CONTRACT #00-000-000
COAL SUPPLY AGREEMENT
This is a coal supply agreement (the "Agreement") dated January 1, 1996
between LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation, 000 Xxxx
Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Buyer") and LAFAYETTE COAL COMPANY, an
Illinois corporation, 000 Xxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxx 00000 and BLACK
BEAUTY COAL COMPANY, an Indiana corporation, 000 X. Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxx 00000 (collectively "Seller").
The parties hereto agree as follows:
SECTION 1. GENERAL. Seller will sell to Buyer and Buyer will buy from
Seller steam coal under all the terms and conditions of this Agreement.
SECTION 2. TERMINATION OF CURRENT AGREEMENT; TERM.
Section 2.1 TERMINATED AGREEMENT. The Coal Supply Agreement dated
August 2, 1989 between the parties, as amended (the "Terminated Agreement"),
shall be terminated effective December 31, 1995.
Section 2.2 TERM. The term of this Agreement shall commence on
January 1, 1996 and shall continue through December 31, 1997. Buyer shall
have the right to extend the term hereof through December 31, 2000 with a
Base Quantity in the amount of 500,000 tons per year, subject to the parties
reaching an agreement on price for the coal sold during such extended term.
CONTRACT #00-000-000
SECTION 3. QUANTITY.
Section 3.1 BASE QUANTITY. Except as adjusted under Section 3.3,
Seller shall sell and deliver and Buyer shall purchase and accept delivery of
the following annual base quantity of coal ("Base Quantity"):
YEAR BASE QUANTITY (TONS)
---- --------------------
1996 560,000
1997 560,000
Section 3.2 DELIVERY SCHEDULE. By December 1 of each year, Buyer shall
specify in writing to Seller the quantities to be delivered in each month of the
following year pursuant to a reasonable schedule. Such quantities shall be
shipped in accordance with such schedule. Time is of the essence with respect
to the schedule so established; and failure by Seller to deliver in a timely
fashion shall constitute a material breach within the meaning of Section 16 of
this Agreement.
Section 3.3 ADJUSTMENTS. Buyer may either decrease or increase the Base
Quantity for each year by up to 15% by giving to Seller notice of such
adjustment by December 1 of the previous year, except that (1) the variation in
tonnage between the adjusted Base Quantity and the adjusted Base Quantity from
the preceding year under this Agreement or the Terminated Agreement will not
exceed 15%, and (2) the adjusted Base Quantity shall not exceed 644,000 tons or
be less than 476,000 tons for any year.
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CONTRACT #00-000-000
SECTION 4. SOURCE.
Section 4.1 SOURCE. The coal sold hereunder, including coal purchased by
Seller from third parties, shall be supplied from Indiana geological seams 5, 6
and 7, Columbia Mine, Pike County, Indiana and Enterprise Mine, Xxxxxx County,
Indiana (the "Coal Property").
Section 4.2 ASSURANCE OF OPERATION AND RESERVES. Seller represents and
warrants that the Coal Property contains economically recoverable coal of a
quality and in quantities which will be sufficient to satisfy all the
requirements of this Agreement. Seller agrees and warrants that it will have at
the Coal Property adequate machinery, equipment and other facilities to produce,
prepare and deliver coal in the quantity and of the quality required by this
Agreement. Seller further agrees to operate and maintain such machinery,
equipment and facilities in accordance with good mining practices so as to
efficiently and economically produce, prepare and deliver such coal. Seller
agrees that Buyer is not providing any capital for the purchase of such
machinery, equipment and/or facilities and that Seller shall operate and
maintain same at its sole expense, including all required permits and licenses.
Seller hereby dedicates to this Agreement sufficient reserves of coal meeting
the quality specifications hereof and lying on or in the Coal Property so as to
fulfill the quantity requirements hereof.
Section 4.3 NON-DIVERSION OF COAL. Seller agrees and warrants that it will
not, without Buyer's express prior written consent, use or sell coal from the
Coal Property in a way that
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CONTRACT #00-000-000
will reduce the economically recoverable balance of coal in the Coal Property to
an amount less than that required to be supplied to Buyer hereunder.
Section 4.4 SUBSTITUTE COAL. Notwithstanding the above representations
and warranties, in the event that Seller is unable to produce or obtain coal
from the Coal Property in the quantity and of the quality required by this
Agreement, and such inability is not caused by a force majeure event as
defined in Section 10, then Buyer will have the option of requiring that
Seller supply substitute coal from other facilities and mines under all the
terms and conditions of this Agreement including, but not limited to, the
price provisions of Section 8, the quality specifications of Section 6.1, and
the provisions of Section 5 concerning reimbursement to Buyer for increased
transportation costs. Seller's delivery of coal not produced from the Coal
Property without having received the express written consent of Buyer shall
constitute a material breach of this Agreement.
SECTION 5. DELIVERY. The coal shall be delivered to Buyer F.O.B. barge at
the Evansville Terminal dock at mile point 784.0 on the Ohio River (the
"Delivery Point"). Seller may deliver the coal at a location different from the
Delivery Point, provided, however, that Seller shall reimburse Buyer for any
resulting increases in the cost of transporting the coal to Buyer's generating
stations. Any resulting savings in such transportation costs shall be retained
by Buyer.
