Exhibit 10.52
COAL SUPPLY AGREEMENT
This is a coal supply agreement (the "Agreement") dated January 1, 2000
between LOUISVILLE GAS AND ELECTRIC COMPANY AND KENTUCKY UTILITIES COMPANY,
Kentucky corporations, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
("Buyer"), and XxXXXXX COAL COMPANY, CONSOLIDATION COAL COMPANY, CONSOL
PENNSYLVANIA COAL COMPANY, GREENON COAL COMPANY, NINEVEH COAL COMPANY, EIGHTY
FOUR MINING COMPANY, AND ISLAND CREEK COAL COMPANY, Delaware corporations, 0000
Xxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 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.TERM. The term of this Agreement shall commence on January
1, 2000 and shall continue through December 31, 2002, subject to the price
review set forth in Section 8.1.
CONSOL ENERGY, INC.
LG&E CONTRACT #1,GE 00010
KU CONTRACT #KUF00731
SECTION 3.QUANTITY.
Section 3.1 BASE QUANTITY. Subject to the price review set forth in
SECTION 8.1, 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)
---- --------------------
2000 3,000,000
2001 3,000,000
2002 3,000,000
The Base Quantity will be delivered in approximately equal
monthly quantities and in accordance with a mutually agreed upon schedule.
Section 3.2 OPTION TO INCREASE OR DECREASE QUANTITY. Buyer shall have
the right to increase or decrease the Base Quantity to be delivered hereunder by
up to 75,000 tons per calendar quarter (three months). For example, if Buyer
increases the quantity by 75,000 tons per quarter during a calendar year, the
net increase will be 300,000 tons. Buyer shall exercise such option by giving
Seller such notice stating Buyer's exercise of the option and specifying the
increase or decrease in tonnage, no later than thirty days prior to the first
day of the quarter in which the increased or decreased tonnage will be
delivered.
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SECTION 4. SOURCE.
Section 4.1 SOURCE. The coal sold hereunder shall be supplied
primarily from geological seam Pittsburgh #8, from Seller's XxXxxxx and
Xxxxxxxxx Mines, Xxxxxxxx County, West Virginia (the "Coal Property"). As
necessary to comply with the quality requirements of this Agreement Seller may
blend with coal from such primary sources, coal from Seller's Xxxxxxxx, Mahoning
Valley, Mine 84, VP #8 and/or Xxxxxxxx, Xxxxx and/or Xxxxx Fork Mines.
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.
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 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 SELLER'S PREPARATION OF MINING PLAN. Seller shall have
prepared a complete mining plan for the Coal Property with adequate supporting
data to demonstrate Seller's capability to have coal produced from the Coal
Property which meets the quantity and quality specifications of
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this Agreement. Seller shall, upon Buyer's request during Coal Property
Inspections, if any (made pursuant to Section 19), provide information to Buyer
of such mining plan which shall contain maps and a narrative depicting areas and
seams of coal to be mined and shall include (but not be limited to) the
following information: (i) reserves from which the coal will be produced during
the term hereof and the mining sequence, by year (or such other time intervals
as mutually agreed) during the term of this Agreement, from which coal will be
mined; (ii) methods of mining such coal; (iii) methods of transporting and, in
the event a preparation plant is utilized by Seller, the methods of washing coal
to insure compliance with the quantity and quality requirements of this
Agreement including a description and flow sheet of the preparation plant; (iv)
quality data plotted on the maps depicting data points and isolines by ash,
sulfur, and Btu; (v) quality control plans including sampling and analysis
procedures to insure individual shipments meet quality specifications; and (vi)
Seller's aggregate commitments to others to sell coal from the Coal Property
during the term of this Agreement.
Buyer's receipt of information or data furnished by Seller (the "Mining
Information") shall not in any manner or way relieve Seller of any of Seller's
obligations or responsibilities under this Agreement; nor shall such review be
construed as constituting an approval of Seller's proposed mining plan as
prudent mining practices, such review by Buyer being limited solely to a
determination, for Buyer's purposes only, of Seller's capability to supply coal
to fulfill Buyer's requirements of a dependable coal supply.
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Section 4.5 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. Seller shall also have the
right to supply substitute coal from other facilities and mines or from third
parties after having received Buyer's prior written consent (which shall not be
unreasonably withheld). Such substitute coal shall be provided 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.
Section 5.1 BARGE DELIVERY. The coal shall be delivered to Buyer F.O.B.
barge at the following points (the "Delivery Point"), for XxXxxxx Mine, the
Ireland Dock at mile point 110.5 on the Ohio River, and for Xxxxxxxxx Mine, the
Xxxxxxxxx Dock at mile point 93.7 on the Ohio River. 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. Buyer shall retain any resulting
savings in such transportation costs.
