* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
EXHIBIT 10.27
COAL SALES AGREEMENT
THIS COAL SALES AGREEMENT (this "Agreement"), dated the 17th day of
February, 2005, between ANKER WEST VIRGINIA MINING COMPANY, INC., a West
Virginia corporation with principal offices at 0000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000 ("Seller"), and ALLEGHENY ENERGY SUPPLY COMPANY,
LLC, a Delaware limited liability company with its principal offices at 0000
Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000 and MONONGAHELA POWER
COMPANY, an Ohio corporation with its principal offices at 0000 Xxxxxxxx Xxxxxx,
Xxxxxxxx, XX 00000 (hereinafter collectively referred to as "Buyer"). Allegheny
Energy Service Corporation is referred to in this Agreement as "Buyer's Agent".
WITNESSETH:
WHEREAS, Anker Energy Corporation ("Anker Energy"). The Sycamore Group,
LLC ("Sycamore") and Buyer are parties to that certain Coal Sales Agreement
dated May 25, 2004 (the "Sycamore Agreement") relating to the supply of coal
from Sycamore's Sycamore No. 1 Mine, located in Xxxxxxxx County, West Virginia,
in U.S.B.M. Mine District No. 3, to Buyer's Xxxxxxxx Power Station (the
"Station") at the rate of 50,000 tons per month, subject to periodic upward or
downward quarterly adjustments by Buyer within certain limits specified therein
(as so adjusted, the "Sycamore Adjusted Base Amount"), for a two year term
ending on April 30, 2006; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase additional
tons of coal from Seller's Xxxxxxxx Division Sycamore No. 2 Mine (the "Source
Mine"), located in Xxxxxxxx County, West Virginia, in U.S.B.M. Mine District No.
3, and accordingly Seller and Buyer desire to enter into this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, and intending to be legally bound, Seller and Buyer
hereby agree as follows:
1.0 TERM AND QUANTITY
1.1 The term of this Agreement (the "Term") shall be the period
commencing on the date hereof and ending on the date of exhaustion
of the Reserve Commitment (as hereinafter defined) (the "Expiration
Date").
1.2 During the Term, Buyer agrees to buy, and Seller agrees to sell,
[_ _ _ _] produced by the Source Mine from existing reserves, as
identified on Schedule 1.2 hereto, currently estimated to be not
less than [_ _ _ _], and from all additional reserves assigned to
Seller for purposes of this Agreement by mutual consent of the
parties (collectively, the "Reserve Commitment"), at the following
annual rates (the "Annual Base Amount"):
CALENDAR YEAR ANNUAL BASE AMOUNT
2005 Actual production from the Source
Mine, estimated to be [_ _ _ _] tons
2006 Actual production from the Source
Mine, estimated to be [_ _ _ _] tons,
but at a production rate of not less than
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
[_ _ _ _] by October 1, 2006
2007-Expiration Date [_ _ _ _]
Buyer shall have the option, upon not less than six (6) months'
prior notice to Seller, to increase the Annual Base Amount (for
calendar years occurring after 2005) by [_ _ _ _] (prorated in the
case of the portion of the calendar year remaining after such
increase takes effect) so as to increase the Annual Base Amount to
[_ _ _ _], subject to availability of equipment at the Source Mine
required by Seller to produce coal to be sold hereunder in such
quantities ("Increased Production Equipment"). If Seller is unable
to produce the increased Annual Base Amount due to unavailability of
the Increased Production Equipment, Seller shall use commercially
reasonable efforts to obtain the Increased Production Equipment
(including, without limitation, by diverting equipment from other
mines to the extent not currently in use or anticipated to be used
in such other mines) prior to the expiration of such six month
period, and in any event shall obtain the Increased Production
Equipment prior to the expiration of eighteen (18) months after
receipt of Buyer's notice. Once the Annual Base Amount is increased
pursuant to this Section 1.2, it may not be decreased without the
mutual consent of the parties. Seller shall not change the source of
the coal supplied hereunder (the "Base Source Coal") without the
prior written consent of Buyer's Agent. Seller represents to Buyer
that the current assigned reserves of the Source Mine comprising the
Reserve Commitment are as set forth in Schedule 1.2 hereto. Seller
shall not reduce the assigned reserves of the Source Mine below that
reflected in Schedule 1.2 without the prior written consent of
Buyer's Agent.
1.3 The Sycamore Adjusted Base Amount remaining to be delivered to Buyer
under the Sycamore Agreement from the date hereof through April 30,
2006, currently scheduled in the monthly quantities set forth in
Schedule 1.3 hereto (the "Sycamore Monthly Scheduled Amounts"),
shall continue to be delivered to the Station until the tonnage
commitment under the Sycamore Agreement has been satisfied. If
Sycamore fails to deliver the Sycamore Monthly Scheduled Amounts
under the Sycamore Agreement (for any reason other than force
majeure or a default by Buyer thereunder) for more than three months
(consecutive or otherwise) in any six month period, or if the
Sycamore Agreement is terminated for any reason other than Buyer's
unexcused failure to accept deliveries of the Sycamore Adjusted Base
Amount thereunder (including, without limitation, by reason of the
rejection of such contract by Anker Energy or Sycamore (or any
trustee on its or their behalf) in any case or proceeding commenced
by or against Anker Energy or Sycamore under the United States
Bankruptcy Code, 11 U.S.C. Section 101 et seq.), Buyer, at its
option, may make up any deficiency in deliveries of the Sycamore
Adjusted Base Amount under this Agreement. In such event, the
applicable monthly quantities to be delivered by Seller hereunder in
any month shall be determined based on the sum of the Sycamore
Monthly Scheduled Amount for such month and the monthly scheduled
quantity of coal to be delivered to Buyer for such month established
pursuant to Section 2.1 of this Agreement, and Buyer will credit any
tonnage (the "Sycamore Makeup Amount") delivered by Seller hereunder
in any month up to the Sycamore Monthly Scheduled Amount for such
month against Sycamore's tonnage commitment under the Sycamore
Agreement, with any tonnage delivered by Seller hereunder in excess
of the Sycamore Monthly Scheduled Amount being credited to the
monthly scheduled quantity of coal to be delivered to Buyer for such
month
2
established pursuant to Section 2.1. The Sycamore Makeup Amount
delivered by Seller hereunder shall be invoiced and paid for by
Buyer in accordance with Section 7.4 at the applicable base price
(expressed in cents/MMBtu) at the time of delivery set forth in the
Sycamore Agreement (or, in the case of deliveries after April 30,
2006, at the applicable base price in effect under the Sycamore
Agreement on April 30, 2006).
