CONTRACT #00-000-000
Exhibit 10.80
COAL SUPPLY AGREEMENT
This is a coal supply agreement (the "Agreement") dated April 1, 1997
between LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation, 000 Xxxx
Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Buyer") and ANDALEX RESOURCES,
INC., a Delaware corporation, 0000 Xxxxxxxxxxx Xxxxx, 0000 Xxxxxxxxxxx Xxxx,
Xxxxxxxxxx, 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 April 1, 1997 and shall
continue through December 31, 2001, subject to SECTION 8.3.
SECTION 3. QUANTITY
Seller shall sell and deliver and Buyer shall purchase and accept
delivery of 62,500 tons of coal per month. Such coal shall be delivered ratably
in accordance with reasonable delivery schedules to be mutually agreed upon by
Buyer and Seller.
SECTION 4. SOURCE
SECTION 4.1 SOURCE. The coal sold hereunder shall be supplied from
geological seam Western Kentucky #11, #12, and #9 (surface and underground), any
of the mines in Seller's Cimarron
CONTRACT #00-000-000
Division as of the effective date of this Agreement (the "Coal Property").
Seller shall have the right to add to the Coal Property mines in Seller's
Cimarron Division developed after the effective date of this Agreement with
Buyer's prior written consent, which will not be unreasonably withheld.
SECTION 4.2 ASSURANCE OF OPERATION AND RESERVES. Seller represents
and warrants that the Coal Property contains economically recoverable coal of
a quality and in quantities which will be sufficient to satisfy all the
requirements of this Agreement. Seller agrees and warrants that it will have
at the Coal Property adequate machinery, equipment and other facilities to
produce, prepare and deliver coal in the quantity and of the quality required
by this Agreement. Seller further agrees to operate and maintain such
machinery, equipment and facilities in accordance with good mining practices
so as to efficiently and economically produce, prepare and deliver such coal.
Seller agrees that Buyer is not providing any capital for the purchase of
such machinery, equipment and/or facilities and that Seller shall operate and
maintain same at its sole expense, including all required permits and
licenses. Seller hereby dedicates to this Agreement sufficient reserves of
coal meeting the quality specifications hereof and lying on or in the Coal
Property so as to fulfill the quantity requirements hereof.
SECTION 4.3 NON-DIVERSION OF COAL. Seller agrees and warrants that it
will not, without Buyer's express prior written consent, use or sell coal
from the Coal Property in a way that 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 5. DELIVERY
SECTION 5.1 BUYER'S OPTION. The coal shall be delivered F.O.B. railcar
at the Cimarron rail loading facility near Madisonville, Kentucky on the Paducah
and Louisville Railway (the
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"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. Buyer may request to change the Delivery Point to
either F.O.B. truck or F.O.B. barge. Upon Buyer's notification to Seller of
its desire to change the Delivery Point, Buyer and Seller shall mutually
agree in writing upon the change(s) and the time frame wherein such change
will take place.
SECTION 5.2 RAIL OR TRUCK DELIVERY. If the coal is delivered F.O.B.
railcar or F.O.B. truck, then title to and risk of loss respecting the coal
will pass to Buyer and the coal will be considered to be delivered when it is
loaded into the railcars or trucks at the rail or truck loading facility.
Buyer or its contractor shall furnish suitable railcars or trucks 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 or trucks owned or leased by Buyer while such railcars or
trucks are in Seller's control or custody. Seller shall comply with the
applicable provisions of Buyer's rail or truck contractor's tariff. 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 applicable 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
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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.
