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Exhibit 10.12
COAL SUPPLY AGREEMENT
THIS COAL SUPPLY AGREEMENT ("Agreement") is made and entered
into as of this 1st day of July, 1994 by and between NEW YORK STATE ELECTRIC &
GAS CORPORATION ("Buyer"), Corporate Drive, Kirkwood Industrial Park,
Binghamton, New York 13902-5224 and EASTERN ASSOCIATED COAL CORP. ("Seller"),
000 Xxxxxxx Xxxxx, X.X. Xxx 0000, Xxxxxxxxxx, XX 00000.
WITNESSETH:
WHEREAS, Seller agrees to sell and tender delivery of, and
Buyer agrees to purchase and accept delivery of, washed coal of the quality and
quantity as described below, during the term and on the terms set forth below;
and
WHEREAS, Buyer and Seller understand and agree that Seller's
obligations hereunder to sell and deliver and Buyer's obligations to purchase
and accept coal are expressly subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, Seller agrees to
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sell and tender delivery of, and Buyer agrees to purchase and accept delivery
of, the quantity and quality of coal (hereinafter the "Coal") specified herein
on the terms and conditions hereinafter set forth.
ARTICLE 1 - TERM
Section 1.1. The term of this Agreement shall be for five and
one-half (5 1/2) years effective as of July 1, 1994 and ending December 31,
1999. A "Contract Year" as used herein shall be all or a portion of a calendar
year, beginning on January 1 and ending on December 31.
ARTICLE 2 - SOURCE, QUANTITY AND POINT OF DELIVERY
Section 2.1. Source. Except as otherwise expressly permitted
herein the source of the Coal to be delivered hereunder shall be the Federal #2
Mine, Miracle Run, Monongalia County, West Virginia (the "Mine").
Section 2.2. Quantity. The quantity of Coal to be delivered
hereunder shall be 200,000 net tons from July 1, 1994 to December 31, 1994
(Seller, to the extent possible, will load all 200,000 net tons during 1994, but
any coal not delivered during 1994 will be rescheduled for delivery
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during 1995, utilizing the Contract Coal 1994 pricing as set forth in Article 4.
Such scheduled tons shall be in addition to the 1995 quantity as hereinafter
described); 250,000 net tons during Contract Year 1995; 250,000 net tons during
Contract Year 1996 and a mutually agreed upon quantity during Contract Years
1997, 1998, and 1999 within a range of 250,000 to 600,000 net tons per year.
Quantities for each of the Contract Years 1997, 1998, and 1999 shall be
established, by mutual agreement, no later than October 1 of the preceding year.
If the parties fail to mutually agree upon the quantity for each of the Contract
Years 1997, 1998, and 1999 by October 1 of the appropriate preceding year, then
the quantity for any such particular year shall be the minimum of the
aforementioned range, that is, 250,000 net tons.
Section 2.3. Buyer has the right to increase or decrease the
quantity of Coal to be delivered hereunder by 50,000 net tons per year by
providing notice by July first (7/1) of each Contract Year (i.e., for the 1995
Contract Year, the tonnage requirement can be increased to 300,000
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net tons or decreased to 200,000 net tons by providing notice by July 1, 1995).
Section 2.4. Point of Delivery. The Point of Delivery for Coal
sold hereunder shall be F.O.B. destination. Title and risk of loss shall pass to
Buyer when Coal shipment is delivered to NYSEG's Xxxxxxxxx or Xxxxxx stations as
designated in NYSEG's shipment order. Shipments may be delivered to Buyer's
other stations at Buyer's option.
Section 2.5. Order Procedure and Scheduling.
(a) In order to assist Seller in planning activities, Buyer
shall provide Seller at least ten (10)days prior to the beginning of each month
with a three (3) month rolling forecast of the quantities of Coal required by
the Buyer for the following three (3) months. It is understood that such rolling
forecasts are intended to be Buyer's estimates of its purchase requirements;
they shall not be binding upon either party. Seller shall within five (5)
business days after receipt of each such forecast notify Buyer of any
prospective problems it might have in meeting Buyer's three (3) month forecast
requirement.
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(b) Buyer shall provide Seller with its firm orders specifying
the quantity and the point of delivery for the following month's order at least
ten (10) days prior to the beginning of that month. Seller will acknowledge
receipt of the order and promptly confirm that the order can be supplied or, if
the requested delivery date cannot be met, the parties will establish a mutually
acceptable alternative delivery date.
Section 2.6. Payment for Transportation.