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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 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 Delivery Points 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 Delivery Points to its generating station(s) and shall pay for the cost of
such transportation. For delays caused by Seller in meeting 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 minimum of 1,500 tons 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
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in accordance with the reasonable loading requirements of Buyer and Buyer's
barging contractor; and that the loading dock operator carry landing owner's
insurance with basic coverage of not less than $300,000, and total of basic
coverage and excess liability coverage of not less than $1,000,000, 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. The coal delivered hereunder shall conform
to the following specifications on an "as received" basis:
Guaranteed Monthly Rejection Limits
Specifications Weighted Average(1) (per shipment)
--------------------------------------------------------------------------------
BTU/LB. min. 12,100 < 11,700
------ ----------
LBS/MMBTU:
MOISTURE max. 5.60 > 7.00
---------- -----------
ASH max. 11.20 > 12.50
--------- -----------
SULFUR max. 3.25 * > 3.50
---------- -----------
SULFUR min. 2.25 < 2.00
----------- -----------
CHLORINE max. 0.06 > 0.08
---------- -----------
FLUORINE max. 0.015 > 0.035
--------- -----------
NITROGEN max. 1.10 > 1.25
---------- -----------
* Agreed to a calendar quarter limit of 3.25 lbs. Sulfur (6.5 lbs. SO2
per MMBtu).
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ASH/SULFUR RATIO min. 3.00:1 < 2.30:1
----------- -------
SIZE (3" X 0"):
Top size (inches)** max. 3X0 > 4X0
-------- -------
Fines (% by wgt)
Passing 1/4" screen max. 50 > 55
-------- -------
% BY WEIGHT:
-----------
VOLATILE min. 36 < 32
-------- ------
FIXED CARBON min. 44 < 42
-------- ------
GRINDABILITY (HGI) min. 55 < 50
--------- ------
BASE ACID RATIO (B/A) .45 > .55
---- ----
SLAGGING FACTOR*** max. 2.00 > 2.30
-------- ------
FOULING FACTOR**** max. .25 > .50
--------- -----
ASH FUSION TEMPERATURE (DEG.F) (ASTM D1857)
REDUCING ATMOSPHERE
Initial Deformation min. 1950 min. 1900
--------- ------
Softening (H=W) min. 1990 min. 1950
--------- ------
Softening (H=1/2W) min. 2099 min. 2050
--------- ------
Fluid min. 2202 min. 2150
--------- ------
OXIDIZING ATMOSPHERE
Initial Deformation min. 2391 min. 2300
--------- -----
Softening (H=W) min. 2461 min. 2400
-------- -----
Softening (H=1/2W) min. 2506 min. 2450
--------- -----
Fluid min. 2535 min. 2500
--------- -----
(1) An actual Monthly Weighted Average will be calculated for each
specification for coal delivered to the Louisville Gas and
Electric generating stations and a separate
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actual Monthly Weighted Average will be calculated for each
specification for coal delivered to the
Kentucky Utility
generating stations.
** 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 fifty per cent ( 50%) 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)O by Weight(Dry))
The Base Acid Ratio (B/A) is herein defined as:
BASE ACID RATIO (B/A) = (Fe(2)O(3) + CAO + MGO + NA(2)O + K(2)O)
DIVIDED BY
(SiO(2) + A1(2)O(3) + TiO(2))
Note: As used herein > means greater than:
< means less than.
Section 6.2 DEFINITION OF "SHIPMENT". As used herein, a "shipment"
shall mean one barge load, 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,
title to and
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risk of loss of the coal shall be considered to have never passed to Buyer and
Buyer shall return the coal to Seller or, at Seller's request, divert such coal
to Seller's designee, all at Seller's cost and risk. 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 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,
then 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,
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wood, corn husks, mining materials, metal, steel, 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 (as to either or both of LG&E
or KU) for any three (3) months in a six (6) month period, or if nine (9) barge
shipments in a 30 day period are rejectable by Buyer, then 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 15
days, provide Buyer with reasonable assurances that subsequent monthly
deliveries of coal shall meet or exceed the Guaranteed Monthly Weighted Averages
set forth in Section 6.1. If Seller fails to provide such assurances within said
15 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 (as to either LG&E or KU) 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
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Buyer may terminate this Agreement and exercise all its other rights and
remedies under applicable law and in equity for Seller's breach.
Section 6.5 IMPLIED WARRANTIES. Except as expressly set forth herein in
Section 6, Seller makes no other warranties and expressly disclaims any other
warranty, of any kind, including those of merchantability and fitness, there
being no warranties which extend beyond those expressly set forth herein.
