Exhibit (10)(i)105
THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN
REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
FOURTH AMENDMENT TO THE
AGREEMENT FOR THE SALE AND PURCHASE OF COAL
THIS FOURTH AMENDMENT ("AMENDMENT"), dated as of
November 1, 1995 TO THAT AGREEMENT ("AGREEMENT") FOR THE SALE AND
PURCHASE OF COAL made and entered into as of the 1st day of
January 1987 by and between CENTRAL XXXXXX GAS & ELECTRIC
CORPORATION, (hereinafter referred to as "BUYER") and KENTUCKY
CARBON CORPORATION (hereinafter referred to as "SELLER" or
"PRODUCER") and THE CARBON FUEL SALES COMPANY (hereinafter
referred to as "SALES AGENT") and as later assigned by "SELLER"
and "PRODUCER" with the consent of "BUYER" to XXXXXX COAL SALES
COMPANY ("ASSIGNEE").
WITNESSETH:
WHEREAS, Article I of the AGREEMENT provides that
beginning July 1, 1991, and six months prior to the end of each
contract year thereafter, BUYER, SALES AGENT and SELLER shall
commence good faith negotiations with respect to quantity,
quality and price of coal for the next Contract Year; and
WHEREAS, the ASSIGNEE assumed the contractual
responsibilities of SALES AGENT and SELLER pursuant to an
AGREEMENT OF ASSIGNMENT, ASSUMPTION, CONSENT AND RELEASE dated
February 29, 1992, by and among BUYER, SALES AGENT and SELLER
(collectively referred to as "ASSIGNOR") and ASSIGNEE; and
WHEREAS, notice was duly given and BUYER and ASSIGNEE
entered into good faith negotiations; and
WHEREAS, after completion of good faith negotiations,
BUYER and ASSIGNEE desire to amend the AGREEMENT to provide for a
replacement pricing mechanism for coal sold and bought thereunder
and to revise certain other AGREEMENT provisions; and
WHEREAS, THIS SECOND AMENDMENT replaces the FIRST
AMENDMENT TO THE AGREEMENT FOR THE SALE AND PURCHASE OF COAL,
dated November 1, 1991 in its entirety, effective January 1,
1994;
WHEREAS, THIS THIRD AMENDMENT replaces the SECOND
AMENDMENT TO THE AGREEMENT FOR THE SALE AND PURCHASE OF COAL,
dated November 1, 1993 in its entirety, effective January 1,
1995.
WHEREAS, THIS FOURTH AMENDMENT replaces the THIRD
AMENDMENT TO THE AGREEMENT FOR THE SALE AND PURCHASE OF COAL,
dated November 1, 1994 in its entirety, effective January 1,
1996.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants set forth herein, the parties hereto agree
as follows:
1. For only the Contract Year occurring during the
Calendar Year 1996, Article II (Deliveries), Article III
(Specifications and Quality and Weight), Article IV (Payment),
Article V (Base Price) and Article VII (Adjustment in Current
Base Price for Quality) of the AGREEMENT shall be respectively
amended in their entirety to read as follows:
ARTICLE II
DELIVERIES
Section 1. Quantities/Delivery Schedule: Except as
provided for below, the quantity of coal sold and purchased
hereunder shall be a firm tonnage of no less than 240,000 tons
per year ("Firm Tonnage"). In addition, there will be 120,000
tons per year called incremental tonnage ("Incremental Tonnage")
which will be sold and purchased hereunder provided that the
delivered cost per million Btu's of oil, natural gas or spot coal
usable at BUYER's Danskammer Point Plant ("Danskammer Plant" or
"BUYER's Plant") exceeds the then-applicable delivered Current
Base Price of coal in delivered cost per million Btu's.
The ASSIGNEE will assume that three trains of approxi-
mately 10,000 tons each will be loaded for shipment each month.
Two of those trains will be Firm Tonnage and one will be
Incremental Tonnage. The BUYER must indicate to the ASSIGNEE not
later than the 22nd of the month preceding each proposed
Incremental Tonnage shipment if the then current delivered price
of oil, natural gas or spot coal to the Danskammer Plant is below
the delivered Current Base Price of coal. If such written notice
is not received by the ASSIGNEE by the 22nd then three trains
will be shipped the next month at the then Current Base Price.
