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EXHIBIT 10.9
2-1-86
RESTATED AND AMENDED
COAL SUPPLY AGREEMENT
BETWEEN
SEMINOLE ELECTRIC COOPERATIVE, INC.
AND
XXXXXXX COUNTY COAL CORPORATION AND
WHITE COUNTY COAL CORPORATION
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INDEX
ARTICLE TITLE PAGE NO.
I Terms of Agreement ......................................................................................2
II Quantity ................................................................................................2
III Source ..................................................................................................6
IV Delivery ................................................................................................7
V Price - Dotiki Mine ....................................................................................10
VI Price - Pattiki Mine ..... .............................................................................11
VII Base Price Adjustments .................................................................................12
VIII Price Review ...........................................................................................19
IX Coal Specifications, Sampling and
BTU Value Adjustments ..................................................................................24
X Cancellation, Rejection and Suspension
by Purchaser ...........................................................................................27
XI Invoicing, Payments and Interest .......................................................................29
XII Records and Review .....................................................................................31
XIII Force Majeure ..........................................................................................32
XIV Governmental Authority .................................................................................34
XV Material Default .......................................................................................36
XVI Remedies ...............................................................................................36
XVII Arbitration ............................................................................................39
XVIII Price Controls..........................................................................................41
XIX Assignment and Delegation...............................................................................42
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XX Indemnification.........................................................................................43
XXI Equal Employment Opportunity............................................................................43
XXII General ................................................................................................44
XXIII Entire Agreement .......................................................................................45
-- Guaranty..................................................................................................
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RESTATED AND AMENDED
COAL SUPPLY AGREEMENT
THIS AGREEMENT is effective the 1st day of February, 1986, by and
between SEMINOLE ELECTRIC COOPERATIVE, INC., a Florida corporation
("Purchaser"), and XXXXXXX COUNTY COAL CORPORATION, a Kentucky corporation, and
WHITE COUNTY COAL CORPORATION, a Delaware corporation (hereinafter called
"Xxxxxxx" and "White," respectively, and collectively or individually called
"Seller").
W I T N E S S E T H :
WHEREAS, the parties entered into a Coal Supply Agreement dated January
17, 1979 ("Coal Supply Agreement") and have agreed to hereby restate and amend
the Coal Supply Agreement; and
WHEREAS, Purchaser desires to secure a supply of coal of the quality
and quantities hereinafter set forth for use in the operation of Purchaser's
Plant Units 1 and 2 located in the State of Florida; and
WHEREAS, both Xxxxxxx and White are wholly-owned subsidiaries of MAPCO
Coals Inc., a Delaware corporation with offices at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx, Xxxxxxxx 00000 ("Agent"), which is Seller's agent for the administration
of this Agreement; and
WHEREAS, Agent is a wholly-owned subsidiary of MAPCO Inc., a Delaware
corporation with offices at 0000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000.
WHEREAS, MAPCO Inc. by an attachment hereto, guarantees the performance
of the respective obligations of Seller under this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the
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parties agree to hereby restate and amend the Coal Supply Agreement and Seller
agrees to sell, and Purchaser agrees to purchase, coal of a quantity and quality
hereinafter specified, during the period, at the prices and upon the other terms
and conditions hereinafter set forth.
ARTICLE I
TERMS OF AGREEMENT
1.1 This Agreement restates and amends the Coal Supply Agreement as of
the date hereof and shall continue until December 31, 2010.
1.2 A "Contract Year" shall be the calendar year.
1.3 This Agreement is subject to the approval of the Administrator of
the Rural Electrification Administration.
ARTICLE II
QUANTITY
2.1 Dotiki Mine. Xxxxxxx shall sell to Purchaser, and Purchaser shall
buy from Xxxxxxx, from Xxxxxxx'x Dotiki Mine, during each Contract Year of this
Agreement ****** tons of coal commencing with the Contract year 1986 and
extending through the Contract Year 1989 and ****** tons of coal for each
Contract Year thereafter.
2.2 Pattiki Mine. White shall sell to Purchaser, and Purchaser shall
buy from White, from White's Pattiki Mine, during each Contract Year of this
Agreement, ****** tons of coal commencing with the Contract Year 1986 and
extending through the Contract Year 1989 and ****** tons of coal during each
Contract Year thereafter.
2.3 Purchaser may increase by as much as ******, the annual quantity to
be delivered pursuant to Section 2.1 and/or 2.2 hereof in any Contract Year by
giving written notice to Seller
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on or before July 1 of the previous Contract Year, provided Seller has
uncommitted production available for Purchaser. Beginning with Contract Year
1990, Purchaser may decrease by as much as ****** the annual quantity to be
delivered pursuant to Section 2.1 and/or 2.2 hereof in any Contract Year by
giving written notice to Seller on or before July 1 of the previous Contract
Year.
2.4 Purchaser from time to time during the term hereof may make written
request upon Seller to stockpile coal for Purchaser in an amount aggregating up
to ****** tons at the Dotiki Mine and ****** tons in the aggregate at the
Pattiki Mine, which amounts shall constitute a part of the annual tonnage
commitment set forth in Section 2.1 and/or 2.2, respectively, when stockpiled.
In the event of such request, Seller shall still be required on written notice
from Purchaser, to deliver such coal to Purchaser at the coal transfer facility
("Coal Transfer Facility") of Mt. Xxxxxx Coal Transfer Company ("Mt. Xxxxxx"),
in Indiana, near Mt. Xxxxxx, Indiana or an alternate delivery point as
designated by Purchaser, and Purchaser shall pay to Seller the then Current
Price (as defined in Sections 5.2 or 6.2), together with an additional allowance
of 20 cents per ton, and any applicable taxes, for the coal so stockpiled when
and as such coal is stockpiled. Seller shall stockpile coal at the rate of up to
5,000 tons for each day Purchaser so requests. Seller shall notify Purchaser in
writing when the requested stockpile is completed. At any time after the
requested stockpile or the appropriate portion thereof has been held by Seller
for 6 months, Seller may, after 10 days written notice to Purchaser (such notice
shall include selling price and other terms of sale), sell coal from the
stockpile to others for Purchaser's account, unless Purchaser, within such 10
days, agrees to take immediate delivery or agrees in writing to assume the risk
of loss of the coal in the stockpile. Risk of loss of stockpiled coal shall
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otherwise be with Seller until such time as stockpiled coal is loaded for
shipment. Coal so stockpiled will be shipped by Seller upon written request from
Purchaser, to the extent that loading equipment is available after meeting
Seller's normal shipping requirements from the mine, and quality adjustments
shall apply to the coal when shipped. Seller shall maintain a running total of
stockpile weights for all coal stockpiled, adjusted to reflect deductions as
shipments are made upon Purchaser's request or sales are made by Seller pursuant
to this Section 2.4. In the event of sales by Seller as aforesaid to others from
the stockpile, Seller shall xxxx xxxxx to Purchaser the actual sales price and
severance taxes, if any, received by Seller from third parties for such coal.
2.5 All coal shipped shall be weighed by Seller at the mine using
scales approved by the Southern Weighing Bureau, or succeeding agency, and
weights so obtained shall be binding upon both parties and govern any disputes
under this Agreement, subject to the further provisions of this Section 2.5.
Purchaser shall also weigh all coal received at its plant using scales approved
by the Southern Weighing Bureau, or succeeding agency. Purchaser or Seller may
observe the weighing and any scale testing. Seller and Purchaser shall each
inspect, test and calibrate their own scales semiannually and a party making
such inspection, testing or calibration shall send a report thereof to the other
party. Purchaser or Seller shall have the right, if it believes that any
weighing is not accurate, to designate an independent expert acceptable to
Seller and Purchaser, who shall check the equipment and procedures used in the
weighing of coal, and whose expense shall be borne equally by the parties. Any
dispute over the independent expert's report shall be subject to arbitration
under Article XVII. If all scales are tested and are accurate, and if it appears
that over .5 percent of shipments on a weighted quarterly average are being lost
due to
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windage, Seller agrees to use its best efforts to reduce such windage loss by
installing, at Seller's cost, a chemical spray system commonly used in the
industry.
