EXHIBIT 10.2
* TEXT OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83
AND 240.24b-2
COAL CONTRACT
THIS CONTRACT made and entered into this 6th day of October, 2004, by
and between National Coal Corporation, a Tennessee corporation with its
principal office at 0000 Xxxxxx Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx 00000,
hereinafter called "SELLER" and East Kentucky Power Cooperative, Incorporated, a
Kentucky corporation with its principal office at 0000 Xxxxxxxxx Xxxx, P. O. Xxx
000, Xxxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxxx 00000-0000, hereinafter called "BUYER."
W I T N E S S E T H
THAT for and in consideration of the mutual covenants contained herein,
SELLER agrees to sell to BUYER and BUYER agrees to purchase from SELLER, coal
for BUYER'S Xxxxxx Power Station, Somerset, Kentucky, under the following terms
and conditions:
1. QUANTITY AND TERM
(a) SELLER does hereby agree to sell to BUYER and BUYER agrees to
purchase from SELLER, * (*) tons of coal (the total contract tonnage) over four
(4) years at a rate of * (*) tons of coal per year (the "base annual tonnage
amount"), subject to Section 5 (d) and 7 herein.
(b) Monthly deliveries shall commence on October 6, 2004, and
continue through September 30, 2008, for a total contract term of four (4)
years.
2. COAL PRICE
The base price for all coal supplied hereunder meeting the quality
specifications contained herein on an "as received" basis as described in
Section 4 (f) and f.o.b. stockpile or unloading facilities at BUYER'S Xxxxxx
Power Station shall be * (*) per million Btu. The base price shall be subject to
price adjustments set forth in Sections 4 (c) and 4 (d).
EXAMPLE: The base price of coal with a heat content of 12,000
Btu/lb. would be $* per ton. For coal with a heat
content of 12,300 Btu/lb., it would be $* per ton.
3. COAL PRICE ADJUSTMENTS
The base price of coal under Section 2 of this Contract shall be fixed
for * with a reopener period as provided below:
(a) *.
(b) The parties hereto agree that the price quoted herein for
coal, in Sections 2, 4 (c), and 4 (d) include the cost of complying with all
existing federal, state, or local laws or regulations as of September 30, 2004.
In the event that any federal, state, or local taxes, fees, special assessments,
or similar levies, directly relating to the mining, processing, or
transportation of coal, but specifically NOT including variable compliance costs
of laws or regulations such as, but not limited to, those in the Federal Surface
Mining Control and Reclamation Act of 1977, does result in a change in costs to
SELLER, the following procedures shall be used for adjustments: SELLER shall
submit any requests for price adjustment under this Section 3 (b) to BUYER prior
to the xxxx XXXXXX desires such price adjustment to become effective, to allow
BUYER a reasonable time in which to review such requests. In the event that
SELLER is unable, using reasonable business care to calculate the exact cost
increase claimed as a price adjustment hereunder, prior to the desired effective
date, SELLER shall submit its best reasonable estimate of such cost increase to
BUYER for review and information purposes, subject to the submission of a final
cost increase schedule. Failure of SELLER to submit a cost increase schedule or
estimate to BUYER within a reasonable time prior to the desired effective date
for a requested price adjustment hereunder shall constitute a waiver of SELLER'S
right to request such price adjustment for any shipments made prior to SELLER'S
submission of a cost increase schedule or estimate to BUYER. Any price
adjustment hereunder shall be based only on a final schedule of cost increases
and not an estimate submitted as provided hereinabove.
SELLER shall use its best efforts and reasonable business care to
submit a final detailed breakdown of cost increases claimed as a basis for price
adjustment hereunder to BUYER as soon as the information is available. Upon the
receipt of said information, BUYER shall, at its sole option, accept or reject
the requested price adjustment.
In the event that the added cost of said taxes, fees, special
assessments, or similar levies on the mining, processing, or transportation of
coal rise to such a level that their inclusion in the price per ton of coal
delivered under this Contract would increase said price to a level materially
higher than the then-current billing price for coal under this Contract and the
delivered price of coal of comparable quality then reasonably available to
BUYER, and the parties cannot agree on an acceptable price, then BUYER shall
have the right, at its sole option, to terminate this Contract with no further
obligation
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or liability to SELLER, except in regard to payment for shipments of coal
received by BUYER prior to such termination.