Title to and risk of loss of coal sold will pass to Buyer and the coal
will be considered to be delivered when barges containing the coal are
disengaged by Buyer's barging
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CONTRACT #00-000-000
contractor from the loading dock. Buyer or its contractor shall furnish
suitable barges in accordance with a delivery schedule provided by Buyer to
Seller. Seller shall arrange and pay for all costs of transporting the coal
from the mines to the loading docks and loading and trimming the coal into
barges to the proper draft and the proper distribution within the barges. Buyer
shall arrange for transporting the coal by barge from the loading dock to its
generating station(s) and shall pay for the cost of such transportation. For
delays caused by Seller in handling the scheduling of shipments with Buyer's
barging contractor, Seller shall be responsible for any demurrage or other
penalties assessed by said barging contractor (or assessed by Buyer) which
accrue at the Delivery Point, including the demurrage, penalties for loading
less than the specified minimum tonnage per barge, or other penalties assessed
for barges not loaded in conformity with applicable requirements. Buyer shall
be responsible to deliver barges in as clean and dry condition as practicable.
Seller shall require of the loading dock operator that the barges and towboats
provided by Buyer or Buyer's barging contractor be provided convenient and safe
berth free of wharfage, dockage and port charges; that while the barges are in
the care and custody of the loading dock, all U.S. Coast Guard regulations and
other applicable laws, ordinances, rulings, and regulations shall be complied
with, including adequate mooring and display of warning lights; that any water
in the cargo boxes of the barges be pumped out by the loading dock operator
prior to loading; that the loading operations be performed in a workmanlike
manner and in accordance with the reasonable loading requirements of
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CONTRACT #00-000-000
Buyer and Buyer's barging contractor; and that the loading dock operator carry
landing owners or wharfinger's insurance with basic coverage of not less than
$300,000.00 and total of basic coverage and excess liability coverage of not
less than $1,000,000.00, and provide evidence thereof to Buyer in the form of a
certificate of insurance from the insurance carrier or an acceptable certificate
of self-insurance with requirement for 30 days advance notification of Buyer in
the event of termination of or material reduction in coverage under the
insurance.
SECTION 6. QUALITY.
Section 6.1 SPECIFICATIONS.
(a) If Buyer nominates "Washed Coal" pursuant to Section 6.1(b),
then the coal delivered hereunder shall conform to the following specifications
on an "as received" basis:
WASHED COAL
-----------
Guaranteed Monthly Rejection Limits
Specifications Weighted Average (per shipment)
----------------------------------------------------------------------------
BTU/LB. min. 11,250 LESS THAN10,700
LBS/MMBTU:
---------
MOISTURE max. 12.25 GREATER THAN14.25
ASH max. 8.25 GREATER THAN10.0
SULFUR max. 2.75 GREATER THAN3.2
SULFUR min. 1.7 LESS THAN1.7
CHLORINE max. .03 GREATER THAN.04
NITROGEN max. 1.6 GREATER THAN2.8
ASH/SULFUR RATIO min. 2.2 LESS THAN2.0
Size (3" x 0"):
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CONTRACT #00-000-000
Top size (inches)* max. 3.0" GREATER THAN3.0"
Fines (% by wgt)
Passing 1/4" screen max. 32% GREATER THAN35%
% BY WEIGHT:
-----------
VOLATILE max. 34 GREATER THAN35
VOLATILE min. 30 LESS THAN29
FIXED CARBON max. 45 GREATER THAN47
FIXED CARBON min. 42 LESS THAN40
GRINDABILITY (HGI) min. 54 LESS THAN52
BASE ACID RATIO (B/A)
SLAGGING FACTOR** max. 1.9 GREATER THAN2.1
FOULING FACTOR*** max. 0.3 GREATER THAN0.44
ASH FUSION TEMPERATURE (DEG. F) (ASTM D1857)
----------------------------------------
REDUCING ATMOSPHERE
-------------------
Initial Deformation min. 2050 min. 2020
Softening (H=W) min. 2210 min. 2190
Softening (H=1/2W) min. 2400 min. 2290
Fluid min. 2475 min. 2350
OXIDIZING ATMOSPHERE
--------------------
Initial Deformation min. 2500 min. 2480
Softening (H=W) min. 2600 min. 2550
Softening (H=1/2W) min. 2620 min. 2610
Fluid min. 2640 min. 2620
* All the coal will be of such size that it will pass through a screen
having circular perforations three (3) inches in diameter, but shall not contain
more than forty per cent (40%) by weight of coal that will pass through a screen
having circular perforations one-quarter (1/4) of an inch in diameter.
** Slagging Factor (R(s))=(B/A) x (Percent Sulfur by Weight(Dry))
*** Fouling Factor (R(f))=(B/A) x (Percent Na(2)0 by Weight(Dry))
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CONTRACT #00-000-000
The Base Acid Ratio (B/A) is herein defined as:
BASE ACID RATIO (B/A) = (FE(2)0(3) + CA0 + MG0 + NA(2)0 + K(2)0)
----------------------------------------
(Si0(2) + A1(2)0(3) + T10(2))
Note: As used herein GREATER THAN means greater than:
LESS THAN means less than.
