CONTRACT #00-000-000
Exhibit 10.78
COAL SUPPLY AGREEMENT
This is a coal supply agreement (the "Agreement") dated January 1,
1997 between LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation, 000
Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Buyer") and CHAROLAIS
CORPORATION, a Kentucky corporation, Xxxxxxx 000, X.X. Xxx 000, Xxxxxxxxxxxx,
Xxxxxxxx 00000 ("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, 1997 and shall continue through December 31, 2001, subject to
SECTION 8.3.
SECTION 3. QUANTITY; DELIVERY SCHEDULE; OPTIONS.
SECTION 3.1 BASE QUANTITY. Seller shall sell and deliver and Buyer
shall purchase and accept delivery of 1,000,000 tons of coal per year (the
"Base Quantity").
SECTION 3.2 DELIVERY SCHEDULE. Within 10 business days after this
Agreement becomes fully executed, Buyer shall specify in writing to Seller
the quantities to be delivered in each month of 1997. For subsequent years,
Buyer shall so specify monthly deliveries by December 1 of the preceding
year. Such quantities shall be shipped in accordance with such schedule. Time
is of the essence with respect to the schedule so established; and failure by
Seller to deliver in a timely fashion shall constitute a material breach
within the meaning of SECTION 15 of this Agreement.
SECTION 3.3 BUYER'S OPTIONS. For each year after 1997, Buyer shall
have the option to purchase from Seller up to an additional 350,000 tons of
coal as follows. Buyer shall exercise such option
CONTRACT #00-000-000
by giving to Seller notice stating Buyer's exercise of the option and
specifying the amount of the tonnage by October 1 of the preceding year. Coal
sold by Seller and purchased by Buyer under Buyer's option set forth in this
SECTION 3.3 shall be subject to all the terms and conditions of this
Agreement.
SECTION 4. SOURCE.
SECTION 4.1 SOURCE. The coal sold hereunder, including coal purchased
by Seller from third parties, shall be supplied from: geological seam Western
Kentucky #13, Xxxx'x Creek or DB94 Mine, Xxxxxxx County, Kentucky; Western
Kentucky #9, Sacramento Surface Mine, XxXxxx County, Kentucky; Xxxxxxx
Xxxxxxxx #0, Xxxx Energy I and II, Xxxxxxx County, Kentucky; or Xxxxxxx
Xxxxxxxx #0, Xxxxxxxxx Xxxxxx Property, Xxxxxxxxx County, Kentucky (the "Coal
Property").
SECTION 4.2 ASSURANCE OF OPERATION AND RESERVES. Seller represents
and warrants that the Coal Property contains economically recoverable coal of
a quality and in quantities which will be sufficient to satisfy all the
requirements of this Agreement. Seller agrees and warrants that it will have
at the Coal Property adequate machinery, equipment and other facilities to
produce, prepare and deliver coal in the quantity and of the quality required
by this Agreement. Seller further agrees to operate and maintain such
machinery, equipment and facilities in accordance with good mining practices
so as to efficiently and economically produce, prepare and deliver such coal.
Seller agrees that Buyer is not providing any capital for the purchase of
such machinery, equipment and/or facilities and that Seller shall operate and
maintain same at its sole expense, including all required permits and
licenses. Seller hereby dedicates to this Agreement
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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 provide Buyer with two copies 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 constructed at the Coal Property, 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
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others to sell coal from the Coal Property during the term of this Agreement.
Such complete mining plan shall be delivered to Buyer on or before April 30,
1997.
Buyer's receipt of the mining plan or other information or data
furnished by Seller shall not in any 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 on a long-term basis to fulfill Buyer's requirements of a dependable
coal supply.
Seller shall annually provide Buyer with a mining plan update
("Update") showing progress to date, conformity to original mining plan, and
then known changes in reserve data and planned changes in mining progression,
plans or procedures. The update shall be submitted annually on or before
April 30 of each year during the term of this Agreement.
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
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.
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SECTION 5. DELIVERY.
SECTION 5.1 GENERAL. The coal shall be delivered FOB barge or FOB
railcar, at Buyer's option.
SECTION 5.2 BARGE. If Buyer shall have opted for coal to be delivered
FOB barge, then the coal shall be delivered to Buyer F.O.B. barge at the
Sebree dock at mile point 43.6 on the Green River or FOB barge at the Island
loadout at mile point 32.9 on the Green River (the "Delivery Point"). Seller
may deliver the coal at a location different from the Delivery Point,
provided, however, that Seller shall reimburse Buyer for any resulting
increases in the cost of transporting the coal to Buyer's generating
stations. Any resulting savings in such transportation costs shall be
retained by Buyer.