In the event that any said taxes, fees, special assessments or similar
levies, whether included in the base price of coal or added to the price of coal
by escalation hereunder, are reduced and such reduction results in a cost
decrease for SELLER, BUYER will submit to SELLER a request for price adjustment
which shall include an estimate of the decreased costs, and the decreased cost
per ton of coal, at which xxxx XXXXXX, at its sole option, will accept or reject
the estimate of the decreased cost. In the event that SELLER rejects the
estimate submitted by BUYER, SELLER will submit its schedule of such decreased
costs to BUYER, which BUYER, at its sole option, will accept or reject.
In the event that a request for price adjustment under this Section 3
(b) reduces the price of coal or would not raise the price of coal sufficiently
to give BUYER the right to terminate this Contract, as provided hereinabove, and
in either event, BUYER and SELLER do not agree on the amount of the adjustment,
the parties do hereby agree to first attempt to compromise said changes in costs
and failing to do so, they will select a third and impartial representative
within ten (10) days thereafter, and the three (3) of them will then attempt to
agree upon said changes in costs, and their decision will be final and binding
on the parties to this Contract. If the two (2) parties cannot agree on a third
and impartial representative, then it is agreed that the Senior Judge of the
Eastern District of Kentucky shall select said third person, and his decision,
and the decision of the three (3) ultimate representatives, shall be binding
upon the parties to this Contract. Time being of the essence, a final decision
shall be made within three (3) months after the parties originally submit their
alleged changes in cost. Each party will bear the cost of its representative and
they shall equally share the cost of a third representative if needed.
4. QUALITY, SAMPLING, AND ANALYSIS
(a) Coal sold hereunder for the Xxxxxx Power Station shall meet
the following specifications:
HEAT CONTENT -- "as received" shall not be less than * Btu per pound,
except as provided in Section 4 (c) (I) hereinbelow.
ASH CONTENT -- "as received" shall not be more than twelve percent
(*%), except as provided in Section 4 (c) (II) hereinbelow.
MOISTURE CONTENT -- "as received" shall not be more than eight percent
(*%).
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SULFUR CONTENT -- "as received" shall not be more than the percentage
computed by the following formula:
Percent Sulfur = * *
ASH SOFTENING TEMPERATURE (REDUCING ATMOSPHERE)
Initial Deformation -- * Minimum
Softening (H=W) -- * Minimum
Softening (H=1/2W) -- * Minimum
Fluid -- * Minimum
GRIND -- Shall not be less than * (*) on a Xxxxxxxxx Scale.
SIZE AND PREPARATION -- Shall be * crushed R.O.M. coal with no
intermediate sizes removed; clean and free of impurities. The
amount of fines (*) shall not exceed * percent (*%).
(b) BUYER shall have the right, at its sole option, to reject any
coal shipment, or any portion on a truckload basis, if upon visual inspection of
such shipment, the coal is not run-of-mine having a maximum top size of 2", is
not free of impurities, has fines exceeding * percent (*%), is "hot coal," or if
BUYER believes that unloading the coal would involve an unusually hazardous
condition. When any truckload has been rejected by BUYER upon visual inspection
before unloading, SELLER shall remove such shipment immediately from BUYER'S
premises at SELLER'S expense.
It is further understood and agreed that BUYER does not waive its
rights under this Contract by receiving any shipments of coal, and acceptance
thereof shall not be implied unless BUYER fails to give SELLER written notice of
any breaches or defaults within a reasonable time after each monthly sampling
period has ended and the coal analysis has been completed.
(c) BUYER agrees to accept deliveries of coal with a heat content
of at least * Btu/lb. and/or an ash content of up to * percent (**%), subject to
the following price adjustments. The parties agree that these adjustments shall
help defray BUYER'S costs for blending and burning such lower quality coal. Such
coal deliveries, subject to the price adjustments provided in this Section 4
(c), shall be considered to conform to the contract specifications for heat
content and ash content.
I. Price Adjustment for heat content below * Btu/lb.,
but not less than * Btu/lb. on an "as received" basis:
For each 100 Btu/lb. that the heat content falls below * Btu/lb., but
does not fall below * Btu/lb., * ($*) per ton shall be deducted from
the billing price. A pro rata adjustment shall be made for any
fractional portion of such a 100 Btu/lb. deficiency in heat content.