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 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 Seller has sole responsibility
for quality control of the coal and shall forward its as loaded quality to the
Buyer as soon as possible. The sampling and analysis of the coal delivered
hereunder shall be performed by Buyer and the results thereof shall
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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 Buyer's approved methods. Samples for
analyses shall be taken by Buyer's approved procedures of sampling, 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
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 (LG&E) until the 25th of the month following the month of unloading (the
"Disposal Date") or Buyer (KU) until thirty (30) days ("Disposal Date") after
the sample is taken, 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 business day of the month following the month
of unloading, in addition, Buyer (KU) will send weekly analyses of coal
unloadings to Seller. Seller, on reasonable notice to Buyer shall have the right
to have a representative present
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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. All
testing of any such sample by the Independent Lab shall be at requestor's
expense unless the results differ by more than the applicable ASTM
reproducibility standards, in such case, Buyer will pay for testing. If the
Independent Lab results differ by more than the applicable ASTM reproducibility
standards, the Independent Lab results will govern. 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 8.1 BASE PRICE. The base price ("Base Price") of the coal to be
sold hereunder will be firm and will be determined by the year in which the coal
is delivered as defined in Section 5 in accordance with the following schedule:
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BASE PRICE
YEAR ($ PER MMBTU) ($ PER TON)
---- ------------- -----------
2000 0.7438 F.O.B. barge $18.00
2001 0.7521 F.O.B. barge $18.20
2002 * *
* Buyer and Seller will begin price negotiations on or before July 1, 2001, for
prices to be effective during the year 2002. The parties then shall attempt to
negotiate on new prices and/or other terms and conditions between July 1, 2001
and October 1, 2001. If the parties do not reach an agreement by October 1,
2001, then this Agreement will terminate as of December 31, 2001 without
liability due to such termination for either party, and the parties shall have
no further obligations hereunder except those incurred prior to the date of
termination. This clause shall not be interpreted as a Right of First Refusal or
exclusive supply agreement.
Section 8.2 QUALITY PRICE DISCOUNTS.
(a) The Base Price is based on coal meeting or exceeding the Guaranteed
Monthly and Quarterly Weighted Average specifications for the Louisville Gas and
Electric generating stations and the
Kentucky Utility generating stations, as
set forth in Section 6.1. Quality price discounts shall be applied for each
specification, separately for the Louisville Gas and Electric generating
stations and for the
Kentucky Utility generating stations, to reflect failures
to meet the
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Guaranteed Monthly or Quarterly 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:
MONTHLY DISCOUNT VALUES
BTU/LB. $ 0.2604/MMBTU
ASH $ 0.0083/LB/MMBTU
MOISTURE$ 0.0016/LB/MMBTU
QUARTERLY DISCOUNT VALUES
SULFUR $ 0.1232/LB/MMBTU
(b) Notwithstanding the foregoing, for each specification, there shall
be no discount if the actual Monthly or Quarterly Weighted Average meets the
applicable Discount Point set forth below. Actual Monthly and Quarterly Weighted
Averages will be separately calculated for the Louisville Gas and Electric
generating stations and for the
Kentucky Utility generating stations. However,
if the actual Monthly or Quarterly Weighted Average for the Louisville Gas and
Electric generating stations and/or the
Kentucky Utility generating stations
fail to meet such applicable Discount Point, then the discount shall apply to
and shall be calculated on the basis of the difference between the actual
Monthly or Quarterly Weighted Average and the Guaranteed Monthly or Quarterly
Weighted Average pursuant to the methodology shown in Exhibit A
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attached hereto. The discount will be applied only to the particular company
whose actual Monthly or Quarterly Weighted Average failed to meet the Discount
Points.
GUARANTEED MONTHLY WEIGHTED AVERAGE DISCOUNT POINT
BTU Min. 12,100 BTU/LB 11,900 BTU/XX
XXX Max. 11.20 LB/MMBTU 11.20 LB/MMBTU
MOISTURE Max. 5.60 LB/MMBTU 7.00 LB/MMBTU
GUARANTEED QUARTERLY WEIGHTED AVERAGE DISCOUNT POINT
SULFUR Max. 3.25 LB/MMBTU 3.25 LB/MMBTU
For example, if the actual Monthly Weighted Average of ash equals 12.00
lb/MMBTU, then the applicable discount would be (12.00 lb. - 11.20 lb.) X
$.0083/lb/MMBTU = $.00664/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.
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SECTION 9. INVOICES, BILLING AND PAYMENT.
Section 9.1 INVOICING: Two invoices will be sent to Buyer. The invoice
for Louisville Gas and Electric will be sent to the following address:
Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Director, Fuels Management
With a copy to:
Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Manager, Accounts Payable
The invoice for
Kentucky Utilities will be sent to the following address:
Kentucky Utilities Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Director, Fuels Management
Section 9.2 INVOICE PROCEDURES FOR COAL SHIPMENTS. Seller shall provide
Buyer two separate invoices, one for Louisville Gas and Electric and one for
Kentucky Utilities. Seller shall invoice Buyer at the Base Price, minus any
quality price discounts, for all coal unloaded in a calendar month by the
fifteenth (15th) of the following month.
Section 9.3 PAYMENT PROCEDURES FOR COAL SHIPMENTS. Payment for coal
unloaded in a calendar month shall be wired by the 25th of the month following
the month of unloading, except that, if the 25th is a weekend or a holiday
observed by the Buyer, payment shall be made on the next
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business day or within ten days after receipt of Seller's invoice, whichever is
later. Buyer shall electronically transfer all payments to Seller's account at:
CONSOL Inc.