Title to and risk of loss of coal sold will pass to Buyer and the
coal will be considered to be delivered when barges containing the coal are
disengaged by Buyer's barging contractor from the loading dock. Buyer or its
contractor shall furnish suitable barges in accordance with a delivery
schedule provided by Buyer to Seller. Seller shall arrange and pay for all
costs of transporting the coal from the mines to the loading docks and
loading and trimming the coal into barges to the proper draft and the proper
distribution within the barges. Buyer shall arrange for transporting the coal
by barge from the loading dock to its generating station(s) and shall pay for
the cost of such transportation. For delays caused by Seller in handling the
scheduling of shipments with Buyer's barging contractor, Seller shall be
responsible for any demurrage or other penalties assessed by said barging
contractor (or assessed by Buyer) which accrue at the Delivery Point,
including the demurrage, penalties for loading less than the specified
minimum tonnage
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per barge, or other penalties assessed for barges not loaded in conformity
with applicable requirements. Buyer shall be responsible to deliver barges in
as clean and dry condition as practicable. Seller shall require of the
loading dock operator that the barges and towboats provided by Buyer or
Buyer's barging contractor be provided convenient and safe berth free of
wharfage, dockage and port charges; that while the barges are in the care and
custody of the loading dock, all U.S. Coast Guard regulations and other
applicable laws, ordinances, rulings, and regulations shall be complied with,
including adequate mooring and display of warning lights; that any water in
the cargo boxes of the barges be pumped out by the loading dock operator
prior to loading; that the loading operations be performed in a workmanlike
manner and in accordance with the reasonable loading requirements of Buyer
and Buyer's barging contractor; and that the loading dock operator carry
landing owners or wharfinger's insurance with basic coverage of not less than
$300,000.00 and total of basic coverage and excess liability coverage of not
less than $1,000,000.00, and provide evidence thereof to Buyer in the form of
a certificate of insurance from the insurance carrier or an acceptable
certificate of self-insurance with requirement for 30 days advance
notification of Buyer in the event of termination of or material reduction in
coverage under the insurance.
SECTION 5.3 RAIL DELIVERY. If Buyer shall have opted for coal to be
delivered FOB railcar, then the coal shall be delivered to Buyer F.O.B.
railcar at the Xx. Xxxxxxx X-0 loadout on the Paducah and Louisville Railway
(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
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increases in the cost of transporting the coal to Buyer's generating
stations. Any resulting savings in such transportation costs shall be
retained by Buyer.
Title to and risk of loss respecting coal will pass to Buyer
and the coal will be considered to be delivered when it is loaded into the
railcars at the rail loading facility. Buyer or its contractor shall furnish
suitable railcars in accordance with a delivery schedule provided by Buyer to
Seller. Seller shall be responsible for and pay the cost of repairs for any
damages caused by Seller to railcars owned or leased by Buyer while such
railcars are in Seller's control or custody. Seller shall comply with the
applicable provisions of Buyer's rail contractor's tariff.
SECTION 5.4 FREEZE CONDITIONING. At Buyer's request, Seller shall
treat (or have treated) any shipment of coal hereunder with a freeze
conditioning agent approved by Buyer in order to maintain coal handling
characteristics during shipment. If requested by Buyer, Seller shall also
treat (or have treated) any railcars specified by Buyer with a side release
agent approved by Buyer. The price for each such requested chemical treatment
shall be an amount equal to Seller's cost of materials applied on a per
gallon basis for each application of freeze conditioning agent or side
release agent, as the case may be. Seller shall invoice Buyer for all such
treatment which occurred in a calendar month by the fifteenth of the
following month; and payment shall be mailed by the 25th of such following
month or within ten days after receipt of Seller's invoice, whichever is
later.
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CONTRACT #00-000-000
SECTION 6. QUALITY.
SECTION 6.1 SPECIFICATIONS.
(a) The coal delivered hereunder shall conform to the
following specifications on an "as received" basis:
QUALITY A COAL
Guaranteed Monthly Rejection Limits
Specifications Weighted Average (per shipment)
---------------------- -------------------- ------------------
BTU/LB. min. 11,250 LESS THAN 10,800
LBS/MMBTU:
MOISTURE max. 9.50 GREATER THAN 13.0
ASH max. 10.67 GREATER THAN 13.0
SULFUR max. 3.244 GREATER THAN 3.5
SULFUR min. 1.8 LESS THAN 1.8
CHLORINE max. .10 GREATER THAN .10
FLUORINE max. .013 GREATER THAN .013
NITROGEN max. 1.30 GREATER THAN 1.40
ASH/SULFUR RATIO min. 2.5:1 LESS THAN 2.0:1
SIZE (3" x 0"):
Top size (inches)* max. 3"x0 GREATER THAN 3"x0
Fines (% by wgt)
Passing 1/4" screen max. 35% GREATER THAN 40%
% BY WEIGHT:
VOLATILE max. 39 GREATER THAN 40
