Exhibit 10.55
COAL SUPPLY AGREEMENT
This is a coal supply agreement (the "Agreement") dated August 12, 2001
between KENTUCKY UTILITIES COMPANY, a Kentucky corporation, 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Buyer"), and ARCH COAL SALES COMPANY, INC.,
a Delaware corporation, agent for the independent operating subsidiaries of ARCH
COAL, INC., a Delaware corporation (collectively "Seller"), whose address is
XxxxXxxxx Xxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000.
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,
2002 and shall continue through December 31, 2005, subject to early termination
pursuant to the terms of Sections 6.4, 8.1, 10.2, 15 and 20.7.
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"):
ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
YEAR BASE QUANTITY (TONS)
---- --------------------
2002 1,000,000
2003 1,000,000
2004 1,000,000
2005 1,000,000
The Base Quantity will be delivered in approximately equal monthly
quantities and in accordance with a mutually agreed upon schedule, assuming
adjustments in scheduling for maintenance outages. In the event Buyer fails to
take delivery of the Base Quantity in any calendar year for reasons other than
an event of Force Majeure under Section 10, delivery of non-conforming coal,
failure by Seller to deliver coal in accordance with the terms of this
Agreement, or any other reasons excused hereunder, any deficiency in deliveries
shall be made up or carried over to subsequent year(s) only upon mutual written
agreement of both Buyer and Seller.
SECTION 4. SOURCE.
Section 4.1 SOURCE. The coal sold hereunder, shall be supplied primarily
from the Black Thunder Mine located in Xxxxxxxx County, Wyoming (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, subject to Seller obtaining issuance of
necessary permits. 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
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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 allocates 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 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 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
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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 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.
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 coal from
Seller's other facilities and mines or Seller shall also have the right to
supply substitute coal from sources not owned or controlled by Seller 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
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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 RAIL DELIVERY. The coal shall be delivered to Buyer F.O.B.
railcar at the rail loading facility located at Black Thunder Mine near Xxxxxx,
Wyoming (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. Buyer shall retain any resulting savings in such
transportation costs.
Title to and risk of loss of coal sold will pass to Buyer and the coal will
be considered to be delivered as the coal is progressively loaded into railcars
at the Delivery Point. Buyer or its contractor shall furnish suitable railcars
in accordance with a delivery schedule provided by Buyer to Seller. Seller shall
comply with the applicable provisions of Buyer's rail contractor's tariff
provided that such provisions shall first be provided by Buyer for review by
Seller. Buyer shall arrange and pay for all costs of transporting the coal from
the Delivery Point to Buyer's generating station. For delays caused by Seller in
handling the scheduling of shipments with Buyer's rail contractor, Seller shall
be responsible for any demurrage, penalties, damages or charges assessed by said
rail contractor (or assessed by Buyer) which accrue at the Delivery Point,
including the demurrage, penalties for loading less than the minimum of 15,000
tons per
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train shipment, or other penalties, damages or charges assessed for railcars not
loaded in conformity with applicable requirements.
Section 5.2 SIDE RELEASE TREATMENT. At Buyer's request, Seller shall treat
(or have treated) any railcars specified by Buyer with a side release agent
approved by Buyer. The price for each such requested side chemical treatment
shall be an amount, equal to Seller's cost of material applied, for each
application. The cost of the side release treatment shall be established for
each spray season by Seller prior to October of that season. The spray season is
approximately October through March. Seller shall invoice Buyer for all such
treatments, which occurred in a calendar month by the fifteenth of the following
month; and payment shall be wired by the 25th of such following month.
Section 5.3 SODIUM CONDITIONING. At Buyer's request, Seller shall treat (or
have treated) any shipment of coal hereunder with soda ash in order to maintain
approximately 2% sodium content. The price for soda ash applied shall be on a
$0.08 per pound (lb.) basis for each application of soda ash. Seller shall
invoice Buyer for all such treatments, which occurred in a calendar month by the
fifteenth of the following month; and payment shall be wired by the 25th of such
following month.
