current Price for such coal as of October 1, 2000 by
****** percent (******%). An example of the application of this Section 3.1 is
set forth in Exhibit A to this Agreement.
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3.2 The New Base Cost Components for the new Base Prices established
pursuant to Section 3.1 hereof shall be determined in accordance with Section
8.6 of the Restated Agreement.
3.3 The new Base Prices established pursuant to Section 3.1 hereof
shall be subject to adjustment pursuant to Sections 7.1 through 7.3 of the
Restated Agreement commencing April 1, 2001 and shall be subject to adjustment
pursuant to Sections 7.4 through 7.9 (as applicable) commencing January 1, 2001.
ARTICLE IV
COAL SUBSTITUTION
4.1 Definitions. As used herein:
(a) "Dotiki Coal" shall mean coal supplied by Alliance from the
Dotiki Mine which complies with the quality requirements for Dotiki Coal as set
forth in Articles IX and X of the Restated Agreement.
(b) "Pattiki Coal" shall mean coal supplied by Alliance from the
Pattiki Mine which complies with the quality requirements for Pattiki Coal as
set forth in Articles IX and X of the Restated Agreement.
(c) "Dotiki Type Coal" shall mean coal supplied from any source
other than the Dotiki Mine and which shall
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comply, on an individual trainload basis, with the minimum quality
specifications for coal from the Dotiki Mine set forth in Section 10.2 of the
Restated Agreement, and on a monthly weighted average basis comply with the
following quality specifications:
Btu per pound ****** (minimum)
HGI Index ****** (minimum)
Ash content ****** (maximum)
Moisture content ****** (maximum)
Chlorine ****** (maximum)
Ash Fusion Temperature ****** (minimum)
(fluid reducing)
(d) "Pattiki Type Coal" shall mean coal supplied from any source
other than the Pattiki Mine and which shall comply, on an individual trainload
basis, with the minimum quality specifications for coal from the Pattiki Mine
set forth in Section 10.2 of the Restated Agreement, and on a monthly weighted
average basis comply with the following quality specifications:
Btu per pound ******(minimum)
HGI Index ******(minimum)
Ash content ******(maximum)
Moisture content ******(maximum)
Chlorine ******(maximum)
Ash Fusion Temperature ******(minimum)
(fluid reducing)
4.2 Coal Substitution. During the Term hereof, in fulfilling its
obligations under Articles II, III and IV of the Restated Agreement, Alliance
also shall comply with the following:
(a) Alliance shall deliver at least ****** tons
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of either Dotiki Coal, or Dotiki Type Coal from any source other than the Dotiki
Mine, in each Contract Year, such deliveries to be scheduled ratably throughout
the year.
(b) Alliance may deliver up to ****** tons of either Pattiki Coal,
or Pattiki Type Coal from any source other than the Pattiki Mine, in each
Contract Year, such deliveries to be scheduled ratably throughout the year;
PROVIDED, HOWEVER, that on an individual trainload basis, coal delivered
pursuant to this Section 4.2(b) shall comply with the minimum quality
specifications for coal from the Dotiki Mine set forth in Section 10.2 of the
Restated Agreement, and the quality specifications for chlorine and ash fusion
temperature set forth in Section 9.1 of the Restated Agreement.
(c) The remaining balance of Alliance's annual coal delivery
obligations under the Restated Agreement (up to a maximum of ****** tons per
Contract Year) may be satisfied by deliveries of Pattiki Coal and/or Pattiki
Type Coal from any source other than the Pattiki Mine, such deliveries to be
scheduled ratably throughout the year.
(d) Each trainload of Dotiki Type Coal shipped from a source other
than the Dotiki Mine shall meet a hardness specification of at least ****** HGI.
In the event that a trainload of Dotiki Type Coal shipped from a source other
than the Dotiki Mine does not meet a minimum hardness standard of
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****** HGI, in lieu of rejection of the trainload by Seminole, Alliance may
elect to redesignate the trainload as a shipment of either Pattiki Coal (if from
the Pattiki Mine) or Pattiki Type Coal (if not from the Pattiki Mine), provided
it otherwise meets the criteria of Section 4.1(d) hereof. Such shipment shall be
accounted for as so redesignated.