In the event such a written notice is received, and the ASSIGNEE
wishes to match the then current price of oil, natural gas or
spot coal as so delivered, the ASSIGNEE must notify the BUYER of
the same in writing not later than the last working day of that
month. In the event that such notification is given then, the
coal will be shipped as scheduled, with the Incremental Tonnage
at the matched price and the Firm Tonnage at the then-Current
Base Price. If the written notice to match the price is not
received by the BUYER by the last working day of the month, the
Incremental Tonnage train will not be shipped as scheduled. The
ASSIGNEE reserves the right to re-offer any unshipped Incremental
Tonnage to the BUYER at another time in the ensuing 12 months
(commencing with the month during which the unshipped Incremental
Tonnage would otherwise have been shipped) at the then-Current
Base Price. In each such instance, BUYER will then have the
option to accept that Incremental Tonnage or permanently cancel
that Incremental Tonnage. The delivered coal cost, the delivered
oil cost, the delivered natural gas cost and the delivered spot
coal cost shall be determined as shown on Exhibit No. 1.
Section 2. Limitations on Quantities: Notwith-
standing any of the above, BUYER will not be obligated to
purchase Firm and Incremental Tonnage coal from ASSIGNEE under
this AGREEMENT if BUYER is unable to utilize such coal because
the Danskammer Plant is not in "economic dispatch". If, because
of economic reasons, the Danskammer Plant does not then require
all coal contracted for under all then-existing contracts, BUYER
shall notify ASSIGNEE in writing and BUYER will reduce the
tonnage taken from all such contract suppliers on a proportional
basis. The tonnage taken from each such contract supplier will
be in proportion to the annual Firm Tonnage in each such
contract. In the event that contract shipments are so reduced,
BUYER will take no spot coal during the period of reduction.
Following said period of reduction, BUYER will elect either to
increase shipments or to extend the Initial Term of this AGREE-
MENT until such deferred Firm and Incremental Tonnage has been
shipped in the total quantities provided for in this AGREEMENT.
The prices for the tonnage then shipped will be the prices in
effect at time of shipment. In the event the Initial Term is so
extended, the term of this AGREEMENT shall be extended for the
same number of days that the Initial Term was so extended and the
beginning and end of each Contract Year following such an
extension of the Initial Term shall be respectively set back for
the same number of days that the Initial Term was so extended and
the "Contract Year" shall be adjusted accordingly.
Section 3. Delivery Schedule Limitations: All Firm
Tonnage necessary to meet the 20,000 tons per month schedule will
be delivered before any Incremental Tonnage is delivered. Both
Firm Tonnage and Incremental Tonnage can be delivered during the
same month, but ASSIGNEE will not be obligated to deliver more
than four (4) 10,000 ton shipments of coal during any one month,
unless otherwise mutually agreed. There shall be a minimum of
seven (7) calendar days between shipment releases from the
Operations unless otherwise mutually agreed.
Section 4. Passage of Title: The coal sold and
delivered to BUYER hereunder is f.o.b. railway car at the Opera-
tions; and, title to and risk of loss of the coal supplied
hereunder shall pass to BUYER when ASSIGNEE completes loading
coal and tenders the loaded cars to the carrier for destination
to BUYER's Plant.
Section 5. Initial Quality Notification: The
parties recognize the need to know the quality of the coal prior
to receipt of the shipment at the Danskammer Plant. Therefore,
the coal shall be sampled as it is loaded into railway cars and
analyzed by an independent laboratory acceptable to BUYER and
ASSIGNEE within 48 hours after the coal is loaded, who shall
notify BUYER and ASSIGNEE by telephone, telegram, or facsimile of
the average "as received" analytical results of each shipment.
Section 6. Shipping Notice: For each shipment of
coal hereunder, ASSIGNEE shall promptly mail to BUYER's Plant and
to Financial Records Section, Central Xxxxxx Gas & Electric
Corporation, 000 Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxx 00000-0000,
a shipping notice showing weight, type of car and number of each
railway car contained in the shipment, shipping date and origin
mine.