If Buyer nominates "Blend Coal" pursuant to Section 6.1(b), then the coal
delivered hereunder shall conform to the following specifications on an "as
received" basis:
BLEND COAL
----------
Guaranteed Monthly Rejection Limits
Specifications Weighted Average (per shipment)
----------------------------------------------------------------------------
BTU/LB. min. 11,200 LESS THAN10,700
LBS/MMBTU:
---------
MOISTURE max. 12.00 GREATER THAN14.25
ASH max. 9.00 GREATER THAN11.0
SULFUR max. 3.05 GREATER THAN3.4
SULFUR min. 1.7 LESS THAN1.7
CHLORINE max. .03 GREATER THAN.04
NITROGEN max. 1.6 GREATER THAN2.8
ASH/SULFUR RATIO min. 2.2 LESS THAN2.0
Size (3" x 0"):
Top size (inches)* max. 3.0" GREATER THAN3.0"
Fines (% by wgt)
Passing 1/4" screen max. 32% GREATER THAN35%
% BY WEIGHT:
-----------
VOLATILE max. 34 GREATER THAN35
VOLATILE min. 30 LESS THAN29
FIXED CARBON max. 45 GREATER THAN47
FIXED CARBON min. 42 LESS THAN40
GRINDABILITY (HGI) min. 54 LESS THAN52
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CONTRACT #00-000-000
BASE ACID RATIO (B/A)
SLAGGING FACTOR** max. 1.9 GREATER THAN2.1
FOULING FACTOR*** max. 0.3 GREATER THAN0.44
ASH FUSION TEMPERATURE (DEG. F) (ASTM D1857)
----------------------------------------
REDUCING ATMOSPHERE
-------------------
Initial Deformation min. 2050 min. 2020
Softening (H=W) min. 2210 min. 2190
Softening (H=1/2W) min. 2400 min. 2290
Fluid min. 2475 min. 2350
OXIDIZING ATMOSPHERE
--------------------
Initial Deformation min. 2500 min. 2480
Softening (H=W) min. 2600 min. 2550
Softening (H=1/2W) min. 2620 min. 2610
Fluid min. 2640 min. 2620
* All the coal will be of such size that it will pass through a screen
having circular perforations three (3) inches in diameter, but shall not contain
more than forty per cent (40%) by weight of coal that will pass through a screen
having circular perforations one-quarter (1/4) of an inch in diameter.
** Slagging Factor (R(s))=(B/A) x (Percent Sulfur by Weight(Dry))
*** Fouling Factor (R(f))=(B/A) x (Percent Na(2)0 by Weight(Dry))
The Base Acid Ratio (B/A) is herein defined as:
BASE ACID RATIO (B/A) = (FE(2)0(3) + CA0 + MG0 + NA(2)0 + K(2)0)
----------------------------------------
(Si0(2) + A1(2)0(3) + T10(2))
Note: As used herein GREATER THAN means greater than:
LESS THAN means less than.
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CONTRACT #00-000-000
(b) Buyer shall have the right to receive either all Washed Coal
or all Blend Coal or both Washed Coal and Blend Coal in any ratio Buyer desires
hereunder at Buyer's option subject to the pricing provisions set forth in
Section 8.1. Buyer may change such nomination or such ratio at any time by
giving to Seller thirty (30) days prior written notice of such change.
Section 6.2 DEFINITION OF "SHIPMENT". As used herein, a "shipment" shall
mean one barge load or a barge lot load in accordance with Buyer's sampling and
analyzing practices.
Section 6.3 REJECTION.
Buyer has the right, but not the obligation, to reject any shipment
which fail(s) to conform to the Rejection Limits set forth in Section 6.1 or
contains extraneous materials. Buyer must reject such coal within
seventy-two (72) hours of receipt of the coal analysis provided for in
Section 7.2 or such right to reject is waived. In the event Buyer rejects
such non-conforming coal, Buyer shall return the coal to Seller or, at
Seller's request, divert such coal to Seller's designee, all at Seller's
cost. Seller shall replace the rejected coal within five (5) working days
from notice of rejection with coal conforming to the Rejection Limits set
forth in Section 6.1. If Seller fails to replace the rejected coal within
such five (5) working day period or the replacement coal is rightfully
rejected, Buyer may purchase coal from another source in order to replace the
rejected coal. Seller shall reimburse Buyer for (i) any amount by which the
actual price plus transportation costs to Buyer of such coal purchased from
another source exceed the price of such coal under this Agreement plus
transportation costs to
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CONTRACT #00-000-000
Buyer from the Delivery Point; and (ii) any and all transportation, storage,
handling, or other expenses that have been incurred by Buyer for rightfully
rejected coal. This remedy is in addition to all of Buyer's other remedies
under this Agreement and under applicable law and in equity for Seller's breach.