Account No. 107-3965
ABA No. 000000000
Mellon Bank, NA
Xxxxxxxxxx, XX 00000
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
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of God, war, riots, civil insurrection, acts of the public enemy, strikes, labor
disputes, lockouts, fires, explosions, floods or earthquakes, other severe
weather conditions, damage to or breakdown of facilities, plant or equipment or
other causes (whether of a similar or dissimilar nature), 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.
During any period in which Seller's ability to perform hereunder is
affected by a force majeure event, Seller shall not deliver any coal 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.
Tonnage deficiencies resulting from a force majeure event shall be made
up only upon mutual agreement of the parties.
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CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
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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 transfer of title and
21
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
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 prepaid,
for
22
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
mailing by first class, certified, or registered mail, return receipt
requested, and addressed as follows:
If to Buyer: Louisville Gas and Electric Company/Kentucky
Utilities Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn.: Director, Fuels Management
If to Seller: CONSOL Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Executive 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.
Section 12.4 AGREEMENT ADMINISTRATION. Consol Inc. ("CONSOL")
shall administer this Agreement exclusively on behalf of Seller, to include as
follows:
(a) the administration of this Agreement;
(b) all payments by Buyer to Seller hereunder shall be
made to CONSOL;
(c) all notices to be given or received by Seller shall
be given or received by CONSOL;
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CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
and
(d) any amendment, supplement or modification to this
Agreement shall be negotiated by CONSOL, on behalf of
Seller. Buyer shall be entitled to rely upon the
actions and requests of CONSOL in connection with
CONSOL's performance of the foregoing as being
binding upon Seller.
SECTION 13. RIGHT TO RESELL. Buyer shall have the unqualified right
to sell all or any of the coal purchased under this Agreement.
SECTION 14. INDEMNITY AND INSURANCE.
Section 14.1 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 trucks,
barges or railcars provided by Buyer or Buyer's contractor while such trucks,
barges or railcars 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.
24
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
Notwithstanding any provision in this Agreement to the contrary (except
for Seller's indemnifications hereunder with respect to third party claims), in
no event shall either party be liable to the other for any special, indirect, or
consequential losses or damages arising from a breach of the Agreement
including, without limitation, loss or profit, loss of operating income, loss
of, use of, or reduction in the use of, their respective assets or increased
exposure of operation or maintenance or the suitability of said assets.
Section 14.2 INSURANCE. Seller agrees to carry insurance coverage with
minimum limits as follows:
(1) Commercial General Liability, including Completed
Operations and Contractual Liability, $5,000,000 single limit liability.
(2) Automobile General Liability, $1,000,000 single limit
liability.
(3) 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 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
25
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
exhibited in the Certificate of Insurance mentioned above. Seller's liability
shall not be limited to its insurance coverage.
(4) Seller may self-insure in accordance with Seller's
overall insurance policy in lieu of carrying insurance coverage required to be
carried pursuant to this Section 14.
SECTION 15. 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, including,
but not limited to, a breach of a representation and warranty set forth herein,
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.
SECTION 16. TAXES, DUTIES AND FEES.
26
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
Seller shall pay when due, and the price set forth in Section 8 of this
Agreement shall be inclusive of, all taxes, duties, fees and other assessments
of whatever nature imposed by governmental authorities with respect to the
transactions contemplated under this Agreement.
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,
and Seller shall cooperate at no additional cost to Buyer.
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 CFR 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 CFR
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
CFR Section 60-741.4 relating to the employment and advancement of qualified
disabled employees and applicants for
27
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
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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).
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 cooperate with such inspection at no additional cost to Buyer.
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 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.
28
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
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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.
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.
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CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
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Section 20.7 ASSIGNMENT.
A. Seller shall not, without Buyer's prior written consent, make any
assignment or transfer of this Agreement, by operation of law or otherwise,
including without limitation any assignment or transfer as security for any
obligation, and shall not assign or transfer the performance of or right or duty
to perform any obligation of Seller hereunder; provided, however, that Seller
may assign the right to receive payments for coal directly from Buyer to a
lender as part of any accounts receivable financing or other revolving credit
arrangement which Seller may have now or at any time during the term of this
Agreement.
B. Buyer shall not, without Seller's prior written consent, assign
this Agreement or any right for the performance of or right or duty to perform
any obligation of Buyer hereunder; except that, without such consent, Buyer may
assign this Agreement in connection with a transfer by Buyer of all or a part
interest in the generating station, or as part of a merger or consolidation
involving Buyer.
C. In the event of an assignment or transfer contrary to the provisions
of this section, the non-assigning party may terminate this Agreement
immediately.
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. Without limiting the foregoing (a) this Agreement shall not be
construed as a requirements or similar agreement, and (b) this
30
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
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Agreement shall not be construed as affecting Buyer's ability to negotiate with
and/or acquire other sources of coal from third parties throughout the term
hereof.