SECTION 5.3 BARGE DELIVERY. If the coal is delivered F.O.B. barge, then
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 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 to 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
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CONTRACT #00-000-000
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 6. QUALITY
SECTION 6.1 SPECIFICATIONS. The coal delivered hereunder shall
conform to the following specifications on an "as received" basis:
Guaranteed Monthly Rejection Limits
Specifications Weighted Average (per shipment)
-------------- ------------------ ----------------
BTU/LB. min. 11,500 LESS THAN 11,200
LBS/MMBTU:
MOISTURE max. 10.5 GREATER THAN 12
ASH max. 10.5 GREATER THAN 13
SULFUR max. 3.0 GREATER THAN 3.3
SULFUR min. 1.8 LESS THAN 1.8
CHLORINE max. .04 GREATER THAN .05
FLUORINE max. .006 GREATER THAN .006
NITROGEN max. 1.1 GREATER THAN 1.5
ASH/SULFUR RATIO min. 2.5:1 LESS THAN 2.5:1
Size (3" x 0"):
Top size (inches)* max. 3x0 GREATER THAN 3x0
Fines (% by wgt)
Passing 1/4" screen max. 45% GREATER THAN 50%
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Guaranteed Monthly Rejection Limits
Specifications Weighted Average (per shipment)
-------------- ------------------ ----------------
% BY WEIGHT:
VOLATILE max. 40 GREATER THAN 41
VOLATILE min. 35 LESS THAN 33
FIXED CARBON max. 48 GREATER THAN 49
FIXED CARBON min. 44 LESS THAN 40
GRINDABILITY (HGI) min. 55 LESS THAN 52
BASE ACID RATIO (B/A) .39 .43
SLAGGING FACTOR** max. 1.6 GREATER THAN 1.9
FOULING FACTOR*** max. .2 GREATER THAN .3
ASH FUSION TEMPERATURE ((DEGREE)F) (ASTM D1857)
REDUCING ATMOSPHERE
Initial Deformation min. 1940 min. 1900
Softening (H=W) min. 2035 min. 1975
Softening (H=1/2W) min. 2085 min. 2000
Fluid min. 2190 min. 2100
OXIDIZING ATMOSPHERE
Initial Deformation min. 2300 min. 2200
Softening (H=W) min. 2320 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 percent (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)
The Base Acid Ratio (B/A) is herein defined as:
BASE ACID RATIO (B/A) =
(Fe(2)0(3) + Ca0 + Mg0 + Na(2)0 + K(2)0)
----------------------------------------
(Si0(2) + Al(2)0(3) + Tl0(2))
Note: As used herein GREATER THAN means greater than:
LESS THAN means less than.
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CONTRACT #00-000-000
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 actual sampling and analyzing practices.
SECTION 6.3 REJECTION.
Buyer has the right, but not the obligation, to reject any shipment
which fail(s) to conform to the Rejection Limits set forth in SECTION 6.1 or
contains extraneous materials. Buyer must reject such coal within seventy-two
(72) hours of receipt of the coal analysis provided for in SECTION 7.2 or
such right to reject is waived. In the event Buyer rejects such
non-conforming coal, Buyer shall return the coal to Seller or, at Seller's
request, divert such coal to Seller's designee, all at Seller's cost. Seller
shall replace the rejected coal within five (5) working days from notice of
rejection with coal conforming to the Rejection Limits set forth in SECTION
6.1. If Seller fails to replace the rejected coal within such five (5)
working day period or the replacement coal is rightfully rejected, Buyer may
purchase coal from another source in order to replace the rejected coal.
Seller shall reimburse Buyer for (i) any amount by which the actual price
plus transportation costs to Buyer of such coal purchased from another source
exceed the price of such coal under this Agreement (as adjusted under SECTION
8.3 for coal of the quality actually supplied by the other source) 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.
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CONTRACT #00-000-000
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 price shall be adjusted in accordance with SECTION 8.3 and the
quantity Buyer is obligated to purchase from Seller, at Buyer's sole option,
shall be reduced by the amount of each such non-conforming shipment. 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 one
month during the term of this Agreement, or if 3 barge shipments in a 7 day
period are rejectable by Buyer, of if Buyer receives at generating station(s)
2 rail shipments which are rejectable in any 10 day period, Buyer may, upon
notice confirmed in writing and sent to Seller by certified mail, terminate
this Agreement and exercise all its other rights and remedies under
applicable law and in equity for Seller's breach.