2.6 If for any good faith business reason, other than a failure to
perform that is excused under Articles XIII and XIV of this Agreement, Purchaser
determines by reason of a reduction in its total annual requirement for coal
below the minimum quantities specified in this Agreement that it no longer needs
all or a portion of the coal to be supplied hereunder for Purchaser's Units 1
and 2, Purchaser shall provide written notice to Seller. Should such reduced
need continue for ****** consecutive months after receipt of written notice by
Seller, Purchaser may elect to reduce the total quantity of coal required to be
purchased under this Agreement, down to Purchaser's annual total requirement
which may be down to ****** tons. Such election shall be made in writing, shall
specify the good faith business reason for the reduced need and shall set forth
the new aggregate quantity of coal required to be purchased under this Agreement
for the Contract Year in which the election is being exercised. In the event
Purchaser makes such election to reduce the total quantity of coal required to
be purchased under this Agreement, then thereafter: (a) except as hereinafter
provided, Purchaser will purchase 100 percent of its coal requirements for its
Plant Units 1 and 2 from Seller; (b) Purchaser will notify Seller on or before
July 1 of each Contract Year of its requirements for coal for the next
succeeding Contract Year, and Seller shall not be obligated to deliver coal in
an amount greater than specified in such notice unless Seller has uncommitted
production available; (c) Seller shall have the right, at its sole discretion,
to deliver such reduced amount of coal from the Dotiki and Pattiki Mines in
whatever proportion Seller deems appropriate; (d) provided Purchaser is not
otherwise in default under this Agreement, Purchaser shall be obligated to pay
the then Current Price only for coal actually
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supplied; and (e) in the event Purchaser's actual requirements exceed the
quantity stated in Purchaser's notice under (b) above, and Seller does not have
uncommitted production available to supply the excess quantity, then Purchaser
may purchase such excess quantity from third parties.
In the event there is a reduction in deliveries under this Section 2.6
for any two Consecutive Contract Years on or after Purchaser's election to
reduce the total quantity required under this Agreement to an amount less than
****** of the annual minimum quantity which Purchaser was required to accept
under this Agreement except for application of this Section 2.6, Seller shall
have the right to cancel this Agreement and in such event neither party shall
have any further rights or obligations under this Agreement, other than with
respect to performance required hereunder prior to such cancellation.
ARTICLE III
SOURCE
3.1 The coal to be sold pursuant to Section 2.1 shall come from
Xxxxxxx'x Dotiki Mine. The coal to be sold pursuant to Section 2.2 shall come
from White's Pattiki Mine.
3.2 Seller represents and warrants that its total coal reserves in
Xxxxxxx and White Counties contain more than sufficient quantities of coal of a
quality and in quantities recoverable by deep mining under present mining laws
and practices which will be sufficient to satisfy all of Seller's obligations
under this Agreement.
3.3 Seller warrants that it will not, without Purchaser's prior written
consent, use or sell coal meeting the quality specifications hereof from the
Dotiki or Pattiki reserves in any way that will reduce the balance of
recoverable reserves to an amount less than the total amount then remaining to
be supplied Purchaser hereunder. Subject to the provisions of this Agreement,
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Seller otherwise reserves the right to use coal or sell coal to others from the
reserves.
3.4 With the written consent of Purchaser, which consent may not be
unreasonably withheld, Seller may, but shall not be required to, supply from
sources other than the Dotiki Mine and the Pattiki Mine coal which conforms to
the quality requirements of this Agreement. In the event Seller elects to do so,
the price for any such substitute coal shall be the Current Price, as defined in
Section 5.2 or 6.2, as adjusted by Article IX, inclusive of any taxes described
in Section 5.3 or 6.3, adjusted by an amount of any difference, on a Btu basis,
between the transportation costs of the substitute coal to the Purchaser's
Seminole Plant Unit No. 1 or Unit No. 2, respectively, and the transportation
costs then in effect between the above mine(s) and Purchaser's plant units.
3.5 Seller's right to furnish substitute coal shall not affect its
right to claim a force majeure excuse because of events occurring at the
respective mines as provided in Article XIII hereof or to claim excuse pursuant
to Article XIV hereof; however, if Seller is actually furnishing substitute coal
under Section 3.4, and that substitute coal continues to be available to Seller,
Seller shall not claim that an event of force majeure occurring only at the
Dotiki Mine or the Pattiki Mine excuses it from continuing to provide the same
amount it has been supplying from such substitute source.
ARTICLE IV
DELIVERY
4.1 Seller shall be required to deliver the coal purchased hereunder,
and title to the coal purchased hereunder shall pass, to Purchaser, at the Mt.
Xxxxxx Coal Transfer Company facility in Indiana, near Mt. Xxxxxx, Indiana, or
at any other point that Purchaser may direct in its sole discretion.
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4.2 The risk of loss of the coal purchased hereunder shall pass to
Purchaser at the rail cars at the Dotiki Mine or the Pattiki Mine, respectively.
4.3 Unless varied by mutual agreement of Seller and Purchaser, each
unit train shipment shall be of such size so as to minimize transportation costs
which train size currently is approximately ****** tons of coal for deliveries
to Mt. Xxxxxx Coal Transfer Company facilities or ****** tons of coal for direct
all rail shipments to Purchaser's Plants.
4.4 The amount of coal to be delivered under this Agreement shall be at
the rate, to the extent practicable and subject to variation for annual quantity
adjustments under Article II, of approximately ****** tons per month from the
Dotiki Mine and ****** tons per month from the Pattiki Mine, except for the
months in which a miner's vacation shall fall, in which months such amount shall
be reduced proportionately from the normal monthly amount; provided, however,
that for Contract Years 1986 through 1989 the monthly delivery rates shall
approximate ****** tons from the Dotiki Mine and ****** tons from the Pattiki
Mine. Seller shall be responsible for arranging all contracts for transportation
to the delivery point. Purchaser shall be a party to negotiation of such
contracts and such contracts shall be subject to Purchaser's approval, which
approval will not be unreasonably withheld. Seller shall load railroad cars on a
24-hour basis, 7 days per week at a minimum rate of ****** tons per hour,
continuously until a train is fully loaded. Purchaser shall reimburse Seller for
all transportation costs to the delivery point for coal purchased under this
Agreement, in accordance with Article XI and as provided for in the
Transportation Exhibit, Exhibit J-1. Seller shall be entitled to ship, and
Purchaser will accept delivery of as much as ****** tons in addition to the
monthly delivery rate, in any month, in
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order to make up amounts unshipped without excuse previously that Contract Year,
if such tonnage can be shipped and received with then existing shipping,
transloading and receiving facilities, but Purchaser shall not be required to
purchase in any Contract Year more than that Contract Year's commitment. If
Seller offers to ship more than the normal monthly amount during any month that
the said deficit exists, and said tonnage cannot be shipped and received with
the Purchaser's existing shipping and receiving facilities, Purchaser shall have
the option of stockpiling pursuant to the provisions of Section 2.4. In the
event Purchaser refuses to accept deliveries or so stockpile, Seller's annual
commitment under Sections 2.1 and/or 2.2 shall be reduced by the amount of said
deficit that Seller offers to ship in excess of the normal monthly amount which
is not accepted or so stockpiled by Purchaser.
4.5 Seller's loading facilities are designed to load railroad cars at
the rate of ****** tons per hour. In the event that, during the term of this
Agreement, Purchaser either elects shipments from the mine(s) under a tariff or
tariffs requiring changes in the design or operation of Seller's mining,
preparation or loading facilities, Seller shall use its best efforts to make
such changes as may be necessary; provided, however, that Purchaser and Seller,
before such changes are made, shall attempt to agree upon an adjustment to the
Base Price for the coal sold hereunder to reflect the cost to Seller of any such
changes as may be made under this Section 4.5. Purchaser's obligation to
purchase and Seller's obligation to sell under this Agreement shall not be
suspended or otherwise altered during negotiations or arbitration if no
agreement is reached.
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ARTICLE V
PRICE - DOTIKI MINE
5.1 The Base Price, as of February 1, 1986, for coal sold hereunder
from the Dotiki Mine is ****** per ton loaded in rail cars at the mine,
inclusive of Kentucky severance tax. The Base Price is subject to adjustments
from time to time for events occurring or having an effect on or after February
1, 1986, pursuant to Article VII, and for quality variations pursuant to Article
IX. The components of the February 1, 1986, Base Price are shown in Exhibit A. A
new Base Price may be established from time to time pursuant to the provisions
of Article VIII.
5.2 The "Current Price" under this Agreement for coal from the Dotiki
Mine shall be, at any given time, the "Base Price" provided for in Section 5.1
adjusted in accordance with the applicable provisions of this Agreement,
inclusive of severance taxes.
5.3 As the Base Price is adjusted under other provisions of the
Agreement, the Base Price will also be adjusted, effective at the same time as
the other adjustments are made, to reflect application of Kentucky severance tax
(or any other similar governmental tax on the severance, mining or sale of the
coal, hereinafter referred to as "severance tax"). The initial Kentucky net
effective severance tax rate is ******. Such severance tax rate shall be
adjusted annually to reflect the net Kentucky or other governmental severance
tax rate actually paid by Seller, using the mechanism and procedure set forth in
Exhibit G. As soon after each December 31, as Seller's annual severance tax
summary report has been filed with the appropriate governmental agency, the
actual monthly net effective severance tax rate calculated on the basis of that
return will be sent to Purchaser and used to adjust retroactively the severance
tax cost component of the Current Price invoiced for coal shipped during the
applicable month.
