EXHIBIT 10.9.1
[*] Indicates that the confidential portion has been omitted from this
filed exhibit and filed separately with the Securities and Exchange
Commission
AMENDMENT ONE TO UNDERGROUND COAL SALES AGREEMENT
This AMENDMENT ONE TO UNDERGROUND COAL SALES AGREEMENT ("Amendment
One"), by and between SAN XXXX COAL COMPANY, a Delaware corporation (referred to
herein as "SJCC") and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico
corporation, and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation
(collectively referred to herein as the "Utilities") (with SJCC and Utilities
herein sometimes collectively referred to as "Parties"), effective as of
December 15, 2003, amends that certain Underground Coal Sales Agreement dated
August 31, 2001 (the "UGCSA") between SJCC and the Utilities.
RECITALS
A. AU Mines, Inc. ("AU") has withdrawn as a partner of Cimarron Coal
Company ("Cimarron") in exchange for an undivided 31% interest in the assets of
Cimarron, and Cimarron has been reorganized into a partnership in which AU has
no further interest.
B. SJCC has agreed to enter into with Cimarron the Installment Sale
Agreement and Release, pursuant to which SJCC will purchase all of the remaining
rights and interest of Cimarron in the La Plata leases and the La Plata mine
created or reserved under the Cimarron Assignment Agreement dated October 30,
1979, originally between Cimarron and Western Coal Company and assigned to SJCC,
as amended and modified over time by various agreements.
C. SJCC has agreed to enter into the AU Letter Agreement dated as of
December 15, 2003 with AU amending the Cimarron Assignment Agreement dated
October 30, 1979, as amended and modified.
NOW THEREFORE, in consideration of the terms, covenants and agreements
contained in this Amendment One and for other good and valuable consideration,
the Utilities jointly and severally agree with SJCC as follows:
AGREEMENT
1. The UGCSA is amended by deleting the text of Section 1.2 in its
entirety and replacing it with "[intentionally omitted]". The remaining sections
following 1.2 shall not be renumbered.
2. The UGCSA is amended by adding the following definitions to Section
1.15:
SS) "Cimarron Coal Assignment" defined in Section 2.1.E.
TT) "Installment Sale Agreement" defined in Section 2.1.E
UU) "Utility Payment Stream" defined in Section 8.5.C.
3. The UGCSA is amended by adding a new Section 2.1.E as follows:
E) To perform all of the obligations contained in (i) the
Cimarron Coal Assignment dated October 30, 1979, originally
between Cimarron Coal Company and Western Coal Company and
assigned to SJCC, as amended and modified, including but not
limited to the letter amendment dated as of December 15, 2003
between AU Mines, Inc. and SJCC ("Cimarron Coal Assignment")
and (ii) the Installment Sale Agreement and Release between
Cimarron Coal Company and SJCC, dated as of December 15, 2003
("Installment Sale Agreement").
4. The UGCSA is amended by adding after the title line of Section 8.5,
"Other Costs", the new line:
Other Costs shall be the following:
5. The UGCSA is amended by replacing the existing text of Section 8.5.C
in its entirety with the following:
C) Payment of the Utility Payment Stream
For purposes of this Section 8.5.C, the following definitions
apply:
"Y1" is the final Implicit Price Deflator Index of the Gross
Domestic Product ("IPD-GDP") (defined below) for the fourth
quarter of 2002, presently equal to 111.25
"Y2" is the final IPD-GDP for the fourth quarter of 1979,
presently equal to 53.90.
"Xl" is the most recently published quarterly IPD-GDP as of
the Calculation Date. The Calculation Date is the 5th day of
the month following the month for which each Utility Payment
Stream payment is being made (e.g., February 5 for the January
payment).
The factors X1/Y1 and X1/Y2 as applied below in this Section
8.5.C are utilized to recognize the effects of inflation and
deflation on certain relevant base amounts.
The IPD-GDP as utilized in this Section 8.5.C refers to the
Implicit Price Deflator of the Gross Domestic Product Index
("Index") published quarterly by the Bureau of Economic
Analysis of the U.S. Department of Commerce ("BEA").