SECTION 6. QUALITY.
Section 6.1 SPECIFICATIONS. The coal delivered hereunder shall conform to
the following specifications on an "as received" basis:
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Guaranteed Monthly Rejection Limits
Specifications Weighted Average(1) (per shipment)
--------------------------------------------------------------------------------------------
BTU/LB. min. 8,800 < 8,500
------ ------
LBS/MMBTU:
MOISTURE max. 30.68 > 35.29
------ ------
ASH max. 6.82 > 10.59
------ ------
SULFUR max. 0.40 * > 0.60
------ ------
SULFUR min. NA < NA
------ ------
CHLORINE max. 0.01 > 0.02
------ ------
NITROGEN max. 0.95 > 1.00
------ ------
* Individual shipment limit of 1.20 lbs. SO(2)/MMBTU
SIZE (3" X 0"):
Top size (inches)** max. 3X0 > 3X0
------ ------
Fines (% by wgt)
Passing 1/4" screen max. 35 > 40
------ ------
% BY WEIGHT:
VOLATILE min. 32 < 30
------ ------
FIXED CARBON min. 36 < 31
------ ------
GRINDABILITY (HGI) min. 52 < 44
------ ------
ASH FUSION TEMPERATURE (DEG.F) (ASTM D1857)
REDUCING ATMOSPHERE
Initial Deformation min. +2135 min. +2050
------ ------
Softening (H=W) min. +2160 min. +2060
------ ------
Softening (H=1/2W) min. +2175 min. +2070
------ ------
Fluid min. +2240 min. +2100
------ ------
OXIDIZING ATMOSPHERE
Initial Deformation min. +2220 min. +2100
------ ------
Softening (H=W) min. +2230 min. +2100
------ ------
Softening (H=1/2W) min. +2250 min. +2120
------ ------
Fluid min. +2300 min. +2140
------ ------
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(1) An actual Monthly Weighted Average will be calculated for each
specification for coal delivered for the
Kentucky Utilities Ghent
generating station at the Delivery Point.
Note: As used herein > means greater than:
< means less than.
Section 6.2 DEFINITION OF "SHIPMENT". As used herein, a "shipment" shall
mean one unit trainload that is loaded at the Delivery Point.
Section 6.3 BUYER AGREES THAT SELLER MAKES NO EXPRESS WARRANTIES OTHER THAN
THOSE SET FORTH IN THIS AGREEMENT. SELLER MAKES NO WARRANTY CONCERNING THE
SUITABILITY OF COAL DELIVERED HEREUNDER FOR USE IN BUYER'S PLANT, OR OTHER
ELECTRIC GENERATION STATION. ALL WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR
A PARTICULAR PURPOSE OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE ARE
SPECIFICALLY EXCLUDED.
Section 6.4 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 that in the reasonable judgement of Buyer could interfere
with the Buyer's operation. 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 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 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
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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. 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, wood, mining materials, metal,
steel, etc., the estimated weight of such materials shall be deducted from the
weight of that shipment.
Section 6.5 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 two (2) months in a
six (6) month period, then Buyer may upon notice confirmed in writing and sent
to Seller by certified mail, suspend future shipments except
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shipments already loaded into railcars. Seller shall, within 10 days of receipt
of Buyer's notice, 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 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,
then Buyer may terminate this Agreement and exercise all its other rights and
remedies under applicable law and in equity for Seller's breach.
Guaranteed Monthly Weighted Averages must be based on a minimum of three
(3) shipments. For any month in which there is less than three (3) shipments
made, the Guaranteed Monthly Weighted Average will be based on the last one or
two shipments from the previous calendar month so that three shipments are used
to determine the monthly weighted average for Suspension and Termination
purposes.