1.4 If, during any calendar year, Seller fails to deliver, or Buyer
fails to accept, other than by reason of force majeure, the Annual
Base Amount to be delivered during such calendar year, the party not
at fault shall have the right to schedule the shortfall for delivery
in the following calendar year. Such party shall provide written
notice to the other party within thirty (30) days after the end of
such calendar year of the shortfall tonnage it elects to deliver or
accept in such following calendar year; provided, however, that in
no event shall Seller be obligated to produce and deliver, nor shall
Buyer be obligated to accept, aggregate deliveries of coal as a
result of such rescheduled deliveries in excess of the applicable
limitation set forth in Section 2.1.
2.0 DELIVERY AND BILLING WEIGHT
2.1 Buyer's Agent and Seller shall develop monthly and weekly delivery
schedules for each calendar year which are consistent with the
Annual Base Amount for such calendar year and the Station's annual
scheduled maintenance outages. No later than 30 days in advance of
each calendar year, Buyer's Agent will provide Seller with the
monthly delivery schedule for each month of such calendar year for
the Annual Base Amount to be delivered; provided, however, that in
no event shall Seller be obligated to produce and deliver an
aggregate quantity of coal in such calendar year in excess of the
Annual Base Amount if such excess production is greater than what
the Source Mine can reasonably accommodate based on existing Source
Mine equipment and existing permits, nor shall Buyer be obligated to
schedule or accept delivery of an aggregate quantity of coal in
excess of the annual tonnage commitment under both the Sycamore
Agreement and this Agreement if such excess deliveries are greater
than what the Station can reasonably accommodate based on existing
Station equipment and existing permits. In the event of any
conflict, the tonnage to be delivered under the Sycamore Agreement
shall have priority.
2.2 Buyer reserves the right to designate a destination other than
Xxxxxxxx Power Station for delivery of coal to be supplied by Seller
hereunder and to consign shipments to such alternate destination. In
the event Buyer's Agent designates an alternate destination for
delivery of any coal supplied by Seller hereunder, Buyer's Agent
shall designate the method of delivery to such alternate
destination. Arrangements and charges for transportation and
delivery of the coal from the applicable delivery point to the
destination designated by Buyer shall be the sole responsibility of
Buyer. Buyer shall not be required to ship tonnage to an alternate
destination. Seller shall not be responsible for any transportation
arrangements to an alternate destination.
2.3 Buyer reserves the right, at any time, and from time to time, at its
sole discretion, to sell any or all coal purchased by Buyer under
this Agreement to any person, firm, or corporation designated by
Buyer (a "Third Party Purchaser"): provided, however, that Buyer's
Agent shall give Seller not less than ten (10) days' notice of any
proposed sale to a Third Party Purchaser (including the terms of
such sale) and Seller shall have the right, at any time prior to the
expiration of such ten (10)
3
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
day period, to either release Buyer from its commitment to purchase
such coal from Seller or to repurchase such coal from Buyer at the
same price offered by the Third Party Purchaser. Buyer's Agent will
designate the destination and method of delivery to any Third Party
Purchaser and Buyer shall be responsible for any additional
transportation arrangements or costs associated therewith.
2.4 Seller shall deliver the coal to be sold hereunder by truck, unless
otherwise agreed by Buyer and Seller. Title to and risk of loss of
any coal delivered to Buyer pursuant to this Agreement shall pass to
Buyer when such coal has been delivered to Buyer F.O.B. the Station,
or if Buyer designates an alternate destination for delivery of coal
pursuant to Section 2.2 or 2.3, when such coal has been delivered to
Buyer F.O.B. such other delivery point as Seller and Buyer may
agree.
3.0 QUALITY AND SPECIFICATIONS
3.1 The coal to be supplied by Seller hereunder shall meet the following
specifications on a composite "as-received" basis averaged over each
Sample Period specified in Article 4.0:
Btu (Btu/#) ................. Not less than [_ _ _ _]
Total Moisture (%) .......... Not to exceed [_ _ _ _]
Ash (#Ash/MMBtu) ............ Not to exceed [_ _ _ _]
Sulfur (#/MMBtu) ............ Not less than [_ _ _ _], and
not to exceed [_ _ _ _]
Volatile Ranking ............ [_ _ _ _]
Grindability ................ Not less than [_ _ _ _]
Size ........................ Not to exceed [_ _ _ _]
If the quality specifications specified above are to be met by the
blending of coals with different characteristics, such blending must
take place off Station property.
3.2 In addition, the coal shall not contain a prohibitive amount of
fines and shall be free of other extraneous materials or any other
matter affecting coal quality, including earth, rock, wood, bone,
metal, sulfur balls or other impurities which would adversely affect
the operation of Buyer's equipment.
4.0 WEIGHING, SAMPLING AND ANALYSIS
4.1 The final determination of the actual quantity of coal delivered to
Buyer hereunder shall be made by Buyer's weighing of the coal on the
truck scales at the Station or any alternate destination designated
by Buyer's Agent, or such other method as the parties may mutually
agree upon. Buyer shall record such weights in Buyer's transaction
receipt and report or weight ticket for each shipment. Absent
manifest error, the scale weights recorded in the transaction
receipt and report or weight ticket prepared by Buyer shall be
controlling as to the quantity of coal delivered.
4.2 Except as otherwise provided in Section 4.5, sampling and analysis
of coal delivered pursuant to this Agreement shall be determined by
analyses of representative samples collected by Buyer of the coal
supplied by Seller, which analyses shall be performed by Buyer's
Agent in accordance with methods and standards approved by the
American Society for Testing and Materials
4
("ASTM"), or such other methods and standards as the parties may
mutually agree upon. If the results of the analyses performed to
determine compliance with the quality specifications set forth in
Article 3.0 indicate concentration levels for any specification that
are within the precision and bias limits applicable for the ASTM
test method utilized, then the coal shall be deemed to comply with
such specification.
4.3 Each calendar month during the Term shall be divided into three
sample periods. The first period shall be the 1st through the 10th
day of the month; the second period the 11th through 20th day of the
month; and the third period the 21st through the last day of the
calendar month (each such period being referred to herein as a
"Sample Period"). Buyer's Agent shall separately determine a
weighted average "as-received" analysis of the coal delivered over
each Sample Period based on daily samples taken during such Sample
Period (calculated as the weighted average results of the daily "as
received" analyses and the associated weights of the samples
analyzed). As soon as practicable after the end of each Sample
Period, Buyer's Agent shall advise Seller in writing of the results
of the analysis for such Sample Period. Seller may observe the
collection and preparation of samples, and, upon written request of
Seller, Buyer shall make available to Seller a representative
portion of each daily sample.
4.4 In the event Buyer's Agent designates an alternate destination for
any coal supplied by Seller hereunder, then, unless otherwise agreed
by the parties, said coal shall be weighed on scales at the
alternate destination designated by Buyer's Agent, or by such other
method as the parties may mutually agree upon, and shall be sampled
and analyzed in accordance with the procedures set forth in Sections
4.2 and 4.3 based on samples taken at such alternate destination.
