EXHIBIT 10-14
CONTRACT NO. 83S-248
NEW YORK STATE ELECTRIC & GAS CORPORATION
and
CONSOLIDATION COAL COMPANY
COAL SALES AGREEMENT
DATED: 12/21/83
TABLE OF CONTENTS
ARTICLE PAGE
I Term of Agreement, Renegotiation, Average Price,
Diversion, and Test Coal 2
II Source of Coal 8
III Quantity of Coal 9
IV Loading 10
V Weighing, Sampling, and Analysis 14
VI Coal Quality 17
VII Price 23
VIII Price Adjustment for Heating Quality 24
IX Adjustment of Base Mine Price 25
X Governmental Imposition 34
XI Force Majeure 36
XII Records and Audits 38
XIII Billing and Payment 39
XIV Laws and Regulations 40
XV Assignment 40
XVI Waivers and Remedies 41
XVII Confidentiality 42
XVIII Miscellaneous 43
Page 1
COAL SALES AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of
November, 1983, by and between NEW YORK STATE ELECTRIC & GAS
CORPORATION, a corporation organized and existing under the laws
of the State of New York ("Buyer"), and CONSOLIDATION COAL
COMPANY, a corporation organized and existing under the laws of
the State of Delaware ("Seller").
WITNESSETH:
WHEREAS, Buyer desires to secure, to the extent of the
quantities and for the Term hereinafter stated, a supply of
bituminous coal of the quality hereinafter set forth which is
suitable for the operation of Buyer's generating unit being
constructed near the Town of Somerset, in the State of New York
("Somerset Unit #l"); and
WHEREAS, Seller represents that it is experienced in the
commercial production of coal and that it owns or has leased for
a term in excess of the Term of this Agreement, the hereinafter
mentioned reserves of bituminous coal which, when mined and
processed, will conform to the quality standards hereinafter set
forth; and
WHEREAS, Seller desires to sell coal to Buyer and Buyer
desires to buy coal from Seller;
Page 2
NOW, THEREFORE, in consideration of the premises and mutual
covenants and undertakings of the parties herein contained,
Seller agrees to sell to Buyer and Buyer agrees to buy from
Seller the coal subject hereto, upon the following terms and
conditions.
ARTICLE I
TERM OF AGREEMENT, RENEGOTIATION,
AVERAGE PRICE, DIVERSION, AND TEST COAL
Section 1.1 - Term of Agreement
The term of this Agreement shall extend from the date hereof
("Effective Date") through December 31, 1997 (the "Term"). No
later than June 30, 1997 the parties shall meet to determine if
the Agreement is to be extended under mutually agreeable terms
and conditions.
Section 1.2 - Renegotiation of Articles VII and IX
The total coal purchased for Somerset Unit #1, including but
not necessarily limited to this Agreement, shall be defined as
the sum of Lot A, Lot B and Lot C. Within any single calendar
year ("year") each of the three lots shall contain the exact same
tonnage of coal, with each lot representing one-third of the coal
purchased for Somerset Unit #1.
The Base Mine Price, and adjustments thereto pursuant to
Articles IX and X, shall initially apply as follows: for Lot A
from the Effective Date through December 31, 1985, for Lot B from
the Effective Date through December 31, 1986, and for Lot C from
the Effective Date through
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December 31, 1987. After the initial term of each lot, each lot
will come up for renegotiation every third year, in alternating
fashion, as set forth in the schedule in Exhibit D-1, contained
in Appendix D, attached hereto ("Schedule"). By July 1, 1985 and
by July 1 of each year thereafter, either party may give the
other party written notice by certified mail, of its desire to
renegotiate one or both of the following Articles:
Article VII - "Price"
Article IX - "Adjustment of Base Mine Price"
Such renegotiation shall apply to the lot, either A, B, or C,
currently up for renegotiation.
If, following such written notice and prior to October 1 of
the year in which the renegotiation request was made, Buyer and
Seller agree on revised terms and conditions for the lot up for
renegotiation, then the terms and conditions for that lot shall
be adjusted accordingly effective on the following January 1.