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 20.10 JOINT AND SEVERAL LIABILITY. XxXxxxx Coal Company,
Consolidation Coal Company, Consol Pennsylvania Coal Company, Greennon Coal
Company, Nineveh Coal Company, Eighty Four Mining Company, and Island Creek Coal
Company shall be jointly and severally liable for all obligations of Seller
hereunder, it being intended that Buyer be entitled to enforce its rights
hereunder against any one or all of such parties.
Louisville Gas and Electric and Kentucky Utilities shall be jointly and
severally liable for all obligations of Buyer hereunder, it being intended that
Seller be entitled to enforce its rights hereunder against each or both parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
LOUISVILLE GAS AND ELECTRIC XxXXXXX COAL COMPANY
COMPANY
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------- -----------------------------
Xxxxx X. Xxxxx Vice President, Consol Inc.
EVP - Power Generation Attorney In Fact
Date: 5/12/00 Date: 5/9/00
31
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
KENTUCKY UTILITIES COMPANY CONSOLIDATION COAL COMPANY
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------- -------------------------
Xxxxx X. Xxxxx Vice President, CONSOL Inc.
EVP - Power Generation Attorney in Fact
Date: 5/12/00 Date: 5/9/00
CONSOL PENNSYLVANIA COAL COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Vice President, CONSOL Inc
Attorney in Fact
Date: 5/9/00
GREENON COAL COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Vice President, CONSOL Inc.
Attorney in Fact
Date: 5/9/00
NINEVEH COAL COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------
Vice President, CONSOL Inc.
Attorney in Fact
Date: 5/9/00
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CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
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EIGHTY FOUR MINING COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Vice President, CONSOL Inc.
Attorney in Fact
Date: 5/9/00
ISLAND CREEK COAL COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Vice President, CONSOL Inc.
Attorney in Fact
Date: 5/9/00
33
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
Exhibit A
Page 1 of 2
EXHIBIT A
SAMPLE COAL PAYMENT CALCULATIONS
--------------------------------------------------------------------------------
For contracts supplied from multiple "origins", each "origin will be calculated
individually.
SECTION I BASE DATA
1) Base F.O.B. price per ton: $ 18.00 /ton
-------
1a) Tons of coal delivered: tons
------
2) Guaranteed average heat content: 12,100 BTU/LB.
------
2r) As received monthly avg. heat content: BTU/LB.
------
2a) Energy delivered in MMBTU: MMBTU
------
[(Line 1a) *2,000 lb./ton*(Line 2r)] *MMBTU/1,000,000 BTU
[( ) *2,000 lb./ton*( )]*MMBTU/1,000,000 BTU
2b) Base F.O.B. price per MMBTU: $ 0.7438 MMBTU
------
{[(Line 1)/(Line 2)]*(1 ton/2,000 lb.)]}*1,000,000 BTU/MMBTU
{[( /ton)/( BTU/LB)]*(1 ton/2,000 lb.)}*1,000,000 BTU/MMBTU
3) Guaranteed quarterly avg. max. sulfur 3.25 LBS./MMBTU
-----
3r) As received quarterly avg. sulfur LBS./MMBTU
-----
4) Guaranteed monthly avg. ash 11.20 LBS./MMBTU
------
4r) As received monthly avg. ash LBS./MMBTU
------
5) Guaranteed monthly avg. max. moisture 5.60 LBS./MMBTU
------
5r) As received monthly avg. moisture LBS./MMBTU
------
SECTION II DISCOUNTS
----------------------------------------------------- -----------------
Assign a (-) to all discounts (round to (5) decimal places)
6d) BTU/LB.: If line 2r < 11,900 BTU/lb. then:
{1 -{(line 2r) / (line 2)} * $0.2604/MMBTU
{1 - ( ) / ( )} * $0.2604 = $ /MMBTU
-----------------
7d) SULFUR: If line 3r is greater than 3.25 lbs./MMBTU
[ (line 3r) - (line 3) ] * 0.1232/lb. Sulfur
[ ( ) - ( ) ] * 0.1232 = $ /MMBTU
---------
8d) ASH: If line 4r is greater than 11.20 lbs./MMBTU
[ (line 4r) - (line 4) ] * 0.0083/MMBTU
[ ( ) - ( ) ] * 0.0083 = $ /MMBTU
---------
9d) MOISTURE: If line 5r is greater than 7.00 lbs./MMBTU
[ (line 5r) - (line 5) ] * 0.0016/MMBTU
34
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00000
XX XXXXXXXX #XXX00000
[ ( ) - ( ) ] * 0.0016 = $ /MMBTU
-----------
35
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
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Exhibit A
Page 2 of 2
TOTAL PRICE
SECTION III ADJUSTMENTS
Determine total Discounts as follows:
Assign a (-) to all discounts (round to (5) decimal places)
Line 6d: $ /MMBTU
--------
Line 7d $ /MMBTU
--------
Line 8d $ /MMBTU
--------
Line 9d $ /MMBTU
--------
10) Total Discounts (-):
Algebraic sum of above: $ /MMBTU
--------
11) Total evaluated coal price = (line 2b) + (line 10)