4.5 In the event of any sale by Buyer of any coal purchased by Buyer
hereunder to a Third Party Purchaser, Seller's weights and analyses
shall govern for the purpose of determining the quantity of such
coal, its compliance with the quality specifications and any
adjustments to the purchase price payable by Buyer to Seller based
therein, provided such weights and analyses shall be performed in
compliance with ASTM methods and standards or such other methods and
standards as the parties may agree upon, and shall be subject to
Buyer's rights to examine Seller's weight and analysis records and
to have a representative present when such weighing, sampling and
analyses are performed.
5.0 REJECTION OF SHIPMENTS
5.1 Buyer shall have the right, in its sole discretion, to reject
individual shipments of coal which it or Buyer's Agent judges to be:
5.1.1 Oversize, or
5.1.2 Finer or wetter than that which existing station equipment is
capable of handling or burning efficiently, or
5.1.3 Considered to contain excess amounts of rock, wood, bone,
metal, sulfur balls, or other impurities which would adversely
affect the operation of Buyer's equipment, or
5
5.1.4 Not homogeneously blended in each delivery in a manner that
will ensure reasonably uniform consistency as to size and
quality.
5.2 If Buyer rejects any coal shipment in accordance with Section 5.1,
Buyer or Buyer's Agent shall notify Seller of its rejection and
Seller, at its expense, shall remove such rejected coal within seven
(7) calendar days after rejection and reimburse Buyer for all
transportation, demurrage and handling charges, if any, incurred by
Buyer associated with such rejected shipment. The provisions of this
Section 5.2 shall survive termination of this Agreement.
5.3 Tonnage deficiencies in any calendar year resulting from Buyer's
rejection of any coal shipment may, at Buyer's option, be deducted
from the Annual Base Amount for such calendar year.
6.0 SUSPENSION AND TERMINATION
6.1 Buyer may, at its option, immediately suspend deliveries hereunder
until such time as Seller can provide Buyer's Agent with assurances
satisfactory to Buyer's Agent that Seller will fully perform its
obligations hereunder if:
6.1.1 The coal delivered fails to meet any of the quality
specifications or ratios set forth in Article 3.0 on a
composite "as-received" basis averaged over each Sample Period
for two (2) Sample Periods (consecutive or otherwise) during
any two (2) month period, or
6.1.2 The coal delivered on any two days (consecutive or otherwise)
during any Sample Period exceeds by 10% or more the maximum
permitted ratios for sulfur and/or ash content set forth in
Article 3.0, or
6.1.3 The quantity of coal delivered during any two consecutive
calendar months does not approximate, other than by reason of
force majeure, the delivery schedule mutually agreed to by
Buyer's Agent and Seller as provided in Section 2.1.
6.2 Should inventories of coal at the Station or other applicable
destination, in the judgment of Buyer's Agent, increase beyond
desired levels, Buyer may reduce or suspend scheduled deliveries
until such time as inventories return to acceptable levels, provided
Seller is given an opportunity to make up deliveries within the
following calendar year, subject to the limitation set forth in
Section 2.1. Subject to Buyer's obligations under contracts in
existence on the date hereof, Buyer shall reduce or suspend spot
purchases before reducing or suspending scheduled deliveries by
Seller under this Section 6.2, and shall reduce or suspend
deliveries by Seller under this Section 6.2 proportionally with all
other suppliers of coal to the Station based on Seller's and such
other suppliers' respective tonnage commitments.
6.3 If within ten (10) calendar days of suspension Seller does not
provide assurances, in writing, reasonably satisfactory to Buyer's
Agent that it will fully perform its obligations hereunder, or if
Seller fails to meet either the required specification criteria or
delivery schedule at any time during the next thirty-day delivery
period after Buyer's Agent's authorization to resume deliveries
(except for de minimus noncompliance), Buyer may terminate this
Agreement.
6
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
6.4 During periods of suspension pursuant to Section 6.1, Buyer shall
have the right to buy replacement coal of similar quality and in
such quantities (not exceeding the suspended quantities) as Buyer
deems necessary to maintain operations and desired levels of
inventories, and Seller shall be responsible for all additional
costs Incurred by Buyer associated therewith.
6.5 Except as provided in Section 6.2, tonnage deficiencies in any
calendar year resulting from any suspension of deliveries may, at
Buyer's option, be deducted from the Annual Base Amount for such
calendar year.
7.0 PRICING AND PAYMENT
7.1 Buyer shall pay to Seller, subject to the quality adjustments
contained herein, a base purchase price per million BTU for all coal
delivered hereunder (the "Base Price") at the rate of [_ _ _ _]. If
Buyer exercises its option to increase the Annual Base Amount
pursuant to Section 1.2, then the Base Price less the transportation
cost allowance set forth in Section 8.5 (as each may be adjusted in
accordance with Article 8.0) (such remainder, the "Base Mine Price")
applicable to all coal delivered to Buyer thereafter shall be
reduced by an amount equal to [_ _ _ _] of the Base Mine Price then
in effect.
7.2 The Base Price is based on such coal meeting the individual quality
specifications set forth in Article 3.0 as received by Buyer.
Whenever the coal delivered during any Sample Period does not
conform to such quality-specifications, the Base Price shall be
adjusted as follows:
7.2.1 Moisture Content. If the weighted average moisture content
of the coal received for any Sample Period exceeds [_ _ _ _],
the Base Price payable for such coal shall be reduced by
[_ _ _ _].
7.2.2 Ash/Btu Content. If the weighted average ash content of
the coal received for any Sample Period exceeds [_ _ _ _],
the Base Price payable for such coal shall be reduced
by [_ _ _ _].
7.2.3 Sulfur/Btu Content. If the weighted average sulfur content of
the coal received for any Sample Period exceeds the ratios
specified below, the Base Price payable for such coal shall be
reduced according to the following schedule:
# Sulfur/MMBtu Adjustment
-------------- ----------
[_ _ _ _] [_ _ _ _]
[_ _ _ _] [_ _ _ _]
[_ _ _ _] [_ _ _ _]
7.3 Each of the adjustments set forth in Section 7.2 are independent of
one another, and the applicable Base Price for any Sample Period
shall be reduced by the cumulative total of all applicable quality
adjustments for such Sample Period (the Base Price, as so adjusted,
being referred to herein as the "Adjusted Base Price").
7
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
7.4 Buyer shall, on a [_ _ _ _] basis, calculate the cumulative payment
due Seller for each of the [_ _ _ _] Sample Periods which comprise
such [_ _ _ _] in accordance with the provisions of this Agreement,
and shall submit an invoice to Seller for all coal delivered and
accepted hereunder during such [_ _ _ _], showing the quantity of
coal purchased for each Sample Period to which it relates
(accompanied by supporting documentation which shall include a
detailed log of daily delivery transactions) and the Adjusted Base
Price applicable thereto. Payment to Seller will be made on or
before [_ _ _ _]. Absent manifest error, the invoices prepared by
Buyer shall be controlling as to the amounts due Seller hereunder.