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For severance tax verification purposes, the Purchaser shall have the right to
review Seller's annual severance tax summary report, governmental audit results
and any records or other data necessary to verify the same.
ARTICLE VI
PRICE - PATTIKI MINE
6.1 The Base Price, as of February 1, 1986, for coal sold hereunder
from the Pattiki Mine is ****** per ton loaded in cars at the mine. A new Base
Price may be established from time to time pursuant to the provisions of Article
VIII. The Base Price is subject to adjustments from time to time for events
occurring or having an effect on or after February 1, 1986, pursuant to Article
VII and for quality variations pursuant to Article IX. The components of the
February 1, 1986, Base Price are shown on Exhibit A-1.
6.2 The "Current Price" under this Agreement for coal from the Pattiki
Mine shall be, at any given time, the "Base Price" provided for in Section 6.1
adjusted in accordance with the applicable provisions of this Agreement
inclusive of severance or similar taxes, if any.
6.3 A. the Base Price is adjusted under other provisions of this
Agreement, the Base Price will also be adjusted, effective at the same time as
the other adjustments are made, to reflect application of any applicable net
severance tax or similar tax, as set forth in Section 5.3 above. It is
understood that the Pattiki Mine February 1, 1986, Base Price does not include
any severance, sales, use or other similar taxes (such as by way of illustration
the Illinois Retailers Occupation Tax) that may be applicable or imposed on coal
supplied by Seller to Purchaser under this Agreement. In the event that after
February 1, 1986, such a tax or taxes be deemed to apply or be imposed on the
coal supplied under this Agreement, the amount of such tax or taxes
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shall be added to the Base Price or Current Price, whichever is applicable.
ARTICLE VII
BASE PRICE ADJUSTMENTS
The Base Price for coal from the Dotiki Mine and the Pattiki Mine shall
be subject to upward or downward adjustments quarterly (each January 1, April 1,
July 1 and October 1) after February 1, 1986, in accordance with Sections 7.1
through 7.3 or from time to time in accordance with the provisions of Sections
7.4 or 7.5 or Article VIII. The Base Price as of February 1, 1986, and the
individual components thereof for the Dotiki Mine are set forth on Exhibit A,
and Base Price as of February 1, 1986, and the individual components thereof for
the Pattiki Mine are set forth on Exhibit A-1. The parties agree that the dollar
amount of the components as set forth on Exhibit A and Exhibit A-1 shall form
the basis for price adjustments under this Agreement, whether or not those
dollar amounts reflect actual mining costs as of February 1, 1986. The February
1, 1986, per ton price component base levels for Labor and Benefits and
Materials and Supplies as set forth under Exhibits A and A-1 and the selection
of the Materials and Supplies base level indexes and establishment of related
weighting factors as set forth under Exhibits C and C-1 shall be adjusted and
new base values reestablished to reflect the percentage mix of the appropriate
mine's total year-to-date actual costs for such components and weighting factors
as prevailing on December 31, 1986. Establishment of the revised base component
levels and weighting factors shall be in accordance with the procedures set
forth under Section 8.6. Any amount due Seller or credit owed Purchaser for coal
supplied hereunder as a result of the reestablishment of the February 1, 1986,
price component base levels shall be paid within 30 days of the determination of
the amount due or credit owed.
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Adjustments calculated under Sections 7.1 through 7.3 shall apply to
all coal shipped during the calendar quarter beginning on the adjustment date.
7.1 Labor and Benefits. The Base Price(s) shall be adjusted quarterly
beginning on April 1, 1986, and on the first day of each subsequent calendar
quarter, to reflect the change in the cost of labor and benefits from the
assumed base cost component of ****** per ton for the Dotiki Mine and ****** per
ton for the Pattiki Mine. The adjusted base component on each adjustment date
will equal the product of ****** per ton for the Dotiki Mine and ****** per ton
for the Pattiki Mine, and a fraction, the numerator of which is the average of
the SIC-12 "final" hourly wage rate (1972 base and exclusive of seasonal
adjustment), for Bituminous and Lignite Hourly Wage Earners reported in the
Bureau of Labor Statistics' Employment and Earnings Publication (currently Table
C-2) as first published for the second calendar quarter preceding the intended
quarterly adjustment date, and the denominator of which is ******, the contract
base level average SIC-12 "final" hourly wage rate.
The average SIC-12 hourly rate for any calendar quarter shall be
calculated as the straight arithmetic average of the monthly average hourly
rates published. If such information is not published for any one or two of the
months comprising a quarter, the average shall be calculated as an arithmetic
average of the month(s) for which the values were published. If a UMWA strike
occurs during the entire quarter for calculating the average SIC-12 hourly rate,
or if no in formation is published for all of the months comprising a quarter,
there shall be no adjustment to the labor and benefits cost component for that
particular quarterly adjustment date. If during any month a UMWA strike occurs
for such month, the SIC-12 hourly rate for that month shall be treated as
unpublished. Exhibits B and B-1 set forth calculations of the SIC-12 contract
base
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hourly wage rate level and set forth examples for calculating the labor and
benefits quarterly adjustment.
7.2 Materials and Supplies. The Base Price(s) shall be adjusted
quarterly beginning on April 1, 1986, and on the first day of each subsequent
calendar quarter, to reflect the change in the cost of materials and supplies
from the assumed base component of ****** per ton for the Dotiki Mine and ******
per ton for the Pattiki Mine. The adjusted base component on each adjustment
date will equal the product of ****** per ton for the Dotiki Mine and ****** per
ton for the Pattiki Mine, and a fraction, the numerator of which is the weighted
average of the Consumer Price Index - Wage Earners and Clerical Workers (CPI-W)
and the "preliminary" Producer Price Indexes, Table 6, reported by the U.S.
Department of Labor, Bureau of Labor Statistics as first published for the
second, third and fourth months preceding the intended quarterly adjustment date
and the denominator(s) of which are 329.591 and 321.192, the contract base
weighted average index level for Dotiki and Pattiki, respectively.
The quarterly average index value for any index in any quarter shall be
calculated as the straight arithmetic average of the monthly values published
for that index. If such information is not published for any one or two of the
months comprising a quarter and the index has not been discontinued, the average
shall be calculated as an arithmetic average of the months for which values were
published. If such information is not published for all of the months comprising
a quarter and the index has not been discontinued, the average for the quarter
in question shall be set equal to the average calculated for the previous
quarter. If no information is published for all of the indexes for all of the
months comprising a quarter, there shall be no adjustment to the material and
supplies cost component for that particular quarterly adjustment date. Exhibits
C
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and C-1 set forth the contract base quarterly index values and related weight
factors for each of the pertinent indexes and set forth examples for calculating
the materials and supplies quarterly adjustment.
7.3 General and Administrative. The Base Price(s) shall be adjusted
quarterly beginning on April 1, 1986, and on the first day of each subsequent
calendar quarter, to reflect the change in the cost of general and
administrative costs from the assumed base cost component of ****** for the
Dotiki Mine and ****** per ton for the Pattiki Mine. The assumed base cost
component levels are calculated values being 5.5% of the respective February 1,
1986, Base Prices. The adjusted base component on each adjustment date will
equal the product of ****** per ton for the Dotiki Mine and ****** per ton for
the Pattiki Mine and a fraction, the numerator of which is the average of the
CPI-W Index as first published for the second, third and fourth months preceding
the intended quarterly adjustment date, and the denominator of which is 322.433,
the contract base average CPI-W index level. Exhibits D and D-1 set forth
calculation of the CPI-W contract base index level and set forth examples for
calculating the general and administrative quarterly adjustment.
7.4 Royalty. As the Base Price is adjusted under other provisions of
this Agreement, the Base Price shall also be adjusted, effective at the same
time as the other adjustments by an amount equal to ****** for Dotiki and ******
for Pattiki of the other adjusted base components to reflect the change in
royalty expenses from the assumed base cost component of ****** per ton for the
Dotiki Mine and ****** per ton for the Pattiki Mine. The royalty surcharge rates
of ****** for Dotiki and ****** for Pattiki were derived from base nominal rates
of ****** and ******, respectively, and take into account the compounding
effects of paying royalty on royalty
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collected. The nominal and contract royalty surcharge rates shall remain
unchanged for the duration of this Agreement. Exhibits E and E-1 set forth
calculation of the contract base royalty cost component levels and set forth
calculation of the contract royalty surcharge rates of ****** and ******.
Exhibits F and F-1 set forth examples of calculating royalty costs as other
adjustments are made under provisions of this Agreement.