SECTION 7. WEIGHTS, SAMPLING AND ANALYSIS
SECTION 7.1 WEIGHTS. The weight of the coal delivered hereunder shall be
determined on a per shipment basis by Buyer on the basis of scale weights at the
generating station(s) unless another method is mutually agreed upon by the
parties. Such scales shall be duly reviewed by an appropriate testing agency and
maintained in an accurate condition. Seller shall have the right, at Seller's
expense and upon reasonable notice, to have the scales checked for accuracy
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CONTRACT #00-000-000
at any reasonable time or frequency. If the scales are found to be
inaccurate, over or under the tolerance range allowable for the scale, 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. Buyer shall send to Seller by telecopier or
electronic data transmittal a copy of the analysis within (10) business days
after sampling the applicable shipment. All analyses shall be made in Buyer's
laboratory at Buyer's expense in accordance with reliable and industry
accepted standards. Samples for analyses shall be taken by any reliable and
industry accepted standard acceptable to both parties, may be composited, and
shall be taken with a frequency and regularity sufficient to provide
reasonably accurate representative samples of the deliveries made hereunder.
Seller represents that it is familiar with Buyer's sampling and analysis
practices, and finds them to be acceptable. Buyer shall notify Seller in
writing of any significant changes in Buyer's sampling and analysis
practices. Any such changes in Buyer's sampling and analysis practices shall,
except for industry accepted changes in practices, provide for no less
accuracy than the sampling and analysis practices existing at the time of the
execution of this Agreement, unless the Parties otherwise mutually agree.
Each sample taken by Buyer shall be divided into 4 parts and put into
airtight containers, properly labeled and sealed. One part shall be used for
analysis by Buyer; one part shall be used by Buyer as a check sample, if Buyer
in its sole judgment determines it is necessary; one part shall be retained by
Buyer until the 25th of the month following the month
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CONTRACT #00-000-000
of unloading (the "Disposal Date") and shall be delivered to Seller for
analysis if Seller so requests before the Disposal Date; and one part
("Referee Sample") shall be retained by Buyer until the Disposal Date. Seller
shall be given copies of all analyses made by Buyer by the 12th day of the
month following the month of unloading. Seller, on reasonable notice to Buyer
shall have the right to have a representative present to observe the sampling
and analyses performed by Buyer. Unless Seller requests a Referee Sample
analysis before the Disposal Date, Buyer's analysis shall be used to
determine the quality of the coal delivered hereunder. The Monthly Weighted
Averages shall be determined by utilizing the individual shipment analyses.
If any dispute arises before the Disposal Date, the Referee Sample
retained by Buyer shall be submitted for analysis to an independent commercial
testing laboratory ("Independent Lab") mutually chosen by Buyer and Seller. For
each coal quality specification in question, a dispute shall be deemed not to
exist and Buyer's analysis shall prevail and the analysis of the Independent Lab
shall be disregarded if the analysis of the Independent Lab differs from the
analysis of Buyer by an amount equal to or less than:
(i) 0.50% moisture
(ii) 0.50% ash on a dry basis
(iii) 100 Btu/lb. on a dry basis
(iv) 0.10% sulfur on a dry basis.
For each coal quality specification in question, if the analysis of the
Independent Lab differs from the analysis of Buyer by an amount more than the
amounts listed above, then the analysis of the Independent Lab shall prevail and
Buyer's analysis shall be disregarded. The cost of the analysis made by the
Independent Lab shall be borne by Seller to the extent that
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CONTRACT #00-000-000
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 (the "Base Price") of the coal to
be sold hereunder will be firm and will be determined by the year in which the
coal is delivered as defined in SECTION 5 in accordance with the following
schedule:
YEAR BASE PRICE ($ PER MMBTU)
---- ------------------------
1997 $0.78000
1998 $0.79000
1999 $0.80000
2000 $0.81000
2001 $0.82000
SECTION 8.2 QUALITY PRICE ADJUSTMENTS.