Section 7. Railroad: Except as otherwise expressly
provided herein, ASSIGNEE shall deliver coal sold and purchased
hereunder in accordance with the contract between BUYER and
railroad and the applicable railroad tariff provisions all as
specified in Exhibit 2 - RAILROAD PROVISIONS, attached hereto and
made a part hereof. BUYER shall be responsible for providing any
applicable amendments or revisions to said railroad tariff
provisions to ASSIGNEE.
BUYER shall cooperate with ASSIGNEE in its scheduling
of work at its Operations, shall be responsible for arranging and
coordinating with the railroad (also referred to herein as
"carrier") the arrival of rail cars for loading. BUYER shall pay
carrier for all rail transportation charges for coal purchased
from ASSIGNEE under this AGREEMENT, except as provided for in the
remainder of this Section 7.
ASSIGNEE will pay all additional freight charges,
required by BUYER's rail transportation agreements or the
applicable railroad tariffs, on coal delivered hereunder that are
a result of ASSIGNEE's failure to deliver the quantity of coal as
scheduled by BUYER, in accordance with this AGREEMENT unless the
tonnage deficiency is excused by other provisions of this
AGREEMENT.
BUYER shall be responsible for payment of any and all
increased freight charges which result solely from or on account
of the coal being shipped to more than one destination.
ASSIGNEE shall pay all additional freight charges,
required by the applicable railroad tariffs or BUYER's rail
transportation agreements on coal delivered hereunder that are a
result of ASSIGNEE's failure to notify the railroad, in writing,
in accordance with the applicable railroad tariffs or BUYER's
rail transportation agreement, of ASSIGNEE's inability to make
shipment as scheduled.
ASSIGNEE shall pay all detention and switching charges
at ASSIGNEE's Operations resulting from ASSIGNEE's failure to
load and ship the coal in accordance with the applicable railroad
tariffs or BUYER's rail transportation agreement. ASSIGNEE shall
load coal so as to permit loading of 10,000-ton trains within a
24-hour period.
ASSIGNEE shall pay all charges resulting from
overloading or underloading cars in accordance with the
applicable tariffs or BUYER's rail transportation agreement.
ARTICLE III
SPECIFICATIONS & QUALITY & WEIGHT
Section 1. Origin: The coal shall be from the
Xxxxxx Xxxx Creek Seam or other such seams as approved and con-
firmed in writing by BUYER and which meets the specifications
herein. Deliveries shall originate from ASSIGNEE's Xxxxxx Mine
unless other arrangements are made and confirmed in writing with
BUYER to deliver coal from another facility.
Section 2. Quality Specifications: The quality of
coal sold and purchased hereunder shall meet the following
specifications:
ASTM
Expected Minimum Maximum Method
As Received:
Moisture % 6.1 4 10 D3173
Volatiles % 34.9 30 36 D3175
Fixed Carbon % 51 47 60 D3172
Ash % 8.0 -- 10 D3174
Btu/LB. 13,000 12,500 -- D3286
Sulphur % 0.66 0.47 0.70 D3177/4239
SO2 (LBS./MMBTU) 1.0 -- 1.1 Calculated
Grind (HGI) 52 48 60 D409-85
Xxxxxx Xxxx Creek Only 42 40 -- D409-85
Ash Fusion (I.D., F) 2,700 2,300 D1587
This coal shall be free of extraneous material and
shall have a maximum top size of two inches.
Section 3(a). BUYER's Remedies Related to Quality
Specifications: In lieu of any other remedies related to
ASSIGNEE's failure to meet the quality specifications provided
for herein, except for the price adjustments for quality provided
for in Article VII herein, BUYER shall have the rights and
remedies described in this Section 3 upon ASSIGNEE's failure to
deliver coal in accordance with the specifications set forth in
Sections 2 and 3 of this Article III.