If Buyer fails to reject a shipment of non-conforming coal which it had
the right to reject for failure to meet any or all of the Rejection Limits
set forth in Section 6.1. or because such shipment contained extraneous
materials, than such non-conforming coal shall be deemed accepted by Buyer;
however, the quantity Seller is obligated to sell to Buyer under the
Agreement may or may not be reduced by the amount of each such non-conforming
shipment at Buyer's sole option and the Shipment shall nevertheless be
considered "rejectable" under Section 6.4. Further, for shipments containing
extraneous materials, which include, but are not limited to, slate, rock,
wood, corn husks, mining materials, etc., the estimated weight of such
materials shall be deducted from the weight of that shipment.
Section 6.4 SUSPENSION AND TERMINATION.
If the coal sold hereunder fails to meet one or more of the Guaranteed
Monthly Weighted Averages set forth in Section 6.1 for any three (3)
consecutive months in a six (6) month period, or if nine (9) barge
shipments in a 30 day period are rejectable by Buyer, Buyer may upon notice
confirmed in writing and sent to Seller by certified mail, suspend future
shipments except shipments already loaded into barges. Seller shall, within
10 days, provide Buyer with reasonable assurances that subsequent monthly
deliveries of coal shall
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CONTRACT #00-000-000
meet or exceed the Guaranteed Monthly Weighted Averages set forth in Section
6.1 and that the source will exceed the rejection limits set forth in Section
6.1. If Seller fails to provide such assurances within said 10 day period,
Buyer may terminate this Agreement by giving written notice of such
termination at the end of the 10 day period. A waiver of this right for any
one period by Buyer shall not constitute a waiver for subsequent periods. If
Seller provides such assurances to Buyer's reasonable satisfaction, shipments
hereunder shall resume and any tonnage deficiencies resulting from suspension
may be made up at Buyer's sole option. Buyer shall not unreasonably withhold
its acceptance of Seller's assurances, or delay the resumption of shipment.
If Seller, after such assurances, fails to meet any of the Guaranteed Monthly
Weighted Averages for any one (1) month within the next six (6) months or if
three (3) barge shipments are rejectable within any one (1) month during such
six (6) month period, then Buyer may terminate this Agreement and exercise
all its other rights and remedies under applicable law and in equity for
Seller's breach.
SECTION 7. WEIGHTS, SAMPLING AND ANALYSIS.
Section 7.1 WEIGHTS. The weight of the coal delivered hereunder shall be
determined on a per shipment basis by Buyer on the basis of scale weights at the
generating station(s) unless another method is mutually agreed upon by the
parties. Such scales shall be duly reviewed by an appropriate testing agency
and maintained in an accurate condition. Seller shall have the right, at
Seller's expense and upon reasonable notice, to have the scales checked for
accuracy at any reasonable time or frequency. If the scales are found to be
over
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CONTRACT #00-000-000
or under the tolerance range allowable for the scale based on industry accepted
standards, either party shall pay to the other any amounts owed due to such
inaccuracy for a period not to exceed thirty (30) days before the time any
inaccuracy of scales is determined.
Section 7.2 SAMPLING AND ANALYSIS. The sampling and analysis of the coal
delivered hereunder shall be performed by Buyer and the results thereof shall be
accepted and used for the quality and characteristics of the coal delivered
under this Agreement. All analyses shall be made in Buyer's laboratory at
Buyer's expense in accordance with industry-accepted standards. Samples for
analyses shall be taken by any industry-accepted standard, mutually acceptable
to both parties, may be composited and shall be taken with a frequency and
regularity sufficient to provide reasonably accurate representative samples of
the deliveries made hereunder. Seller represents that it is familiar with
Buyer's sampling and analysis practices, and finds them to be acceptable. Buyer
shall notify Seller in writing of any significant changes in Buyer's sampling
and analysis practices. Any such changes in Buyer's sampling and analysis
practices shall, except for industry accepted changes in practices, provide for
no less accuracy than the sampling and analysis practices existing at the time
of the execution of this Agreement, unless the Parties otherwise mutually agree.
Each sample taken by Buyer shall be divided into 4 parts and put into
airtight containers, properly labeled and sealed. One part shall be used for
analysis by Buyer; one part shall be used by Buyer as a check sample, if
Buyer in its sole judgment determines it is necessary; one part shall be
retained by Buyer until the 25th of the month following the
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CONTRACT #00-000-000
month of unloading (the "Disposal Date") and shall be delivered to Seller for
analysis if Seller so requests before the Disposal Date; and one part ("Referee
Sample") shall be retained by Buyer until the Disposal Date. Seller shall be
given copies of all analyses made by Buyer by the 12th day of the month
following the month of unloading. Seller, on reasonable notice to Buyer shall
have the right to have a representative present to observe the sampling and
analyses performed by Buyer. Unless Seller requests a Referee Sample analysis
before the Disposal Date, Buyer's analysis shall be used to determine the
quality of the coal delivered hereunder. The Monthly Weighted Averages shall be
determined by utilizing the individual shipment analyses.
If any dispute arises before the Disposal Date, the Referee Sample
retained by Buyer shall be submitted for analysis to an independent commercial
testing laboratory ("Independent Lab") mutually chosen by Buyer and Seller. For
each coal quality specification in question, a dispute shall be deemed not to
exist and Buyer's analysis shall prevail and the analysis of the Independent Lab
shall be disregarded if the analysis of the Independent Lab differs from the
analysis of Buyer by an amount equal to or less than:
(i) 0.50% moisture
(ii) 0.50% ash on a dry basis
(iii) 100 Btu/lb. on a dry basis
(iv) 0.10% sulfur on a dry basis.