4.3 Source Schedules.
(a) Alliance shall provide Seminole with a schedule of coal
deliveries pursuant to Section 4.2 hereof for each Contract Year, by month and
by mine source, not later than October 30 of the prior Contract Year. For
purposes of the 2000 Contract Year, Alliance's schedule of coal deliveries and
mine sources pursuant to Section 4.2 shall be provided to Seminole not later
than five (5) business days subsequent to execution of this Agreement. In the
event that Alliance subsequently desires to alter the monthly delivery schedule
or a mine source under such schedule, it shall provide Seminole with sufficient
advance notice of the change so as to not adversely impact Seminole's coal
delivery and transportation schedules, or Seminole's coal stockpile management
plan for the coal sources in question.
(b) If, during the course of a Contract Year, Alliance proposes to
change a coal source from a source which is then currently supplying, or
scheduled to be the supply source under an agreement with a Seminole ******
customer, Seminole and
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Alliance shall consult with each other in good faith to develop a coal source
substitution plan which satisfies both Alliance's supply source preference and
Seminole's ****** arrangements. In the event that an agreement cannot be
reached, any coal source change by Alliance shall be limited to sources within
the same transportation or freight rate district as the ****** customer's
then-current source, or another transportation or freight rate district which
offers an equivalent or lower transportation cost to the ****** customer, such
that the ****** customer's coal transportation cost per MMBtu would not be
increased. The provisions of this Section 4.3(b) shall apply to a maximum of
****** tons of coal in any Contract Year.
(c) If Seminole determines that the number or variety of coal
sources proposed by Alliance pursuant to this Section 4.3 for a Contract Year,
or a subsequent change in the number or variety of coal sources proposed by
Alliance, cannot reasonably be accommodated through Seminole's reasonable
management of its coal storage area, Seminole shall so advise Alliance and
Alliance shall modify its proposed number or variety of coal sources in a manner
consistent with Seminole's coal storage area capabilities.
(d) If Alliance proposes to deliver coal under this Agreement from
a source from which coal previously has not been burned successfully in
Seminole's coal-fired generating
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plant, after reasonable determination, Seminole shall have the right
to conduct a test burn of up to ****** tons of coal, prior to the commencement
of regular deliveries from that source. If Seminole in its reasonable judgment
determines that the coal can be burned satisfactorily for the operation of the
plant, Seminole shall authorize Alliance to deliver additional coal from that
source, subject to the quality, coal storage area management, and scheduling
requirements of this Agreement.
(e) Upon Seminole providing prior notice to Alliance and Alliance
providing Seminole acknowledgment of receipt of such notice, Seminole shall have
the right to inspect any coal source proposed by Alliance prior to the
commencement of deliveries from that source, in order to ensure that such
source's coal sampling, testing, weighing and loading procedures conform to the
standards set forth in the Restated Agreement. Seminole shall have no obligation
hereunder to accept shipments of coal from a source which does not conform to
these standards.
(f) For all coal to be delivered from the Dotiki Mine, the Pattiki
Mine, or Alliance's Xxxxxxx County Mine, the testing laboratories utilized to
measure the hardness of the coal shall be instructed to utilize the ASTM
standard 409-71 (revised 1978).
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ARTICLE V
SUSPENSION OF SHIPMENTS
5.1 Any other provision of this Agreement notwithstanding, in the event
coal from a source other than the Dotiki Mine or the Pattiki Mine has
unforeseen, adverse effects on the operation of Seminole's coal-fired electric
generating plant, Seminole shall so notify Alliance and, at its option
exercisable at or subsequent to the time of notification, may direct Alliance to
suspend further shipments of coal from such source until Alliance can deliver
coal from such source (or other source(s)) which does not adversely affect the
operation of Seminole's plant. Upon notification by Seminole, Alliance
immediately shall take reasonable and economically prudent measures to correct
such conditions under its control so as to eliminate the cause of the adverse
effect. If shipments have been suspended at Seminole's direction and Alliance
believes it has corrected the condition, Alliance shall so notify Seminole and
the parties shall arrange for a test shipment. If the results of the test
shipment indicate that the coal can be burned satisfactorily, and that the
adverse operational effects have been eliminated, then shipments from the
subject source may be resumed by Alliance. If the test shows that the adverse
effects persist, Alliance will make no further shipments from the subject source
under this Agreement.