VOLATILE min. 30 LESS THAN 29
FIXED CARBON max. 50 GREATER THAN 51
FIXED CARBON min. 40 LESS THAN 40
GRINDABILITY (HGI) min. 53 LESS THAN 50
BASE ACID RATIO (B/A) .59 GREATER THAN 1.2
SLAGGING FACTOR** max. 2.2 GREATER THAN 2.5
FOULING FACTOR*** max. 0.5 GREATER THAN 0.5
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ASH FUSION TEMPERATURE (DEG.F) (ASTM D1857)
REDUCING ATMOSPHERE
Initial Deformation min. 1940 min. 1900
Softening (H=W) min. 1975 min. 1950
Softening (H=1/2W) min. 2035 min. 2000
Fluid min. 2190 min. 2100
OXIDIZING ATMOSPHERE
Initial Deformation min. 2300 min. 2200
Softening (H=W) min. 2330 min. 2280
Softening (H=1/2W) min. 2425 min. 2300
Fluid min. 2490 min. 2375
QUALITY B COAL
Guaranteed Monthly Rejection Limits
Specifications Weighted Average (per shipment)
----------------------- --------------------- ------------------
BTU/LB. min. 11,250 LESS THAN 10,000
LBS/MMBTU:
MOISTURE max. 10.0 GREATER THAN 13.0
ASH max. 16.0 GREATER THAN 18.0
SULFUR max. 3.95 GREATER THAN 3.95
SULFUR min. 1.8 LESS THAN 1.8
CHLORINE max. .10 GREATER THAN .10
FLUORINE max. .013 GREATER THAN .013
NITROGEN max. 1.30 GREATER THAN 1.40
ASH/SULFUR RATIO min. 2.5:1 LESS THAN 2.5:1
SIZE (3" x 0"):
Top size (inches)* max. 3"x0 GREATER THAN 3"x0
Fines (% by wgt)
Passing 1/4" screen max. 35% GREATER THAN 40%
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% BY WEIGHT:
VOLATILE max. 39 GREATER THAN 40
VOLATILE min. 30 LESS THAN 29
FIXED CARBON max. 50 GREATER THAN 51
FIXED CARBON min. 40 LESS THAN 40
GRINDABILITY (HGI) min. 53 LESS THAN 50
BASE ACID RATIO (B/A) .59 GREATER THAN 1.2
SLAGGING FACTOR** max. 2.5 GREATER THAN 2.7
FOULING FACTOR*** max. 0.50 GREATER THAN 0.5
ASH FUSION TEMPERATURE (DEG.F) (ASTM D1857)
REDUCING ATMOSPHERE
Initial Deformation min. 1940 min. 1900
Softening (H=W) min. 1975 min. 1950
Softening (H=1/2W) min. 2035 min. 2000
Fluid min. 2190 min. 2100
OXIDIZING ATMOSPHERE
Initial Deformation min. 2300 min. 2200
Softening (H=W) min. 2330 min. 2280
Softening (H=1/2W) min. 2425 min. 2300
Fluid min. 2490 min. 2375
* 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 thirty-five per cent (35%) 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 WeightDry)
*** Fouling Factor (R(f))=(B/A) x (Percent Na(2)0 by WeightDry)
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The Base Acid Ratio (B/A) is herein defined as:
BASE ACID RATIO (B/A) = (Fe(2)0(3) + C(a)0 + M(g)0 + Na(2)0 + K(2)0)
----------------------------------------
(Si0(2) + A1(2)0(3) + T10(2))
Note: As used herein GREATER THAN means greater than:
LESS THAN means less than.
(b) At least two-thirds of the total tonnage delivered in any
year hereunder shall be Quality A Coal. For each shipment hereunder, Seller
shall indicate to Buyer whether the shipment is Quality A Coal or Quality B
Coal and such shipment shall be treated accordingly for all purposes
hereunder including determining compliance with specifications under this
SECTION 6 and applying quality price discounts under SECTION 8.2.
SECTION 6.2 DEFINITION OF "SHIPMENT". As used herein, a "shipment"
shall mean one barge load, a barge lot load, or one unit trainload, 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 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
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CONTRACT #00-000-000
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
amount of each such non-conforming shipment at Buyer's sole option and the
shipment shall nevertheless be considered "rejectable" under SECTION 6.4.
Further, for shipments containing extraneous materials, which include, but
are not limited to, slate, rock, wood, corn husks, mining materials, 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 for any two (2)
months in a six (6) month period, or if nine (9) barge shipments in a 30 day
period are rejectable by Buyer, or if Buyer receives at generating station(s)
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two (2) rail shipments which are rejectable in any 30 day period, Buyer may
upon notice confirmed in writing and sent to Seller by certified mail,
suspend future shipments except shipments already loaded into barges and/or
railcars. Seller shall, within 10 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 and that
the source will exceed the rejection limits set forth in SECTION 6.1. If
Seller fails to provide such assurances within said 10 day period, Buyer may
terminate this Agreement by giving written notice of such termination at the
end of the 10 day period. A waiver of this right for any one period by Buyer
shall not constitute a waiver for subsequent periods. If Seller provides such
assurances to Buyer's reasonable satisfaction, shipments hereunder shall
resume and any tonnage deficiencies resulting from suspension may be made up
at Buyer's sole option. Buyer shall not unreasonably withhold its acceptance
of Seller's assurances, or delay the resumption of shipment. If Seller, after
such assurances, fails to meet any of the Guaranteed Monthly Weighted
Averages for any one (1) month within the next six (6) months or if three (3)
barge shipments or 1 rail shipment are rejectable within any one (1) month
during such six (6) month period, then Buyer may terminate this Agreement and
exercise all its other rights and remedies under applicable law and in equity
for Seller's breach.