For each coal quality specification in question, if the analysis of the
Independent Lab differs from the analysis of Buyer by an amount more than the
amounts listed above, then the analysis of the Independent Lab shall prevail and
Buyer's analysis shall be disregarded.
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CONTRACT #00-000-000
The cost of the analysis made by the Independent Lab shall be borne by Seller to
the extent that Buyer's analysis prevails and by Buyer to the extent that the
analysis of the Independent Lab prevails.
SECTION 8. PRICE.
Section BASE PRICE. Subject to Section 8.4, the base price ("Base Price")
of the coal to be sold hereunder will be firm and will be $.79000/MMBTU for
Washed Coal and $.77500/MMBTU for Blend Coal.
Section 8.2 QUALITY PRICE DISCOUNTS.
(a) The Base Price is based on coal meeting or exceeding the Guaranteed
Monthly Weighted Average specifications as set forth in Section 6.1. Quality
price discounts shall be applied for each specification each month to reflect
failures to meet the Guaranteed Monthly Weighted Averages set forth in Section
6.1, as determined pursuant to Section 7.2, subject to the provisions set forth
below. The discount values used are as follows:
DISCOUNT VALUES
---------------
$/MMBTU
-------
BTU/LB. 0.2604
$/LB./MMBTU
-----------
SULFUR 0.1232
ASH 0.0083
MOISTURE 0.0016
(b) Notwithstanding the foregoing, for each specification each month,
there shall be no discount if the actual Monthly Weighted Average meets the
applicable Discount Point set forth below. However, if the actual Monthly
Weighted Average fails to meet such
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CONTRACT #00-000-000
applicable Discount Point, then the discount shall apply and shall be calculated
on the basis of the difference between the actual Monthly Weighted Average AND
THE GUARANTEED MONTHLY WEIGHTED AVERAGE pursuant to the methodology shown in
Exhibit A attached hereto.
WASHED COAL
-----------
Guaranteed
Monthly
Weighted Average Discount Point
---------------- --------------
BTU/LB min. 11,250 11,000
LB/MMBTU:
---------
SULFUR max. 2.75 3.0
ASH max. 8.25 9.5
MOISTURE max. 12.25 13.75
BLEND COAL
----------
Guaranteed
Monthly
Weighted Average Discount Point
---------------- --------------
BTU/LB min. 11,200 10,900
LB/MMBTU:
---------
SULFUR max. 3.05 3.30
ASH max. 9.00 10.50
MOISTURE max. 12.00 13.50
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For example, for Washed Coal, if the actual Monthly Weighted Average of
sulfur equals 3.05 lb/MMBTU, then the applicable discount would be (3.05 lb. -
2.75 lb.) X $.1232/lb/MMBTU = $.03696/MMBTU.
Section 8.3 PAYMENT CALCULATION. Exhibit A attached hereto shows the
methodology for calculating the coal payment and quality price discounts for the
month Seller's coal was unloaded by Buyer. If there are any such discounts,
Buyer shall apply credit to amounts owed Seller for the month the coal was
unloaded.
Section 8.4 GOVERNMENTAL IMPOSITIONS. The Base Price is inclusive of
all federal, state, municipal and local taxes, fees and costs of any kind
whether arising from government law, rule, regulation or otherwise, including,
without limitation, all costs of conforming to federal and state mining and
reclamation laws, rules and regulations and all other and/or additional mining
and operating costs and expenses. No price adjustment shall be made for costs
occasioned by any such taxes, fees, costs and the like in effect on the
effective date of this Agreement. In the event of any one enactment,
promulgation or change in any statute, regulation, or the like or of any one
governmental imposition enacted or promulgated after the effective date of this
Agreement, which increases or decreases the Seller's total costs of performance
hereunder by at least $.10 per ton, Seller shall give Buyer prompt written
notice thereof, including the amount of increase or decrease in cost and notice
of proportionate adjustment in Base Price, including the furnishing to Buyer of
all computations, data and information reasonably necessary to substantiate such
notice.
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Buyer shall have the right to audit and inspect Seller's books and records for
the purpose of evaluating such notice. The Base Price shall be adjusted in
accordance with the notice subject to revision based upon an audit by Buyer.
SECTION 9. INVOICES, BILLING AND PAYMENT.
Section 9.1 INVOICING ADDRESS. Invoices will be sent to Buyer at the
following address:
Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000
Attention: Manager, Coal Supply
With a copy to:
Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000
Attention: Manager, Accounts Payable
Section 9.2 INVOICE PROCEDURES FOR COAL SHIPMENTS. Seller shall invoice
Buyer at the Base Price, minus any quality price discounts, for all coal
unloaded in a calendar month by the fifteenth of the following month.