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EXAMPLES:
ASSUME: Contract Monthly Average
Specification Analysis
Btu * *
COMPUTATION:
BTU:
* - * = * / * x $* = $* per ton.
Therefore, $* per ton would be deducted from the billing
price.
(d) BUYER reserves the right to reject any shipments of coal by
SELLER which does not meet the minimum heat content requirement of * Btu/lb.,
maximum ash content requirement of * percent (*%), or other contract
specifications contained in Section 4 (a) hereinabove. In the event that BUYER
elects to accept occasional shipments of nonconforming coal, the following price
adjustments shall apply to such shipments, as appropriate, in addition to the
price adjustments provided in Section 4 (c), hereinabove, and in addition to any
other remedies available to BUYER:
I. Price Adjustment for heat content below * Btu/lb., on
an "as received" basis:
For each * Btu/lb. that the heat content falls below *
Btu/lb., * ($*) per ton shall be deducted from the billing
price. A pro rata adjustment shall be made for any fractional
portion of such a * Btu/lb. deficiency in heat content.
II. Price Adjustment for ash content over * percent (*%)
on an "as received" basis:
For each * percent (*%) that the ash content exceeds * percent
(*%), * ($*) per ton shall be deducted from the billing price.
A pro rata adjustment shall be made for any fractional portion
of such a * percent (*%) excess in ash content.
III. Price Adjustment for sulfur content in excess of
Section 4 (a) specification on an "as received" basis:
For each * (*%) the sulfur content exceeds the Section 4 (a)
specification, * ($*) per ton shall be deducted from the
billing price. A pro rata adjustment shall be made for any
fractional portion of such a *% excess in sulfur content.
EXAMPLES:
ASSUME: Contract Monthly Average
Specification Analysis
Btu * *
Ash * *
Sulfur * (1) *
(1) Based on * Btu/lb. "as received" in this example.
COMPUTATION:
BTU:
* - * = * / * x $* = $* per ton.
* - * = * / * x $*= $* per ton.
Therefore, $* per ton would be deducted from the billing
price.
ASH:
* - * = * x $* = $* per ton.
Therefore, $* per ton would be deducted from the billing
price.
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SULFUR:
* - * = * / * x $* = $* per ton.
Therefore, $* per ton would be deducted from the billing
price.
(e) Price Adjustment for sulfur content lower than Section 4 (a)
specification on an "as received" basis:
Effective on October 6, 2004, for each * (*%) the sulfur
content is lower than Section 4 (a) specification, * ($*) per
ton shall be added to the billing price. A pro rata adjustment
shall be made for any fractional portion of such a *% lower in
sulfur content.
ASSUME: Contract Monthly Average
Specification Analysis
Btu * *
Ash * *
Sulfur * (1) *
(1) Based on * Btu/lb. "as received" in this example.
COMPUTATION:
SULFUR:
* - * = * / * x $* = $** per ton.
Therefore, $* per ton would be added to the billing price.
Each calendar quarter beginning with January 1, 2005, the sulfur
dioxide allowance market will be reviewed. If the market price of sulfur dioxide
allowances falls below * ($*) per ton, the sulfur premium of $* per ton shall be
calculated quarterly as follows:
The market price of SO2 allowances shall be determined by adding
together the SO2 market price as obtained from Cantor Xxxxxxxxxx and
Evolution Markets for the second month of the preceding calendar
quarter and dividing by two. This average SO2 allowance price shall be
deemed to be the market price for SO2 allowances.
The SO2 allowance price will be multiplied by a conversion rate of *
(*) and divided by 100 to arrive at a "sulfur cost" per one percent
sulfur. The sulfur cost will then be divided by ten (10) to arrive at a
"sulfur price" per one-tenth percent (.1%) sulfur. The new premium will
be * of this sulfur price per * percent. The new premium will be
rounded off to the nearest cent.
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EXAMPLE:
Calculation for the quarter beginning January 1, 2005:
Cantor Xxxxxxxxxx SO2 allowance cost--November 2004................$223
Evolution Markets SO2 allowance cost--November 2004................$234
223 + 234 = 457 / 2 = 228.5--SO2 Market Price
* x * = * / 100 = *--Sulfur Cost per one percent sulfur
* / 10 = *--Sulfur price per one-tenth percent sulfur
* / * = $* rounded off to $* per ton per one-tenth percent sulfur
content.