Calculations for this Section 8.5.C shall be made based upon
the most recent Index published on the BEA website (if the BEA
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website no longer publishes the Index, then the Index as most
recently published in the Survey of Current Business shall be
utilized), at the applicable Calculation Date. Presently,
information concerning the Index is disseminated by the BEA by
means of the Survey of Current Business, (a magazine published
monthly by the U.S. Department of Commerce, Economic and
Statistics Administration, Bureau of Economic Analysis, and
printed by the Government Printing Office) in a Selected NIPA
Table designated as "Quantity and Price Indexes for Gross
Domestic Product" and, also, via BEA's website on the
Internet, as line 4 of Table 7.1 at:
xxx.xxx.xxx.xxx/xxx/xx/xxxxxxx/XxxxxxXxxxx.xxx?XxxxxxxxxX#X0.
At present, the Index is calculated and based on the reference year of
1996 = 100. The Selected NIPA Tables are presented through quarterly
estimates, updated monthly; the Parties agree that any update to the
Index after the Calculation Date, caused by BEA adjusting its
estimates, shall not result in a recalculation of the amount of a
Utility Payment Stream payment.
If, in the future, the BEA should change the reference year utilized to
calculate the IPD-GDP then: Y1 shall be the IPD-GDP shown for the
fourth quarter of 2002; and Y2 shall be the JPD-GDP shown for the
fourth quarter of 1979, in conversion tables prepared by the BEA in
respect to the new reference year and Xl for each succeeding Utility
Payment Stream payment becoming due after the date of the change of
reference years shall be determined by reference to the most recently
published IPD-GDP, as of the Calculation Date, based on the new
reference year.
If the IPD-GDP should cease to be published by the BEA but another
comparable index is published by another governmental agency then such
index shall be utilized in the same manner as provided in this Section
8.5.C in order to establish the amounts of the Utility Payment Stream
becoming due for required future Utility Payment Stream payments. If no
such index is published by governmental agencies, then such other index
which may be available shall be utilized in a manner which will fairly
and reasonably reflect the effects of inflation or deflation on the
dollar amounts of the Utility Payment Stream payments.
The Utilities shall pay to SJCC the Utility Payment Stream calculated
in two parts as follows ("Utility Payment Stream"):
1) i) [*] ("Initial Payment") paid on January 22,
2004 to the account described in Section 8.7.C; and
ii) one hundred sixty nine (169) monthly payments
("Payment(s)") each in the amount calculated in this
Section 8.5.C(l) below, with the first Payment for
the month of December 2003 due on January 22, 2004,
and the final Payment for the month of December 2017
due on January 22, 2018. The terms Initial Payment
and Payment(s) as defined in this Section 8.5.C(1)
apply only in this Section 8.5.C(1).
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The amount of each Payment shall be calculated
utilizing [*] as the base amount to be subject to
inflation and deflation adjustment and calculated
mathematically by the following formula applied
separately for each Payment:
[*] x (X1/Y1) = amount of Payment
Utilities shall make the Payments specified in this
Section 8.5.C(1) to an SJCC bank account designated
as [*] (or such other account as either of the
Parties may designate upon 30 days written notice to
the other party) and due on the 22nd of the month
following the month for which the Payment is being
made. Payments due on a Saturday will be payable on
the previous Friday. Payments due on a Sunday will be
payable on the following Monday. Payments due on a
bank holiday will be payable on the next bank
workday.
2) i) [*] ("Initial Payment") paid on January 22,
2004 to the account described in Section 8.7.C; and
ii) one hundred sixty nine (169) monthly payments
("Payment(s)") each in the amount calculated in this
Section 8.5.C(2) below, with the first Payment for
the month of December 2003 due on January 22, 2004,
and the final Payment for the month of December 2017
due on January 22, 2018. The terms Initial Payment
and Payment(s) as defined in this Section 8.5.C(2)
apply only in this Section 8.5.C(2). The amount of
each Payment shall be calculated by adding certain
payment amounts as follows:
Tier 1 shall be calculated utilizing [*] as the base
amount to be subject to inflation and deflation
adjustment and calculated mathematically by the
following formula applied separately for each
Payment:
[*] x (X1/Y2) = Tier 1 payment
If the LPM Annual Production (the total tons mined
and delivered to the Utilities in a calendar year
from the La Plata Mine) is zero, no payments are due
for Tier 2 and Tier 3. Only if the LPM Annual
Production exceeds [*] tons in any year after 2003,
payments from at least Tier 2, and possibly Tier 3,
shall he added to the December Tier 1 payment, as
described below. Tier 2 and Tier 3 payments are only
calculated and applied to the December payment of
each year and shall be calculated utilizing [*] as
the base amount to be subject to inflation and
deflation adjustment.