SECTION 7. WEIGHTS, SAMPLING AND ANALYSIS.
SECTION 7.1 WEIGHTS. The weight of the coal delivered hereunder shall
be determined on a per shipment basis by Buyer on the basis of scale weights
at the generating station(s) unless another method is mutually agreed upon by
the parties. Such scales shall be duly reviewed by an
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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 sampling and analysis of the
coal delivered hereunder shall be performed by Buyer and the results thereof
shall be accepted and used for the quality and characteristics of the coal
delivered under this Agreement. All analyses shall be made in Buyer's
laboratory at Buyer's expense in accordance with industry-accepted standards.
Samples for analyses shall be taken by any industry-accepted standard,
mutually acceptable to both parties, may be composited and shall be taken
with a frequency and regularity sufficient to provide reasonably accurate
representative samples of the deliveries made hereunder. Seller represents
that it is familiar with Buyer's sampling and analysis practices, and finds
them to be acceptable. Buyer shall notify Seller in writing of any
significant changes in Buyer's sampling and analysis practices. Any such
changes in Buyer's sampling and analysis practices shall, except for industry
accepted changes in practices, provide for no less accuracy than the sampling
and analysis practices existing at the time of the execution of this
Agreement, unless the Parties otherwise mutually agree.
Each sample taken by Buyer shall be divided into 4 parts and put into
airtight containers, properly labeled and sealed. One part shall be used
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for analysis by Buyer; one part shall be used by Buyer as a check sample, if
Buyer in its sole judgment determines it is necessary; one part shall be
retained by Buyer until the 25th of the month following the month of
unloading (the "Disposal Date") and shall be delivered to Seller for analysis
if Seller so requests before the Disposal Date; and one part ("Referee
Sample") shall be retained by Buyer until the Disposal Date. Seller shall be
given copies of all analyses made by Buyer by the 12th day of the month
following the month of unloading. Seller, on reasonable notice to Buyer shall
have the right to have a representative present to observe the sampling and
analyses performed by Buyer. Unless Seller requests a Referee Sample analysis
before the Disposal Date, Buyer's analysis shall be used to determine the
quality of the coal delivered hereunder. The Monthly Weighted Averages shall
be determined by utilizing the individual shipment analyses.
If any dispute arises before the Disposal Date, the Referee Sample
retained by Buyer shall be submitted for analysis to an independent
commercial testing laboratory ("Independent Lab") mutually chosen by Buyer
and Seller. For each coal quality specification in question, a dispute shall
be deemed not to exist and Buyer's analysis shall prevail and the analysis of
the Independent Lab shall be disregarded if the analysis of the Independent
Lab differs from the analysis of Buyer by an amount equal to or less than:
(i) 0.50% moisture
(ii) 0.50% ash on a dry basis
(iii) 100 Btu/lb. on a dry basis
(iv) 0.10% sulfur on a dry basis.
For each coal quality specification in question, if the analysis of
the Independent Lab differs from the analysis of Buyer by an amount more than
the amounts listed above, then the
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analysis of the Independent Lab shall prevail and Buyer's analysis shall be
disregarded. 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 $.85636/MMBtu for coal delivered
in 1997, $.89061/MMBtu for coal delivered in 1998, and $.92623/MMBtu for coal
delivered in 1999 through 2001.
SECTION 8.2 QUALITY PRICE DISCOUNTS.
(a) The Base Price is based on coal meeting or exceeding the
Guaranteed Monthly Weighted Average specifications as set forth in SECTION
6.1. For each coal quality, quality price discounts shall be applied for each
specification each month to reflect failures to meet the Guaranteed Monthly
Weighted Averages set forth in SECTION 6.1, as determined pursuant to
SECTION 7.2, subject to the provisions set forth below. The discount values
used are as follows:
DISCOUNT VALUES
$/MMBTU
------------
BTU/LB. 0.2604
$/LB./MMBTU
-------------
SULFUR 0.1232
ASH 0.0083
MOISTURE 0.0016
(b) Notwithstanding the foregoing, for each specification each month,
there shall be no discount if the actual Monthly Weighted Average meets the
applicable Discount Point set forth below. However, if the actual Monthly
Weighted Average fails to meet such applicable
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Discount Point, then the discount shall apply and shall be calculated on the
basis of the difference between the actual Monthly Weighted Average AND THE
GUARANTEED MONTHLY WEIGHTED AVERAGE pursuant to the methodology shown in
Exhibit A attached hereto.
QUALITY A COAL
CONTRACT #00-000-000
Guaranteed Monthly
Weighted Average Discount Point
------------------------- --------------------- ---------------
BTU/LB min. 11,250 10,800
LB/MMBTU:
SULFUR max. 3.244 3.344
ASH max. 10.67 11.67
MOISTURE max. 9.50 10.50
QUALITY B COAL
Guaranteed Monthly
Weighted Average Discount Point
------------------------- --------------------- ---------------
BTU/LB min. 11,250 10,100
LB/MMBTU:
SULFUR max. 3.95 3.95
ASH max. 16.00 16.00
MOISTURE max. 10.00 11.00
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For example, for Quality A Coal, if the actual Monthly Weighted
Average of sulfur equals 3.544 lb./MMBTU, then the applicable discount
would be (3.544 lb. - 3.244 lb.) X $.1232/lb/MMBTU = $.03696/MMBTU.