12) Total discount price adjustment for Energy delivered:
(line 2a) * (line 10) (-)
$ /MMBTU + $ /MMBTU = $
-------- --------- --------
13) Total base cost of coal
(line 2a) * (line 2b)
$ /MMBTU + $ /MMBTU = $
-------- --------- --------
14) Total coal payment for month
(line 12) + (line 13)
$ /MMBTU + $ = $
-------- ---------- --------
36
AMENDMENT NO.1 TO
COAL SUPPLY AGREEMENT
THIS AMENDMENT NO. 1 TO
COAL SUPPLY AGREEMENT ("Amendment No. 1") is
entered into effective as of January 1, 2002, by and between LOUISVILLE GAS AND
ELECTRIC COMPANY AND KENTUCKY UTILITIES COMPANY, Kentucky corporations, 000 Xxxx
Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 (collectively "Buyer"), and XxXXXXX COAL
COMPANY, CONSOLIDATION COAL COMPANY, CONSOL PENNSYLVANIA COAL COMPANY, GREENON
COAL COMPANY, NINEVEH COAL COMPANY, AND ISLAND CREEK COAL COMPANY, Delaware
corporations, EIGHTY FOUR MINING COMPANY, a Pennsylvania corporation, and
WINDSOR COAL COMPANY, an Ohio corporation, all of 0000 Xxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000, (individually and collectively, "Seller"). In
consideration of the agreements herein contained, the parties hereto agree as
follows.
1.0 AMENDMENTS
The Agreement heretofore entered into by the parties, dated effective
January 1, 2000, and identified by the Contract Numbers set forth
above, (hereinafter referred to as "Agreement") is hereby amended as
follows:
2.0 TERM
The term of this Agreement shall continue through December 31, 2003,
subject to the provisions of Section 8.4.
3.0 QUANTITY
3.1 Section 3.1 BASE QUANTITY, is hereby modified to include the
following paragraph:
The following schedule (a) incorporates a deficiency from year
2000 in the amount of 394,800 tons, and (b) assumes there will be
a deficiency from year 2001 in the amount of approximately 172,431
tons which will be delivered during the first quarter of 2002, in
addition to the Base Quantity.
YEAR BASE QUANTITY (TONS)
2002 1,600,000 (includes carryover from 2000)*
2003 2,500,000
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
AMENDMENT NO. 1
* Deficiency tons from year 2001 in the amount of approximately
172,431 tons will be the first tons to be shipped during the
first quarter of 2002. Ratable deliveries of the Base Quantity
will also be delivered during the first quarter in the amount of
133,333 tons per month. Total monthly deliveries during the first
quarter will be in the amount of 190,810 tons per month.
Deficiency tonnage from 2000 in the amount of 394,800 tons is
included in the 1,600,000 base quantity above. Pricing is set
forth in Section 8.1.
The Base Quantity will be delivered in approximately equal
monthly quantities and in accordance with a mutually agreed upon
schedule.
3.2 Section 3.2 OPTION TO INCREASE OR DECREASE QUANTITY, is hereby
deleted in its entirety.
4.0 SOURCE
4.1 The second sentence of Section 4.1, Source, is hereby deleted in
its entirety and replaced with the following sentence: "As
necessary solely to comply with the quality requirements of this
Agreement, Seller may blend with coal from the Coal Property, coal
from Seller's Xxxxxxxx, Mahoning Valley, Mine 84, VP#8, Xxxxxxxx,
Xxxxxx/Xxxxx Fork, Blacksville, Xxxxxxxx Run and/or Windsor Mines
(the "Alternate Mines")".
4.2 The first two sentences of Section 4.2, Assurance of Operation and
Reserves, are hereby deleted in their entireties and replaced with
the following sentences: "Seller represents and warrants that the
Coal Property and Alternate Mines together contain 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
and Alternate Mines adequate machinery, equipment and other
facilities to produce, prepare and deliver coal in the quantity
and of the quality required by this Agreement."
4.3 The first sentence of Section 4.4, Seller's Preparation of Mining
Plan, is hereby deleted in its entirety and replaced with the
following sentence: "Seller shall have prepared a complete mining
plan for the Coal Property with adequate supporting data to
demonstrate Seller's capability to have coal produced from the
Coal Property which together with blend coal from the Alternate
Mines meets the quantity and quality specifications of this
Agreement."
4.4 The first sentence of Section 4.5, Substitute Coal, is hereby
deleted in its entirety and replaced with the following sentence:
"Notwithstanding the above representations and warranties, in the
event that Seller is unable to produce or obtain coal from the
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
AMENDMENT NO. 1
Coal Property and the Alternate Mines 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."