Notwithstanding Section 2.4, Buyer shall be responsible for
the payment of all transportation costs.
ARTICLE 3 - QUALITY SPECIFICATIONS
Section 3.1. Quality Specifications. The Coal to be delivered
hereunder shall have the following quality specifications; unless otherwise
expressly noted to the contrary below, such requirements will apply on a per
"payment lot" as-received basis. A "payment lot" is defined as a shipment per
station.
Quality Limits Penalties per Payment Lot
Moisture 7.50% Maximum Greater than 8.0%
Ash 7.75% Maximum Greater than 9.0%
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Sulfur 2.1 lbs. Sulfur Max. per payment lot Greater than 2.4 lbs.
Sulfur per MMBTU
1.9 lbs. Sulfur Max. per rolling 3
month weighted average per station
1.7 lbs. Sulfur Max. per rolling
annual weighted average for Xxxxxx
Station Only
BTU 13,250 Minimum Less than 12,800
AFT(H=W reducing) 2,140 degrees F. minimum
Size 2" x 0
Volatile 37.0% Nominal
ARTICLE 4 - PRICE
Section 4.1. The Contract Price shall be fixed in accordance
with this Section 4.1, except for changes in Laws hereof (Section 4.2).
The payment price to be paid by the Buyer to the Seller for
the payment lot of Coal delivered hereunder shall be the value of such Coal in
dollars per ton as determined by the following formula:
Payment Price for Coal in dollars per ton in Payment
Lot = (A X B X0.002) - C
Where A = "As Received" heating value of Coal in the payment lot
expressed in BTU's per pound
Contract Price + Applicable Rail Rate at time of shipment
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and B = [ (2 x BTU Guarantee) ]
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1000
and C = The applicable rail transportation rate at the time of
shipment in dollars per ton
Contract Prices are as follows:
1994 $19.09/ton, F.O.B. mine
1995 $20.00/ton, F.O.B. mine
1996 $20.75/ton, F.O.B. mine
Contract Prices for calendar years 1997, 1998, 1999 will be negotiated. Contract
Price for each of such years shall be established, by mutual agreement, no later
than October 1 of the preceding year. In the event the parties are unable to
establish a mutually agreeable Contract Price by October 1 of the preceding year
for each of calendar years 1997, 1998 and 1999, the parties agree that this
Agreement shall terminate and be of no further force and effect as of December
31 of the then current calendar year.
Section 4.2. Laws. In the event changes in federal, state or
local laws or regulations, or the official interpretations thereof, which affect
the Contract Price or the administration of this Agreement, should be enacted
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and/or enforced, the Contract Price shall be adjusted to the extent of such
change.
ARTICLE 5 - SPECIAL TERMS AND CONDITIONS
Section 5.1. Weights. The weight of Coal delivered hereunder
by rail to Buyer's Plant shall be determined from Buyer's Power Plant scales,
which scales shall be certified and tested in accordance with The Association of
American Railroad's ("AAR") Scale Handbook Procedures. If the AAR Procedures are
modified, the new requirements shall govern. These certifications and testing
are in addition to periodic testing and calibrating which shall be performed in
accordance with accepted industry standards. Seller shall receive a minimum of
two (2) weeks prior notice of certification and testing dates, and shall have
the right to have a representative present to observe all such tests. If Buyer's
scale is inoperative, then the weights shall be determined by using the weighted
average car weights for the previous three (3) payment lots received at the
respective station.
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Section 5.2. Sampling and Analysis. Buyer shall sample and an
independent laboratory shall analyze the Coal shipped hereunder. The analysis
shall be performed according to ASTM standards by a mutually acceptable
independent commercial testing laboratory. The results of such sampling and
analysis shall be controlling for all purposes. Seller and Buyer shall have the
right to have a representative present at any and all times to observe the
sampling and the analytical procedure by the independent laboratory. All samples
shall be divided into three (3) parts and put in suitable airtight containers.