5.2 The provisions of Section 5.1 notwithstanding, in
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the event that the coal delivered by Alliance in any month from a particular
source fails to comply with the applicable quality specifications in Section 4.1
hereof on a monthly weighted average basis, Seminole shall so notify Alliance
and, at its option exercisable at or subsequent to the time of notification, may
direct Alliance to suspend further shipments of coal from such source until
Alliance provides reasonable assurances that future shipments will meet the
applicable coal quality specifications. Upon notification by Seminole, Alliance
immediately shall take reasonable and economically prudent measures under its
control to bring the coal into compliance with such specifications. If shipments
have been suspended at Seminole's direction and Alliance believes that the coal
will comply with the applicable quality specifications, Alliance shall so notify
Seminole and the parties shall arrange for a test shipment. If the results of
the test indicate that the coal complies with such quality specifications, then
shipments from the subject source may be resumed by Alliance. However, if, after
six (6) months from Seminole's initial notice, Alliance is unable to supply coal
which meets the applicable quality specifications in Section 4.1 of this
Agreement by economically prudent and reasonable measures, on a monthly weighted
average basis, then the Restated Agreement shall terminate and neither party
shall have any further rights or obligations thereunder
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other than with respect to performance required prior to such termination.
5.3 The provisions of this Article V notwithstanding, the quality
requirements and Seminole's rights concerning rejection, suspension and
cancellation related to shipments of coal from the Dotiki Mine or the Pattiki
Mine shall continue to be governed by applicable provisions of the Restated
Agreement.
ARTICLE VI
SUBSTITUTE COAL PRICING
6.1 Dotiki Mine Coal or Pattiki Mine Coal. The price paid by Seminole
for coal delivered under this Agreement by Alliance from the Dotiki Mine and/or
the Pattiki Mine (as applicable) shall be determined in accordance with
applicable terms of the Restated Agreement, subject to Article III and Section
6.3 of this Agreement.
6.2 Dotiki Type Coal or Pattiki Type Coal. The prices paid by Seminole
for Dotiki Type Coal and Pattiki Type Coal delivered under this Agreement by
Alliance from sources other than the Dotiki Mine or the Pattiki Mine shall be
determined as follows:
(a) A nominal FOB mine billing price shall be calculated quarterly
for each source of Dotiki Type Coal and for each source of Pattiki Type Coal
based upon the nominal heat
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content (in Btus per pound) for each source. Such prices shall be those which
yield an equivalent delivered cost per million Btus to coal as if delivered from
the Dotiki Mine and/or the Pattiki Mine, respectively, calculated using the same
procedures employed to determine delivered costs for purposes of establishing
the Pattiki Substitute Coal Price under the Restated Agreement, specifically
excluding any price ****** adjustment (initially established as $****** per
ton). Examples of the calculation of quarterly nominal FOB mine billing prices
for Dotiki Type Coal and for Pattiki Type Coal are set forth in Exhibit B to
this Agreement.
(b) The coal quality and weight of each trainload of coal shipped
as Dotiki Coal or Dotiki Type Coal, or Pattiki Coal or Pattiki Type Coal, shall
be determined in accordance with the provisions of the Restated Agreement
applicable to Dotiki Coal and Pattiki Coal, and shall be used to calculate
monthly weighted average quality statistics for sulfur, ash and moisture
(expressed as percentages) in accordance with the Restated Agreement. Monthly
premiums or penalties for ash and moisture content of all coal delivered by
Alliance shall be determined pursuant to the provisions of the Restated
Agreement applicable to Dotiki Coal and Pattiki Coal. Adjustments for sulfur
content shall be in accordance with Section 6.3 hereof.
(c) In addition to adjustments, premiums and
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penalties pursuant to Sections 6.2(b) and 6.3 hereof, an adjustment (calculated
separately for each coal source) shall be made to compensate for the variation
in heat content (i.e., Btus per pound) of coal delivered each month by Alliance,
based upon the weighted average heat content (i.e., Btus per pound) of coal
delivered from each source of Dotiki Type Coal and/or Pattiki Type Coal,
compared to the nominal heat content (i.e., Btus per pound) described in Section
6.2(a) of this Agreement. This adjustment procedure is illustrated in Exhibit B
to this Agreement.