4.5 The last sentence of Section 4.5, Substitute Coal, is hereby
deleted in its entirety and replaced with the following sentence:
"Seller's delivery of coal not produced from the Coal Property or
the Alternate Mines without having received the express written
consent of Buyer shall constitute a material breach of this
Agreement."
5.0 QUALITY
5.1 Section 6.1 SPECIFICATIONS is modified and reads as follows
"The calendar quarter limit of 3.25 lbs. Sulfur (6.50 lbs. SO2 per
MMBTU) is effective only for the first quarter of calendar year
2002 (January 1, 2002 through March 31, 2002). Effective April 1,
2002, the maximum Guaranteed MONTHLY Weighted Average for Sulfur
is 3.125 lbs. Sulfur per MMBTU (6.25 lbs. SO2 per MMBTU).
5.2 The fourth and fifth sentences of the first paragraph of Section
6.3 REJECTION are hereby deleted and replaced with the following
sentences:
"Seller shall replace the rejected coal within ten (10) 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 ten (10) working day period
or the replacement coal is rightfully rejected, Buyer may purchase
coal from another source in order to replace the rejected coal."
6.0 PRICE
6.1 Section 8.1 BASE PRICE is deleted and replaced with the following:
"The base price ("Base Price") of the coal to be sold hereunder
will be firm and will be determined by the criteria set forth in
Section 3.1 in accordance with the following schedule:
YEAR BASE PRICE ($ PER MMBTU)
2002 $0.7521 for 2001 deficiency*
2002 $0.9638**
2003 $1.0331
* The first tons delivered in 2002 will be the 2001 deficiency in
the amount of 172,431 tons.
** The price is a weighted price based upon 394,800 carryover tons
from 2000 at a price of $.7521 per MMBtu and 1,205,200 additional
tons at a price of $1.0331 per MMBtu.
6.2 Section 8.2 QUALITY PRICE DISCOUNTS is modified as follows:
MONTHLY DISCOUNT VALUES
BTU/LB. $ 0.2604/MMBTU
ASH $ 0.0083/LB/MMBTU
MOISTURE $ 0.0016/LB/MMBTU
SULFUR $ 0.1232/LB/MMBTU
(Effective April 1, 2002)
QUARTERLY DISCOUNT VALUE (EFFECTIVE JANUARY
1, 2002 THROUGH MARCH 31, 2002.
SULFUR $0.1232/LB/MMBTU
GUARANTEED MONTHLY WEIGHTED AVERAGE DISCOUNT POINT
BTU Min. 12,100 BTU/LB 11,900 BTU/XX
XXX Max. 11.20 LB/MMBTU 11.20 LB/MMBTU
MOISTURE Max. 5.60 LB/MMBTU 7.00 LB/MMBTU
SULFUR Max. 3.125 LB/MMBTU(1) 3.25 LB/MMBTU
GUARANTEED QUARTERLY WEIGHTED AVERAGE DISCOUNT POINT
SULFUR Max. 3.25 LB/MMBTU (2) 3.25 LB/MMBTU
(1) Effective April 1, 2002
(2) Effective January 1, 2002 through March 31, 2002
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
AMENDMENT NO. 1
6.3 Section 8.4 PRICE REVIEW is added and reads as follows:
"The Base Price and all other terms and conditions of this
Agreement shall be subject to review for any reason at the request
of either party for revisions to become effective on January 1,
2003. The party requesting such a review shall give written notice
of its request to the other party on or before July 1, 2002. The
parties then shall negotiate new prices and/or other terms and
conditions between July 1 and October 1. If the parties do not
reach an agreement by December 1, 2002 then this Agreement will
terminate as of December 31, 2002 without liability due to such
termination for either party."
7.0 INVOICES, BILLING AND PAYMENT
7.1 Section 9.1 INVOICING is revised as follows:
The copy of the invoice to the attention of the Manager Accounts
Payable is eliminated.
7.2 Section 9.3 PAYMENT PROCEDURES FOR COAL SHIPMENTS is deleted and
replaced with the following:
"For all coal delivered pursuant to Section 5 hereof, and unloaded
at the Buyer's generating stations between the first (1st) and
fifteenth (15th) days of any calendar month, Buyer shall make
preliminary payment for seventy-five percent (75%) of the amount
owed for the coal (based on the assumption that the coal will meet
all guaranteed monthly quality parameters) by the twenty-fifth
(25th) day of such month of delivery and unloading. If the 25th is
not a regular working day, payment shall be made on the next
regular working day. For all coal delivered, as defined in Section
5 hereof, and unloaded at the Buyer's generating stations between
the sixteenth (16th) and the last day of any calendar month, Buyer
shall make preliminary payment for seventy-five percent (75%) of
the delivered and unloaded coal by the tenth (10th) day of the
month following the month of delivery and unloading. If the 10th
is not a regular workday, payment shall be made on the next
regular working day.
Preliminary payment shall be in the amount of seventy-five percent
(75%) of the then current price on a dollar per ton basis as
calculated by the guaranteed monthly weighted average BTU/lb and
the then current Base Price in cents per MMBTU.