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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 Seller on the basis of weights generated
at the Delivery Point unless another method is mutually agreed upon by the
parties. Such scales shall be duly reviewed by an appropriate testing agency
every six (6) months and maintained in an accurate condition. Buyer shall have
the right, at Buyer'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 loading quality to the
Buyer as soon as possible. The sampling and analysis of the coal loaded
hereunder shall be performed by Seller 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 done at an independent laboratory located on
Seller's property and at Seller's expense. Samples for analyses shall be taken
by ASTM 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 shipments made hereunder. Seller shall notify
Buyer in writing of any significant changes in Seller's sampling and analysis
practices. Any such changes in Seller's sampling and analysis practices shall
provide for no less
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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 Seller shall be divided into three (3) parts and put
into airtight containers, properly labeled and sealed. One part shall be used
for analysis by Seller; one part shall be retained for thirty (30) days
("Retention Period") after the sample is taken, and shall be delivered to Buyer
for analysis if Buyer so requests before the end of the Retention Period; and
one part ("Referee Sample") shall be retained by Seller until the for thirty
(30) days. Buyer, on reasonable notice to Seller shall have the right to have a
representative present to observe the sampling and analyses performed by Seller.
Unless Buyer requests a Referee Sample analysis, Seller's analysis shall be used
to determine the quality of the coal loaded hereunder. The Monthly Weighted
Averages shall be determined by utilizing the individual shipment analyses.
If Buyer disputes the analysis, the Referee Sample retained by Seller 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
Buyer to the extent that Seller's analysis prevails and by Seller to the extent
that the analysis of the Independent Lab prevails.
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SECTION 8. PRICE.
Section 8.1 BASE PRICE. The base price ("Base Price") of the coal to be
sold hereunder will be firm during each time period of this Agreement in
accordance with the following schedule, subject to adjustment only for quality
variations pursuant to Section 8.2 and Governmental Impositions pursuant to
Section 8.4. See Exhibit B for a listing of the price components.
BASE PRICE
PERIOD LOADING POINT ($ PER MMBTU) ($ PER TON)
------ ------------- ------------- -----------
1/1/02 - 12/31/03 Thunder Junction, Wyoming 0.5966 F.O.B. railcar $10.50
1/1/04 - 12/31/04 *
1/1/05 - 12/31/05 *
* Buyer and Seller will begin negotiating price and other terms and
conditions for each year, 2004 and 2005, on or before July 1 of the preceding
year, with the intent to reach a mutually agreed price which would begin on
January 1, 2004 or January 1, 2005, as appropriate. If the parties do not reach
an agreement by October 1, of either 2003 or 2004, then this Agreement will
terminate as of December 31, 2003 or December 31, 2004, as appropriate, 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.
Section 8.2 QUALITY PRICE DISCOUNTS.
(a) The Base Price is based on coal meeting or exceeding the Guaranteed
Monthly Averages specifications as set forth in Section 6.1. Quality price
discounts shall be applied for each
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specification to reflect failures to meet the Guaranteed Monthly Weighted
Averages or Individual Shipment SO2 specifications set forth in Section6.1, as
determined pursuant to Section7.2, subject to the provisions set forth below.
The discount values used are as follows:
MONTHLY DISCOUNT VALUES
$/MMBTU
BTU/LB. 0.2604
$/LB./MMBTU
ASH 0.00863
MOISTURE 0.0016
INDIVIDUAL SHIPMENT DISCOUNT VALUE
$/TON
SO(2) 3.00
(b) Notwithstanding the foregoing, for each specification, 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 applicable Discount Point, then the discount shall apply to 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.
GUARANTEED MONTHLY
WEIGHTED AVERAGE DISCOUNT POINT
BTU/LB Min. 8,800 8,600
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GUARANTEED MONTHLY
WEIGHTED AVERAGE DISCOUNT POINT
------------------ --------------
LB/MMBTU:
ASH Max. 6.82 7.95
MOISTURE Max. 30.68 31.81
GUARANTEED
SHIPMENT DISCOUNT POINT
LBSSO(2)/MMBTU --------------
--------------
LB/MMBTU:
---------
SO(2) Max. 1.20 1.20
For example, if the actual Monthly Weighted Average of ash equals 8.00
lb/MMBTU, then the applicable discount would be (8.00 lb./mmbtu - 6.82 lb./mbtu)
X $.00863 lb./mmbtu = $.010183/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 at the Ghent Station. 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.