(d) Prices for Dotiki Type Coal and Pattiki Type Coal as determined
pursuant to this Article VI shall be deemed inclusive of all taxes, fees or
other assessments in connection with the mining, preparation or sale of coal
hereunder (whether such tax, fee or assessment is levied upon Alliance or levied
upon Seminole solely due to Dotiki Type Coal and Pattiki Type Coal being
supplied from substitute sources other than the Dotiki Mine and/or the Pattiki
Mine), and shall constitute the entire consideration payable by Seminole for all
coal delivered under this Agreement.
6.3 Adjustments for Sulfur Content.
(a) During the Term of this Agreement, Seminole's right to suspend
coal shipments pursuant to the sulfur content provisions of Section 10.3(3) of
the Restated Agreement shall be
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limited to circumstances in which the sulfur content exceeds ******% for more
than ****** percent (******%) of the coal shipped by Alliance during a month.
This provision shall not affect Seminole's right to reject individual shipments
of coal pursuant to Section 10.2(3) of the Restated Agreement.
(b) Subject to Section 6.3(a), above, in any calendar month during
the Term of this Agreement in which the weighted average sulfur content of coal
delivered by Alliance exceeds ******%, the following provisions shall apply:
(i) If the weighted average sulfur content is greater than
******% but less than or equal to ******%, Alliance shall pay a penalty for each
ton of coal delivered during the month equal to $****** for each ****** percent
(******%), or pro-rata fraction thereof, by which the sulfur content exceeds
******%.
(ii) If the weighted average sulfur content is greater than
******%, Alliance shall pay a penalty for each ton of coal delivered during the
month equal to $****** for each ****** percent (******%), or pro-rata fraction
thereof, by which the sulfur content exceeds ******%, and an additional $******
for each ****** percent (******%), or pro-rata fraction thereof, by which the
sulfur content exceeds ******%. An example of the penalties described in this
Section 6.3(b) is set forth in Exhibit C hereto.
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(c) The provisions of Sections 6.3(a) and (b) notwithstanding,
should any regulatory authority having jurisdiction impose a rule or standard on
Seminole's operation of its coal-fired electric generating plant that has the
effect of prohibiting the use of coal having a sulfur content greater than
******%, or permitting such use only upon the adoption of procedures or
installation of equipment that imposes additional cost on Seminole's operations,
Seminole shall provide notice to Alliance as early as practicable but no later
than thirty (30) days prior to the effective date of the prohibition or other
regulation. Alliance may elect to compensate Seminole for the additional cost,
and shall make payment as and when the expense is actually incurred by Seminole,
attributable to such procedures or equipment necessary to enable Seminole to
continue to use coal provided by Alliance with a sulfur content greater than
******%. In the event that Alliance declines to provide such compensation, then
at Seminole's sole option the provisions of this Section 6.3 shall be void and
of no further effect, and the sulfur content of all coal supplied by Alliance
pursuant to this Agreement shall be subject to the provisions of Section 9.1
(for Dotiki Coal and Dotiki Type Coal), Section 9.2 (for Pattiki Coal and
Pattiki Type Coal), and Section 9.3, Section 10.2(3), Section 10.3(3) and
Article XIV of the Restated Agreement for all coal.
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ARTICLE VII
******
ARTICLE VIII
GENERAL
8.1 Construction. The validity, construction and performance of this
Agreement shall be determined in accordance with the laws of the State of
Florida.
8.2 Confidentiality. Except to the extent that disclosure is required
by law, court order or applicable regulatory requirements, the provisions of
this Agreement shall not be disclosed to or discussed with anyone other than the
parties hereto, their respective officers, employees, agents and attorneys.
Where disclosure hereof is required, the affected party shall give notice
thereof to the other as far in advance as practicable, and shall take such
reasonable actions as are available under applicable law to attempt to preserve
the confidentiality of the material disclosed.
8.3 Waiver. Unless otherwise provided herein, the failure of either
party on one or more occasions to insist upon strict performance of the
provisions of this Agreement or to avail itself of a right hereunder shall not
be construed as a waiver of any such provisions or right in the future, but the
same shall continue and remain in full force and effect for the duration of the
Term hereof.
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WHEREFORE, the parties by their undersigned, duly authorized
representatives, have executed this Agreement as of the 13th day of April, 2000.
SEMINOLE ELECTRIC COOPERATIVE, INC.
Attest:
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
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Its: Executive Vice President and
General Manager
ALLIANCE COAL, LLC
Attest:
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
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Its: Senior Vice President -
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Marketing
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