(f) For the purpose of computing payment for coal subject to price
adjustment under Sections 4 (c), 4 (d), or 4 (e), the heat, ash, and sulfur
contents of the coal "as received" shall be deemed to be the monthly weighted
composite average value of the heat, ash, and sulfur contents as defined and
computed in Subsection (i) of this Section 4. BUYER and SELLER agree that the
application of the price reductions provided in Section 4 (d) shall not be
considered liquidated damages but is intended to partially defray BUYER'S
additional costs for blending and burning said lower quality coal; shall not
constitute a waiver by BUYER of any of the terms of this Contract; shall not
excuse noncompliance with the contract specifications by any shipment by SELLER;
and shall not affect BUYER'S right to exercise any of its remedies provided
hereunder or at law for unsatisfactory performance of the contract by SELLER or
reject any coal received that fails to meet the requirements of Section 4 (a)
herein or that BUYER has a right to reject pursuant to other provisions of this
Contract.
(g) If the coal shipped to BUYER fails to meet a minimum heat
content requirement of 11,500 Btu per pound, a maximum ash content of * percent
(*%), or any of the other requirements set forth in Subsection (a) of this
Section 4, for two (2) consecutive weeks based on the analyses made during such
time, except for the sulfur requirements which are discussed further
hereinbelow, or if SELLER fails to deliver coal in scheduled amounts for two (2)
consecutive weeks without adequate excuse under Section 7, and notice thereof,
BUYER shall have the right, upon giving SELLER written notice, to refuse to
accept further deliveries until SELLER has provided assurance, in the opinion of
BUYER, that all shipments of coal delivered thereafter will conform to each and
every requirement set forth in Section 4 (a). If SELLER fails to furnish BUYER
with such assurance within thirty (30) days after written notice is sent to
SELLER, BUYER may, at its sole option, treat this Contract as materially
breached by SELLER. It being understood and agreed, of course, that the
aforesaid assurance procedure is not an exclusive remedy afforded BUYER, but it
is optional and cumulative and in addition to other rights and remedies of BUYER
provided herein and by law.
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NOTWITHSTANDING ANY OTHER PROVISIONS CONTAINED HEREIN TO THE CONTRARY,
OR OTHERWISE, it is understood and agreed that BUYER faces severe penalties by
the Environmental Protection Agency, and others, in the event of its use of coal
with a sulfur content of more than the percentages noted in Section 4 (a)
hereinabove; and therefore, BUYER constantly monitors and tests its coal to
assure itself of sulfur compliance, and it cannot tolerate the receipt of any
substantial amount of coal which does not meet such specifications. Therefore,
in the event that BUYER'S testing procedures reveal that ANY coal delivered
under this Contract fails to meet the above stated sulfur requirements, then
BUYER may suspend shipments until and unless within thirty (30) days, SELLER
assures BUYER of future and continuous compliance with said sulfur requirements.
If SELLER provides assurance of future compliance within this thirty (30) day
period that is satisfactory to BUYER, then deliveries may resume under the terms
of this Contract. If, however, SELLER fails to provide BUYER with adequate
assurance of future compliance, BUYER shall have the right, at its sole option,
to declare SELLER in material breach of this Contract, or to allow SELLER up to
an additional sixty (60) days to provide adequate assurance of such future
sulfur compliance. In the event that BUYER allows an additional period of time
for the furnishing of such assurance, SELLER shall either make arrangements for
delivery of adequate quantities of coal meeting such contract specification as
provided in Section 4 (a), hereinabove, at the then-current contract price, to
meet SELLER'S contract commitment; or SELLER shall reimburse BUYER for any
amount that replacement coal purchased by BUYER, in amounts not to exceed
scheduled quantities under this Contract, exceeds the then-current contract
price. Such reimbursement shall be made by SELLER to BUYER by the 20th day of
the month following the receipt of such replacement coal. If SELLER does not
provide adequate assurance of future compliance by the end of any such extended
time period, BUYER may, at its sole option, declare SELLER in material breach of
this Contract. This assurance procedure is not an exclusive remedy for such
noncompliance, but is optional and cumulative and in addition to other rights
and remedies of BUYER provided herein or at law.