Section 9.3 PAYMENT PROCEDURES FOR COAL SHIPMENTS. Payment for coal
unloaded in a calendar month shall be mailed by the 25th of the month following
the month of unloading or within ten days after receipt of Seller's invoice,
whichever is later. Buyer shall mail all payments to Seller's account at
Lafayette Coal Company, X.X. Xxx 00000, Xxxxxxx, Xxxxxxxx 00000.
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Section 9.4 WITHHOLDING. Buyer shall have the right to withhold from
payment of any billing or xxxxxxxx (i) any sums which it is not able in good
faith to verify or which it otherwise in good faith disputes, (ii) any damages
resulting from or likely to result from any breach of this Agreement by Seller,
and (iii) any amounts owed to Buyer from Seller. Buyer shall notify Seller
promptly in writing of any such issue, stating the basis of its claim and the
amount it intends to withhold.
Payment by Buyer, whether knowing or inadvertent, of any amount in dispute
shall not be deemed a waiver of any claims or rights by Buyer with respect to
any disputed amounts or payments made.
SECTION 10. FORCE MAJEURE.
Section 10.1 GENERAL FORCE MAJEURE. If either party hereto is delayed in
or prevented from performing any of its obligations or from utilizing the coal
sold under this Agreement due to acts of God, war, riots, civil insurrection,
acts of the public enemy, strikes, lockouts, fires, floods or earthquakes, which
are beyond the reasonable control and without the fault or negligence of the
party affected thereby, then the obligations of both parties hereto shall be
suspended to the extent made necessary by such event; provided that the affected
party gives written notice to the other party as early as practicable of the
nature and probable duration of the force majeure event. The party declaring
force majeure shall exercise due diligence to avoid and shorten the force
majeure event and will keep the other party advised as to the continuance of the
force majeure event.
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CONTRACT #00-000-000
During any period in which Seller's ability to perform hereunder is
affected by a force majeure event, Seller shall not deliver any coal from the
Coal Property to any other buyers to whom Seller's ability to supply is
similarly affected by such force majeure event unless contractually committed to
do so at the beginning of the force majeure event; and further shall deliver to
Buyer under this Agreement at least a pro rata portion (on a per ton basis) of
its total contractual commitments to all its buyers to whom Seller's ability to
supply is similarly affected by such force majeure event in place at the
beginning of the force majeure event. An event which affects the Seller's
ability to produce or obtain coal from a mine other than the Coal Property will
not be considered a force majeure event hereunder.
During any period in which Buyer's ability to perform hereunder is affected
by a force majeure event, Buyer shall not take delivery of any coal from any
other sellers from whom Buyer's ability to take delivery is similarly affected
by such force majeure event unless contractually committed to do so at the
beginning of the force majeure event; and further shall take delivery from
Seller under this Agreement of at least a pro rata portion (on a per ton basis)
of its total contractual commitments to all its sellers from whom Buyer's
ability to take delivery is similarly affected by such force majeure event in
place at the beginning of the force majeure event.
Tonnage deficiencies resulting from a force majeure event may be made up by
mutual agreement of Buyer and Seller on a reasonable schedule.
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CONTRACT #00-000-000
Section 10.2 ENVIRONMENTAL LAW FORCE MAJEURE. The parties recognize
that, during the continuance of this Agreement, legislative or regulatory bodies
or the courts may adopt environmental laws, regulations, policies and/or
restrictions which will make it impossible or commercially impracticable for
Buyer to utilize this or like kind and quality coal which thereafter would be
delivered hereunder. If as a result of the adoption of such laws, regulations,
policies, or restrictions, or change in the interpretation or enforcement
thereof, Buyer decides that it will be impossible or commercially impracticable
(uneconomical) for Buyer to utilize such coal, Buyer shall so notify Seller, and
thereupon Buyer and Seller shall promptly consider whether corrective actions
can be taken in the mining and preparation of the coal at Seller's mine and/or
in the handling and utilization of the coal at Buyer's generating station; and
if in Buyer's sole judgment such actions will not, without unreasonable expense
to Buyer, make it possible and commercially practicable for Buyer to so utilize
coal which thereafter would be delivered hereunder without violating any
applicable law, regulation, policy or order, Buyer shall have the right, upon
the later of 60 days notice to Seller or the effective date of such restriction,
to terminate this Agreement without further obligation hereunder on the part of
either party.
SECTION 11. CHANGES. Buyer may, by mutual agreement with Seller, at any
time by written notice pursuant to Section 12 of this Agreement, make changes
within the general scope of this Agreement in any one or more of the following:
quality of coal or coal specifications, quantity of coal, method or time of
shipments, place of delivery (including
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CONTRACT #00-000-000
transfer of title and risk of loss), method(s) of weighing, sampling or analysis
and such other provision as may affect the suitability and amount of coal for
Buyer's generating stations.
If any such changes makes necessary or appropriate an increase or decrease
in the then current price per ton of coal, or in any other provision of this
Agreement, an equitable adjustment shall be made in: price, whether current or
future or both, and/or in such other provisions of this Agreement as are
affected directly or indirectly by such change, and the Agreement shall
thereupon be modified in writing accordingly.
Any claim by the Seller for adjustment under this Section 11 shall be
asserted within thirty (30) days after the date of Seller's receipt of the
written notice of change, it being understood, however that Seller shall not be
obligated to proceed under this Agreement as changed until an equitable
adjustment has been agreed upon. The parties agree to negotiate promptly and in
good faith to agree upon the nature and extent of any equitable adjustment.