(b). BUYER's Right to Reject Individual
Shipments: BUYER's ability to use the coal being dependent on
the coal meeting the specifications set forth above, it is agreed
that BUYER shall have the right to reject any and all shipments
which fail to meet any of the individual shipment rejection
limits shown below:
INDIVIDUAL SHIPMENT REJECTION LIMITS
Sulphur 0.7% Maximum
Volatiles 25% Minimum
Ash Fusion (I.D.) 2,300 F Minimum
Grind (HGI) 47 Minimum
Xxxxxx Xxxx Creek Only 39 Minimum
Btu 12,500 Minimum
SO2 (LBS./MMBTU) 1.1 Maximum
ASSIGNEE shall pay all freight, diversion, demurrage,
testing and other expenses in connection with any such rejected
shipment, or shipment found by ASSIGNEE to be non-conforming,
unless such shipment is accepted by BUYER. Furthermore, ASSIGNEE
certifies that it will not make any shipment shown by sampling
and analyses to exceed the Maximum allowable Sulphur levels or to
be below the Minimum acceptable Btu level.
(c). BUYER's Right to Suspend or Have Price
Adjustments For Moisture/Ash Limitations: In addition to the
limits for individual shipments shown in Section 3(b) above, the
delivered coal must meet the following weighted average specifi-
cations for each six (6) consecutive shipments (first through
sixth, seventh through twelfth, thirteenth through eighteenth,
and so on):
SIX CONSECUTIVE SHIPMENTS LIMITS
Ash 10% Maximum
Moisture 10% Maximum
If the weighted average ash or moisture quality of coal
in a series of six (6) consecutive shipments delivered hereunder,
as determined by sampling and analysis, does not meet the above
Six Consecutive Shipments Limits, BUYER shall have the right to
suspend further shipments under this AGREEMENT or to have the
Current Base Price for such coal adjusted all in accordance with
the following:
(i) BUYER's Right to Suspend: In the event
six consecutive shipments do not so meet said Six Consecutive
Shipments Limits, BUYER shall thereupon have the right to suspend
shipments under this AGREEMENT until ASSIGNEE has furnished
reasonable assurance to BUYER in writing that the deviation from
such limits or specifications can and will be corrected. If
ASSIGNEE fails to promptly furnish reasonable assurance that such
correction can and will be made within 60 days after BUYER's
suspension of shipments (or within such longer period as shall be
reasonably requested by ASSIGNEE and agreed to in writing by
BUYER), or if corrections are not made within such 60-day period
(or such longer period agreed to by BUYER), BUYER shall have the
right at any time thereafter to terminate this AGREEMENT by
giving written notice of such termination to ASSIGNEE, and
thereupon BUYER shall stand discharged of any and all further
obligations or liability under the terms of this AGREEMENT or as
a result of such termination without waiver of any rights that
BUYER may have under this AGREEMENT. If BUYER, after having
suspended shipments for a period of 180 days, has not elected to
terminate this AGREEMENT, then ASSIGNEE shall have the option of
terminating this AGREEMENT by giving BUYER written notice of such
termination within 60 days after the expiration of such 180-day
period;
(ii) BUYER's Right to Price Adjustment: In
the event six consecutive shipments do not meet the Six Consecu-
tive Shipments Limits, as an alternative to suspending shipments
as provided for above, BUYER may cause ASSIGNEE to adjust Current
Base Price for such coal (in addition to any adjustment for
quality as provided in Article VII) for such failure of the
delivered coal to meet the Six Consecutive Shipments Limits, as
follows:
(1) For each one percent the ash of such
coal exceeds the Six Consecutive Shipments Limits,
the Current Base Price, adjusted, to be paid
ASSIGNEE by BUYER for such shipment shall be
reduced by one dollar ($1.00), fractions pro rata;
and also
(2) For each one percent the moisture of
such coal exceeds the Six Consecutive Shipments
Limits, the Current Base Price, adjusted, to be
paid ASSIGNEE by BUYER for such shipments shall be
reduced by one dollar ($1.00), fractions pro rata.
The analyses obtained in accordance with Article ___,
with respect to moisture and ash, shall be the analyses upon
which rejection of shipments, as provided in Section 3(b) above
and application of Current Base Price adjustments or suspension
of shipments, as provided in this Section 3(c), is based.
Sampling and analyses shall be in accordance with ASTM standards
and tolerances.