(h) For purposes of determining the price and quality of all coal
delivered under this Contract, except for the purposes of Section 4 (g) and for
coal rejected by BUYER by visual inspection before unloading, including the
moisture, ash, sulfur, and heat content requirements, the analysis of the coal
shall be deemed to be, and is, the average monthly values of the moisture, ash,
sulfur, and heat content as defined and computed in Subsection (i) of this
Section 4.
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(i) The average monthly values of the moisture, ash, sulfur, and
heat content of the coal "as received" shall be the weighted average moisture,
ash, sulfur, and heat content of all composite samples collected during the
Sample Period. (As example of this weighted average, at present, samples are
taken from each truckload delivered and an analysis is made of all composite
samples taken in a given week. These weekly analyses are then weighted according
to the quantities delivered in each week, and a monthly weighted average figure
is computed. This procedure could change, however, but the weighted average
approach will be retained.) The Sample Period shall be a one (1) month interval
during which period of time several samples, the exact number being at the
BUYER'S option, shall be collected and used for the aforesaid sampling purposes.
The collection, preparation, and analysis of coal conducted in determining the
average monthly values of the moisture, ash, sulfur, and heat content of the
coal shall be performed by BUYER from samples taken at BUYER'S facilities and in
accordance with the "Coal Sampling and Analysis Procedures," Xxxxxx Power
Station, dated July 20, 1978, and subsequent amendments to those procedures,
copies of which are available from BUYER upon request, and all tests shall be
conducted at BUYER'S expense. SELLER shall be sent a copy of any changes in
procedures for sampling and analysis. SELLER, at its expense, shall have the
right upon written notice to BUYER, to have a representative present when
samples are taken, prepared, and analyzed in BUYER'S laboratory. Of each
composite sample prepared for analysis, a split will be prepared for SELLER and
retained by BUYER for at least fourteen (14) days after the analysis results of
that sample have been sent to SELLER. Anytime within this fourteen (14) day
period, this split shall be made available to SELLER upon request.
5. DELIVERY AND WEIGHING
(a) The prices for all of said coal are as stated in Sections 2, 4
(c), 4 (d), and 4 (e) of this Contract; and therefore, the total cost and sole
responsibility for the delivery of all of said coal to BUYER'S stockpile or
unloading facilities at Xxxxxx Power Station shall be and is the sole
responsibility of SELLER.
(b) SELLER shall make all deliveries by truck to BUYER'S Xxxxxx Power
Station. The weight shall be determined and computed by the scales at BUYER'S
Xxxxxx Power Station. If said scales are not available temporarily, then until
such time as the scales are available, the quantity of coal delivered by truck
shall be determined on the basis of average truck weights of previous shipments
of coal received from SELLER and weighed by BUYER. It being clearly understood
by the parties that BUYER is purchasing coal from several different suppliers,
and, therefore, SELLER understands and
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agrees that all deliveries shall be made only on Monday through Friday during
receiving hours, which will be determined by BUYER, and in the daily amounts
designated and determined by BUYER from time to time at its sole option.
(c) The monthly delivery rates as provided for in Section 1 shall
not be exceeded in any month, nor shall the term of this Contract be extended in
order to make up for deficiencies in the delivery schedule caused by SELLER,
except at the sole option of BUYER.
(d) SELLER agrees to defend, indemnify, and hold harmless BUYER,
its directors, officers, employees, and agents, from any and all damage, loss,
claim, demand, suit, liability, penalty, or forfeiture of every kind and
nature--including, but not limited to, costs and expenses of defending against
the same and payment of any settlement or judgment, therefore, by reason of (a)
injuries or deaths to persons, (b) damages to or destructions of properties, (c)
pollutions, contaminations of, or other adverse effects on the environment, or
(d) violations of governmental laws, regulations, or orders--whether suffered
directly by BUYER itself or indirectly by reason of claims, demands, or suits
against it by third parties, resulting or alleged to have resulted from acts or
omissions of SELLER, its employees, agents, subcontractors, or other
representatives or from their presence on the premises of BUYER or otherwise
from performance of this Contract.