(a) The term "Governmental Imposition" shall mean any taxes, fees,
assessments or other obligations which are imposed by any government or
governmental agency pursuant to any new law, regulation or ruling, or pursuant
to changes in the interpretation or application of existing laws, regulations or
rulings, which cause an increase or decrease in Seller's cost for the
production, mining, or preparation of coal to be supplied to Buyer hereunder. If
any Governmental Imposition is adopted or becomes effective on or after January
1, 2002, Seller shall notify Buyer and shall
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demonstrate to Buyer that such Governmental Imposition has increased or
decreased Seller's cost of owning or operating the coal mines designated as
sources hereunder as it relates to the production, mining or preparation of coal
from such mines for sale to Buyer under this Agreement. The purchase price for
coal to be paid by Buyer hereunder shall then be adjusted by adding or
subtracting the per ton cost of the Governmental Imposition to determine an
adjusted purchase price. If the Governmental Imposition will continue for the
life of this Agreement, then the purchase price for subsequent Contract Years,
if any, shall also be adjusted by the per ton amount of the Governmental
Imposition.
(b) Seller shall submit to Buyer in writing, an analysis identifying
the Governmental Imposition causing the cost impact and the extent of such cost
impact on Seller's ownership or operation of the coal mines or on Seller's cost
for the production, mining or preparation of coal purchased hereunder and
showing the calculation of the amount of change in the purchase price. The
effective date of any price increase or decrease pursuant to this section shall
be the effective date of the Governmental Imposition causing the cost increase
or decrease, as the case may be.
SECTION 9. INVOICES, BILLING AND PAYMENT.
Section 9.1 INVOICING:
Invoices for Buyer will be sent to the following address:
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Kentucky Utilities Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Fuels Management Department
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 (15th) of the following month.
Section 9.3 PAYMENT PROCEDURES FOR COAL SHIPMENTS. Payment for coal
unloaded in a calendar month shall be mailed or 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 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:
Arch Coal, Inc.
PNC Bank - Pittsburgh, PA
ABA Number: 000000000
Account Number: 0000000000
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 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 issues, 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.
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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, in whole or in part, due to acts of God, war, riots, civil
insurrection, acts of the public enemy, inability to obtain permits after
applying for same with reasonable diligence, strikes, lockouts, fires, floods or
earthquakes, or other causes of a similar 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 after the occurrence
of the force majeure event. Such written notice shall include the probable
duration and the nature 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
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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 Seller's force majeure event shall be
made up at Buyer's sole option on a mutually agreeable schedule; tonnage
deficiencies resulting from Buyer's force majeure event shall be made up at
Seller's sole option on a mutually agreeable schedule.
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 or reinterpret 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 or reinterpretation 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
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KU Contract # KUF02848 PRB
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 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 the requested change, it being understood, however that Seller
shall not be obligated to modify this Agreement 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.
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
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 mailing by first class, certified, or registered mail, return receipt
requested, and addressed as follows:
If to Buyer:
Kentucky Utilities Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn.: Director, Corporate Fuels
If to Seller: Arch Coal Sales Company, Inc.
XxxxXxxxx Xxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Regional Vice-President Sales
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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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
SECTION 13. RIGHT TO RESELL. Buyer shall have the unqualified right to sell
all or any of the coal purchased under this Agreement. Seller makes no
representations or warranties concerning any coal that Buyer resells to other
parties, and Buyer shall indemnify and defend Seller against any claims arising
from the sale of coal by Buyer to any such parties or the use thereof by those
parties.
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) due to any failure of Seller to comply with
laws, regulations or ordinances, or (ii) due to the acts or omissions of Seller
in the performance of this Agreement.
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, $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.