SECTION 8.3 PRICE REVIEW. The Base Price and all the 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 of
each year hereunder beginning January 1, 1998. The party requesting such a
review shall give written notice of its request to the other party on or
before October 1 preceding the effective January 1 date of the revision. The
parties then shall negotiate an agreement on new prices and/or other terms
and conditions between October 1 and December 1. If the parties do not reach
an agreement by December 1, then this Agreement will terminate as of December
31 of the applicable year without liability due to such termination for
either party. However, the parties will review the Agreement again at
mutually agreeable times between August and November of the year immediately
succeeding termination and will consider reinstating, but shall not be
obligated to reinstate, the Agreement under the same terms or modified terms.
SECTION 8.4 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 ADDRESS. Invoices will be sent to Buyer at
the following address:
Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000
Attention: Director, Fuels Procurement and Delivery
With a copy to:
Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000
Attention: Manager, Accounts Payable
SECTION 9.2 INVOICE PROCEDURES FOR COAL SHIPMENTS. Seller shall
invoice Buyer at the Base Price, minus any quality price discounts, for all
coal unloaded in a calendar month by the fifteenth of the following month.
SECTION 9.3 PAYMENT PROCEDURES FOR COAL SHIPMENTS. Payment for coal
unloaded in a calendar month shall be mailed by the 25th of the month
following the month of unloading or within ten days after receipt of Seller's
invoice, whichever is later. Buyer shall mail all payments to Seller's
account at Seller's address as set forth in the preamble hereto.
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
19
CONTRACT #00-000-000
promptly in writing of any such issue, stating the basis of its claim and the
amount it intends to withhold.
Payment by Buyer, whether knowing or inadvertent, of any amount in
dispute shall not be deemed a waiver of any claims or rights by Buyer with
respect to any disputed amounts or payments made.
SECTION 10. FORCE MAJEURE.
SECTION 10.1 GENERAL FORCE MAJEURE. If either party hereto is delayed
in or prevented from performing any of its obligations or from utilizing the
coal sold under this Agreement due to acts of God, war, riots, civil
insurrection, acts of the public enemy, strikes, lockouts, fires, floods or
earthquakes, which are beyond the reasonable control and without the fault or
negligence of the party affected thereby, then the obligations of both
parties hereto shall be suspended to the extent made necessary by such event;
provided that the affected party gives written notice to the other party as
early as practicable of the nature and probable duration of the force majeure
event. The party declaring force majeure shall exercise due diligence to
avoid and shorten the force majeure event and will keep the other party
advised as to the continuance of the force majeure event. 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
20
CONTRACT #00-000-000
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 at Buyer's sole option on a reasonable 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 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.
21
CONTRACT #00-000-000
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 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,
22
CONTRACT #00-000-000
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: Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn.: Director, Fuels Procurement and Delivery
with a copy to: Louisville Gas and Electric Company
000 Xxxx Xxxxxxxx
P.O. Box 32020
Xxxxxxxxxx, Xxxxxxxx 00000
Attn.: Manager, Procurement Services
If to Seller: Charolais Corporation
X.X. Xxx 000
Xxxxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn.: President
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 13. RIGHT TO RESELL. Buyer shall have the unqualified
right to sell all or any of the coal purchased under this Agreement.
23
CONTRACT #00-000-000
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 barges or
railcars provided by Buyer or Buyer's contractor while such 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.
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.
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
24
CONTRACT #00-000-000
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, 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.
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.
25
CONTRACT #00-000-000
SECTION 17. DOCUMENTATION AND RIGHT OF AUDIT.
Seller shall maintain all records and accounts pertaining to
payments, quantities, quality analyses, and source for all coal supplied
under this Agreement for a period lasting through the term of this Agreement
and for two years thereafter. Buyer shall have the right at no additional
expense to Buyer to audit, copy and inspect such records and accounts at any
reasonable time upon reasonable notice during the term of this Agreement and
for 2 years thereafter.
SECTION 18. EQUAL EMPLOYMENT OPPORTUNITY. To the extent applicable,
Seller shall comply with all of the following provisions which are
incorporated herein by reference: Equal Opportunity regulations set forth in
41 CRF SECTION 60-1.4(a) and (c) prohibiting discrimination against any
employee or applicant for employment because of race, color, religion, sex,
or national origin; Vietnam Era Veterans Readjustment Assistance Act
regulations set forth in 41 CRF SECTION 50-250.4 relating to the employment
and advancement of disabled veterans and veterans of the Vietnam Era;
Rehabilitation Act regulations set forth in 41 CRF SECTION 60-741.4 relating
to the employment and advancement of qualified disabled employees and
applicants for employment; the clause known as "Utilization of Small Business
Concerns and Small Business Concerns Owned and Controlled by Socially and
Economically Disadvantaged Individuals" set forth in 15 USC SECTION
637(d)(3); and subcontracting plan requirements set forth in 15 USC SECTION
637(d).