(iii) Effect of Termination: In the event
that BUYER exercises its right to terminate this AGREEMENT
pursuant to above Section 3(c)(i), or ASSIGNEE exercises its
right to terminate this AGREEMENT under said Section, neither
party shall have any further obligations or liabilities hereunder
from and after the effective date of such termination, provided,
however, that such termination shall not affect the rights or
obligations of the parties which accrued prior to the effective
date of termination.
(d). Grind Limitations: In addition to the
limits for individual shipments shown in Section 3(b) above and
the Limitations for Six Consecutive Shipments shown in Section
3(c) above, the delivered coal must meet the following weighted
average specifications for each three consecutive shipments
(first through third, fourth through sixth, seventh through
ninth, and so on):
THREE CONSECUTIVE SHIPMENTS LIMITS
Grind (HGI) 48 Minimum
Xxxxxx Xxxx Creek Only 40 Minimum
If the average grind of coal in a series of three (3)
consecutive shipments delivered hereunder, as determined by
sampling and analysis, does not meet the above Three Consecutive
Shipments Limits, BUYER shall have the right to reject any of the
immediately following three (3) consecutive shipments in the
event that such shipment does not meet said Minimum Grind (HGI)
limitation. The basis of any such rejection shall be the
averaged results of 3 different independent laboratories as
provided for in Article ___.
Section 4. ASSIGNEE's Duty of Care: ASSIGNEE
shall, at all times, exercise reasonable care and diligence in
its efforts to ship to BUYER coal which conforms to the
specifications set forth in above Section 2 and 3. Nothing in
this Article III shall be construed to relieve ASSIGNEE of its
obligation to conduct its mining and coal cleaning operations in
a competent manner, consistent with good industry practices, so
as to produce coal which will meet the specifications set forth
above.
Section 5. Weight Measurement: The weight of coal
sold hereunder shall be determined on BUYER's scales at the
Danskammer Plant, which scales shall be maintained and certified
in accordance with the provisions of Exhibit No. 3. If such
scales are inoperative at the time of any coal delivery, the
weight of coal shall be the weight upon which BUYER bases its
payment to the railroad.
ARTICLE IV
PAYMENT
Section 1. Price: For coal delivered and accepted,
BUYER shall pay ASSIGNEE the Current Base Price herein provided
by cash or check in United States Funds for all coal delivered,
and accepted hereunder.
Section 2. Submission of Weight to ASSIGNEE: BUYER
shall submit to ASSIGNEE the certified weights within five (5)
working days after the certified weights become available.
Section 3: Invoice: Thereafter, an invoice for any
adjustments for quality as hereinafter defined, and all coal
shipped based on certified weights will be submitted by the
ASSIGNEE to the BUYER. The coal shipped will be invoiced at the
Current Base Price (hereinafter defined).
Section 4: Payment: BUYER shall make payment to
ASSIGNEE within thirty (30) calendar days from shipment of the
coal from the Operations. There shall be no discounts.
Payment to ASSIGNEE shall be made by check, as follows:
Xxxxxx Coal Sales Company
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxxx 00000
The above address may be changed by ASSIGNEE upon written notice
to BUYER.
ARTICLE V
CURRENT BASE PRICE
Section 1: The Current Base Price for Firm Tonnage
and Incremental Tonnage for the Contract Year 1996 shall be
$xx.xx (U.S. Dollars) per net ton, except as otherwise provided
in THIS THIRD AMENDMENT, f.o.b. railcar at ASSIGNEE's loading
facility.
Section 2. The Current Base Price shall be subject
to adjustment for BTU Value and Ash Value as provided for herein.
ARTICLE VII
ADJUSTMENT IN CURRENT BASE PRICE FOR QUALITY
Section 1. BTU Value: The Current Base Price and
matching incremental price to be paid to ASSIGNEE by BUYER is
based upon coal with 13,000 BTU/LB heat content (BTU Value) for
each ton of coal in each shipment. The BTU Value of the coal
sold hereunder may vary, and the price for such coal shall be
adjusted to compensate for variations in BTU Value, as described
below.