Seller shall not readdress or object to a payment issued by Buyer
after [_ _ _ _] days has elapsed from the date of the original
invoice.
8.0 BASE PRICE ESCALATION ADJUSTMENTS
8.1 As of the date hereof, the Base Price is comprised of the following
base dollar amounts (the "Base Dollar Amounts") of the following
components and subcomponents of Seller's cost to mine and produce
coal. The Base Price and the Base Dollar Amounts shall be adjusted
to reflect changes in such components and subcomponents, such that
the resulting Base Price applicable to any coal consigned for
shipment on and after the effective date of any such adjustment
shall remain in effect until the Base Price is again adjusted
pursuant to this Section. All such adjustments shall be accompanied
by appropriate documentation (which shall be furnished by Seller to
Buyer) and shall be subject to verification by Buyer.
Base Dollar
Sub- Amount Per
Component component Ton(as(1/1/05) Index or Method
--------------- ------------ -------------- ---------------------------
Labor Esc.- Ref. $ [_ _ _ _] Bituminous coal and lignite
Benchmark surface mining, Average
Hourly Earnings of
Production Workers (CEU
Series ID: CEU1021211106)
Medical Esc.- Ref. $ [_ _ _ _] CPI -- All Urban Wage
Benchmark Earners Medical Care
(CPI Series ID:
CWUR0000SAM)
Steel Supplies Esc.- Ref. $ [_ _ _ _] Fabricated Metal
Benchmark Products (PPI Series
ID: PCU331--331--
Fuel & Esc.- Ref. $ [_ _ _ _] Petroleum Products,
Lubricants Benchmark Refined (PPI Series ID:
WPU057)
Subtotal $ [_ _ _ _] Subject to Supplemental
(Variable Cost Adjustment
Components)
Supplies Esc. - Index $ [_ _ _ _] Industrial Commodities,
Based Less Fuels and Related
Products and Power (PPI
Series ID: WPU03T15M05)
Repairs & Esc. - Index $ [_ _ _ _] Mining Machinery Equipment
Maintenance Based (PPI Series ID: WPU1192)
Electric Power Esc. - Index $ [_ _ _ _] Industrial Power (PPI
Based Series ID: WPU0543)
Subtotal (All $ [_ _ _ _]
Escalating
Components)
8
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
Governmental Pass $ [_ _ _ _] Federal Black Lung Excise Tax
Assessment Through
Components $ [_ _ _ _] Federal Reclamation Fees
$ [_ _ _ _] WV Severance Tax
$ [_ _ _ _] WV Workers Comp
Fixed Component $ [_ _ _ _] Fixed for the Term and not
subject to adjustment
Total-All $ [_ _ _ _] Base Mine Price
Components
Trucking $ [_ _ _ _] Base Transportation Cost
$ [_ _ _ _] Base Price (FOB Station)
8.2 The Labor, Medical, Steel Supplies and Fuel & Lubricants components
of the Base Mine Price set forth above (collectively, the "Variable
Cost Components"), as well as the Supplies, Repairs & Maintenance
and Electric Power components of the Base Price set forth above,
shall be adjusted [_ _ _ _] effective [_ _ _ _] (each such date, an
"Adjustment Date"), commencing [_ _ _ _]. The first adjustment
effective as of [_ _ _ _] shall be determined by comparing the
average value of each respective index for [_ _ _ _] to the average
value of each respective index for [_ _ _ _]. As of each Adjustment
Date thereafter, the average value of each respective index for the
[_ _ _ _] preceding such Adjustment Date shall be compared to the
average value of each such index for the [_ _ _ _] preceding such
Adjustment Date. For example, the [_ _ _ _] adjustment shall compare
the average value of each respective index for [_ _ _ _] to the
average value of each such index for [_ _ _ _]. In each such case,
[_ _ _ _] of the respective change (carried out to four decimal
places, e.g., 6.124% shall be 0.0612) in each such index shall be
multiplied by the last previously effective Base Dollar Amount of
the component or subcomponent correlative thereto. The net amounts
of increase or decrease so obtained shall be added to or subtracted
from, as the case may be, such last previously effective Base Dollar
Amount of the component or subcomponent correlative thereto and the
resulting amount per ton (rounded to the nearest whole cent) shall
become the then effective Base Dollar Amount of such component or
subcomponent of the Base Mine Price. A sample calculation of
adjustments to such components and subcomponents of the Base Mine
Price pursuant to this Section 8.2 is attached hereto as Schedule
8.2.
8.3 If the Base Mine Price is reduced pursuant to the last sentence of
Section 7.1, such reduction shall be applied to all components and
subcomponents of the Base Mine Price then in effect (other than the
Governmental Assessment Components portion thereof), pro rata in
accordance with the respective Base Dollar Amounts of such
components and subcomponents then in effect, so as to reduce the
aggregate Base Dollar Amounts of all of such components and
subcomponents by an amount equal to [_ _ _ _] of the Base Mine Price
then in effect (before giving effect to such reduction). A sample
calculation of adjustments to such components and subcomponents of
the Base Mine Price pursuant to this Section 8.3 is attached hereto
as Schedule 8.3.
9
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
8.4 The Base Dollar Amounts of the Governmental Assessment Components of
the Base Mine Price set forth above shall be adjusted for changes in
federal black lung excise tax, federal reclamation fees, West
Xxxxxxxx xxxxxxxxx tax and West Virginia workers' compensation
(which for this purpose shall be limited to base rates, exclusive of
experience premiums and other adjustments not applicable to
employers in the mining industry generally) occurring after
[_ _ _ _], effective as of [_ _ _ _] following the effective date of
any such change (except when such change is effective on the first
day of a month, in which case such adjustment shall be effective as
of such date). The parties agree that the proposed West Virginia
severance tax, regardless of the form in which it is enacted, will,
if enacted, be deemed to constitute an additional item of the
Governmental Assessment Components for purposes of this Section.
Such amounts shall be adjusted for any related tax credits or other
credits allowed to Seller. For the purpose of calculating
adjustments to the Base Mine Price pursuant to this Section 8.4, all
such adjustments shall be deemed to be based on those governmental
assessments applicable to underground mining. A sample calculation
of adjustments to the Governmental Assessment Components of the Base
Mine Price pursuant to this Section 8.4 is attached hereto as
Schedule 8.4.