(e) SELLER shall provide and maintain, and shall require any and
all subcontractors to provide and maintain, with an insurance company authorized
to do business in the Commonwealth of Kentucky and otherwise acceptable to BUYER
the following insurance:
(i) Workers Compensation and Employer's Liability Policy: Prior to
the start of the Work, SELLER shall submit evidence of SELLER'S Workers'
Compensation and Employer's Liability Insurance Policy, and each such policy
shall include:
1. Workers' Compensation (statutory benefits coverage)
Insurance accordance with the laws of the Commonwealth of Kentucky
2. Employer's Liability with a minimum limit of One
Million Dollars ($1,000,000) with respect to Bodily Injury Each
Accident/($1,000,000), Bodily Injury by Disease Each
Employee/($1,000,000), and Bodily Injury by Disease Policy Limit.
3. United States Longshoremen and Harbor Workers Act
Endorsement (WC 00 01 06), if exposures warrant.
4. Maritime "Xxxxx Act" Endorsement (WC 00 02 01); if
exposures warrant.
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5. Federal Employer's Liability Act Endorsement "FELA"
(WC 00 01 04), if exposures warrant.
(ii) Commercial General Liability Policy: Prior to the start of
Work, SELLER shall provide evidence of SELLER'S Policy providing Commercial
General Liability Insurance, with combined single minimum limit for bodily
injury and property damage of One Million Dollars ($1,000,000) each Occurrence,
Two Million Dollars ($2,000,000) General Aggregate, and the following coverage:
1. Coverage for premises and operations, including Work
let or sublet.
2. No exclusion of coverage for Blanket Contractual
Liability to the extent covered by the policy against liability assumed
by SELLER under this Contract.
3. No exclusion for Broad Form Property Damage hazard.
4. Said policy shall name BUYER as an Additional Insured
to the extent necessary to fulfill SELLER'S indemnity obligations under
Section 5 (d), with SELLER'S policy deemed to be primary.
5. Said policy shall be endorsed to provide that the
underwriter(s) have waived their Rights of Recovery Against Others
(subrogation) against BUYER and BUYER'S insurance carrier(s).
6. Coverage shall be amended to provide for Aggregate
Limit of Liability at each project or jobsite.
7. Should policy contain a deductible clause for bodily
injury or property damage liability, said deductible shall be shown on
the Certificate of Insurance, and SELLER'S carrier shall agree to pay
any such claims "first dollar" and then recover the deductible amount
from SELLER.
(iii) Commercial Automobile Liability Insurance Policy: Prior to the
start of Work, SELLER shall provide evidence of SELLER'S Commercial Automobile
Liability Insurance Covering the use of all owned, non-owned, and hired
vehicles, with a minimum combined single limit for bodily injury and property
damage of One Million Dollars ($1,000,000) each Accident with respect to
SELLER'S vehicles assigned to or used in performance of Work under this
Contract. Said policy shall name BUYER as an Additional Insured to the extent
necessary to fulfill SELLER'S indemnity obligations under Section 5 (d) with
said policy designated to be primary. Said policy shall include an endorsement
providing that the underwriter(s) have waived their Rights of Recovery Against
Others (subrogation) against BUYER and BUYER'S insurance carrier(s).
(iv) The above policies to be provided by SELLER shall be written
by companies satisfactory to BUYER or having a Best Rating of not less than
A--("Excellent"). These policies shall not be materially changed or cancelled
except with a thirty-day written
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notice to BUYER from the SELLER and the Insurance Carrier. Evidence of coverage,
notification of cancellation, or other changes shall be mailed to:
East Kentucky Power Cooperative, Inc.
ATTN: Finance & Risk Management
P. O. Xxx 000
Xxxxxxxxxx, XX 00000-0000
BUYER shall not be obligated to review any of SELLER'S Certificates of
Insurance, insurance policies or endorsements, or to advise SELLER of any
deficiencies in such documents. Minimum limits and coverage required under this
Article should not be construed to necessarily be adequate for SELLER'S own
insurance and risk management needs. Any receipts of such documents or their
review by BUYER shall not relieve SELLER from or be deemed a waiver of BUYER'S
rights to insist on strict fulfillment of SELLER'S obligations under the
Contract.
BUYER reserves the right to request and receive a summary of coverage
of any of the above policies or endorsements. SELLER shall provide notice of any
accidents or claims at the Work site to BUYER'S Finance & Risk Management, at
the above address, and BUYER'S plant authorized representative.