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
26
CONTRACT #00-000-000
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 underground mines and related facilities are inherently high-risk
environments. Buyer's failure to inspect the Coal Property or to object to
defects therein at the time Buyer inspects the same shall not relieve Seller
of any of its responsibilities nor be deemed to be a waiver of any of Buyer's
rights hereunder.
SECTION 20. MISCELLANEOUS.
SECTION 20.1 APPLICABLE LAW. This Agreement shall be construed in
accordance with the laws of the State of Kentucky, and all questions of
performance of obligations hereunder shall be determined in accordance with
such laws.
SECTION 20.2 HEADINGS. The paragraph headings appearing in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
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.
27
CONTRACT #00-000-000
SECTION 20.5 SEVERABILITY. If any provision of this Agreement is
found contrary to law or unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms,
unless such unlawful or unenforceable provision is material to the
transactions contemplated hereby, in which case the parties shall negotiate
in good faith a substitute provision.
SECTION 20.6 BINDING EFFECT. This Agreement shall bind and inure
to the benefit of the parties and their successors and assigns.
SECTION 20.7 ASSIGNMENT. Neither party may assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
other party, which consent shall not be unreasonably withheld or denied;
provided, however, that Seller shall have the right, without consent of
Buyer, to assign all or any part of this Agreement to Centennial Resources,
Inc., a Delaware corporation, or any company controlling, controlled by, or
under common control with Centennial Resources, Inc.
SECTION 20.8 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties as to the subject matter hereof, and there are
no representations, understandings or agreements, oral or written, which are
not included herein.
SECTION 20.9 AMENDMENTS. Except as otherwise provided herein, this
Agreement may not be amended, supplemented or otherwise modified except by
written instrument signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
28
CONTRACT #00-000-000
LOUISVILLE GAS AND ELECTRIC
COMPANY CHAROLAIS CORPORATION
By: ___________________________ By: ___________________________
Xxxxx Xxxxxxx, Vice President &
General Manager, Wholesale Electric Title: ___________________________
Business
Date: ___________________________ Date: ___________________________
29
CONTRACT #00-000-000
Exhibit A Quality A
EXHIBIT A QUALITY A Page 1 of 2
SAMPLE COAL PAYMENT CALCULATIONS
TOTAL EVALUATED COAL COSTS FOR CONTRACT NO. 00-000-000
-------------------------------------------------------------------------------
For contracts supplied from multiple "origins", each "origin will be calculated
individually.
SECTION I BASE DATA
----- ---------------------------------------------------- ------------------------------------
1) Base F.O.B. price per ton: $ 19.27 /ton
-----------------------
1a) Tons of coal delivered: tons
-----------------------
2) Guaranteed average heat content: 11,250 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: $ /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 monthly avg. max. sulfur 3.244 LBS./MMBTU
-----------------------
3r) As received monthly avg. sulfur LBS./MMBTU
-----------------------
4) Guaranteed monthly avg. ash 10.67 LBS./MMBTU
-----------------------
4r) As received monthly avg. ash LBS./MMBTU
-----------------------
5) Guaranteed monthly avg. max. moisture 9.50 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 is less than 10,800 BTU/lb.
then: {1-(line 2r)/(line 2)}*$0.2604/MMBTU
{1-( )/(11,000)}*$0.2604= $ /MMBTU
--------------
7d) SULFUR: If line 3r is greater than 3.344 lbs./MMBTU
[1-[(line 3r)-(line 3)]}*0.1232/lb. Sulfur
[1-[( )/( ]}*0.1232= $ /MMBTU
--------------
8d) ASH: If line 4r is greater than 11.67 lbs./MMBTU
[1-[(line 4r)-(line 4)]}*0.0083/MMBTU
[1-[( )/( ]}*0.0083= $ /MMBTU
--------------
9d) MOISTURE: If line 5r is greater than 10.50 lbs./MMBTU
[1-[(line 5r)-(line 5)]}*0.0016/MMBTU
[1-[( )/( ]}*0.0016= $ /MMBTU
--------------
30
CONTRACT #00-000-000
Exhibit A Quality 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 + $ = $
-------------- ----------------------- ---------
31
CONTRACT #00-000-000
LOUISVILLE GAS AND ELECTRIC COMPANY
ACKNOWLEDGMENT OF ASSIGNMENT AND RELEASE OF ASSIGNOR
Louisville Gas and Electric Company ("LG&E") hereby (a) acknowledges
the assignment by Charolais Corporation ("Charolais") of the Coal Supply
Agreement dated January 1, 1997 (the "Coal Supply Agreement"), between LG&E
and Charolais, to Centennial Resources, Inc. ("Centennial") pursuant to the
terms of Section 20.7 of the Coal Supply Agreement and the Assignment and
Assumption Agreement between Charolais and Centennial, a copy of which is
attached hereto; and (b) hereby releases and forever discharges Charolais
from any and all obligations and liabilities under the Coal Supply Agreement
effective as of the assignment of the Coal Supply Agreement to Centennial.