Section 2. Adjustments for BTU Value: If the BTU
Value of the coal shipment is between 12,850 BTU/LB and 13,150
BTU/LB, there will be no adjustment for BTU Value variation. If
the BTU Value is less than 12,850 BTU/LB or greater than 13,150
BTU/LB, the price for a shipment shall be adjusted, based upon
variations from the 13,000 BTU/LB BTU Value, as follows:
(a) For a coal shipment with a BTU Value greater than
13,150 BTU/LB, a premium shall be paid by BUYER to ASSIGNEE at
the rate of xxcent/100 BTU/LB, fractions pro rata; or
(b) For a coal shipment with a BTU Value less than
12,850 BTU/LB, a penalty shall be deducted from the Current Base
Price at the rate of xxcent/100 BTU/LB, fractions pro rata.
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS
BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
(c) If the weighted average BTU Value for all ship-
ments shipped in any one month, excluding the BTU Value on ship-
ments on which a penalty was previously applied, is less than
12,900 BTU/LB, then the Current Base Price as applied to such
shipments, excluding shipments on which a penalty was previously
applied, shall be retroactively reduced at the rate of xxcent/100
BTU/LB, fractions pro rata.
Exhibit No. 5 illustrates adjustments for BTU Value to
the Current Base Price.
Section 3. Ash Value: The Current Base Price and
matching incremental price to be paid to ASSIGNEE by BUYER is
based upon coal with an ash content ("Ash Value") of eight
percent (8%) by weight of the "as received" analysis for the coal
in each shipment. The Ash Value of the coal sold hereunder may
vary and the price shall be adjusted to compensate for variations
as described below.
Section 4. Adjustment for Ash Value: If the Ash
Value of the coal shipment is between 7.5% and 8.5%, there will
be no adjustment for ash content. If the Ash Value is less than
7.5% or greater than 8.5% the price for a shipment shall be
adjusted, based upon variations from 8% as follows:
(a) For a coal shipment with an Ash Value less than
7.5%, a premium of $x.xxx per ton shall be paid to ASSIGNEE for
each .1% Ash Value variation below 8.0%.
(b) For a coal shipment with an Ash Value greater than
8.5%, a penalty of $x.xxx shall be deducted from the price for
each .1% Ash Value variation in excess of 8.0%."
2. Commencing on January 1, 1996 and continuing for
the remaining term of this AGREEMENT, Articles II, III, IV, V and
VII of the AGREEMENT shall respectively read as they are set
forth in the AGREEMENT and not how they are set forth in the
SECOND, THIRD or FOURTH AMENDMENT unless otherwise agreed upon by
the parties hereto.
3. For only the Contract Year occurring during the
Calendar Year 1996, Article VI (Base Price Adjustment) shall have
no force and effect and, for that Contract Year, be deemed
deleted in its entirety from the AGREEMENT.
4. Except as may be amended herein, all terms and
conditions of the AGREEMENT shall remain in full force and effect
as of the date of this FOURTH AMENDMENT. The addresses of the
parties hereto are as set forth in the AGREEMENT.
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS
BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
5. All terms defined in the AGREEMENT shall have the
same meaning in the FOURTH AMENDMENT unless otherwise defined
herein.
6. For only the Contract Year occurring during the
Calendar Year 1996, Exhibit 1 (Calculations of Delivered Fuel
Costs) and Exhibit 5 (Examples of Adjustments to Current Base
Prices for Quality) to the AGREEMENT shall be respectively
amended in their entirety to read in the form attached to the
FOURTH AMENDMENT.
7. For only the contract year occurring during the
Calendar Year 1996, Exhibit 6, attached hereto, shall be an
Exhibit to the AGREEMENT.
IN WITNESS WHEREOF, each party hereto has caused this
AGREEMENT to be executed in its behalf by its proper officer
thereunder duly authorized, all as of the day and year first
above written.
BUYER: CENTRAL XXXXXX GAS & ELECTRIC CORPORATION
BY (SGD.) XXXX X. XXXXX
Xxxx X. Xxxxx
ITS President and Chief Operating Officer
ASSIGNEE: XXXXXX COAL SALES COMPANY
BY (SGD.) XXX XXXXXXX
Xxx XxXxxxx
ITS Senior Vice President