7.5 Government Adjustment. Subject to the provisions of Article XIV,
there shall also be adjustments made from time to time in the Current Price to
reflect changes in Seller's actual costs as of the date incurred because of
government regulatory events occurring or continuing to have an effect on or
after February 1, 1986, which are beyond the direct control of Seller and which
after said date change Seller's expenses, require additional capital
expenditures, affect the productivity at Dotiki Mine or the Pattiki Mine or
otherwise change Seller's actual costs at Dotiki Mine or the Pattiki Mine, and
which are not otherwise provided for in Article VII. The Base Prices specified
in Sections 5.1 and 6.1 as of February 1, 1986, include the cost of compliance
with all laws and regulations currently in effect to the extent such laws and
regulations are currently being interpreted and enforced. Government regulatory
events shall include, by way of illustration, but not limitation: new or amended
or restated Federal, State or local legislation or regulation, or the
interpretation of application thereof by courts, administrative agencies, or any
other body having jurisdiction relating to mining, mine safety or environmental
matters, or otherwise affecting Seller's costs. If any such event increases or
decreases Seller's costs of producing coal from any of the two mines covered by
this Agreement, there shall be added to or subtracted from the Base Price from
time to time adjustments to reflect the full change in Seller's costs because of
such event or events, based on actual production costs and productivity
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experienced at the respective mine before and after the change. Should capital
items be affected by such a change, adjustments shall be based on Seller's
computation of actual expenditures (or reasonable estimates thereof) subject to
review under Section 12.2 for capital items, the useful life of such items,
interest relating to the purchase or carrying thereof and actual productivity
experienced at the mine before and after the change. For purposes of this
provision, there is a ****** per ton base cost component level for such costs as
of February 1, 1986, for both the Dotiki Mine and Pattiki Mine, which represents
the ****** per ton Federal Black Lung Fee and ****** per ton Federal Reclamation
Fee.
The parties recognize there may be government action claims for both
ongoing compliance costs and fixed per ton fees and/or taxes prevailing at such
time a new Base Price may be established under provisions of Article VIII. If
the parties agree that any or all portions of cost relating to claims for
ongoing compliance costs have reached a "normalized cost level" on a particular
January 1 new Base Price establishment date, by mutual agreement, the parties
may allocate such costs over all other remaining cost components when
establishing new Base Price base cost component levels under the methodology set
forth under Exhibits H and H-1. For any or all portions of ongoing compliance
costs that the parties do not wish to allocate, Seller shall continue to submit
claims on an actual cost basis for the remaining term of this Agreement or until
such time the parties agree to make an allocation to other cost components on a
subsequent January 1 new Base Price establishment date.
7.6 Fixed Portion. The fixed portion shall be calculated as ****** of
the Dotiki Mine and Pattiki Mine Base Price(s), inclusive of severance or
similar tax measured as a percentage of selling price. The contract base level
fixed portion effective February 1, 1986, is
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****** per ton for the Dotiki Mine and ****** per ton for the Pattiki Mine. The
aforemen tioned per ton contract base levels shall remain unchanged for duration
of the Agreement unless changed as a result of establishing a new Base Price
under the provision of Article VIII.
7.7 Calculations. Unless otherwise noted, all calculations shall be
carried at three decimal places, and rounded as specifically noted within the
Exhibits of this Agreement. To calculate the Current Price for each adjustment
date, the sum of all cumulative-to-date adjustments made pursuant to Articles
VII and XIV shall be rounded to two decimal places with a "5" in the third
decimal being rounded up if the preceding digit is odd and dropped if the
preceding digit is even. Exhibits B and B-1 through F and F-1 exemplify
adjustments which may be made under Articles VII and XIV in calculating the
Current Price.
7.8 Unavailability of or Changes in Any Index. Excluding SIC-12 hourly
rates with regard to being unavailable due to a UMWA strike, if an index ceases
to be published or is unavailable frequently (for three reference months or
longer) comparable index or indexes shall be substituted by mutual agreement of
the parties hereto and, if available, reconstructed to the latest adjustment
date for which the discontinued index was available and used in determining the
adjusted base cost component level. The resulting revised base index level shall
replace the previously used base index level as the denominator in subsequent
price adjustment calculations. The revised base price cost component to be used
in subsequent price adjustments shall be the last level which was calculated
using the index which was subsequently discontinued or frequently unavailable.
Should representative indexes cease to be published by the designated agency,
the most practical equivalent index, upon mutual agreement of the parties
hereto, shall be used for calculations to effectuate the intent of the parties.
In the event of a major change in
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the structure of any existing index used herein, a new base period index level
and related cost component level shall be established for use on the first
quarterly adjustment date thereafter in the manner as described above for
discontinuation of an index. No retroactive price adjustment will be made
because revised index levels are published. In the event an index is
discontinued or otherwise becomes unavailable, as addressed under this Section
7.8, Seller and Purchaser shall, after consulting with the Bureau of Labor
Statistics, undertake to agree upon a substitute index or a substitute method of
cost adjustment. If the parties fail to reach agreement on a substitute index or
method within thirty (30) days, the matter shall be submitted to arbitration
pursuant to Article XVII.
7.9 Exhibits. All exhibits attached hereto and referenced throughout
this Agreement are incorporated as an integral part of this Agreement.
ARTICLE VIII
PRICE REVIEW
8.1 The "Current Price" for each mine as defined in Articles 5.2 and
6.2 shall initially be subject to review for adjustment on January 1, 1989.
Later adjustments may be requested by either party as provided herein but such
later adjustments shall not be made more frequently than once every ******.
Either party may request an adjustment to be effective ******, and ******
thereafter until a new Base Price is established by agreement or arbitration.
Subsequently, either party may request further adjustment but such adjustment
shall not be effective until the passage of at least a ****** period following a
prior adjustment. Further requests for review and adjustment of the "Current
Price" may be requested by either party in the above-described manner until the
end of the term of this Agreement. This Article VIII shall apply separately in
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establishing new Base Prices to be effective under either Articles V or VI.
8.2 The new Base Price established under this Article VIII shall not be
more than ****** nor less than ****** of the "Current Price" in effect for each
mine as of October 1 of the year immediately preceding the year of adjustment
for any price adjustments effective ******, and shall not be more than ******
nor less than ****** of the "Current Price" in effect for each mine as of
October 1 of the year immediately preceding the year of adjustment for any price
adjustments effective on or after ******.
8.3 On or after October 1 but not later than November 1 of the year
preceding an adjustment year (the "Notice Year"), either party may propose a new
Base Price for coal from either or both mines to be effective January 1 of the
adjustment year. The new Base Price(s) proposed shall be within the limits set
forth in Section 8.2. If new Base Price(s) are proposed, but the parties after
discussion fail to reach agreement on or before November 30 of the Notice Year,
the determination of the new Base Price(s) shall be submitted to arbitration.
8.4 It is the intent of the parties that the new Base Price(s) that
should be in effect on January 1 of the adjustment year should, within the
limits specified in Section 8.2, be the market price which is defined as the
price which a willing and able Buyer would then be willing to buy and a willing
and able Seller would then be willing to sell coal: (a) produced from
underground mines located in the appropriate United States Bureau of Mines
producing districts of the Mines; (b) of the quality specified in Article IX of
the Coal Supply Agreement and in the total quantity specified in Article II of
the Coal Supply Agreement; and (c) for a term of years comparable to that
remaining under this Agreement. Reliable published information reflecting these
parameters is relevant, but not controlling, as to such prices. It is the intent
of the parties that the new
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market prices to be determined herein are to be term market prices based on the
parameters set forth above and not to be spot prices.
8.5 In the event of arbitration with respect to a price review, each
party shall select an Arbitrator and the two arbitrators shall select a third
who shall be a neutral arbitrator. The Arbitrators' award shall be a majority
vote. The parties shall both submit their proposed prices. In establishing the
new Base Price for a particular Mine, the Arbitrators must select either the
price submitted by Seller for that particular Mine or the price submitted by
Purchaser for that particular Mine. The arbitrators shall only consider the
information submitted by the parties in arriving at an award. It is understood
and agreed that the parties may submit for consideration by the Arbitrators any
information that a party considers relevant to the determination of market price
for coal sold hereunder in establishing a new Base Price as intended under
Section 8.4. The award shall be final and binding. Except as modified herein,
the provisions of Article XVII of this Agreement shall apply. Such new Base
Price(s) as determined by the Arbitrators shall be effective retroactive to
January 1 of the adjustment year and shall be subject to all adjustments as
provided for under this Agreement.