LOUISVILLE GAS AND ELECTRIC COMPANY
By _________________________________
Vice President and General Manager
Wholesale Electric Business
Date: MARCH 7, 1997
------------------------------
32
CONTRACT #00-000-000
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated March 7, 1997, between
CHAROLAIS CORPORATION, a Kentucky corporation (the "Assignor") and CENTENNIAL
RESOURCES, INC., a Delaware corporation (the "Assignee").
W I T N E S S E T H:
WHEREAS, Assignor, Assignee, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, and
Xxxx Energy, Inc., a Kentucky corporation, have entered into a Stock and
Asset Purchase Agreement, dated February 13, 1997 (the "Agreement"), pursuant
to which Assignee has agreed to purchase from Assignor all of the "Acquired
Assets" (as defined in the Agreement); and
WHEREAS, Assignor desires to assign to Assignee all of Assignor's
interests in the customer contracts and other agreements listed in Schedule 1
attached hereto (the "Assigned Contracts") currently possessed by Assignor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy is hereby acknowledged by both Assignor and Assignee, the parties
hereto hereby agree as follows:
SECTION 1: DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall
have the meaning given to those terms in the Agreement.
SECTION 2: ASSIGNMENT.
Assignor hereby grants, transfers and assigns to Assignee all of the
rights, title, and interest of Assignor in, to and under the Assigned
Contracts; PROVIDED, HOWEVER, that with respect to any Assigned Contract the
assignment of which requires the consent of any other party
33
CONTRACT #00-000-000
thereto, which consent has not been obtained as of the date hereof, the
assignment contemplated hereby shall be conditional until such consent shall
have been obtained as to such contract. Upon obtaining such consent, such
Assigned Contract for which consent has not heretofore been obtained shall,
automatically and without the taking of any further action hereunder, be
assigned. Notwithstanding the foregoing, this Section 2 is deemed to be
subject to and not to vary in any respect the terms of the Agreement.
SECTION 3: COVENANTS OF ASSIGNEE.
Subject to Section 2.3 of the Agreement, Assignee hereby expressly
and unconditionally assumes and agrees to perform fully and faithfully each
and every term, covenant and condition of each Assigned Contract required to
be performed by Assignor thereunder, arising after the date hereof (but
excluding any liability arising under such agreements as a result of any
breach, default or failure of Assignor to perform any covenants or
obligations required to be performed by Assignor thereunder on or prior to
the date hereof), and shall indemnify and hold harmless Assignor from and
against any loss, claim, damage or expense caused by or attributable to the
failure of Assignee to so perform its obligations hereunder; PROVIDED,
HOWEVER, that to the extent that such breach or default by Assignor arises
from Assignor's performance or failure to perform a non-monetary obligation,
Assignee shall promptly take any and all reasonable actions to cure any such
breach or default by Assignor and to mitigate the liability for such breach
or default subject to Assignor's obligation to indemnify Assignee for any and
all reasonable expenses incurred by Assignee in connection with curing such
breach or default by Assignor.
34
CONTRACT #00-000-000
SECTION 4: COVENANTS OF ASSIGNOR.
Pursuant to the terms of Section 6.3 of the Agreement, Assignor shall
indemnify and hold harmless Assignee from and against any loss, claim, damage
or expense caused by or attributable to the failure of Assignor to perform
each and every term, covenant and condition of the Assigned Contracts
required to be performed by it on or prior to the Closing Date.
SECTION 5: MISCELLANEOUS
Nothing contained herein shall limit or otherwise affect any of
Assignee's rights under the Agreement, including Assignee's rights to
indemnification contained in the Agreement, or any other document or other
instrument executed in connection therewith or the consummation of the
transactions contemplated thereby.
This Assignment shall be governed by and construed under the laws of
the Commonwealth of Kentucky.
Reference is made to Section 6.1(d) of the Agreement for certain
further assurances and procedures with respect to obtaining the consent of
other parties applicable to the assignments contemplated by the Agreement.
This Assignment and Assumption Agreement may be amended, and the
observance of any term of this Assignment and Assumption Agreement may be
waived, with, but only with, the prior written consent of both parties hereto.
Two or more duplicate originals of this Assignment Agreement may be
signed by the parties hereto, each of which shall be an original, but all of
which together shall constitute one and the same instrument.
35
CONTRACT #00-000-000
IN WITNESS WHEREOF, each of the parties hereto has caused this
Assignment Agreement to be executed on its behalf by officers thereunto duly
authorized, all as of the day and year first written above.
CENTENNIAL RESOURCES, INC. CHAROLAIS CORPORATION
(Assignee) (Assignor)
By: ______________________ By: __________________________
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: President Title: President
36
CONTRACT #00-000-000
March 7, 1997
Louisville Gas and Electric Company
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Director, Fuels Procurement and Delivery
Manager, Accounts Payable
Gentlemen:
Effective March 7, 1997, Charolais Corporation ("Charolais") assigned
to Centennial Resources, Inc. ("Centennial") all of Charolais' rights and
obligations under the Coal Supply Agreement dated January 1, 1997, between
Louisville Gas and Electric Company ("LG&E") and Charolais (Contract
#96-440-026) (the "Supply Agreement"), pursuant to an Assignment and
Assumption Agreement dated March 7, 1997 (the "Assignment"), between
Charolais and Centennial. Pursuant to the Assignment, Centennial has assumed
and agreed to perform fully and faithfully each and every term, covenant and
condition of the Supply Agreement.