8.5 The Base Price is also subject to adjustments to the Base
Transportation Cost (as hereinafter defined) based on changes in
trucking costs. Such adjustments, if applicable, shall be determined
and computed in accordance with the methodology set forth in
Schedule 8.5 attached hereto, shall be paid separately and shall not
be taken into account in computing any other adjustments to the Base
Price hereunder. As of the date hereof, the Base Price includes an
allowance of [_ _ _ _] for truck transportation costs (the "Base
Transportation Cost"). [_ _ _ _]
8.6 If upon agreement or final determination, an adjustment to the cost
per ton is found to be appropriate in accordance with Section 8.2,
8.3, 8.4 or 8.7, an appropriate credit for such amount (converted to
an equivalent delivered cents/MMBtu basis), for all coal delivered
hereunder on and after the effective date of any such adjustment,
shall be made to the party to whom the benefit of such credit is
due.
8.7 [_ _ _ _]
10
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
8.8 The indices utilized in calculations made pursuant to this Agreement
shall be the indices as they are first published. In the event that
the current base or any index referred to in Section 8.1 or 8.3 is
converted to a new base, or should the United States Department of
Labor convert an index from the Standard Industrial Classification
System to the North American Industry Classification System, then
conversion tables published by the United State Department of Labor,
Bureau of Labor Statistics, or the United State Department of
Commerce, Bureau of Economic Analysis, as the case may be, shall be
used in re-computing the level of any such index. Should publication
of any index be discontinued, an index which is as nearly as
practicable equivalent shall be substituted by mutual agreement of
the parties. In the event that supervening events or circumstances
shall render inapplicable any of the methods set forth in this
Article 8.0 for computing adjustments to the Base Price, the parties
shall meet promptly to consider and agree upon new or revised
methods appropriate to the circumstances then prevailing.
9.0 RE-OPENER
9.1 [_ _ _ _] during any calendar year after [_ _ _ _] shall exceed
[_ _ _ _] of the Base Mine Price then in effect (as the same may
have been adjusted in accordance with Article 8.0), then Seller
shall have the right at any time within ninety (90) days after the
end of such calendar year to give Buyer written notice of its
election to negotiate an adjustment to the Base Price pursuant to
this Article 9.0; provided, however, that if any such
11
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
increase occurs prior to [_ _ _ _] as a result of a change in law
described in Section 12.2, Seller may give a notice to Buyer
pursuant to this Section within ninety (90) days after the end of
the calendar year in which such increase occurs. Seller shall
furnish to Buyer, upon request therefor, sufficient information
[_ _ _ _] (other than information the disclosure of which would
breach any confidentiality agreement or other legal requirement by
which Seller may be bound) to enable Buyer to verify whether such
condition has been met. Subject to such limitations, Buyer shall
have the right at its expense to examine, or cause an audit to be
made of, the records and books of account of Seller with respect to
its [_ _ _ _].
9.2 If the market price of coal available to Buyer (F.O.B. Station)
during any calendar year after [_ _ _ _], as determined by
responses to Buyer's bid solicitations pursuant to Qualifying Bids
for coal of similar quality to that required by this Agreement,
shall be less than [_ _ _ _]% of the Base Price then in effect (as
the same may have been adjusted in accordance with Article 8.0),
then Buyer shall have the right at any time within ninety (90) days
after the end of such calendar year to give Seller written notice
of its election to negotiate an adjustment to the Base Price
pursuant to this Article 9.0. Buyer's Agent shall determine a
weighted average annual price per ton of coal (converted to an
equivalent delivered cents/MMBtu basis) based on all Qualifying
Bids received. For purposes of this Section 9.2, "Qualifying Bids"
must meet the following criteria:
9.2.1 Each bid must be submitted by a single coal producer (or one
or more affiliates of such producer), or direct sales agent
of such a coal producer (who possesses reasonably
satisfactory evidence of its right to sell such coal), or a
coal marketer, who is not an affiliate of Buyer;
9.2.2 The quality of the coal must meet the quality specifications
set forth in Article 3.0 on a composite "as-received" basis,
or the bid price shall be appropriately adjusted to take into
account differentials between the average Btu, ash and sulfur
content per pound, and moisture content, of coal under the bid
and the corresponding specifications set forth in Section 3.1
and the additional costs (including, but not limited to,
emission allowance costs), if any, to Buyer of utilizing such
coal; and
9.2.3 The bids submitted must be for an aggregate tonnage of not
less than [_ _ _ _].
Buyer's Agent shall furnish to Seller, upon request therefor,
sufficient information concerning its bid solicitations and
Qualifying Bids (other than information that would fail to maintain
confidentiality of the bidders, or the disclosure of which would
breach any confidentiality agreement or other legal requirement by
which Buyer or Buyer's Agent may be bound) to enable Seller to
verify whether such condition has been met. Subject to such
limitations, Seller shall have the right at its expense to examine,
or cause an audit to be made of, the records and books of account of
Buyer and Buyer's Agent with respect to the calculation of the
weighted average price per ton of coal available to Buyer under this
Section 9.2.
9.3 If Seller gives a notice to Buyer pursuant to Section 9.1, or Buyer
gives a notice to Seller pursuant to Section 9.2, the parties shall
negotiate in good faith to reach agreement on an appropriate
adjustment to the Base Price, taking into
12
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
consideration all relevant factors, [_ _ _ _]
9.4 If, within ninety (90) days after receipt by Buyer of Seller's
notice pursuant to Section 9.1 or Seller's receipt of Buyer's notice
pursuant to Section 9.2, as the case may be, the parties have been
unable to reach agreement on a new Base Price in accordance with
Section 9.3, then either party shall have the right to terminate
this Agreement upon not less than [_ _ _ _] prior written
notice to the other party.
10.0 RESERVES AND SOURCES
Seller represents and warrants to Buyer that Seller now owns, leases or
controls mining and/or processing operations with sufficient reserves of
coal to enable Seller to supply Buyer with the total quantity of coal
specified in this Agreement for the Term of this Agreement. Seller will
not sell or agree to sell to others coal from such reserves which would
jeopardize Seller's ability to supply the total Reserve Commitment during
the Term of this Agreement. At Buyer's Agent's reasonable request, Seller
shall continue to demonstrate throughout the term of the Agreement the
availability of these quantities, qualities or capacities.
11.0 CONFIDENTIALITY AND NON-DISCLOSURE
11.1 The terms and conditions of this Agreement shall only be disclosed
to Buyer's and/or Seller's employees and representatives on a "need
to know" basis and shall not be disclosed to any third party. Such
terms and conditions shall under no circumstances be disclosed to a
competitor of Seller or Buyer.
11.2 Except as provided below, neither party shall, without the express
written permission of the other, disclose this Agreement or the
terms hereof to any third party, provided, however, that each party
may disclose information related to this Agreement to any Federal,
state or local governmental agency, authority or commission, or any
court, tribunal or arbitrator (collectively, "Official Bodies") as
required by law, including those which regulate Buyer's business.