8.6 Establishment of New Base Cost Components. In the event a new Base
Price is established under provisions of this Article VIII, new base cost
component levels shall be established to equal the new Base Price. To
accommodate establishment of the new base cost components, new base index levels
shall also be established for all components which are adjusted by indexes. The
new base cost components and related new base index levels shall serve as the
bases from which to calculate adjustments during the remaining term of this
Agreement unless new base cost levels and index levels are established as a
result of a
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subsequent price review under this Article VIII. The new Base Price shall be
subject to all adjustments as provided for under this Agreement occurring on or
after that January 1 on which a new Base Price is established, except that
adjustments pursuant to Sections 7.1, 7.2 and 7.3 shall not be made until April
1 of that same year.
Establishment of new base cost components shall be conducted in the
following manner. From the new Base Price, there shall be subtracted the
appropriate per ton amounts for (i) severance or similar tax measured as a
percentage of selling price, (ii) the ****** fixed portion, (iii) royalty at the
nominal rate of ****** and ****** for Dotiki and Pattiki, respec tively, (iv)
general and administrative costs at ****** of the new Base Price and (v)
governmental action fees or taxes assessed on a fixed per ton amount basis. New
labor and benefit and material and supplies cost components shall also be
established to make up the balance of the new Base Price with their allocations
to be made by applying the balance of the new Base Price to the respective
percentages of these two components as determined from the total of Seller's
actual costs for these two components. Seller's actual cost levels to be used
for this determination shall be the appropriate Mine's total year-to-date actual
costs as prevailing on December 31 of the year preceding the January 1 new Base
Price establishment date.
At such time as new base cost components are established under
provisions of this Article VIII, it may be necessary for Seller to establish a
new mix of materials and supplies indexes and index weighting factors to more
accurately reflect the then existing material and supply cost structure at the
mine for which a new Base Price was established.
If Seller determines the Mine's costs for the cost review year are
distorted due to abnormal events materially affecting the Mine's cost structure,
the parties shall agree upon
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alternate cost review data, such as the forthcoming year's budgeted operating
cost structures or other information deemed relevant. Examples of events which
may prevent determination of normal operating costs include but are not limited
to conditions such as extended force majeure events, mine shutdown or
implementation of new mining techniques such as longwall mining.
If Purchaser disagrees with Seller's establishment of the labor and
benefits and materials and supplies new base data levels as provided for under
this Article VIII, the matter shall be submitted to a mutually agreeable
independent accounting or consulting firm for verification with the associated
costs to be shared equally between Purchaser and Seller. The independent firm
shall advise both parties of only the facts that the establishment of the labor
and benefits and materials and supplies new base cost component levels and
selection of new material and supplies indexes and related index weighting
factors are representative in the manner described herein of the percentage mix
breakdown of the appropriate mine's costs. The findings of such independent firm
shall be final and binding on the parties. The independent firm shall in no way
reveal to Purchaser the Mine's actual cost per ton for such components or the
Mine's total production cost unless otherwise agreed to in writing by Seller.
Exhibits H and H-1 set forth examples for establishing new base cost
components and related new base index levels as the result of establishment of a
new Base Price.
8.7 In the event Seller's actual cost per ton, excluding profits but
including indirect and overhead costs, in the aggregate, for coal sold hereunder
in any 24-month period is in excess of the then Current Price, per ton, in the
aggregate, for such coal during such 24-month period, Seller, upon 9 months'
written notice to Purchaser given within 3 months after the end of such 24-month
period, may elect to suspend its obligations under this Agreement and close the
Mine,
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in which event upon such suspension neither party shall have any further rights
or obligations under this Agreement, other than those with respect to
performance required hereunder prior to the effective date of such suspension.
In the event Seller plans to reopen the Mine during the term of this Agreement,
Seller shall notify Purchaser in writing at least six months prior to the date
coal produced from the Mine will be available for sale and delivery. Purchaser
shall have ninety (90) days after receipt of such notice to elect in writing to
purchase from the Mine the quantity of coal to be produced up to the quantity
set forth in Article II in accordance with the terms and at the then prevailing
price for such coal under this Agreement. If Purchaser fails to notify Seller
within ninety (90) days of receipt of notice of Seller's intent to reopen the
Mine, Seller shall have the right to sell the coal produced from the Mine to
other purchasers.
ARTICLE IX
COAL SPECIFICATIONS, SAMPLING
AND BTU VALUE ADJUSTMENTS
9.1 The coal supplied by Seller and purchased by Purchaser hereunder
from the Dotiki Mine shall undergo beneficiation as required to substantially
conform to the following analysis on an "as received" rather than "dry" basis:
Coal Property Contract Specifications
------------- -----------------------
Moisture ****** maximum
Ash ****** maximum
Sulphur ****** maximum
Heat Content ****** BTU/lb. minimum
Ash, Fusion (Fluid
Temperature reducing) ****** minimum
Grindability ****** Xxxxxxxxx
Chlorine ****** maximum
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9.2 The coal supplied by Seller and purchased by Purchaser hereunder
from the Pattiki Mine shall undergo beneficiation as required to substantially
conform to the following analysis on an "as received" rather than "dry" basis:
Coal Property Contract Specifications
------------- -----------------------
Moisture ****** maximum
Ash ****** maximum
Sulphur ****** maximum
Heat Content ****** BTU/lb. minimum
Ash, Fusion (Fluid
Temperature reducing) ****** minimum
Grindability ****** Xxxxxxxxx
Chlorine ****** maximum
9.3 Failure to meet the specifications in Sections 9.1 and 9.2 shall not
be deemed a breach of this Agreement unless the corresponding specifications in
Sections 10.2 and 10.3 are not met.
9.4 All coal supplied under this Agreement shall be ranked in the
category of high volatile bituminous as defined by ASTM Coal Classification
System.
All coal supplied hereunder shall be sampled by Seller at the mine in
accordance with ASTM procedures for continuous automatic sampling, and shall be
analyzed by a mutually designated laboratory in accordance with ASTM standards
and procedures. Purchaser and Seller may have a representative present during
any sampling or analysis.
9.5 Seller shall cause to be sent to Purchaser by mutually acceptable
means a report showing the results of the analysis of each coal sample analyzed
within two working days of sampling of each shipment and a separate weighted
average analysis of each month's shipment within 10 working day following the
end of each month. This report shall be the basis for
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adjustments under Section 9.8.
9.6 Seller shall retain a representative portion of each sample taken
for a period of 30 days from the date of sending to Purchaser the initial
shipment analysis report required by Section 9.5 hereof. In the event Purchaser
or Seller does not give written notice to the other that it disputes such report
within such 30-day period, the report shall be final. In the event within such
30-day period Seller receives Purchaser's written notice that Purchaser disputes
such report, or Seller disputes such report and so notifies Purchaser, the
representative sample retained by Seller shall be delivered by Seller to a
second mutually acceptable independent laboratory for analysis, whose results
shall be binding upon both parties. The charges for any such independent
analysis shall be borne by the party disputing such report unless the
independent analysis deviates from that reported by more than 5 percent, in
which event the cost shall be borne equally by Seller and Purchaser.
9.7 The Base Price for coal from the Dotiki Mine is based upon the coal
having a BTU value of ****** BTUs per pound "as received," and from the Pattiki
Mine, ****** BTUs per pound "as received."
9.8 Whenever the weighted average BTU value of the coal shipped during
any month, as determined under this Article IX, varies from ****** BTUs for coal
from the Dotiki Mine or from ****** BTUs for coal from the Pattiki Mine "as
received," a proportionate adjustment should be made to compensate for the
variation in BTU value, as in the examples which follow:
Example 1: Assume that the weighted average BTU value of coal shipped from the
Pattiki Mine during month X is ****** BTU/pound. Assume further a Current Price,
less severance tax, of ****** per ton, transportation costs of ****** per ton,
and ****** tons shipped:
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(****** - ******) x $(****** + ******) x ****** = *******
---------------------------------------------------------
****** Credit to
Purchaser, excl. of
severance taxes
Example 2: Assume that the weighted average BTU value of coal shipped from the
Pattiki Mine during month Y is 12,000 BTU/pound. Assume further a Current Price,
less severance tax, of ****** per ton, transportation costs of ****** per ton
and ****** tons shipped:
(****** - ******) x (****** + ******) x ****** - *******
--------------------------------------------------------
****** Owed to Seller
exclusive of
severance taxes
*Subject to adjustment for severance tax at the applicable rate(s).