(a) The Base Price is based on coal meeting or exceeding the
Guaranteed Monthly Weighted Average specifications as set forth in SECTION
6.1. Quality price discounts shall be applied for each specification each
month to reflect failures to meet the Guaranteed Monthly Weighted Averages
set forth in SECTION 6.1, as determined pursuant to SECTION 7.2, subject to
the provisions set forth below. The discount values used are as follows:
DISCOUNT VALUES
$/MMBTU
-------
BTU/LB 0.2604
$/LB./MMBTU
-----------
SULFUR 0.1232
ASH 0.0083
MOISTURE 0.0016
(b) Notwithstanding the foregoing, for each specification each month,
there shall be no discount if the actual Monthly Weighted Average meets the
applicable Discount Point set
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CONTRACT #00-000-000
forth below. However, if the actual Monthly Weighted Average fails to meet
such applicable Discount Point, then the discount 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. 11,500 11,350
LB/MMBTU
--------
SULFUR max. 3.0 3.2
ASH max. 10.5 12.0
MOISTURE max. 10.5 11.0
For example, if the actual Monthly Weighted Average of ash equals
12.5 lb/MMBTU, then the applicable discount would be (12.5 lb. - 10.5 lb.) x
$0.0083/lb./MMBTU = $.0166/MMBTU.
SECTION 8.3 PRICE REVIEW. The Base Price and all other terms and
conditions of this Agreement shall be subject to review for any reason at the
request of either party for revisions to become effective on January 1, 1999,
January 1, 2000, and January 1, 2001, respectively. The party requesting such a
review shall give written notice of its request to the other party on or before
the September 1 preceding the applicable revision effective date. 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.
If this Agreement is terminated under this SECTION 8.3, the Seller
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CONTRACT #00-000-000
nevertheless shall have the opportunity to propose a new coal supply
agreement each subsequent October through 2001. Buyer shall consider any such
proposals, but shall have no obligation to accept any of them.
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.
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. 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 pay for coal unloaded in a
calendar month either by mailing payment to Seller's
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CONTRACT #00-000-000
account at Andalex Resources, Inc., Dept. 97292, Xxxxxxxxxx, Xxxxxxxx 00000,
or by transferring the payment by wire to Seller's account.
SECTION 9.4 WITHHOLDING. Buyer shall have the right to withhold from
payment of any billing or xxxxxxxx (i) any sums which it is not able in good
faith to verify or which it otherwise in good faith disputes, (ii) any
damages resulting from or likely to result from any breach of this Agreement
by Seller, and (iii) any amounts owed to Buyer from Seller. Buyer shall
notify Seller promptly in writing of any such issue, stating the basis of its
claim and the amount it intends to withhold.
Payment by Buyer, whether knowing or inadvertent, of any amount in
dispute shall not be deemed a waiver of any claims or rights by Buyer with
respect to any disputed amounts or payments made.
SECTION 10. FORCE MAJEURE
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 (i) acts of God, (ii) war, (iii) riots, (iv) civil insurrection, (v) acts
of the public enemy, (vi) strikes, (vii) lockouts, (viii) fires, (ix) floods,
(x) earthquakes, (xi) explosions, (xii) mine accidents that are solely
responsible for delaying or preventing performance of Seller for 10
consecutive days, (xiii) breakdown of or damage to equipment, plant,
transmission systems, or transportation providers that is solely responsible
for delaying or preventing the performance of Seller for 10 consecutive days,
(xiv) unforeseen adverse geologic conditions which were not detected despite
prudent mine planning and mining processes and which are solely responsible
for delaying or preventing the performance of Seller for 10 consecutive days,
or (xv) the inability to obtain necessary mining permit(s) after applying for
such with prudent and reasonable diligence, and such event is
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beyond the reasonable control and without the fault or negligence of the
party affected thereby, then the obligations of both parties hereto shall be
suspended to the extent made necessary by such event; provided that the
affected party gives written notice to the other party as early as
practicable of the nature and probable duration of the force majeure event.
The party declaring force majeure shall exercise due diligence to avoid and
shorten the force majeure event and will keep the other party advised as to
the continuance of the force majeure event.