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
If any of the above policies are written on a claim 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 exhibited
in the Certificate of Insurance mentioned above. Seller's liability shall not be
limited to its insurance coverage.
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 may be terminated
by the
23
ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
non-breaching party at the end of the notice period in addition to all the other
rights and remedies available to the non-breaching party under this Agreement
and at law and in equity.
SECTION 16. TAXES, DUTIES AND FEES.
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, as such price may be adjusted
pursuant to Section 8.4.
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 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
24
ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
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 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 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.
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
SECTION 20. MISCELLANEOUS.
Section 20.1 APPLICABLE LAW. This Agreement shall be construed in
accordance with the laws of the Commonwealth 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.
Section 20.7 ASSIGNMENT.
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
A. Seller shall not, without Buyer's prior written consent, which consent
shall not be unreasonably withheld, 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, which consent
shall not be unreasonably withheld, 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 majority interest in the Buyer's Ghent
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 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.
27
ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BUYER SELLER
KENTUCKY UTILITIES COMPANY ARCH COAL SALES COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxx Xxxxx
------------------------------- --------------
Xxxx X. Xxxxxxxx Xxxx Xxxxx - President
Senior VP - Energy Services
Date: 12/31/01 Date: 12/19/01
28
ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
Exhibit A
Page 1 of 2
EXHIBIT A
SAMPLE COAL PAYMENT CALCULATIONS
Total Evaluated Coal Costs for Xxxxxxxx Xx. XX X00000
For contracts supplied from multiple "origins", each "origin will be calculated
individually.
SECTION I BASE DATA
-------------------------------------------------------------- ----------------------------
1) Base F.O.B. price per ton: $ 10.50 /ton
----------
1a) Tons of coal delivered:
---------- tons
2) Guaranteed average heat content: 8,800 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 XXX
0x) Base F.O.B. price per MMBTU: $ 0.5966 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 shipment. max. SO2 1.20 LBS./MMBTU
----------
3r) Number of tons > 1.20 lbs SO2/Mmbtu
---------- TONS
4) Guaranteed monthly avg. ash 6.82 LBS./MMBTU
----------
4r) As received monthly avg. ash
---------- LBS./MMBTU
5) Guaranteed monthly avg. max. moisture 30.68 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 < 8,600 BTU/lb. then:
{1 - (line 2r) / (line 2)} * $0.2604/MMBTU
{1 - ( ) / ( )} * $0.2604 = $ /MMBTU
----------
7d) SO2: If any individual shipment is greater than 1.20 lbs./MMBTU
(line 3r) * $3.00 per ton / line 2a
( ) * (3.00) / ( ) = $ /MMBTU
----------
8d) ASH: If line 4r is greater than 7.95 lbs./MMBTU
(line 4r) - (line 4) * 0.00863/MMBTU
( ) - ( ) * 0.00863 = $ /MMBTU
----------
9d) MOISTURE: If line 5r is greater than 31.81 lbs./MMBTU
(line 5r) - (line 5) * 0.0016/MMBTU
( ) - ( ) * 0.0016 = $ /MMBTU
----------
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
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 + $ = $
-------- ------------- -----------
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
EXHIBIT B
Arch Coal Sales Company, Inc.
KU/LG&E Contract #KUF02848
January 1, 2002 Pricing Breakdown
$ Per MMBtu $ Per Ton
2002 & 2003 2002 & 2003
-----------------------------------------
FIXED 0.425 7.480
ROYALTY 0.0746 1.313
SEVERANCE 0.0282 0.496
AD VALOREM 0.0241 0.424
BLACK LUNG 0.0252 0.443
RECLAMATION FEE 0.0195 0.344
-------- -------
0.5966 10.500
======== =======
2002 & 2003
-------------
Royalty Amount : Base Price X 12.50% = $1.313
Wyoming Severance Tax: (7.00% X 67.5%) X Base Price = $0.496
Wyoming Ad Valorem Tax: (5.9880% X 67.5%) X Base Price = $0.424
Federal Black Lung Excise Tax: 4.40% X (Base Price - Fed. Black Lung) = $0.443
Federal Coal Reclamation Fee : (1.00 - .0171 = .9829) X $.35 = $0.344
-----------
$3.020
-----------
2000 Ad Valorem Rate 5.9880%
2000 Direct Cost Ratio 67.500%
2nd Qtr 2001 Excess Moisture 1.71%
The excess moisture is fixed at 1.71% for the duration of this Agreement. The
Wyoming Ad Valorem and Wyoming Severance Tax shall be adjusted only for
changes in the applicable statutory rates, excluding any changes in the
direct mining ratio. The direct mining ratio is fixed at 67.5% for the
duration of this Agreement.