ARTICLE X
CANCELLATION, REJECTION AND SUSPENSION BY PURCHASER
10.1 Cancellation for Inability to Burn Coal. Should the
characteristics of the coal which Seller supplies hereunder during any 60-day
period or a period during which at least ****** tons is received, whichever is
greater, be such that (i) it fails to meet the specifications of ****** percent
chlorine, or ash fusion (fluid temperature reducing atmosphere ****** minimum)
or iron in ash not to exceed ****** percent, or sodium in ash not to exceed
****** percent or (ii) because of grindability of less than ****** or because of
unforeseen adverse burning characteristics of the coal in Purchaser's boilers
which cannot be corrected by Purchaser with an expenditure of funds deemed by
Purchaser to be prudent and reasonable, then in such event Purchaser shall have
the right on fifteen (15) days written notice to suspend performance of this
Agreement until the Seller has established to Purchaser's satisfaction that the
coal supplied from Seller's Mine will, depending on the basis of the suspension,
conform to the specifications of this Agreement or will not have adverse burning
characteristics in Purchaser's boilers. If,
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within ninety (90) days from the date of such notice, Seller is unable to
furnish coal that will conform to the specifications of this Agreement or does
not have adverse burning characteristics in Purchaser's boilers, then Purchaser
may terminate this Agreement, in which event neither party shall have any
further rights or obligations under this Agreement other than those with respect
to performance required hereunder prior to the effective date of such
termination. If Purchaser does not elect to terminate, performance of this
Agreement shall be resumed.
10.2 Right to Reject Coal. In the event Seller shall make any shipment
of coal for which the shipment analysis pursuant to Article IX indicates any one
of the following:
(1) BTU content: Less than ****** BTU/lb. for the Pattiki
Mine and ****** BTU for the Dotiki Mine;
(2) Ash content: Greater than ******;
(3) Sulphur content: Greater than ******;
then Purchaser shall have the right to reject such shipment. In the event of
such rejection, Purchaser shall notify Seller promptly and segregate such
rejected coal from its regular stockpile. Purchaser and Seller shall thereupon
agree upon a disposition of coal. Any direct handling expenses including
demurrage resulting from such rejection over costs which would otherwise have
been borne by Purchaser shall be borne by Seller.
10.3 Right to Suspend Shipments. In the event Seller shall deliver coal
over any calendar month for which the analysis pursuant to Article IX, on a
weighted average basis, indicates any one of the following
(1) BTU content: Less than ****** BTU/lb. for the Pattiki
Mine and ****** BTU for the Dotiki Mine;
(2) Ash content: Greater than ******;
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(3) Sulphur content: Greater than ******;
then Purchaser shall either (a) notify Seller of the deviation but not suspend
shipments; or (b) notify Seller to suspend further shipments of coal until
Seller can supply coal conforming to the specification limitations set forth in
this Section 10.3.
Upon such notification by Purchaser under (a) or (b) above, Seller
shall immediately take economically prudent and reasonable measures to correct
such conditions under its control so as to comply with the specification
limitations of this Section 10.3 for future shipments. In the event of a
suspension and Seller believes it has corrected the conditions and can comply
with the said specification limitations and so notifies Purchaser, Purchaser and
Seller shall arrange for a test shipment; if the results of the analysis of the
said test shipment indicate that the coal in the test shipment complies with the
specification limitations set forth in this Section 10.3, then shipments shall
be resumed.
If after 6 months from Purchaser's notice under (a) or (b) above,
Seller is unable to meet the specification limitations of this Section 10.3 by
economically prudent and reasonable measures, on a weighted monthly average
basis, then this Agreement shall terminate, and in such event neither party
shall have any further rights or obligations under this Agreement, other than
with respect to performance required hereunder prior to such termination.
ARTICLE XI
INVOICING, PAYMENTS AND INTEREST
11.1 For each shipment of coal, Seller will promptly forward an invoice
to Purchaser showing the railroad car numbers and the shipping date, and the
applicable Current Price, to the extent that the Current Price is then
calculated by Seller in accordance with this Agreement, plus
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transportation costs to the delivery point. Purchaser shall pay all such
invoices within 20 days from receipt of invoice.
11.2 Seller will issue a separate invoice or credit memorandum for any
adjustment due to quality variations pursuant to Article IX promptly after the
monthly weighted average calorific value and the corresponding adjustment amount
is determined. The amount of a credit memorandum to Purchaser shall be deducted
from its next payment. An invoice to Purchaser for such adjustment shall be paid
within 20 days from receipt of invoice.
11.3 Any change in the Current Price under Article VII shall be
reflected in Seller's next invoice or credit memorandum issued promptly after
determination of the dollar amount of the change. The amount of a credit
memorandum for such adjustment shall be deducted from Purchaser's next payment.
Any invoice to Purchaser for such adjustment shall be paid not later than 20
days after the receipt of the invoice.
11.4 Payment shall have been made on the date of the postmark on
Purchaser's remittance unless Seller shall have established some other local
depository, in which event payment shall be made upon delivery to the local
depository.
11.5 The amount of any invoice, or portion thereof, not paid, or any
credit memorandum not issued, when due, shall bear interest from 30 days after
the date the invoice was issued, or in the case of a credit memorandum, from the
date it should have been applied, through the date the invoice is paid or the
credit memorandum is applied at a rate equal to the then prime rate charged by
the Chemical Bank of New York. Should Purchaser or Seller dispute the payment of
any portion of any invoice or the issuance of any portion of a credit mem
orandum, interest shall be payable only if the party making the claim prevails.
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ARTICLE XII
RECORDS AND REVIEWS
12.1 The parties shall keep accurate records and books of account
showing all payments, price revisions, credits, debits, weights, analyses and
all other data required of each of them to be kept for the purposes of this
Agreement.
12.2 Purchaser and Seller shall each have the right at all reasonable
times, upon reasonable prior written notice to the other, to examine, through
its agents, employees or any independent auditor or consultant satisfactory to
the other party, the appropriate records and books of the other pertaining to
shipments or other matters occurring within the previous four (4) Contract
Years, for the purpose of reviewing the determination of Current Price or the
other party's performance or nonperformance under this Agreement, or reviewing
other material and relevant matters subject to a dispute between the parties.
The cost adjustment provisions for which actual cost audit is
appropriate with regard to determination of Current Price are as follows:
o Section 5.3 - Kentucky severance or similar tax
o Section 6.3 - Illinois severance or similar tax
o Section 7.5 - Government Adjustment
o Section 14.3 - Governmental Authority
If any such audit discloses that any error has occurred and, as a
result thereof, an overpayment or an underpayment has been made, the amount
thereof shall promptly be paid to the party to whom it is owed by the other
party, provided that each party hereto has the right to contest the results of
such audit under Article XVII.
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12.3 Any information obtained through such review shall be confidential
and under no circumstances shall be disclosed to any third person unless
required by legal process or governmental authority. The party requesting an
independent audit shall direct its auditors or consultants similarly to protect
the information reviewed.
12.4 Nothing in this Article shall bar any rights of the parties under
this Agreement, other than the 4-year audit limitation.
ARTICLE XIII
FORCE MAJEURE
13.1 If, by reason of a "force majeure event," either party is wholly
or partially prevented from performing under this Agreement, and the party
affected gives prompt written notice to the other, the obligations of the party
giving notice shall be suspended or reduced to the extent caused by the force
majeure event. Neither party shall claim force majeure excuse for events lasting
the equivalent of three full operating days or less.
13.2 A "force majeure event" is any occurrence beyond the reasonable
control of the party claiming it and not due to its negligence or default, which
wholly or partially prevents the mining, preparing, loading, delivering or
selling of coal by the Seller or transporting, unloading, receiving or
utilization of coal by the Purchaser. Such force majeure events shall include,
by way of illustration but not by limitation: acts of God or of the public
enemy; insurrection or riots; strikes, organizational attempts or other labor
disputes, shortages of supplies or equipment; strike-related absenteeism;
floods; fires; adverse mining conditions; major equipment breakdowns or damage;
delays in completion of construction; interruptions or unavailability of
transportation; embargoes; orders of court or acts of civil or military
authorities or any other
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causes beyond the reasonable control of a party.
13.3 The party affected by a force majeure event shall use reasonable
efforts to eliminate the effects of the force majeure event as soon as
reasonably practicable.
13.4 For the purpose of any partial or total force majeure event
claimed by Seller under this Agreement, it will be presumed that, except for the
claimed force majeure, total production at the Mine would have occurred at a
rate per day equal to the annual contract quantity specified in Article II for
the particular calendar year divided by 241 which represents the average number
of work days at the Mine in a calendar year. For the purpose of any partial or
total force majeure event claimed by Purchaser under this Agreement, it will be
presumed that, except for the claimed force majeure, total shipments to
Purchaser from the Mine would have occurred at a rate per day equal to the
annual contract quantity specified in Article II for the particular calendar
year divided by 326. The number 326 used in reference to force majeures claimed
by Purchaser represents Purchaser's estimate of total operating days based on
365 days less 39 days of planned maintenance days. In the event a force majeure
claimed by Purchaser occurs during or continues through days previously
scheduled for planned maintenance, or if planned maintenance days are reduced as
the result of the force majeure event, such days shall not be considered part of
the force majeure for purposes of calculating the quantity of coal excused by
reason of the force majeure. Exhibit I sets forth examples for calculating
excused force majeure tonnage for both Purchaser and Seller.