With respect to such disclosure to Official Bodies, the parties each
agree: (1) to appropriately limit their respective requests and/or
requirements for the disclosure or delivery of such confidential
information to the minimum necessary to comply with applicable law;
(2) to provide to the other timely notice of any Official Body's
disclosure requirement so that the party seeking protection of such
information can contest such disclosure requirement to the fullest
extent allowed by law, and (3) to undertake such steps as may be
available pursuant to law or regulation to provide for the
confidentiality of any such confidential information released or
disclosed to any Official Body. To the extent that the disclosure of
any such confidential information to a third party (other than to
Official Bodies, as described above) is necessary, each of the
parties agrees to give notice thereof to the other party and request
that the party seeking protection of such information shall have the
right to obtain from such third parties any enforceable
13
* CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION. BRACKETS AND UNDERSCORES
DENOTE SUCH OMISSIONS.
confidentiality agreements providing for protection at least as
stringent as those provided hereby. Except as to information which
may become public through means other than the action or inaction of
the party charged with improper disclosure, this Agreement shall
remain in effect for a period of five years after the term of this
Agreement expires
11.3 Any reference to Buyer, this Agreement, the quantities of coal
purchased by Buyer hereunder or other data relating to such
purchases or the Station for Seller's advertising or reporting
purposes shall be promptly reviewed by Buyer prior to release and
shall not be released without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed. Any
reference to Seller, this Agreement, the quantities of coal sold to
Buyer hereunder or other data relating to such sales or the Source
Mines for Buyer's advertising or reporting purposes shall be
promptly reviewed by Seller prior to release and shall not be
released without the prior written consent of Seller, which consent
shall not unreasonably be withheld or delayed.
12.0 LEGISLATION, REGULATIONS AND ORDERS
12.1 Seller shall comply with the provisions of all Federal, State and
other governmental laws and any applicable orders and/or regulations
or any amendments or supplements thereto relating to the sale of
coal hereunder which have been or may at any time during the Term of
this Agreement be issued by a governmental agency having appropriate
jurisdiction. Seller warrants that it and its subcontractors are in
compliance with all such laws, orders and/or regulations now in
effect.
12.2 If the cost to Seller of producing, processing and delivering
coal hereunder shall have increased (or decreased) as a result of
any new or amended, or a change in the interpretation or
enforcement of any, Federal, state or local law, rule, regulation,
order or tax occurring after the date hereof (each, a "regulatory
change"), Seller shall notify Buyer of such event promptly after
Seller becomes aware thereof and shall specify in such notice the
amount of any increase (or decrease) to the Base Price payable
under this Agreement necessary as a result of such regulatory
change. Buyer shall notify Seller within twenty (20) days after
receipt of such notice from Seller whether Buyer agrees to Seller's
proposed adjustment to the Base Price. If Buyer agrees to such
adjustment, the Base Price shall be changed accordingly. If Buyer
does not agree to such adjustment, the Base Price shall be adjusted
by [_ _ _ _] as a result of such regulatory change, as verified by
supporting documentation to be submitted by Seller as hereinafter
provided. Seller shall furnish to Buyer, upon request therefor,
sufficient information concerning Seller's costs to enable Buyer to
verify Seller's calculation of any change in Seller's costs
incurred as a result of such regulatory change and the resulting
new Base Price. Buyer shall have the right at its expense to
examine, or cause an audit to be made of, the records and books of
account of Seller with respect to any change in Seller's costs as a
result of such regulatory change and the calculation of any
adjustment to the Base Price pursuant to this Section 12.2.
Notwithstanding the foregoing, the Base Price shall not be changed
pursuant to this Section 12.2 as a result of any change in
corporate net income taxes or taxes, fees or other impositions
levied on or measured by, in whole or in part, capital, retained
earnings or any other similar measure, or any business privilege,
value added, general franchise or other similar taxes imposed on
Seller or its properties or assets, or as a result of any change
for which Seller has already
14
received a transportation cost adjustment pursuant to Section 8.5 or
a Supplemental Adjustment pursuant to Section 8.7. For the purpose
of calculating adjustments to the Base Price pursuant to Article
8.0, any adjustment to the Base Price pursuant to this Section 12.2
shall be subtracted from the corresponding Base Dollar Amounts of
the components or subcomponents of the Base Price affected by such
regulatory change (pro rata in accordance with the respective Base
Dollar Amounts of such components or subcomponents).
12.3 In the event of the enactment after the date hereof of any Federal,
State or other governmental law, regulation or order which may
prohibit, make economically unfeasible, or restrict so as to
effectively prohibit Buyer's use of the coal specified in this
Agreement, Buyer shall notify Seller of such event promptly after
Buyer becomes aware thereof and this Agreement shall no longer be
binding after the effective date of such law, regulation, or order;
provided, however, that Buyer shall exert good faith efforts to
secure relief from such governmental restrictions. In the event of a
conflict in interpretation of applicable governmental laws,
regulations, and orders, then, for purposes of this Agreement, any
reasonable interpretation which prohibits, makes economically
unfeasible, or restricts so as to effectively prohibit Buyer's use
of the coal specified herein shall be sufficient to permit Buyer to
cancel this Agreement.
12.4 In the event of the enactment after the date hereof of any Federal,
State, or other governmental law, regulation or order which may
prohibit or restrict so as to effectively prohibit Seller's mining,
processing, or shipping of the coal specified in this Agreement,
Seller shall notify Buyer of such event promptly after Seller
becomes aware thereof and this Agreement shall no longer be binding
after the effective date of such law, regulation, or order to the
extent that such legislation has affected the production,
processing, or shipping of coal under this Agreement; provided,
however, that Seller shall exert good faith efforts to secure relief
from such governmental restrictions. An increase in Seller's
economic costs alone and which are not addressed in this Agreement
shall not be sufficient cause to modify or terminate this Agreement
or to suspend deliveries hereunder. In the event of a conflict in
interpretation of applicable governmental laws, regulations, and
orders, then, for purposes of this Agreement, any reasonable
interpretation which prohibits or restricts so as to effectively
prohibit Seller's mining, processing, or shipping of the coal
specified herein shall be sufficient to permit Seller to cancel this
Agreement.
13.0 FORCE MAJEURE
13.1 As used herein, "force majeure" means any causes or circumstances
beyond the reasonable control and without fault or negligence of the
party affected thereby or of its subcontractors or carriers, such
as, acts of God, governmental regulation, war, acts of terrorism,
weather, floods, fires, accidents, strikes, major breakdowns of
equipment, shortages of carrier's equipment, accidents of
navigation, interruptions to transportation, embargoes, orders of
civil or military authority, or other causes, whether of the same or
different nature, existing or future, foreseen or unforeseeable,
which wholly or partly prevent the mining, processing, shipment
and/or loading of the coal by Seller, or the receiving, transporting
and/or delivery of the coal by any carrier, or the accepting,
utilizing and/or unloading of the coal by Buyer, but specifically
excluding economic factors alone.