6. PAYMENT AND NOTICE
(a) Each Friday EKPC will make a payment of * per ton for coal
delivered during the previous week. The balance owed for deliveries during a
calendar month will be payable by the 20th of the month following the calendar
month in which the coal was delivered.
All said payments shall be made payable to National Coal Corporation,
and shall be mailed to SELLER at 0000 Xxxxxx Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx
00000, unless designated otherwise by SELLER in writing to BUYER.
(b) All notices required or permitted to be given hereunder shall
be in writing and shall be deemed properly given if mailed to the proper party
at the following addresses:
BUYER: EAST KENTUCKY POWER COOPERATIVE, INC.
0000 XXXXXXXXX XXXX
P. O. XXX 000
XXXXXXXXXX, XXXXXXXX 00000-0000
SELLER: NATIONAL COAL CORPORATION
0000 XXXXXX XXXXXXXX XXXX
XXXXXXXXX, XXXXXXXXX 00000
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7. INTERRUPTION OF OPERATION--FORCE MAJEURE
It is specifically understood and agreed that the obligations of both
parties under this Contract are subject to riots, strikes, or Acts of God that
directly affect the operations of either of said parties. In the event of such
an occurrence, then said affected party shall be excused from performance of
this Contract, but only for such time as said occurrence is in effect, and after
said occurrence has ended or been resolved, then both parties shall be fully
bound to perform under the terms of this Contract for the duration of this
Contract, except that any deficiencies in the production or sale of coal
hereunder caused by force majeure will only be made up by mutual consent of the
parties, nor will the term of this agreement be extended by force majeure unless
the parties so agree. No other acts or events shall excuse either party from
full performance of this Contract except as may be stated under the terms of
this Contract.
"Force Majeure" as used herein shall mean a cause beyond the control of
SELLER or BUYER, as the case may be, whether foreseen or unforeseen, which
wholly or materially prevents the mining, loading, or delivery of coal at or
from the property, or receiving, transporting or delivery of same, or the
unloading, storing, or burning of coal by BUYER at its destination and which the
party claiming force majeure could not have prevented with the exercise of
reasonable prudence. Examples (without limitations) of force majeure, but only
if beyond the control of SELLER or BUYER, as the case may be, are the following:
Acts of God; acts of the public enemy; insurrections; riots,
strikes; labor disputes; shortage of supplies; fires, explosions;
floods; breakdowns of or damage to plants, mine equipment or
facilities; interruptions to or contingencies of transportation;
embargoes; orders or acts of civil or military authority.
Malfunctions of computer hardware, software, or any type of
equipment resulting from so-called "Year 2000 compliance"
problems that could reasonably be foreseen and were within a
non-performing party's ability to prevent or correct, shall not
be considered to be force majeure events that excuse
non-performance by BUYER or SELLER hereunder.
If because of force majeure either BUYER or SELLER are unable to carry
out their obligation under this Agreement, and if such party promptly gives the
other party hereto written notice of such force majeure, the obligations and
liabilities of the party giving such notices and the corresponding obligations
of the other party shall be suspended to the extent made necessary by and during
the continuance of such force majeure, provided, however, that the disabling
effects of such force majeure shall be eliminated as soon as and to the extent
practicable. During any period when BUYER asserts a force majeure condition and
said condition results in a reduction of coal deliveries, BUYER shall prorate
deliveries of coal meeting the specifications
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contained in Section 4 (a) herein among its suppliers based on contractual
commitments.
8. CHANGES IN LEGISLATION
It is fully contemplated by both parties that BUYER is purchasing said
coal for the primary purpose of using it as fuel for the generation and
production of electrical power under present governmental standards and
regulations, and it is understood and agreed that in the event any federal,
state, or local law, regulation, or standard has been or is enacted that would
prohibit or make commercially uneconomical BUYER'S purchase or use in its Xxxxxx
Power Station of the grade or quality of coal hereinbefore specified for such
purpose, such as stricter or relaxed environmental quality standards, then all
obligations under this Contract by BUYER to use and SELLER to sell the said
prohibitive grade or quality of coal will be discharged and excused on the date
specified in said law, regulation, or standard. However, said parties will be
fully bound and legally obligated to perform under the exact terms and
conditions of this Contract up and until said date. It is also understood that
in the event that during the term of this Contract there is any federal, state,
or local law, regulation, or standard enacted which prevents or severely
penalizes SELLER from mining, removing, and delivering coal to BUYER, other than
the aforesaid taxes, fees, special assessments, or similar levies for which
escalation is provided for in Section 3 herein, and SELLER is unable to correct
or modify such condition without unreasonable expense, then SELLER and BUYER
may, upon the effective date specified in such legislation or regulation, be
discharged and excused from the respective obligations under this Contract to
sell and purchase coal.