During any period in which Seller's ability to perform hereunder is
affected by a force majeure event, Seller shall not deliver any coal to any
other buyers to whom Seller's ability to supply is similarly affected by such
force majeure event unless contractually committed to do so at the beginning
of the force majeure event; and further shall deliver to Buyer under this
Agreement at least a pro-rata portion (on a per ton basis) of its total
contractual commitments to all its buyers to whom Seller's ability to supply
is similarly affected by such force majeure event in place at the beginning
of the force majeure event. An event which affects the Seller's ability to
produce or obtain coal from a mine other than the Coal Property will not be
considered a force majeure event hereunder.
Tonnage deficiencies resulting from Seller's declared force majeure
event shall be made up at Buyer's sole option on a reasonable schedule.
Tonnage deficiencies resulting from Buyer's declared force majeure event
shall be made up at Seller's sole option on a reasonable schedule.
SECTION 11. NOTICES
SECTION 11.1 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,
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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: Andalex Resources, Inc.
0000 Xxxxxxxxxxx Xxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Director of Eastern Sales
SECTION 11.2 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. RIGHT TO SELL
Buyer shall have the unqualified right to sell all or any of the coal
purchased under this Agreement.
SECTION 13. INDEMNITY AND INSURANCE
SECTION 13.1 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 attorney's fees) (i) relating to the barges or railcars provided by
Buyer or
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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 13.2 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 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 14. TERMINATION FOR DEFAULT.
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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 15 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 15. 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.
SECTION 16. DOCUMENTATION AND RIGHT OF AUDIT
Seller shall maintain all records and accounts pertaining to payments,
quantities, quality analyses and source of 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 17. 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 00 XXX XXXXXXX 60-
18
CONTRACT #00-000-000
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 18. 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 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.
19
CONTRACT #00-000-000
SECTION 19. MISCELLANEOUS
SECTION 19.1 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 19.2 HEADINGS. The paragraph headings appearing in this
Agreement are for convenience only and shall not affect the meaning of
interpretation of this Agreement.
SECTION 19.3 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 19.4 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 19.5 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 19.6 BINDING EFFECT. This Agreement shall bind and inure
to the benefit of the parties and their successors and assigns.
SECTION 19.7 ASSIGNMENT. Neither party may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party, which consent shall not be unreasonably withheld or denied; provided,
however, that Buyer shall have the right,
20
CONTRACT #00-000-000
without consent of Seller, to assign all or any part of this Agreement to any
company, controlling, controlled by, or under common control with Buyer.
SECTION 19.8 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 19.9 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.
LOUISVILLE GAS AND ELECTRIC
ANDALEX RESOURCES, INC. COMPANY
By: __________________________ By: __________________________
Xxxxx Xxxxxxx, Vice President &
Title: _________________________ General Manager
Wholesale Electric Business
Date: __________________________ Date: __________________________
21
CONTRACT #00-000-000
Exhibit A
Page 1 of 2
EXHIBIT A
SAMPLE COAL PAYMENT CALCULATIONS
TOTAL EVALUATED COAL COSTS FOR CONTRACT NO.
-------------------------------------------------------------------------------
For contracts supplied from multiple "origins", each "origin will be calculated
individually.
SECTION I BASE DATA
----------------------------------------------- --------------
1) Base F.O.B. price per ton: $ 17.94 /ton
--------------
1a) Tons of coal delivered: tons
--------------
2) Guaranteed average heat content: 11,500 BTU/LB.
--------------
2r) As received monthly avg. heat content: BTU/LB.