A reconciliation of amounts paid and amounts owed shall occur by
the twenty-fifth (25th) day of the month following the month of
delivery and unloading. (For example, Buyer will make one initial
payment by September 25 for seventy-five
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
AMENDMENT NO. 1
percent (75%) of coal delivered and unloaded September 1 through
15, and another initial payment by October 10 for seventy-five
percent (75%) of coal delivered and unloaded September 16 through
30. Reconciliation will occur by October 25 for all deliveries and
unloadings made in September.) The reconciliation shall be made as
follows: Seller shall invoice Buyer on or before the 15th day of
the month following the month of delivery and unloading. The
amount due for all coal (based on the Base Price minus any Quality
Price Discounts) delivered and unloaded and accepted by Buyer
during any calendar month shall be calculated and compared to the
sum of the preliminary payments made for coal delivered and
unloaded and accepted during such month. The difference shall be
paid by or paid to Seller, as applicable, by the twenty-fifth
(25th) day of the month following the month of delivery and
unloading, except, that, if the 25th is not a regular working day,
payment shall be made in the next regular working day. Buyer shall
electronically transfer all payments to Seller's account at:
CONSOL Energy Inc.
Account No. 107-3965
ABA No. 000000000
Mellon Bank, NA
Xxxxxxxxxx, XX 00000
7.3 Section 9.5 CREDIT RATING is added and reads as follows:
"If the credit rating of either Buyer (if Buyer has a public
rating) or Buyer's affiliates that have public ratings falls below
investment grade (BBB - as defined by Standard & Poor's or the
equivalent as defined by other public ratings agencies), Buyer
shall, within thirty (30) days after Seller's written request,
provide Seller with a mutually agreed upon form of credit
enhancement (e.g., letter of credit, guaranty from an investment
grade entity, etc.). Until the mutually acceptable assurances of
good credit are received, Seller has the right to require payments
in cash at the time of delivery. Such mutually acceptable
assurances of good credit shall not be more than the average
monthly outstanding net balance."
8.0 NOTICES
8.1 Section 12.1 FORM AND PLACE OF NOTICE is modified as follows:
"Notice if to Seller: CONSOL Energy Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Executive Vice President, Marketing
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
AMENDMENT NO. 1
Notices and correspondence of a routine nature shall be addressed
to Seller at:
CONSOL Energy Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: General Sales Manager
8.2 Section 12.4 AGREEMENT ADMINISTRATION is modified as follows:
"Consol Inc. shall read CONSOL Energy Inc."
9.0 RIGHT TO RESELL
Section 13, RIGHT TO RESELL is revised as follows:
"Buyer shall have the right to sell all or any of the coal
purchased under this Agreement with the written approval of the
Seller."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
1 on the day and year below written, but effective as of the day and year first
set forth above.
LOUISVILLE GAS AND ELECTRIC COMPANY XxXXXXX COAL COMPANY
BY: /s/ Xxxx X. Xxxxxxxx BY: /s/ Xxxxxx X. Xxxxxxxx
----------------------------- ------------------------------
TITLE: SR. VICE PRESIDENT, TITLE: VICE PRESIDENT, CONSOLENERGY INC.
ENERGY SERVICES
DATE: 1/17/02 DATE: JANUARY 07, 2002
KENTUCKY UTILITIES COMPANY CONSOLIDATION COAL COMPANY
BY: /s/ Xxxx X. Xxxxxxxx BY: /s/ Xxxxxx X. Xxxxxxxx
-------------------------- ------------------------------
TITLE: SR. VICE PRESIDENT, TITLE: VICE PRESIDENT, CONSOLENERGY INC.
ENERGY SERVICES
DATE: 1/17/02 DATE: JANUARY 07, 2002
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
AMENDMENT NO. 1
CONSOL PENNSYLVANIA COAL COMPANY
BY: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
TITLE: VICE PRESIDENT, CONSOL ENERGY INC.
DATE:
--------------------------------
GREENON COAL COMPANY
BY: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
TITLE: VICE PRESIDENT, CONSOL ENERGY INC.
DATE:
--------------------------------
NINEVEH COAL COMPANY
BY: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
TITLE: VICE PRESIDENT, CONSOL ENERGY INC.
DATE:
--------------------------------
EIGHTY FOUR MINING COMPANY
BY: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
TITLE: VICE PRESIDENT, CONSOL ENERGY INC.
DATE:
--------------------------------
ISLAND CREEK COAL COMPANY
BY: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
TITLE: VICE PRESIDENT, CONSOL ENERGY INC.
DATE:
--------------------------------
CONSOL ENERGY INC.
LG&E CONTRACT #LGE 00010
KU CONTRACT #KUF00731
AMENDMENT NO. 1
WINDSOR COAL COMPANY
BY: /s/ XXXXXX X. XXXXXXXX
--------------------------------
TITLE: VICE PRESIDENT, CONSOL ENERGY INC.
DATE:
--------------------------------