Buyer shall have an independent laboratory (1) analyze the contents of the first
container in such a manner that the moisture, ash and sulfur percentages and the
calorific value in BTU's per pound, are determined on an "as received" basis;
and (2) compute the pounds of sulfur as provided in Section 3.1. The results of
such analysis shall, except as hereinafter provided, be controlling for all
purposes under this Agreement. Buyer and Seller will promptly notify each other
of all analyses. The second and third containers in each case shall be held
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available by Buyer in a storage room at the Plant for a period of thirty (30)
days after such sample was taken. The part in the second container shall be
available to Seller. If Seller's analysis of the part in said second container
differs by more than the allowable ASTM standards, Seller may request an
analysis of the part in the third container. The part in the third container
shall be retained for such thirty (30) day time period, properly sealed and
labeled, to be analyzed if a dispute arises due to a difference between Buyer's
and Seller's analyses. The analysis of the part in the third container of each
sample, if necessary, shall be made as soon as possible by a mutually acceptable
independent commercial testing laboratory, and the results of such analysis
shall be controlling for all purposes. The cost of the sampling and/or analysis
made by such commercial laboratory shall be shared equally by the parties
hereto. If the automatic sampler or sampling process is inoperative, the average
qualities of the last three (3) payment lots for the station will be used as a
basis for payment.
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Section 5.3. Penalty for Coal Quality Deficiencies. Should the
quality of Coal delivered hereunder fail to comply with any of the Penalties per
Payment Lot stated in Section 3.1 of this Agreement, as determined in accordance
with Section 5.2 of this Agreement, a ten (10) percent penalty shall apply to
the Contract Price as calculated in 4.1.
Should the rolling three (3) month weighted average sulfur
limit or the rolling annual weighted average sulfur limit exceed the
specifications stated in Section 3.1 of this Agreement, as determined in
accordance with Section 5.2 of this Agreement, Buyer shall have the right to
immediately suspend further shipments by giving written notice of the suspension
to Seller. After receipt of a suspension notice, Seller shall suspend further
shipments of Coal and shall immediately commence appropriate action and use all
reasonable efforts to correct the deficiency. Seller shall furnish Buyer with
reasonable written documentation to ensure Buyer of Seller's ability to perform.
If Buyer is reasonably assured that Seller can
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furnish Coal which complies with the specifications of Section 3.1, as
determined in accordance with Section 5.2 of this Agreement (Buyer shall make
such decision with reasonable commercial expediency, considering the
circumstances presented, and shall not unreasonably withhold its concurrence
with Seller's reasonable assurances), then shipments shall immediately resume.
If the Buyer does not receive such reasonable assurances from
Seller within fifteen (15) days of Seller's receipt of suspension notice, or if
after giving Buyer such assurances, Seller's subsequent deliveries during the
ensuing month fail both to meet and bring the 3 month rolling monthly or annual
weighted average sulfur quantity within the limits of Section 3.1, as determined
in accordance with Section 5.2, Buyer shall send Seller written notice of such
failure, and this Agreement may be immediately terminated, at Buyer's sole
option. If Buyer does not exercise its suspension or termination rights within
sixty (60) days after failure occurs, Buyer shall be deemed to have waived its
suspension or termination rights,
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as the case may be, as to that event. Tonnage not shipped as a result of
suspension under this Section 5.3 shall be made up on a mutually agreeable
delivery schedule. The penalty provision and the right to suspend future
shipments are in addition to any other legal rights or remedies available to
NYSEG upon delivery of non-conforming goods.
Section 5.4. Freeze Protection. At Buyer's request, freeze
conditioning agents of a quality, type, source and quantity acceptable to the
Buyer shall be applied by the Seller at the mine to minimize the freezing of
Coal during periods of cold weather, provided, however, that Seller's actual
cost for any such freeze conditioning shall be for Buyer's account. Such costs
shall be competitive in the industry. Upon scheduling trains, Buyer will specify
the date to begin and end freeze conditioning each year or by shipment.
Section 5.5. Confidentiality. Buyer and Seller agree that the
terms of this Agreement will be kept in strict confidence and that neither party
will disclose the same to any third party, except (a) to the extent necessary
for the
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disclosing party to comply with any applicable laws, rules, regulations,
statutes or ordinances necessary to the conduct of its business affairs, (b) by
commission of a valid subpoena and/or order of a court of competent
jurisdiction, or (c) to a subsidiary, parent or affiliated company of Buyer or
Seller.
Section 5.6. Substitution. Seller shall have the right, but
not the obligation, with Buyer's approval, to supply coal from sources other
than as specified in the Agreement, but such substitute coal must be of a
quality equal to that required under the Agreement and the delivered price of
such coal must be the same, on a per million BTUs basis, as the delivered price
in effect under the Agreement for Coal from the source specified.
Section 5.7. Billing and Payment.
Billing and payment for each payment lot received from Seller
shall be based upon the quantity and quality of Coal as determined hereunder.