--------------
2a) Energy delivered in MMBTU: MMBTU
--------------
[(Line 1a) *2,000 lb./ton*(Line 2r)] *MMBTU/1,000,000 BTU
[( ) *2,000 lb./ton*( )]*MMBTU/1,000,000 BTU
2b) Base F.O.B. price per MMBTU: $ 0.78000 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 3.00 LBS./MMBTU
--------------
3r) As received monthly avg. sulfur LBS./MMBTU
--------------
4) Guaranteed monthly avg. ash 10.50 LBS./MMBTU
--------------
4r) As received monthly avg. ash LBS./MMBTU
--------------
5) Guaranteed monthly avg. max. moisture 10.50 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 greater than 11,350 BTU/lb. then:
{1-(line 2r)/(line 2)}*$0.2604/MMBTU
{1-( )/(11,350)}*$0.2604= $ /MMBTU
--------------
7d) SULFUR: If line 3r is greater than 3.20 lbs./MMBTU
[1-[(line 3r)-(line 3)]}*0.1232/lb. Sulfur
[1-[( )/(3.20)]}*0.1232= $ /MMBTU
--------------
8d) ASH: If line 4r is greater than 12.00 lbs./MMBTU
[1-[(line 4r)-(line 4)]}*0.0083/MMBTU
[1-[( )/(12.00)]}*0.0083= $ /MMBTU
--------------
9d) MOISTURE: If line 5r is greater than 11.0 lbs./MMBTU
[1-[(line 5r)-(line 5)]}*0.0016/MMBTU
[1-[( )/(11.0)]}*0.0016= $ /MMBTU
--------------
22
CONTRACT #00-000-000
Exhibit A
Page 2 of 2
TOTAL PRICE
SECTION II 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 + $ = $
------ -------------- ------
23
EXHIBIT B
[NONE]
24
CONTRACT #00-000-000
AMENDMENT TO COAL SUPPLY AGREEMENT
This is an amendment (the "Amendment") effective ____________, 1997 to
the Coal Supply Agreement dated April 1, 1997 (the "Agreement") between
LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation, 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Buyer") and ANDALEX RESOURCES, INC., a
Delaware corporation, 0000 Xxxxxxxxxxx Xxxxx, 0000 Xxxxxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 ("Seller").
The parties hereto agree as follows:
1. Section 5.1 of the Agreement is deleted in its entirety and replaced
with the following:
SECTION 5.1 BUYER'S OPTION. The coal shall be delivered to one of
the following locations as directed by Buyer (collectively, the
"Delivery Point"): (a) F.O.B. railcar at the Cimarron rail
loading facility near Madisonville, Kentucky on the Paducah and
Louisville Railway; and (b) F.O.B. Sebree Dock, mile point 44 on
the Green River. Seller may deliver the coal at a location
different from the Delivery Point, provided, however, that Seller
shall reimburse Buyer for any resulting increases in the cost of
transporting the coal to Buyer's generating stations. Any
resulting savings in such transportation costs shall be retained
by Buyer. Buyer may request to change the Delivery Point to
either F.O.B. truck or F.O.B. barge. Upon Buyer's notification to
Seller of its desire to change the Delivery Point, Buyer and
Seller shall mutually agree in writing upon the change(s) and the
time frame wherein such change will take place.
2. Section 5.4 is added to the Agreement and shall read as follows:
SECTION 5.4 DELIVERY TO SEBREE DOCK. For coal delivered F.O.B.
Sebree Dock, title to and risk of loss respecting the coal will
pass to Buyer and the coal will be considered to be delivered
when the coal is unloaded at Sebree 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 Buyer shall arrange and pay for all costs of
loading and trimming the coal into barges to the proper draft and
the proper distribution within the barges. Buyer shall also
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.
3. The first sentence of Section 7.2 is amended to read as follows:
Unless another method of sampling and analysis is mutually agreed
upon by the parties, 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.
CONTRACT #00-000-000
4. Section 8.1 of the Agreement is deleted in its entirety and replaced
with the following:
SECTION 8.1 BASE PRICE AND TRANSPORTATION CHARGE.
(a) BASE PRICE. The base price (the "Base Price") of the coal
to be sold hereunder will be firm and will be determined by
the year in which the coal is delivered as defined in
SECTION 5 in accordance with the following schedule:
YEAR BASE PRICE ($ PER MMBTU)
------- ------------------------
1997 $0.78000
1998 $0.79000
1999 $0.80000
2000 $0.81000
2001 $0.82000
(b) TRANSPORTATION CHARGE. In addition to the Base Price, Buyer
shall pay a transportation charge for coal delivered pursuant to
SECTION5.1(b) in an amount equal to $3.00/ton.