If, following such written notice and prior to October 1 of
the year in which the renegotiation request was made, Buyer and
Seller are unable to agree on revised terms and conditions for
the lot up for renegotiation, then both parties' obligation with
respect to that lot shall cease as of the next termination date
identified for that lot in the Schedule for a period of one (1)
year. Buyer may then replace said lot's tonnage by any means and
from any source it deems appropriate during that year. In that
year Buyer and Seller may renegotiate not only the lot up for
renegotiation but also the lot lost in the previous year's
renegotiation. Buyer and Seller may agree on revised terms and
conditions for both lots, one of the lots or
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neither of the lots. Any lot that is reinstated, having been
lost in the previous year, will have a term such that it expires
on the next termination date identified for that lot on the
Schedule.
If Buyer and Seller are unable to agree on revised terms and
conditions for the same lot for two (2) successive
renegotiations, then both parties' obligation with respect to
that lot shall terminate. Buyer may then replace said lot's
tonnage by any means and from any source it deems appropriate
throughout the remaining Term of this Agreement.
If by July 1, 1985 and by July 1 of each year thereafter
either party does not give the other party written notice of its
desire to renegotiate one or both of the above Articles, then the
existing terms and conditions in effect for the lot currently
expiring shall be automatically extended to the next termination
date identified for that lot on the Schedule.
In any year in which Seller supplies only one of the lots
(i.e., one-third of the coal purchased for Somerset Unit #l) and
that lot is currently up for renegotiation either party may in
its sole discretion terminate this Agreement in accordance with
Section 18.2. Such termination shall become effective on the
next termination date identified for that lot in the Schedule.
If Buyer and Seller agree on revised terms and conditions for
the lot up for renegotiation and/or any previously lost lot then
the terms and conditions for each lot for which agreement was
reached shall be adjusted accordingly effective on the following
January 1.
Page 5
Section 1.3 - Renegotiation of Article VIII
Beginning July 1, 1985 and every three years thereafter, as
set forth in the Schedule and coinciding with the term for Lot A,
either party may give the other party written notice by certified
mail of its desire to renegotiate Article VIII - "Price
Adjustment for Heating Quality." Such renegotiation shall apply
to all of the lots Buyer purchases from Seller during each
three-year term.
If, following such written notice and prior to October 1 of
the year in which the renegotiation request was made, Buyer and
Seller agree on revised terms and conditions for Article VIII
then the Agreement will be adjusted accordingly effective on the
following January 1. If, however, on October 1 the parties have
failed to agree on revised terms and conditions for Article VIII,
neither party shall have any further obligation with respect to
Lot A, after December 31 of the year in which renegotiation on
this Article takes place, except the option to renegotiate Lot A
with Lot B in the next year. With respect to Lot B and Lot C the
terms and conditions of Article VIII in existence prior to the
renegotiations shall remain in effect until such time as Lot B
and Lot C come up for renegotiation as specified in the Schedule.
In the event the parties fail to agree on revised terms and
conditions for Article VIII, the parties' obligations with
respect to Lot B and later Lot C shall cease on the next
termination date identified for each Lot in the Schedule. If
agreement has not been reached for Lot A, Lot B and Lot C, then
this Agreement shall terminate in accordance with Section 18.2 on
the next termination date identified for Lot C in the Schedule.
Page 6
Section 1.4 - Average Price
For the purpose of accounting and payment to Seller, Buyer
shall calculate, for each shipment, an Average Price ("Average
Price"). Such Average Price shall be calculated by adding the
Base Mine Price or Adjusted Base Mine Price, as the case may be,
for each of the lots supplied in the then current year and
dividing by the number of such lots. The Average Price shall be
subject to further adjustment, on a per shipment basis, based on
the "as received" heating quality of coal pursuant to Article
VIII and then subject to any reduction pursuant to Article VI
hereof.
In addition, if Seller chooses to provide coal in excess of
the Annual Coal Tonnage Requirement pursuant to Section 3.2,
Buyer and Seller agree that the price for such coal shall be the
Average Price as adjusted pursuant to Article VIII and then
subject to any reduction pursuant to Article VI hereof.