On receipt of the "As Received" analysis from the independent
laboratory as determined under Article 5,
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hereunder, of each payment lot of Coal, Buyer will prepare a "Coal Purchase
Advice" which will include Coal quality and pricing information.
Payment for each payment lot of Coal shall be due within 30
days after receipt of the payment lot and shall be made by Federal Reserve Wire
Transfer of same day funds to Eastern Associated Coal Corp., Account No.
161-9323, Mellon Bank of Pittsburgh, ABA No. 000000000 or such other account
that Seller may from time to time select on thirty (30) days notice to Buyer.
Section 5.8. Force Majeure.
Section 5.8.1. Definition of Force Majeure. An event of "force
majeure" shall mean an act of God or of the public enemy; strike, lockout,
slowdown, interruption, or other labor dispute; sabotage; labor shortage; fire;
flood; low water; war; riot; insurrection; explosion; accident; embargo;
blockade; unexpected mining condition which may arise; preexisting natural
condition; inability to secure supplies, fuel, power, governmental authorization
or permit; breakdown of or damage to machinery or apparatus;
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interruption of transportation or shortage of transportation equipment;
regulation, rule, law, order, act or restraint of any civil or military
governmental authority; or any other event, whether of the kind enumerated
herein or otherwise, and whether or not foreseen or foreseeable by either or
both of the parties, which is beyond the control of the party claiming excuse
thereby and which wholly or partially prevents, interrupts, or delays the
production, loading or delivery of the Coal by Seller, or the acceptance,
unloading, or utilization of the Coal by Buyer. An event is beyond a party's
control if it cannot be prevented or eliminated by the exercise of due diligence
or if its prevention or elimination would be commercially impracticable. An act
shall be deemed commercially impracticable when it can be accomplished only at
an excessive and unreasonable cost. Settlement of a strike, lockout or other
labor dispute shall be deemed beyond the control of the party claiming excuse
thereby regardless of the cause of, or the ability of such party to settle, such
dispute.
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Section 5.8.2. Consequence of Force Majeure. A party's
performance of its obligations hereunder, except obligations to pay money to the
other party, shall be excused to the extent prevented by a force majeure event.
Deficiencies in the quantity of Coal delivered hereunder due to a force majeure
event shall not be made up except by mutual consent of Buyer and Seller. Unless
the other party is on actual notice, the party claiming excuse because of a
force majeure event shall send written notice to the other party as soon as
practicable after learning of the existence of such event, but the right to
claim force majeure shall not be conditional upon the giving of such notice. If
there is no reasonable prospect that the force majeure event can be corrected or
eliminated within six (6) months, then either party may notify the other that
the force majeure event is "likely to be permanent." Unless the party receiving
such notice requests, within thirty (30) days of such receipt, resolution of the
matter pursuant to the Dispute Resolution provision of the Agreement, either
party shall then have the right (a) to terminate the Agreement if the force
majeure
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event excuses total performance of the party claiming excuse, or (b) if only a
portion of performance is excused by the force majeure event, to terminate the
Agreement with respect to that portion of performance so excused.
Section 5.9. Dispute Resolution. The parties will attempt to
settle any and all disputes arising out of or in connection with the execution,
interpretation, performance, or non-performance of this Agreement or any other
certificate, agreement, or other instrument between, involving, or affecting the
parties and their relationship hereunder by first using the dispute resolution
procedures set forth in this Article. If the Buyer and Seller are unable to
resolve a dispute after a reasonable period of time following good faith efforts
they will (A) reduce to writing the nature of the dispute, and (B) forward the
dispute to the parties' respective chief operational officers responsible for
this Agreement for resolution, hereinafter the "Principals." The Principals will
schedule a meeting as soon as possible after receipt of the dispute where they
will attempt to resolve the dispute to the
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parties' mutual satisfaction. If, however, the dispute is not resolved within
sixty (60) days after referral to the Principals, then either party may pursue
any legal recourse or remedy available to that party under this Agreement or at
law.
Section 5.10. Assignment. Neither party may assign the
Agreement without the prior written consent of the other; which consent may not
be unreasonably withheld, except that either party may assign the Agreement to
an affiliated company, but no such assignment shall release the assigning party
from the obligation to perform the Agreement unless the other party consents
thereto.
Section 5.11. Waivers and Defaults. The failure of a party to
insist in any one or more instances upon strict performance of a provision of
the Agreement or to take advantage of any of its rights under the Agreement
shall not be construed as a waiver of such provision or the relinquishment of
such right. Unless otherwise provided in the Agreement, no default of a party in
the performance of a covenant or obligation under the Agreement shall result in
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the other party's right to cancel or terminate the Agreement unless such
defaulting party shall have failed to correct the default within thirty (30)
days after written notice of claim of default has been given by the other party.