13.5 Performance shall resume as soon as practicable after cessation of
the force majeure event. Subject to the provisions of Section 13.6, Seller shall
use reasonable efforts to make up force majeure excused deliveries to the extent
reasonably requested by Purchaser.
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13.6 Subject to Purchaser's rights under Section 2.4, Seller shall be
permitted to sell production normally intended for Purchaser during periods of
force majeure events claimed by Purchaser.
13.7 In the event of an instance of inability to perform in whole or in
substantial part because of a force majeure event lasting for a period of 6
consecutive months or more, the party not claiming force majeure shall have the
option of terminating this Agreement, exercisable by giving 30 days' written
notice to the party claiming the force majeure at any time after such inability
has continued for a period of 6 consecutive months and prior to the performance
or resumption of performance by the disabled party. In the event of such
termination, neither party shall have any further rights or obligations under
this Agreement other than those with respect to performance required hereunder
prior to the effective date of such termination.
13.8 A force majeure event which prevents Seller from producing or
delivering, or Purchaser from transporting, unloading, receiving or utilizing
the coal supplied hereunder, shall not excuse Purchaser from reimbursing Seller
for payment of all transportation costs incurred by Seller, including the
reimbursement of any minimum tonnage charges of the railroad.
13.9 Nothing in this Article shall be construed to allow the Purchaser
to tell the Seller how to produce coal hereunder.
ARTICLE XIV
GOVERNMENTAL AUTHORITY
14.1 "Governmental Authority" shall include the provisions of all
Federal, State and other governmental laws and all applicable orders,
regulations and rules thereunder, which have been or may at any time be, issued
by a governmental agency or made applicable by a court having jurisdiction.
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14.2 In the event of any exercise of Governmental Authority which
wholly or partially prevents the mining, preparing, loading, delivery or selling
of coal by the Seller or the transporting, unloading, receiving or utilization
of the coal by the Purchaser, the same shall be deemed an event of force majeure
subject to the provisions of Article XIII.
14.3 In the event that any exercise of Governmental Authority increases
Seller's costs, adversely affects the quality of the coal produced, or limits or
restricts the productive capacity of Seller's mining operation at the mine, to a
degree which, in Seller's sole judgment, permits continued performance hereunder
after taking into consideration proper adjustments to the Current Price, and/or
other rights and/or obligations of Seller hereunder, the then Current Price
shall be adjusted and this Agreement shall be amended so as to compensate Seller
fully for the effect upon it of such exercise. Any price or other contract
adjustment pursuant to this provision shall be effective as of the date the
effect of exercise of governmental authority is experienced, and subject to
audit under Article XII and/or arbitration under Article XVII of this Agreement.
If Seller makes the judgment provided for in the first sentence of this Section,
Seller shall specify the amendments and/or adjustments it considers necessary
for its continued performance hereunder and shall notify Purchaser promptly in
writing of those amendments and/or adjustments. Purchaser, in lieu of agreeing
to such amendments and/or adjustments, or Seller, should Purchaser fail to agree
to such amendments and/or adjustments, within 30 days of receipt of notice
thereof, may terminate this Agreement by notifying the other party in writing,
such termination to be effective not less than 30 days after delivery of the
notice first above described.
14.4 If either Purchaser or Seller elects to terminate this Agreement
under the
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provisions of this Article XIV, then neither party shall have, after the
effective date of such termination, any further rights or obligations under this
Agreement, other than those with respect to performance required hereunder prior
to the effective date of such termination.
ARTICLE XV
MATERIAL DEFAULT
15.1 Seller shall be in material default hereunder only if it should
fail to ship, without excuse under this Agreement, during any Contract Year at
least 85 percent of the coal shipments required to be shipped during such
period. Any deliveries excused by Articles XIII or XIV shall be considered as
shipments made by Seller.
15.2 Purchaser shall be in material default hereunder only if it should
fail to purchase or accept, or fail to cooperate in arranging, shipments,
without excuse under this Agreement, during any Contract Year, of at least 85
percent of the coal shipments which Purchaser is required to accept under this
Agreement, or should it fail to pay any invoice of Seller within 60 days of the
date payment is due hereunder and not later prevail on its dispute that such
payment was not due. Any purchase or receipts of shipments excused by Articles
XIII or XIV shall be considered as shipments accepted by Purchaser.
ARTICLE XVI
REMEDIES
16.1 In the event of material default by one party as defined in
Article XV, the other may elect to cancel this Agreement by giving 60 days'
prior written notice of its intention to do so within 30 days after the end of
the Contract Year in which the material default occurs, and thereafter recover
damages for nondelivery, nonacceptance or nonpayment as provided herein
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through the date of such cancellation. If Seller has given timely notice of
cancellation, it shall be entitled to recover from Purchaser a) with respect to
coal tendered for delivery which Purchaser has failed to accept or arrange for
delivery hereunder from the beginning of the Contract Year on account of which
the material default is claimed through the date of cancellation, the difference
between the Current Price hereunder the then actual price received for such coal
sold in a commercially reasonable manner, but without any incidental or
consequential damages whatsoever or b) with respect to coal supplied to
Purchaser but not paid for, the total amount owed for such coal, as provided in
Article XI. If Purchaser has given timely notice of cancellation, it shall be
entitled to recover from Seller, with respect to coal not delivered hereunder
from the beginning of the 12-month period on account of which the material
default is claimed through the date of cancellation, the difference between the
cost of obtaining replacement coal purchased in a commercially reasonable manner
and the Current Price of such coal Seller failed to deliver during such 12-month
period, including allowances for increased transportation charges, but without
any other incidental or consequential damages. The cancellation remedy herein
for Purchaser and Seller, respectively, shall be the sole and exclusive remedy
for the material default giving rise to the exercise of XVI do not apply to a
material default in bad faith and in the event of a material default committed
by a party in bad faith, the other party, in addition to the remedies provided
in this Article XVI, shall be entitled to any other remedies available in law or
in equity, but without incidental or consequential damages.
16.2 In the event the Seller shall fail to deliver during any Contract
Year the quantity of coal required by this Agreement and such failure is not
excused by this Agreement, and provided that Purchaser has not elected to cancel
under Section 16.1, Purchaser may either:
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(1) Elect to receive the quantity required, but not delivered
or excused, at the end of the term of this Agreement at the Current Price in
effect at the time the coal is shipped; or
(2) Elect to purchase coal, and actually purchase and accept
delivery of such coal, within 6 months of the end of the Contract Year, in a
commercially reasonable manner, in a quantity equal to that required to be
delivered during that Contract Year but not shipped or excused. Purchaser shall
thereafter be entitled to recover the difference between the cost of obtaining
such replacement coal and the Current Price of the coal Seller failed to deliver
during that Contract Year, including allowances for increased transportation
charges, but without any other incidental or consequential damages; or
(3) Elect to waive the default.
Purchaser shall notify Seller, in a writing dated within 60 days of the
expiration of the said Contract Year in which it claims Seller has failed to
deliver the required quantity of coal, of its election hereunder, or be barred
from any remedy.
16.3 In the event the Purchaser shall fail to accept, or fail to
cooperate in arranging shipments and such failure is not excused by this
Agreement, and provided Seller has not elected to cancel under Section 16.1,
Seller may:
(1) Elect to deliver the quantity required but not accepted or
excused, at the end of the term of this Agreement at the Current Price in effect
at the time the coal is shipped; or
(2) Elect to sell coal, and actually sell such coal within six
months of the end of the contract year, in a commercially reasonable manner, in
a quantity equal to that required to be accepted during that Contract Year but
not accepted or excused. Seller shall thereafter be entitled to recover from
Purchaser the difference between the amount obtained for such coal and
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the Current Price Seller would have received hereunder for such coal, but
without any other incidental or consequential damages; or
(3) Elect to waive the default.
Seller shall notify Purchaser, in a writing dated within 60 days of the
expiration of the said Contract Year in which it claims Purchaser has failed to
purchase or accept the required quantity of coal, of its election hereunder, or
be barred from any remedy.
16.4 Should either party fail to pay any sums required to be paid under
this Agreement, the other party shall, in addition to any remedy therefor
afforded by this Agreement, have the right to submit the claim to arbitration
under Article XVII to collect the same and any award rendered thereon shall
provide for interest as set forth in Section 11.5.
16.5 The remedies provided in this Article XVI shall be the sole and
exclusive remedies should Seller fail to deliver or Purchaser fail to purchase,
accept and pay for the quantity of coal required by this Agreement.
16.6 The adjustments provided in Article IX are liquidated remedies and
together with the remedies provided for in Article X shall be the Purchaser's
sole and exclusive remedies should the coal shipped not meet the specifications
of Article IX.