5. Except as specifically amended herein, all provisions of the
Agreement will remain in full force and effect. In case of any conflict between
the provisions of this Amendment and the provisions of the Agreement, the
provisions of this Amendment shall prevail.
6. This is the final and complete agreement of the parties relating to
the subject matter hereof and hereby supersedes any prior or contemporaneous
oral or written understanding, statements or agreements between the parties
relating thereto.
The parties have executed this Amendment through their duly authorized
representatives on the dates set forth below.
LOUISVILLE GAS AND ELECTRIC COMPANY
By: ______________________________
Title: ______________________________
Date: ______________________________
ANDALEX RESOURCES, INC.
By: ______________________________
Title: ______________________________
Date: ______________________________
CONTRACT #00-000-000
CONSENT TO ASSIGNMENT
AND ESTOPPEL AGREEMENT
THIS CONSENT TO ASSIGNMENT AND ESTOPPEL AGREEMENT (this "Agreement") is
made and entered into this 23rd day of January 1998, by and among Louisville Gas
and Electric Company, a Kentucky corporation ("Coal Buyer"), having an address
at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000; ANDALEX RESOURCES, INC., a
Delaware corporation ("Assignor"), having an address at Xxxxx 000, 00 Xxxx 00000
Xxxxx, Xxxxx, Xxxx 00000; and XXXXXXX COUNTY COAL LLC, a Delaware limited
liability company ("Assignee"), having an address in care of MAPCO Coal, Inc.,
000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000; Attn: Xxxxxx X.
Xxxxxxx, Esq.
W I T N E S S E T H:
WHEREAS, Assignor is the seller and Coal Buyer is the buyer of certain
coal, as more fully described in the coal supply agreement (the "Coal Supply
Agreement"), a copy of which is attached hereto and made a part hereof as
EXHIBIT A and as amended by EXHIBIT B; and
WHEREAS, Assignor and Assignee have heretofore entered into or
anticipate they may enter into an Agreement for Purchase and Sale of Assets
whereby Assignee has agreed or may agree to acquire certain assets of the
Assignor, including the Coal Supply Agreement (such acquisition hereinafter
referred to as the "Transfer"); and
WHEREAS, to facilitate the Transfer, Coal buyer is willing [i] to grant
its consent to Assignee's replacement of Assignor under the Coal Supply
Agreement subject to the terms of the Coal Supply Agreement and this Agreement,
and [ii] to make the representations and agreements set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiently of which are hereby acknowledged, the parties hereto agree as
follows:
1. Coal Buyer represents and warrants to Assignor and Assignee that it
has full right and lawful authority to enter into this Agreement.
2. Coal Buyer hereby consents to and waives any objection to or claim
based on assignment of the Coal Supply Agreement by Assignor to Assignee. Such
consent is given only to the assignment by Assignor to Assignee and any further
assignment, sublease, or other transfer of any interest in the Coal Supply
Agreement shall be made only after compliance with all of the terms and
conditions set forth in the Coal Supply Agreement.
3. Coal Buyer hereby agrees, represents and warrants for the benefit of
Assignor and Assignee, and Assignor hereby agrees, represents and warrants for
the benefit of Coal Buyer as follows:
a. The Coal Supply Agreement is in full force and effect and has
not been amended or modified except as provided in EXHIBIT B
and such modifications are binding on the parties and are a
part of the Coal Supply Agreement. The attached EXHIBIT A and
EXHIBIT B together constitute a true, accurate and complete
copy of the Coal Supply Agreement.
b. Assignor is not presently in default pursuant to any
provision of the Coal Supply Agreement or this Agreement.