Values for Govermental Impositions Cost Formulas
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
2002 & 2003
------------
Direct Mining Cost Ratio (Assumed) 67.5000%
Severance Tax Rate 7.0000%
General Mill Levy Rate (1) 5.9880%
Federal & State Royalty Rate 12.0000%
Federal Black Lung Excise Tax Rate (2) 4.4000%
Federal Coal Reclamation Fee ($/ton) (3) $0.35
(1) Source: Xxxxxxxx County, Wyoming Tax Notice. The 5.9888% is the rate for
Calendar Year 2000.
(2) Maximum of $.55 per ton.
(3) The Excess Moisture rate will be fixed at the estimated rate of 1.71%.
Values for Govermental Impositions Cost Formulas
BLM Royalty = (Base Price) X (Federal & State Royalty Rate)
Severance Tax = (Base Price) X (Severance Tax Rate) X (Direct Mining Cost Ratio)
Federal Black Lung Excise Tax = (Base Price) - (Federal Black Lung Excise Tax) X
4.4% (4) Federal Reclamation Fee =(Base Price) X ( 1 - Excess Moisture) Ad
Valorem Tax = (General Mill Levy Rate) X (Direct Mining Cost Ratio) X (Base
Price)
(4) Effective rate (4.4%) / ( 1 + .044) = 4.2146%
SECTION 4 STATES THE SOURCE OF THE COAL IN THIS AGREEMENT SHALL BE SUPPLIED
PRIMARILY FROM BLACK THUNDER MINE LOCATED IN XXXXXXXX COUNTY, WYOMING. THE ABOVE
HAS BEEN PRICE IN ACCORDANCE WITH THE LAWS OF WYOMING.
32
ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT ("Guaranty") is made and entered into this 1st day
of January 2002 by ARCH COAL, INC. ("Arch"), a Delaware corporation, with
offices at XxxxXxxxx Xxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000, to and for the
benefit of
KENTUCKY UTILITIES COMPANY ("Buyer"), a
Kentucky corporation, with
offices at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
WHEREAS, Buyer and Arch Coal Sales Company, Inc. ("Seller"), a Delaware
corporation, with offices at XxxxXxxxx Xxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx
00000, which Seller is agent for the independent operating subsidiaries of Arch,
propose to enter into a Coal Supply Contract dated on or about January 1, 2002
("Contract") for a coal supply from the Black Thunder Mine in Xxxxxxxx County,
Wyoming (the "Coal Property"); and
WHEREAS, Buyer's performance under the Contract will benefit Arch through
the Seller, and to induce Buyer to enter into the Contract, Arch is willing to
guarantee to Buyer, its successors, representatives and assigns, Seller's
performance of Seller's obligations (collectively, the "Obligations") set forth
in the Contract and any extension or amendment thereof executed by Buyer and
Seller.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00)
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Arch hereby agrees as follows:
1) GUARANTY - Arch guarantees to Buyer Seller's performance of the
Obligations and agrees that this Guaranty shall inure to the benefit of and may
be enforced by Buyer, its successors, representatives and assigns.
2) ACCEPTANCE AND AMENDMENTS - Arch waives notice of acceptance of this
Guaranty, and consents to any and all waivers and extension of the time of
performance and to any and all changes, modifications or amendments in the
terms, covenants and conditions in the Contract agreed to by Seller in
accordance with the terms of the Contract.