Tier 2 only applies when LPM Annual Production
exceeds [*] tons in any year after 2003. If LPM
Annual Production exceeds [*] tons, the Tier 2
payment amount calculation is initiated by
multiplying [*] by the lesser of: i) the LPM Annual
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Production minus [*] tons or ii) [*] tons, and then
multiplying the product by [*], multiplied further by
X1/Y2. This product multiplied by [*] is the Tier 2
payment amount, and it shall be added to the Tier 1
payment amount for December each year that Tier 2
applies.
Tier 3 only applies when LPM Annual Production
exceeds [*] tons in any year after 2003. If LPM
Annual Production exceeds [*] tons, the Tier 3
payment amount calculation is initiated by
multiplying [*] by: (the LPM Annual Production minus
[*] tons), and then multiplying the product by [*],
multiplied further by XI/Y2. This product multiplied
by [*] is the Tier 3 payment amount, and it shall be
added to the sum of the Tier 1 and Tier 2 payment
amounts for December each year that Tier 3 applies.
Utilities shall make the Payments specified in this
Section 8.5.C(2) to the SJCC bank account designated
as [*] (or such other account as either of the
Parties may designate upon 30 days written notice to
the other party) and due on the 22nd of the month
following the month for which the Payment is being
made. Payments due on a Saturday will be payable on
the previous Friday. Payments due on a Sunday will be
payable on the following Monday. Payments due on a
bank holiday will be payable on the next bank
workday.
By the tenth (10th) day of each month, SJCC shall provide to
the Utilities a detailed calculation of the Utility Payment
Stream due for the previous month. In the event of a dispute
between the Parties or with a third party over calculation of
payments set out in Section 8.5.C(1) or Section 8.5.C(2), the
Utilities shall submit their written position statement
regarding the disputed calculation to SJCC. A determination of
the same issue in a dispute resolution process involving a
third party, in which the Utilities' position statement is
presented in good faith by SJCC, shall be binding upon SJCC
and the Utilities for purposes of this Agreement.
6. The UGCSA is amended by adding the following new Section
8.5.F:
F) Dispute Costs
In addition to the Utility Payment Stream set forth in
Sections 8.5.C(l) and 8.5.C(2) above, the Utilities shall pay
to SJCC legal fees and costs arising from disputes, if any,
under the Cimarron Coal Assignment and/or the Installment Sale
Agreement.
7. Section 6.1 of the UGCSA is amended by adding the following
paragraph at the end of the current Section 6.1:
"SJCC shall not mine and sell coal to any third party from the
coal leases described in the Cimarron Coal Assignment."
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8. Section 8.1 of the UGCSA is amended by replacing, in the first
paragraph, the term "reimburse" with the phrase "reimburse or pay, as
applicable,".
9. The UGCSA is amended by deleting the text of Section
8.7.A(2).iii in its entirety and replacing it with "[intentionally
omitted]". The remaining sections following Section 8.7.A(2).iii shall
not be renumbered.
10. The UGCSA is amended by replacing the existing text of Section
8.7.A(2).v in its entirety with the following: Other Miscellaneous
Costs
11. The UGCSA is amended by adding the following new Section
8.7.A(2).vi:
vi. Dispute Costs
12. Section 8.7.C of the UGCSA is amended by replacing the
existing text in its entirety with the following:
Invoices submitted by SJCC in accordance with Section 8.7
"Invoicing and Settlement" and any supplemental or true-up
invoices shall be due and payable by Utilities on the
twenty-second (22nd) day of the month succeeding the month for
which such invoice is submitted, or on the twelfth (12th) day
after receipt of the invoice by Utilities, whichever date is
later; provided, however, that payment of the Utility Payment
Stream by the Utilities is due the twenty-second (22nd) day of
the month, regardless of whether, or when, a detailed
calculation thereof as specified in Section 8.5.C is received
by the Utilities. Payment pursuant to this Agreement, except
for payments under Sections 8.5.C.(1) (ii) and 8.5.C.(2)(ii),
shall be made to SJCC by electronic funds transfer to such
bank accounts as SJCC may from time to time designate.