SECTION 12. NOTICES.
Section 12.1 FORM AND PLACE OF NOTICE. 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 when delivered in person, transmitted by facsimile or other
electronic media, delivered to an established mail service for same day or
overnight delivery, or dispatched in the United States mail, postage
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CONTRACT #00-000-000
prepaid, for mailing by first class, certified, or registered mail, return
receipt requested, and addressed as follows:
If to Buyer: Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn.: Manager, Coal Supply
with a copy to: Louisville Gas and Electric Company
000 Xxxx Xxxxxxxx
P.O. Box 32020
Xxxxxxxxxx, Xxxxxxxx 00000
Attn.: Manager, Procurement Services
If to Seller: Lafayette Coal Company
000 Xxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
AND Black Beauty Coal Company
000 X. Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Senior Vice President - Marketing
Section 12.2 CHANGE OF PERSON OR ADDRESS. Either party may change the
person or address specified above upon giving written notice to the other party
of such change.
Section 12.3 ELECTRONIC DATA TRANSMITTAL. Seller hereby agrees, at
Seller's cost, to electronically transmit shipping notices and/or other data to
Buyer in a format acceptable to and established by Buyer upon Buyer's request.
Buyer shall provide Seller with the appropriate format and will inform Seller as
to the electronic data requirements at the appropriate time.
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CONTRACT #00-000-000
SECTION 13. EARLY TERMINATION. Each party hereto shall have the right
of early termination for any reason or no reason, in whole or in part, of its
rights and obligations under this Agreement as follows: The party desiring to
exercise its right of early termination shall give written notice thereof to the
other party and pay the price for early termination as described herein. Notice
may be given by either party no later than four (4) months before the end of any
calendar year; and this Agreement will be terminated at the end of such year.
If this Agreement is terminated early in whole, then the price paid for such
early termination shall be $3.50 times the Base Quantity remaining under this
Agreement from the effective date of the early termination until the termination
date of this Agreement as set forth in Section 2. For example, if Seller
terminates this Agreement in whole effective December 31, 1996, then Seller
would owe Buyer $1,960,000 under this Section 13. If this Agreement is
terminated early in part, then the price paid for such early termination shall
be $3.50 times the total tonnage terminated from the effective date of the early
termination until the termination date of this Agreement as set forth in Section
2. For example, if Seller terminates this Agreement in part effective December
31, 1996 by reducing the Base Quantity from 560,000 to 300,000 tons, then Seller
would owe Buyer $910,000 under this Section 13. This provision is not intended
to limit, liquidate, or otherwise affect in any manner damages recoverable for
breach of this Agreement.
SECTION 14. RIGHT TO RESELL. Buyer shall have the unqualified right to
sell all or any of the coal purchased under this Agreement.
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CONTRACT #00-000-000
SECTION 15. INDEMNITY AND INSURANCE.
Section 15.1 INDEMNITY. Seller agrees to indemnify and save harmless
Buyer, its officers, directors, employees and representatives from any
responsibility and liability for any and all claims, demands, losses, legal
actions for personal injuries, property damage and pollution (including
reasonable inside and outside attorney's fees) (i) relating to the barges
provided by Buyer or Buyer's contractor while such barges are in the care and
custody of the loading dock or loading facility, (ii) due to any failure of
Seller to comply with laws, regulations or ordinances, or (iii) due to the acts
or omissions of Seller in the performance of this Agreement.
Section 15.2 INSURANCE. Seller agrees to carry insurance coverage with
minimum limits as follows:
(1) Commercial General Liability, including Completed
Operations and Contractual Liability, $1,000,000 single limit liability.
(2) Automobile General Liability, $1,000,000 single limit
liability.
(3) In addition, Seller shall carry excess liability
insurance covering the foregoing perils in the amount of $4,000,000 for any one
occurrence.
(4) Workers' Compensation and Employer's Liability with
statutory limits.
If any of the above policies are written on a claims made basis, then the
retroactive date of the policy or policies will be no later than the effective
date of this Agreement. Certificates of Insurance satisfactory in form to the
Buyer and signed by the Seller's insurer
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CONTRACT #00-000-000
shall be supplied by the Seller to the Buyer evidencing that the above insurance
is in force and that not less than 30 calendar days written notice will be given
to the Buyer prior to any cancellation or material reduction in coverage under
the policies. The Seller shall cause its insurer to waive all subrogation
rights against the Buyer respecting all losses or claims arising from
performance hereunder. Evidence of such waiver satisfactory in form and
substance to the Buyer shall be exhibited in the Certificate of Insurance
mentioned above. Seller's liability shall not be limited to its insurance
coverage.
SECTION 16. TERMINATION FOR DEFAULT.
Subject to Section 6.4, if either party hereto commits a material breach of
any of its obligations under this Agreement at any time, then the other party
has the right to give written notice describing such breach and stating its
intention to terminate this Agreement no sooner than 30 days after the date of
the notice (the "notice period"). If such material breach is curable and the
breaching party cures such material breach within the notice period, then the
Agreement shall not be terminated due to such material breach. If such material
breach is not curable or the breaching party fails to cure such material breach
within the notice period, then this Agreement shall terminate at the end of the
notice period in addition to all the other rights and remedies available to the
aggrieved party under this Agreement and at law and in equity.