13.2 If, by reason of force majeure, either party is unable, wholly or
partially, to perform its obligations under this Agreement, the
affected party shall promptly
15
give the other party notice of such force majeure and full
information concerning the causes or circumstances claimed to
constitute such force majeure and, if such notice is given, the
obligations of the party giving such notice shall be suspended (or
reduced to the extent made necessary by such force majeure) during
the continuance of such force majeure or its effects. The party
claiming such force majeure shall exert due diligence to remove the
causes or circumstances constituting such force majeure as soon as
and to the extent reasonably practicable, and shall promptly notify
the other party when the causes or circumstances constituting such
force majeure have terminated. The other party shall have the right
to investigate the causes or circumstances claimed by the affected
party to constitute such force majeure.
13.3 The requirement that the causes or circumstances constituting force
majeure shall be removed by the affected party with all reasonable
dispatch shall not require the settlement of strikes, lockouts or
other labor disputes.
13.4 No suspension or reduction for reason of force majeure shall
invalidate the remainder of this Agreement, but, on removal of the
causes or circumstances constituting such force majeure, deliveries
of coal hereunder shall resume at the applicable Annual Base Amount
rate; provided, however, that if either party suffers an extended
period of force majeure, whether whole or partial, lasting six (6)
months or longer, the other party shall have the right to terminate
this Agreement upon thirty (30) days' prior notice. Tonnage
deficiencies caused by force majeure shall not be made up, except by
mutual consent.
14.0 EMPLOYMENT STANDARDS
Seller shall (and shall cause its subcontractors, if any, to) comply with
all applicable federal, state and local rules and regulations governing
labor or employee relations, including Sections 6, 7,12 and 14 of the Fair
Labor Standards Act, as amended. Seller agrees that Seller shall be
subject to all applicable contract clauses required by federal, state or
local law, rule or regulation to be included in this Agreement, including
but not limited to the following clauses, which are incorporated by
reference herein: Equal Opportunity Clause (41 C.F.R. Section60-1.4);
Affirmative Action Clause for Disabled Veterans and Veterans of the
Vietnam Era (41 C.F.R. Section60-250.4); Affirmative Action Clause for
Handicapped Workers (41 C.F.R. Section60-741.4); the Certification of
Nonsegregated Facilities Clause (41 C.F.R. Section60-1.8; 41 C.F.R.
Section1-12.803.10); and the Nondiscrimination Clause (16 Pa. Code
Section49.101). In addition, Seller certifies, if applicable, that it has
developed a written affirmative action compliance program [41 C.F.R.
Section60-1.40(a)] and will annually file Standard Form 100 (EEO-1) [41
C.F.R. Section60-1.7(a)].
15.0 DRUG AND ALCOHOL ABUSE
Seller shall be solely responsible for its employees and subcontractors,
and their employees, regarding drug and alcohol abuse. Controlled
substances and alcohol are prohibited on Buyer's properties. The use,
possession or sale of controlled substances or alcohol while on Buyer's
properties will result in disciplinary action, including removal from the
job site. The use of controlled substances and/or alcohol while off
Buyer's property in a manner that adversely affects an employee's job
performance or public perception of Buyer is not acceptable and will
result in disciplinary action, including removal from the job site. Cost
of testing shall be borne by Seller.
16
16.0 GOVERNING LAW
This Agreement and the rights and obligations of the parties hereto shall
be governed by the laws of the State of West Virginia.
17.0 ASSIGNMENT
No party hereto may assign this Agreement or any portion hereof without
the advance written consent of the other party, except that no such
consent shall be required for (a) an assignment is made to any subsidiary
or affiliate of Buyer, (b) an assignment in connection with a sale of
Buyer's Xxxxxxxx Power Station or other destination designated by Buyer or
of all or substantially all of the assets or business of Buyer, or (c) an
indirect assignment by reason of a change in control of Seller's parent,
Anker Coal Group, Inc. In addition, Buyer may assign this Agreement
without the consent of Seller to a third party for the purpose of
manufacturing synthetic fuel for use at the applicable destination, but no
such assignment shall relieve Buyer of its obligations under this
Agreement unless such assignee provides Seller with security reasonably
satisfactory to Seller to secure performance of all of the obligations of
the purchaser of coal under this Agreement. Sale or lease of Seller's
property, coal processing, or loadout facilities which service this
Agreement is considered an assignment and therefore requires the prior
written consent of Buyer. In all instances in which consent of the other
party to any assignment is required, such consent shall not be
unreasonably withheld or delayed.
18.0 NON-WAIVER
The failure of any party to insist in any one or more instances upon
strict performance of any obligation of another party under this Agreement
shall not be deemed to be a waiver of the performance of any such
obligation or a relinquishment of any rights hereunder for the future.
Without limiting the foregoing, Buyer's acceptance of any coal that does
not meet the quality specifications specified in this Agreement shall not
be deemed a waiver of any right Buyer may have hereunder. The respective
rights and remedies of the parties hereunder are cumulative and not
exclusive of any rights or remedies which any party would otherwise have.
19.0 INDEMNIFICATION AND DAMAGES
19.1 Seller shall indemnify, save harmless, and defend Buyer(s), Buyer's
Agent, and their respective employees, agents and representatives
(collectively "Buyer Indemnified Parties") from and against all
claims, losses, liabilities, costs, settlements, awards, and
expenses (including attorneys' fees and expenses) growing out of
personal injury, death, or damage to property (including property of
any Buyer Indemnified Party) arising out of or in any way connected
with Seller's, its or their respective subcontractors' and/or
carriers' performance or non-performance hereunder (negligent or
otherwise), suffered or claimed to have been suffered by any person,
corporation or entity (including any Buyer Indemnified Party) except
to the extent due to the negligence or willful misconduct of any
Buyer Indemnified Party.
19.2 Under no circumstances, whether arising in contract, equity, or tort
(including negligence), shall Seller be responsible for or liable to
Buyer for consequential, incidental, punitive, exemplary or indirect
damages, including lost profits.
17
20.0 INSURANCE
20.1 Prior to rendering any service hereunder, Seller shall, at its own
expense, procure and thereafter keep in effect until service has
been performed:
20.1.1 Worker's Compensation Insurance for its employees engaged in
this work, sufficient to comply fully with requirements and
coverages specified by laws of each jurisdiction in which
work shall be performed.
20.1.2 Employer's Liability insurance with limits of not less than
$1,000,000 per occurrence.
20.1.3 Comprehensive automobile liability with limits of not less
than $1,000,000 combined single limits.