9. BREACH OF CONTRACT
It is fully understood and agreed that a material breach of contract
shall specifically include, but is not specifically limited to: unjustified
nonpayment by BUYER, failure by SELLER to provide coal in the quantities or
meeting the specifications stated in this Contract, violation by SELLER of the
provisions of Section 10, or the insolvency, bankruptcy, or assignment for the
benefit of creditors of either party.
10. SECURITY FOR PERFORMANCE
To assure, in part, performance under this Contract, by no later than
October 6, 2004, SELLER shall provide BUYER with a * Dollar ($*) Performance
Bond from a surety which is approved by BUYER and in a form acceptable to BUYER.
Said bond shall be paid and delivered to BUYER in the event of default or
material breach of this
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Contract by SELLER or the insolvency or bankruptcy of SELLER. It is understood
and agreed by the parties, however, that said security does not represent
"liquidated damages," but it is additional security from SELLER to BUYER in the
event of a default or breach of this contract by SELLER.
11. WAIVER OF BREACH AND REMEDIES
No waiver of a breach of this contract shall be construed or held to be
a waiver of subsequent or any other breaches. All remedies afforded under this
Contract shall be cumulative and in addition to every remedy provided by law.
12. NON-ASSIGNABILITY
This Contract is personal as between BUYER and SELLER, and except that,
after prior written notice to the other party, BUYER may assign its rights under
this Contract only to the Rural Utilities Service, rights or obligations under
this Contract are otherwise neither assignable nor transferable except by the
written consent of said parties, which consent shall not be unreasonably
withheld.
13. FAIR COMPETITIVE BIDDING
This Contract has been awarded to SELLER pursuant to a fair and
confidential competitive bidding process. By entering this Contract, SELLER
represents and warrants that it did not promise or deliver anything of
significant value to, or solicit or receive any confidential competitive bidding
information regarding this Contract from, any officer, director, agent or
employee of BUYER, or any member of their families. BUYER shall have the right
to terminate this Agreement should it determine that this representation of
SELLER is false.
14. CAPTIONS
The captions to sections hereof are for convenience only and shall not
be considered in construing the intent of the parties.
15. APPLICABLE LAW
This Contract shall be construed under the laws of the Commonwealth of
Kentucky, and it is agreed that any disputes that may arise under this Contract
between the parties that culminates in litigation, shall be instituted and tried
in Xxxxx County, Kentucky.
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16. NONDISCRIMINATION
This Contract is subject to the provisions of Sections 1 through 7 of
Section 202, SubPart B, of Presidential Executive Order 11246, September 24,
1965, which is hereby incorporated by reference and made a part of this
Contract.
17. ENTIRE AGREEMENT
This instrument contains the entire contract between the parties, and
there are no representations, understandings, or agreements, oral or written,
which are not included or expressly referred to herein. This Contract cannot be
changed except by duly authorized representatives of all parties in writing.
IN TESTIMONY WHEREOF, WITNESS the signatures of the undersigned, on the
date first above written, in triplicate originals, which are executed in Xxxxx
County, Kentucky, for and on behalf of said parties and pursuant to a duly
authorized resolution by their respective Board of Directors.
ATTEST: SELLER: National Coal Corporation
/s/ Xxxxxxx X. Xxxx /s/ X. X. Xxxxx
------------------------------ BY: ------------------------------------
Senior Vice President, VP Sales & Marketing
General Counsel
ATTEST: BUYER: East Kentucky Power Cooperative, Inc
/s/ Xxxxx X. Xxxxxx /s/ Xxx X. Xxxx
------------------------------ BY: ------------------------------------
For and on behalf of the President & Chief Executive Officer
Corporate Secretary
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