3) BUYER'S REMEDIES - Arch agrees that this Guaranty may be enforced by
Buyer without first enforcing Buyer's rights under the Contract against Seller;
provided, however, that nothing herein contained shall prevent Buyer from
enforcing the Contract with or without making Arch a party to the suit.
4) ARCH'S DEFENSES - Except as otherwise provided in Section 5 of this
Guaranty, Arch shall be entitled to the benefit of any defenses which Seller may
have to the enforcement by Buyer of any of the Obligations.
5) SELLER'S BANKRUPTCY - Arch agrees that its obligations under this
Guaranty shall not be impaired, modified, changed, released or limited in any
manner whatsoever by any impairment, modification, change, release or limitation
of the liability of Seller (or Seller's estate in bankruptcy) resulting from the
operation of any present or future provision of the federal bankruptcy law or
other similar statute.
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ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
6) EXPENSES - If any claim by Buyer is successfully prosecuted against Arch
under this Guaranty, Arch shall reimburse Buyer for all reasonable expenses
incurred by Buyer in connection therewith, including reasonable attorneys' fees.
7) REPRESENTATIONS - Arch represents that:
a. Arch is a validly organized corporation duly existing and in good
standing under the laws of the State of Delaware.
b. The giving of this Guaranty is within Arch's corporate powers.
c. The giving of this Guaranty has been pursuant to all necessary
corporate action, if any, and does not contravene any law or any
contractual restriction binding on Arch.
d. This Guaranty is a legal, valid and binding obligation, enforceable
against Arch in accordance with its terms.
8) WAIVER BY BUYER - The failure of Buyer to enforce any of the provisions
of this Guaranty at any time or for any period of time shall not be construed to
be a waiver of any such provision or of the right thereafter to enforce the
same.
9) GOVERNING LAW - This Guaranty shall be interpreted and enforced in
accordance with the laws of the Commonwealth of
Kentucky.
10) NOTICES - Any notice, request, consent, demand, report or statement
which is given to or made upon either party hereto by the other party hereto
under any of the provisions of this Guaranty shall be in writing unless
otherwise provided herein and shall be treated as duly delivered when the same
is received by the party to be notified whether by personal delivery, or by the
United States mail, as evidenced by a receipt or by telecopier and confirmed by
United States mail, as evidenced by a receipt. Notices shall be properly
addressed as follows:
As to Buyer:
Kentucky Utilities Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Director, Corporate Fuels
As to Seller:
Arch Coal Sales Company, Inc.
XxxxXxxxx Xxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Regional Vice-President Sales
As to Arch:
Arch Coal, Inc.
CityPlace Xxx Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: General Counsel
34
ARCH COAL SALES CO., INC.
KU Contract # KUF02848 PRB
Either party hereto may change its address or representative for the purposes of
notices or communications hereunder by furnishing notice thereof to the other
party in compliance with this provision
11) ASSIGNMENT - Arch's rights and obligations under this Guaranty may be
assigned to the ultimate parent company of an approved assignee of Seller's
rights and obligations under the Contract, provided the assignment
provisions of the Contract shall control and provided further, such that a
wholly-owned subsidiary or wholly affiliate company of the ultimate parent
takes title to the Coal Property. If such assignee is not owned either
directly or indirectly by Arch and if Buyer has agreed to release Seller
from the Obligations, this Guaranty shall terminate and Arch shall be
released from any further obligations or liabilities hereunder. If another
company with substantial assets becomes the new ultimate parent company of
Seller, Arch may, with Buyer's written approval, assign its rights and
obligations hereunder to such other company and thereafter, as to Arch, this
Guaranty shall terminate, and Arch shall be released from any further
obligations or liabilities hereunder.
IN WITNESS WHEREOF, Arch has executed this Guaranty as of the date first
written above.
ARCH COAL, INC.
By:
ATTEST:
35