20.1.4 Commercial General Liability with limits of not less than
$5,000,000 combined single limits per occurrence, including
Pollution Liability, liabilities arising under the Federal
Employees Liability Act (FELA), Protection and Indemnity
Insurance as may be applicable, and Contractual Liability
covering all liability of Seller under this Agreement.
20.1.5 Such other specific insurances and/or limits determined to
Buyer's Agent to be appropriate for work to be performed.
20.2 All insurance required to be provided under Section 20.1 shall be
issued by insurers rated A-/XI or better by A. M. Best Company (or
A-/IX or better in the case of insurers whose parent companies are
rated A-/XI or better) or who maintain comparable ratings assigned
by another reputable and recognized rating agency approved by
Buyer's Agent.
20.3 Allegheny Energy Supply Company, LLC, Monongahela Power Company, and
Allegheny Energy Service Corporation shall be named as additional
insureds for each of the insurance coverages listed in items 20.1.3
and 20.1.4 above. These are "minimum" required limits and are in no
way intended to be a limitation of Seller's liability. Seller shall
furnish Buyer's Agent (Attention: Event Risk Manager) with
certificates of insuring companies showing such insurance to be in
effect and the expiration dates and agreeing to give thirty (30)
days written notice to Buyer's Agent in advance of any change in or
cancellation of such insurance.
21.0 CERTAIN REMEDIES OF BUYER
It is expressly recognized and understood between the parties that prompt
and full deliveries by Seller in accordance with this Agreement are
essential to Buyer. Time is of the essence with respect to such
deliveries. Therefore, the parties agree that in addition to, and not in
limitation of, any and all other remedies to which Buyer may be entitled
by law, Buyer shall have the right to require specific performance of this
Agreement by Seller, and Buyer shall have the right, if necessary, to
enter any appropriate judicial forum and, without bond or other security,
to obtain injunctions and/or other appropriate relief against Seller to
prevent deliveries of any Source Mine coal by Seller to any third parties
while Seller is in default of or threatens default in the delivery of coal
to Buyer that conforms to the specifications required under this
Agreement.
18
22.0 NOTICES
All notices under this Agreement shall be in writing and shall be deemed
to have been given or made when sent by facsimile transmission (telecopy),
recognized overnight delivery service, or first class United States mail
postage prepaid, addressed to Seller, Buyer or Buyer's Agent, as the case
may be, at its address specified below, or at such other address as any
such party may specify by notice to the other parties:
If to Seller: Anker West Virginia Mining Company, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attn: President
If to Buyer or Buyer's Allegheny Energy Service Corporation
Agent: 0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Attention: General Manager, Fuel
Logistics and Operations
with copies to:
Allegheny Energy Service Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Attention: General Manager, Fuel
Procurement
and:
Allegheny Energy Supply
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Attention: General Counsel
23.0 AUTHORITY OF BUYER'S AGENT
Whenever any action or determination under this Agreement is permitted or
required to be taken or made by Buyer, or any right or remedy may be exercised
by Buyer under this Agreement, such action or determination may be taken or
made, and such right or remedy may be exercised, on behalf of Buyer by Buyer's
Agent. Any such action or determination communicated by Buyer's Agent to Seller
shall be binding on Buyer as fully as if such action or determination had been
taken or made directly by Buyer.
24.0 COUNTERPARTS
This Agreement may be executed in counterparts, which shall, in the
aggregate, when signed by all parties constitute one and the same instrument,
and, thereafter, each counterpart shall be deemed an original instrument as
against any party who has signed it. Facsimile signatures shall be enforceable
as original signatures.
[Signatures begin on next page]
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
ANKER WEST VIRGINIA MINING
COMPANY, INC.
(Seller)
By: /s/ D. XXXX XXXXXX
-------------------------------------
Name: D. XXXX XXXXXX
Title: PRESIDENT, ANKER WEST VIRGINIA
MINING COMPANY, INC.
ALLEGHENY ENERGY SUPPLY
COMPANY, LLC
(Buyer)
By: /s/ Xxxx X. Xxxxxxxx /DGF
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President, Allegheny Energy Supply
MONONGAHELA POWER COMPANY
(Buyer)
By: /s/ Xxxxxx X. Xxxxxxxxxx /DGF
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President, Allegheny Power
GUARANTEE
ANKER COAL GROUP, INC., a Delaware corporation ("ACGI"), hereby guarantees
the full and timely payment and performance by Anker West Virginia Mining
Company, Inc., a West Virginia corporation ("Anker Mining"), and its successors
and assigns, of all duties, obligations and liabilities of Anker Mining under or
arising from the Coal Sales Agreement dated the 17th day of February, 2005,
between Anker Mining, as Seller, and Allegheny Energy Supply Company, LLC, a
Delaware limited liability company ("AESC"), and Monongahela Power Company, a
West Virginia corporation ("MPC"), as Buyer (the "Agreement"), and agrees that
AESC and MPC shall have the right to demand payment and performance of Seller's
obligations, duties and liabilities under the Agreement directly from ACGI as
fully as if ACGI were a party to the Agreement, it being understood that this
Guarantee shall bind ACGI and it successors and assigns, and inure to the
benefit of AESC and MPC and their respective successors and assigns.
ANKER COAL GROUP, INC.
By: /s/ Xxxxxxx X. XxXxxxxxx
---------------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: President
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Schedule 1.2
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Schedule 1.3
Sycamore Agreement Deliveries
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.2
Example of How Base Price is Adjusted
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.2
Example of How Base Price is Adjusted
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.2
Example of How Base Price is Adjusted
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.2
Example of How Base Price is Adjusted
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.3
Example of How Base Price is Adjusted
after exercising option to increase Annual Base Tonnage
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.4
Example of How Base Price is Adjusted
for change in a Governmental Assessment Component
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Schedule 8.5
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(a)(1)
Calculation of Total Costs Incurred in Producing Source Mine Coal for
Section 8.7
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(a)(2)
Example of how to determine if Supplemental Adjustment to
Variable Cost Components applies
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(b)(1)
Example of How Labor Variable Cost Component is Adjusted
In accordance with Article 8
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(b)(2)
Example of How Medical Variable Cost Component is Adjusted
In accordance with Article 8
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(b)(3)
Example of How Steel Supplies Variable Cost Component is Adjusted
In accordance with Article 8
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(b)(4)
Example of How Fuel & Lubricants Variable Cost Component is Adjusted
In accordance with Article 8
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(b)(5)
Variable Cost Component Basis
[ _ _ _ _ ]
*CONFIDENTIAL MATERIAL HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
BRACKETS AND UNDERSCORES DENOTE SUCH
OMISSIONS.
Coal Sales Agreement
Schedule 8.7(c)
Example of Supplemental Adjustment to Variable Cost Components
[ _ _ _ _ ]