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CONTRACT #00-000-000
SECTION 17. DOCUMENTATION AND RIGHT OF AUDIT.
Seller shall maintain all records and accounts pertaining to payments,
quantities, quality analyses, and source for all coal supplied under this
Agreement for a period lasting through the term of this Agreement and for two
years thereafter. Buyer shall have the right at no additional expense to Buyer
to audit, copy and inspect such records and accounts at any reasonable time upon
reasonable notice during the term of this Agreement and for 2 years thereafter.
SECTION 18. EQUAL EMPLOYMENT OPPORTUNITY. To the extent applicable,
Seller shall comply with all of the following provisions which are incorporated
herein by reference: Equal Opportunity regulations set forth in 41 CRF Section
60-1.4(a) and (c) prohibiting discrimination against any employee or applicant
for employment because of race, color, religion, sex, or national origin;
Vietnam Era Veterans Readjustment Assistance Act regulations set forth in
41 CRF Section 50-250.4 relating to the employment and advancement of disabled
veterans and veterans of the Vietnam Era; Rehabilitation Act regulations set
forth in 41 CRF Section 60-741.4 relating to the employment and advancement
of qualified disabled employees and applicants for employment; the clause
known as "Utilization of Small Business Concerns and Small Business Concerns
Owned and Controlled by Socially and Economically Disadvantaged Individuals"
set forth in 15 USC Section 637(d)(3); and subcontracting plan requirements
set forth in 15 USC Section 637(d).
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CONTRACT #00-000-000
SECTION 19. COAL PROPERTY INSPECTIONS. Buyer and its representatives,
and others as may be required by applicable laws, ordinances and regulations
shall have the right at all reasonable times and at their own expense to inspect
the Coal Property, including the loading facilities, scales, sampling system(s),
wash plant facilities, and mining equipment for conformance with this Agreement.
Seller shall undertake reasonable care and precautions to prevent personal
injuries to any representatives, agents or employees of Buyer (collectively,
"Visitors") who inspect the Coal Property. Any such Visitors shall make every
reasonable effort to comply with Seller's regulations and rules regarding
conduct on the work site, made known to Visitors prior to entry, as well as
safety measures mandated by state or federal rules, regulations and laws. Buyer
understands that coal mines and related facilities are inherently high-risk
environments. Buyer's failure to inspect the Coal Property or to object to
defects therein at the time Buyer inspects the same shall not relieve Seller of
any of its responsibilities nor be deemed to be a waiver of any of Buyer's
rights hereunder.
SECTION 20. MISCELLANEOUS.
Section 20.1 APPLICABLE LAW. This Agreement shall be construed in
accordance with the laws of the State of Kentucky, and all questions of
performance of obligations hereunder shall be determined in accordance with such
laws.
Section 20.2 HEADINGS. The paragraph headings appearing in this Agreement
are for convenience only and shall not affect the meaning or interpretation of
this Agreement.
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CONTRACT #00-000-000
Section 20.3 WAIVER. The failure of either party to insist on strict
performance of any provision of this Agreement, or to take advantage of any
rights hereunder, shall not be construed as a waiver of such provision or right.
Section 20.4 REMEDIES CUMULATIVE. Remedies provided under this Agreement
shall be cumulative and in addition to other remedies provided under this
Agreement or by law or in equity.
Section 20.5 SEVERABILITY. If any provision of this Agreement is found
contrary to law or unenforceable by any court of law, the remaining provisions
shall be severable and enforceable in accordance with their terms, unless such
unlawful or unenforceable provision is material to the transactions contemplated
hereby, in which case the parties shall negotiate in good faith a substitute
provision.
Section 20.6 BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties and their successors and assigns.
Section 20.7 ASSIGNMENT. Neither party may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party, which consent shall not be unreasonably withheld or denied; provided,
however, that Buyer shall have the right, without consent of Seller, to assign
all or any part of this Agreement to any company, controlling, controlled by, or
under common control with Buyer.
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CONTRACT #00-000-000
Section 20.8 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties as to the subject matter hereof, and there are no
representations, understandings or agreements, oral or written, which are not
included herein.
Section 20.9 AMENDMENTS. Except as otherwise provided herein, this
Agreement may not be amended, supplemented or otherwise modified except by
written instrument signed by both parties hereto.
SECTION 21. JOINT AND SEVERAL LIABILITY. The obligations and
liabilities of Seller under this Agreement shall be joint and several
obligations and liabilities of Lafayette Coal Company and Black Beauty Coal
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
LOUISVILLE GAS AND ELECTRIC
COMPANY LAFAYETTE COAL COMPANY
By: By:
--------------------------- ----------------------------
Title: Title:
--------------------------- ----------------------------
Date: Date:
--------------------------- ----------------------------
BLACK BEAUTY COAL COMPANY
By:
----------------------------
Title:
----------------------------
Date:
----------------------------
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