CONTRACT #00-000-000
c. There has been no act or omission which would with notice or
the passage of time constitute a default pursuant to the terms
of the Coal Supply Agreement or this Agreement.
d. The assignment of the Coal Supply Agreement by Assignor to
Assignee will not or if completed did not, in and of itself,
constitute a default pursuant to the terms of the Coal Supply
Agreement.
e. All payments and deliveries under the Coal Supply Agreement
are current through ______________, 199___ (taking into
account all modifications reflected on EXHIBIT B), and all of
the covenants and obligations of any party to be performed and
observed under the Coal Supply Agreement prior to the
Effective Date have been fully performed and observed. The
term "Effective Date" as used in this Agreement shall mean the
later of the date specified above in this subpart (e) or such
later "Effective Date" as may be set forth in any writing
signed or agreed to by Coal Buyer and hereafter provided to
Assignor and/or Assignee.
4. The Assignee shall not be responsible for any liabilities,
obligations or performance of Assignor under the Coal Supply Agreement which
arose or were due prior to the Effective Date (except for those liabilities
and obligations the performance of which has been expressly extended past the
Effective Date as reflected on EXHIBIT B), nor shall Assignee be responsible
for any acts or omissions which occurred or failed to occur prior to the
Effective Date.
5. Upon the assignment of the Coal Supply Agreement by Assignor to
Assignee and the assumption by Assignee of all of Assignor's liabilities and
obligations thereunder (taking into account the modifications reflected on
EXHIBIT B) arising on or after the Effective Date, Assignor shall be released
from any liabilities and obligations arising on and after the Effective Date and
Assignor shall not be responsible for any acts or omissions of the Assignee
which occur or failed to occur after the Effective Date.
6. Assignor, Assignee and Xxxxxxx County Coal Corporation have executed
Amendment No. 2, attached hereto as Exhibit C, of the Coal Supply Agreement to
evidence the terms and conditions pursuant to which Coal Buyer has given its
consent to the assignment and assumption.
7. The provisions of this Agreement shall bind and inure to the benefit
of the heirs, representatives, successors and assigns of the parties hereto.
8. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
9. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be mailed by first-class,
registered, or certified mail, postage prepaid, or sent via overnight courier
service, or delivered personally at the addresses in the introduction of this
Agreement or to such other address of which the addressee shall have notified
the sender in writing. Notices mailed in accordance with this section shall be
deemed given when mailed and notices sent by overnight courier service shall be
deemed given when placed in the hands of a representative of such service.
10. This Agreement shall at all times be governed by and construed in
accordance with the laws of the Commonwealth of Kentucky, without regard to the
choice of law principles thereof.
CONTRACT #00-000-000
11. This Agreement and the Coal Supply Agreement contain the entire
agreement between Assignor and Coal buyer with respect to the subject matter
hereof and the Coal Supply Agreement, and supersede all prior or contemporaneous
representations, understandings or agreements, oral or written between Assignor
and Coal Buyer, which pertain to the subject matter hereof, and are not included
herein. This Agreement and the Coal Supply Agreement contain the entire
agreement between Assignee and Coal Buyer with respect to the subject matter
hereof and the Coal Supply Agreement, and supersede all prior or contemporaneous
representations, understandings or agreements, oral or written between Assignee
and coal Buyer, which pertain to the subject matter hereof, and are not included
herein. This Agreement may not be changed or modified in any manner except by an
instrument in writing duly executed by the authorized officer or representative
of each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized representatives the date and
year first above written.
"COAL BUYER"
LOUISVILLE GAS AND ELECTRIC COMPANY,
a Kentucky corporation
By:
--------------------------------
Name: XXXXXX X. XXXXXXXX
Title: SENIOR VICE PRESIDENT POWER OPERATIONS
"ASSIGNOR"
ANDALEX RESOURCES, INC.,
a Delaware corporation
By:
--------------------------------
Name: XXXXXXX X. XXXXX
Title: PRESIDENT
"ASSIGNEE"
XXXXXXX COUNTY COAL LLC,
a Delaware limited liability company
By:
---------------------------------
Name: W. DELL XXXXXXX
Title: V.P. ENGINEERING AND PLANNING
CONTRACT #00-000-000
EXHIBIT A
[ATTACH A COPY OF THE COAL SUPPLY AGREEMENT]