Pursuant to the assignment of the Supply Agreement, all payments for
any coal loaded or shipped to LG&E under the Supply Agreement on or before
March 7, 1997 (the "Effective Date") shall be made to Charolais at X.X. Xxx
000, Xxxxxxx 000, Xxxxxxxxxxxx, Xxxxxxxx 00000. With respect to any payments
for coal loaded or shipped to LG&E after the Effective Date, LG&E shall
direct all payments for such coal shipments to Centennial at 000 Xxxx Xxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000.
We appreciate your cooperation and assistance in this matter. Please
contact either Charolais or Centennial if you have any questions related to
this matter.
Sincerely,
CHAROLAIS CORPORATION
By ________________________
Xxxxxx X. Xxxxxx
President
CENTENNIAL RESOURCES, INC.
By ________________________
Xxxxxxx X. Xxxxxx
President
37
CONTRACT #00-000-000
AMENDMENT #1
AMENDMENT TO CONTRACT
THIS AMENDMENT IS entered into, effective as of August 1, 1997, by and
between LOUISVILLE GAS AND ELECTRIC COMPANY (hereinafter referred to as
"LG&E"), whose address is: 000 X. Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 and
Centennial Resources, Inc., a Delaware corporation, whose address is: 000 X.
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000 ("Seller"). In
consideration of the agreements herein contained, the parties agree as
follows:
1.0 AMENDMENTS
The Agreement heretofore entered into by the parties, dated effective
January 1, 1997 and identified by the Contract Number set forth above,
(hereinafter referred to as "Agreement"), is hereby amended as follows:
1.1 In Section 6.1 SPECIFICATIONS, the sulfur max. in Quality A
Coal is changed from 3.244 lbs/MMBTU to 3.25 lbs/MMBTU.
1.2 Section 8.2 QUALITY PRICE DISCOUNTS, the sulfur discount
point in Quality A Coal is changed from 3.344 lbs/MMBTU to 3.35
lbs/MMBTU.
2.0 STATUS OF AGREEMENT
As amended herein, the Agreement shall continue in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the day and year below written, but effective as of the day and year first set
forth above.
LOUISVILLE GAS AND ELECTRIC CENTENNIAL RESOURCES, INC.
COMPANY
By ________________________ By ___________________________
Xxxxxx Xxxxxxxx
Senior Vice President Title PRESIDENT & CEO
Power Operations ----------------
Date 12/23/97 Date 12/23/97
------------------------ --------------------
38
CONTRACT #00-000-000
AMENDMENT #2
AMENDMENT NO. 2 TO CONTRACT
THIS AMENDMENT NO. 2 IS entered into effective as of January 1, 1998,
by and between LOUISVILLE GAS AND ELECTRIC COMPANY (hereinafter referred to
as "LG&E"), whose address is: 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, and CENTENNIAL RESOURCES, INC., a Delaware corporation, whose address
is: 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000 ("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, 1997, and identified by the Contract Number set forth above, as
amended by Amendment dated effective August 1, 1997 (hereinafter together
referred to as "Agreement"), is hereby further amended as follows:
2.0 STATUS OF AGREMENT
2.1 Section 2, TERM, is hereby revised as follows: "The parties
hereto acknowledge that because no agreement was reached regarding "Price"
under the price review requirements of Section 8.3 of the Agreement, the
Agreement terminated on December 31, 1997. The parties agree that, in order
for Seller to provide to LG&E the Shortfall, as defined below, the Term of
the Agreement is hereby extended through February 28, 1998 (the "Temporary
Extension"), at which time the Agreement shall automatically terminate
without liability therefor for either party.
2.2 Section 3.1, BASE QUANTITY, is hereby revised to add the
following sentence: "During the Temporary Extension, the Base Quantity shall
mean the Shortfall."
2.3 Section 3.2, DELIVERY SCHEDULE, is hereby revised to provide that
the quantity to be delivered during the Temporary Extension shall be the
Shortfall, which is defined as the difference between the Base Quantity,
defined in SECTION 3.1, and the amount of coal delivered by Seller during
1997. The Shortfall is agreed by the parties to be 93,000 tons. Seller shall
deliver such Shortfall ratably during the Temporary Extension
3.0 STATUS OF AGREEMENT
As amended herein, the Agreement is hereby ratified and confirmed and
shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
on the day and year below written, but effective as of the day and year first
set forth above.
LOUISVILLE GAS AND ELECTRIC CENTENNIAL RESOURCES, INC.
COMPANY
By ___________________________ By ______________________________
Xxxxxx Xxxxxxxx
Senior Vice President,
Power Operations Title VICE PRESIDENT, SALES AND SERVICE
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CONTRACT #00-000-000
Date 2/27/98 Date 2/27/98
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