16.7 In the event of a cancellation pursuant to Section 16.1, neither
party shall have any further rights or obligations under this Agreement other
than those with respect to performance required hereunder prior to the effective
date of such cancellation.
ARTICLE XVII
ARBITRATION
17.1 Any dispute between the parties with respect to this Agreement
shall be submitted
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to arbitration under the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The arbitration proceeding shall be held
and conducted in Atlanta, Georgia, or such other location as may be mutually
agreed to by the parties. There shall be one arbitrator if the amount claimed in
the demand for arbitration is less than $1,000,000, and three arbitrators
otherwise. This Agreement to arbitrate shall be specifically enforceable. The
award of the arbitrators shall be final and binding, and judgment upon any award
rendered by said Arbitration Board may be entered in any court having
jurisdiction thereof. This provision shall survive the termination of this
Agreement.
17.2 In the event one of the parties gives to the other notice of
arbitration, the parties shall agree upon the arbitrator or arbitrators within
60 days from the date of such notice, and if they fail to do so, the arbitrator
or arbitrators shall be selected by the American Arbitration Association,
Atlanta, Georgia.
17.3 The reasonable compensation and expenses of any arbitrators and
the cost of the arbitration shall be shared equally by the parties. Each party
shall bear its own counsel fees and expenses. In each instance the decision of a
majority of the arbitrators shall be final and binding as to such matters as are
submitted to and determined by them. Each party hereto shall have full rights of
discovery with respect to all documentary information pertinent to the dispute
during such arbitration.
17.4 Any questions as to whether or not a party hereto has committed a
breach of contract or is guilty of a default so as to entitle the other party
hereto to terminate or cancel this Agreement shall not be the subject of
arbitration hereunder.
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ARTICLE XVIII
PRICE CONTROLS
18.1 In the event the price of the coal covered by this Agreement is
subject to governmental voluntary or mandatory price controls or is otherwise
fixed by law or governmental regulation, and such regulated price is more or
less than the then Current Price under this Agreement, the parties shall jointly
petition the proper governmental authority to have this Agreement or the prices
hereunder declared exempt or excepted from such law or regulation and/or to have
the prices specified in this Agreement approved. If such petition is denied or
otherwise dismissed, and if the regulated price is such as to result in a
decrease in the then Current Price, Purchaser will, if lawful, in some manner
compensate Seller for the difference between such regulated price and the price
Purchaser would have paid if such regulated price had not been imposed. Should
Seller's actual costs (excluding profits but including all direct costs but only
mine-level indirect and overhead costs) in producing coal sold during any period
a regulated price is in effect exceed the price paid for the same coal by
Purchaser by an aggregate amount equal to the "Loss Limit," Seller may elect to
terminate this Agreement after 6 months' prior written notice to the Purchaser.
In the event Seller sends such written notice of its election to terminate,
Purchaser shall have the right, for a period of 30 days after receipt of the
termination notice, to notify the Seller in writing of its election to purchase
the Seller's mines then producing coal for delivery under this Agreement,
including an allocation of reserves adequate to fulfill the requirements of this
Agreement, at a price equal to Seller's total investment in such mines and
reserves, less the accumulated cost depletion and depreciation applicable
thereto. Any such purchase shall close not later than 60 days after the date of
Seller's original
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notice of election to terminate. If Purchaser does not elect so to purchase
Seller's mines, neither party shall have any further rights or obligations under
this Agreement after termination, other than with respect to performance
required prior to termination. The "Loss Limit" shall from time to time be equal
to $2,000,000 multiplied by the ratio of (i) the "Consumer Price Index - Wage
Earners and Clerical Workers (CPI-W)" on the January 1 preceding the day the
notice of election to terminate is sent, to (ii) the CPI-W on January 1, 1979.
ARTICLE XIX
ASSIGNMENT AND DELEGATION
19.1 Without relieving the Purchaser of any of its performance
obligations hereunder, the Purchaser shall have the right to sell all or any
portion of the coal under this Agreement at any time, or to assign this
Agreement in its entirety to the United Sates Department of Agriculture, Rural
Electrification Administration.
19.2 Purchaser may from time to time designate in writing an agent or
agents for the purpose of specifying the quantity, destination and routing of
coal to be shipped from time to time to Purchaser hereunder, and for such other
purposes as Purchaser may elect.
19.3 Seller has designated MAPCO Coals Inc. as Seller's agent for the
administration of this Agreement.
19.4 Neither the rights nor obligations of either party hereunder shall
be otherwise assigned or delegated without the prior written consent of the
other party, which shall not be unreasonably withheld; provided, however, that
either party, without consent, may pledge or hypothecate this Agreement purely
for financial purposes or merge or consolidate with another corporation or sell
its assets to another corporation if the successor assumes all of the rights and
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obligations of the Purchaser or Seller. No assignment or other action permitted
under this Section shall alter or otherwise affect the obligations of the
parties to this Agreement.
19.5 Xxxxxxx and White have previously agreed and consented to the
assignment of the Coal Supply Agreement dated January 17, 1979, by Purchaser to
CBT Trust Company of Florida, National Association, as trustee under an
agreement titled Assignment of Fuel Contracts, dated on or about December 6,
1984. This amendment and restatement of the Coal Supply Agreement shall not
alter the consents previously given and this restated and amended agreement, as
between the parties, shall be considered as included in consents executed by or
on behalf of Xxxxxxx and White.
ARTICLE XX
INDEMNIFICATION
20.1 Seller shall indemnify, defend and hold Purchaser harmless from
and against any claim, demand, loss or damage for personal injury to a third
party caused by or resulting from any negligent act or omission of Seller.
Purchaser shall indemnify, defend and hold Seller harmless from and against any
claim, demand, loss or damage for personal injury to a third party caused by or
resulting from any negligent act or omission of Purchaser. Except as otherwise
provided by this Agreement, nothing herein shall affect any right of indemnity
otherwise affordable by law.
ARTICLE XXI
EQUAL EMPLOYMENT OPPORTUNITY
21.1 The Equal Employment Opportunity clause in Section 202, Paragraphs
1 through 7 of Executive Order 11246, as amended, relative to equal employment
opportunity, and the
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implementing Rules and Regulations of the Office of Federal Contract Compliance
are incorporated herein by specific reference, where applicable, with which
Purchaser and Seller agree to comply.
ARTICLE XXII
GENERAL
22.1 Unless otherwise specifically stated herein, the failure of either
party to insist on any one or more instances upon strict performance of any of
the provisions of this Agreement or to take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights unless otherwise provided herein, but the same
shall continue and remain in full force and effect for the term of this
Agreement.
22.2 The validity, construction and performance of this Agreement shall
be determined in accordance with the laws of the State of Florida.
22.3 All notices under this Agreement shall be made in writing by
certified postage prepaid United States mail, addressed, if to Purchaser, at
00000 Xxxxx Xxxx Xxxxx Xxxxxxx, Xxxxx, Xxxxxxx 00000, Attention: Director of
Procurement; and if to Seller, c/o MAPCO Coals Inc., 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx, Xxxxxxxx 00000, Attention: Vice President - Sales; or at such other
address as either party may designate in writing to the other.
22.4 This is an agreement for the purchase and sale of coal in which
the parties recognize and agree that Seller is not an agent or employee of
Purchaser but is independent of any managerial or other control or direction by
Purchaser in its work hereunder, and is free to perform by such means and in
such manner as Seller may choose, all work in pursuance of commitments
hereunder.
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22.5 The captions to sections hereof are for convenience only and shall
not be considered in construing the intent of the parties.
ARTICLE XXIII
ENTIRE AGREEMENT
23.1 This instrument contains the entire agreement between the parties
as to coal produced and sold hereunder and there are no representations,
understandings or agreements, oral or written, which are not included herein.
This Agreement cannot be changed except by duly authorized representatives of
both parties in writing. It is understood that Purchaser from time to time in
the administration of this Agreement may issue and transmit to Seller documents
designated as "Purchase Orders" and "Change Orders"; these documents serve
instructional or accounting functions only and are not amendments to or
constructions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective proper officers thereunto duly authorized, in
duplicate counterparts, each of which shall be deemed to be an original, as of
the day and year first above written.
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PURCHASER: SEMINOLE ELECTRIC
COOPERATIVE, INC.
(CORPORATE SEAL)
ATTEST: By
-----------------------------
President
-------------------------------
Secretary
SELLER: XXXXXXX COUNTY
COAL CORPORATION
(CORPORATE SEAL)
ATTEST: By
-----------------------------
President
-------------------------------
Secretary SELLER: WHITE COUNTY COAL
CORPORATION
(CORPORATE SEAL)
ATTEST: By
-----------------------------
President
-------------------------------
Secretary
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