Section 5.12. Limitations. EXCEPT AS EXPRESSLY STATED IN THE
AGREEMENT, SELLER MAKES NO WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR
ORAL, AND WHETHER AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE, QUANTITY, QUALITY, OR
OTHERWISE. NEITHER SELLER NOR BUYER SHALL BE LIABLE FOR ANY SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION LOSS OF PROFITS OR
OVERHEAD, BY VIRTUE OF ITS BREACH OF ANY OF ITS OBLIGATIONS UNDER THE AGREEMENT.
Section 5.13. Notice. Notice given hereunder by one party to
the other shall be deemed sufficient if in writing, and transmitted by telex or
telegraph or dispatched in the U.S. mail, postage prepaid, for mailing by first
class, certified, or registered mail. Notice shall be forwarded to
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(or to such other person or address as such party may have specified by written
notice):
For Buyers: Vice President of Fuel Supply & Operations Services
New York State Electric & Gas Corporation
Corporate Drive, P.O. Box 0000
Xxxxxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
For Seller: President - Eastern Associated Coal Corp.
000 Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
A copy should be sent to:
Vice President of Sales and Marketing
Peabody COALSALES Company
Laidley Tower, Suite 200
000 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
Section 5.14. Attorney's Fees. Each party shall be entitled to
recover reasonable attorney's fees and court costs from the other party in any
litigation arising out of the other party's breach of this Agreement; provided,
however, it is determined by a court of competent jurisdiction that such party
was in breach of this Agreement and such decision is final and binding upon the
parties.
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Section 5.15. Entire Agreement. The Agreement constitutes the
entire agreement of the parties and supersedes all previous communications or
understandings between them regarding the matters contained herein. No amendment
or modification of the Agreement shall be effective unless agreed to in a
written instrument authorized and executed by the parties.
Section 5.16. Applicable Law. The Agreement shall be construed
in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
Buyer: Seller:
NEW YORK STATE ELECTRIC & GAS EASTERN ASSOCIATED COAL CORP.
CORPORATION
By: By:
-------------------------------- -------------------------------
Its: Its:
------------------------------- ------------------------------
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AMENDMENT NO. 2 TO COAL SUPPLY AGREEMENT
THIS AMENDMENT, made and entered into on March 9, 1998 by and
between NEW YORK STATE ELECTRIC & GAS CORPORATION ("Buyer"), Corporate Drive,
Kirkwood Industrial Park, Binghamton, New York 13902-5224 and EASTERN ASSOCIATED
COAL CORP., ("Seller"), 000 Xxxxxxx Xxxxx, X.X. Xxx 0000, Xxxxxxxxxx, XX 00000.
W I T N E S S E T H :
WHEREAS, Buyer and Seller are parties to a Coal Supply
Agreement entered into as of July 1, 1994 and amended by Amendment No. 1 on
October 2, 1996 ("Agreement");
WHEREAS, Buyer and Seller wish to amend the Agreement in
certain respects.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and undertakings of the parties herein contained, Buyer and Seller
intending to be legally bound hereby, agree as follows:
Section 5.5 is deleted in its entirety and replaced by the
following new Section 5.5:
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Section 5.5. Confidentiality.
The terms and conditions (including prices) set forth in this
Agreement, and information exchanged during negotiation and performance of this
Agreement, are considered by both Buyer and Seller to be confidential and
proprietary. Neither Buyer nor Seller shall disclose any of the terms and
conditions hereof nor any such information to any third party without the prior
written consent of the other except when disclosure in the sole judgment of the
party making the disclosure is required or appropriate (a) by statute, (b) by
regulation, order or request of a governmental agency, (c) in connection with a
judicial or administrative proceeding, (d) to Seller's lending institutions so
long as Seller's lending institutions agree in writing to keep the contents of
this Agreement confidential and use it solely in connection with its loans to
Seller or (e) solely in connection with a sale or potential sale of Buyer's
assets or stock, provided potential buyers agree in writing to keep contract
contents confidential.
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All other terms and conditions of the Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the day and year first above written.
Buyer: Seller:
NEW YORK STATE ELECTRIC & GAS EASTERN ASSOCIATED COAL CORP.
CORPORATION
By: By:
-------------------------------- -------------------------------
Title: Title:
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