13. The UGCSA is amended by deleting the text of Section
12.5.D.(1) in its entirety and replacing it with "[intentionally
omitted]". The remaining sections following Section 12.5.D.(1) shall
not be renumbered.
14. The UGCSA is amended by replacing Section 14.10.A in its
entirety with the following:
A) This Agreement may not be assigned or subcontracted by SJCC
without the consent of Utilities, except that no consent shall
be required in event of an assignment of amounts receivable
hereunder to a bank or lending institution, or a collateral
assignment for purposes of securing indebtedness, or a
transfer under or pursuant to a mortgage, deed of trust or
indenture (including, without limitation, a transfer by
foreclosure or a sale under the power of sale contained in any
such mortgage, deed of trust or indenture), or a transfer to a
successor in interest, by merger, consolidation, sale and
transfer, or otherwise, acquiring all or substantially all of
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the assets and business of SJCC, and except for transfer to a
subsidiary as herein below provided; provided, however, that
any assignee, successor in interest or transferee hereunder
shall first guarantee performance of this Agreement in a
manner satisfactory to Utilities. Notwithstanding anything to
the contrary contained in this Agreement, a collateral
assignment of the Utility Payment Stream (including, without
limitation, a transfer by foreclosure or a sale under a power
of sale contained in any such collateral assignment) shall not
require the assignee or transferee to guarantee performance of
this Agreement, and any claims or rights of setoff against the
Utility Payment Stream shall be subordinate to any such
collateral assignment (including, without limitation, a
transfer by foreclosure or a sale under a power of sale
contained in any such collateral assignment).
15. The UGCSA is amended by replacing the second sentence of
Section 14.18 with the following:
In addition, those provisions and Exhibits referenced in, or
necessary to implement, the provisions that describe the
Parties' post-termination or post-expiration rights and
obligations also shall survive, including, but not limited to,
Sections 2.1.E, 8.5.C, 8.5.E, 8.5.F and 14.10.
16. The UGCSA is amended by replacing Section 1.5 with the
following:
1.5 Guarantee
"Guarantee" shall mean the Guarantee, of even date herewith,
as modified from time to time by the consent of Guarantor,
made by BHP Minerals International Inc. and guaranteeing to
Utilities SJCC's performance of its obligations hereunder.
17. Section 14.13 of the UGCSA is amended by replacing the
existing text in its entirety with the following:
This Agreement may be amended only by written instrument
executed by all of the Parties. Any such amendments may be
executed in any number of counterparts, and it shall not be
necessary that the signatures of all Parties be contained on
any counterpart. Each counterpart shall be deemed an original,
but all counterparts together shall constitute one and the
same instrument.
18. All other provisions of the UGCSA not specifically amended by
this Amendment One remain in full force and effect.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed on their behalf by their respective officers, thereunto duly
authorized. Public Service Company of New Mexico
By: /s/ Xxxxxx Xxxxxxx Xx.
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Name: Xxxxxx Xxxxxxx Xx.
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Title: Senior Vice President Date: December 15, 2003
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Tucson Electric Power Company
By: /s/ Xxxxxxx X. Deloncini
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Name: Xxxxxxx X. Deloncini
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Title: Senior Vice President Date: December 15, 2003
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San Xxxx Coal Company
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
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Title: President Date: December 15, 2003
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CONSENT OF GUARANTOR
BHP Minerals International Inc., a Delaware corporation (formerly
BHP-Utah International Inc.), the guarantor of the obligations of San Xxxx Coal
Company under the Underground Coal Sales Agreement pursuant to the Guarantee
dated September 25, 2001 (the "Guarantee"), hereby consents to the foregoing
Amendment One to the Underground Coal Sales Agreement and agrees that all
references in the Guarantee to the Underground Coal Sales Agreement shall be
deemed to be references to the Underground Coal Sales Agreement as amended by
this Amendment One.
BHP MINERALS INTERNATIONAL INC.
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
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Title: President Date: 12/9/03
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By: /s/ M. Xxxx Xxxxxx
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Name: M. Xxxx Xxxxxx
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Title: Secretary Date: 12/9/03
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JAM2789