Section 1.5 - Diversion
It is understood that the purchase of coal hereunder is for
the operation of Somerset Unit #1 and that Buyer may, at Buyer's
option, divert any portion or all of the coal deliveries
hereunder to any one or more of Buyer's other coal-fired
generating stations ("Stations"), other commitments of Buyer, or
sell the coal on the open market.
Since Buyer and Seller both understand that the coal is being
purchased F.O.B. Somerset Unit #1, if Buyer diverts coal to one
of Buyer's other Stations pursuant to this Section, then the coal
shall be purchased F.O.B. Station. If Buyer diverts coal to a
destination other than one of Buyer's Stations, pursuant to this
Section, then at the time the carrier
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diverts from its route to Somerset Unit #1 or one of Buyer's
other Stations, the risk of loss for the coal in the diverted
shipment shall pass from Seller to Buyer. In the event coal
purchased hereunder is diverted to destination(s) other than
Somerset Unit #1, then the weighing, sampling and analysis of
such coal shall be performed by Seller or by consignee in
accordance with the methods and standards specified in Sections
5.1 and 5.2 hereof or in accordance with methods and standards
agreeable to both Buyer and Seller.
In any year in which coal purchased from Seller is diverted
or sold by Buyer such coal diverted or sold shall apply as a ton
for ton reduction towards Buyer's obligation to purchase coal
from Seller as provided in Article III.
Section 1.6 - Test Coal
Buyer may from time to time test burn various quality coals
(Test Coal) either purchased from Seller or other suppliers for
use at Somerset Unit #1. Should Buyer purchase Test Coal in any
year from another supplier, such coal shall be considered as coal
purchased for Somerset Unit #1 under this Agreement, and shall
apply as a ton for ton reduction in Buyer's obligation to Seller
as provided in Article III up to 100,000 tons per year. Should
Buyer's purchase of such Test Coal from other suppliers exceed
100,000 tons in any year, Buyer shall purchase from Seller
hereunder an amount of coal of an acceptable quality equal to the
excess over 100,000 tons for delivery to Buyer's other Stations
or other commitments during such year. Buyer shall provide
reasonable notice to Seller of its intent to reduce deliveries
hereunder for the purpose of testing other coals.
Page 8
ARTICLE II
SOURCE OF COAL
Section 2.1
The source of coal subject to this Agreement ("Basic Source
Coal") shall be Seller's Blacksville No. 1 and No. 2 Mines (the
"Mines"). Seller, with Buyer's prior written approval, may
deliver to Buyer, coal from an alternate source ("Alternate
Source Coal") so long as such Alternate Source Coal is delivered
to Somerset Unit #1 at no more than the delivered cost per
million British thermal units ("Btu's") of Basic Source Coal and
meets the quality standards described in Sections 6.1, 6.2, and
6.3, and is otherwise suitable, in Buyer's sole judgment, for use
at Somerset Unit #1.
Seller warrants that it owns or controls adequate recoverable
coal reserves associated with Seller's Mines to fulfill the
requirements of this Agreement, including requirements as to
quality and quantity of coal.
Seller agrees that it has not entered into any agreement, and
will not enter into any agreement during the Term, with any
purchaser, which will result in Seller being unable to fulfill
the requirements of this Agreement. Buyer shall have the right
to examine Seller's Mines, dedicated properties, and pertinent
records of such coal reserves associated with Seller's Mines, to
ascertain that Seller has complied with the provisions herein.
Information from such records shall be held in the strictest
confidence by Buyer and shall not be divulged to third parties
without the prior written approval of Seller unless such
disclosure is required by some authority or legal proceeding.
Page 9
ARTICLE III
QUANTITY OF COAL
Section 3.1
Subject to Articles I and VI, Buyer shall order, accept, and
pay for, and Seller shall sell and deliver, the Annual Coal
Tonnage Requirement of Somerset Unit #1.
Section 3.2
The estimated coal tonnage requirements for the years 1984
and 1985 are 800,000 and 900,000 tons, respectively.
Not later than October 1, 1984, Buyer shall by written notice
to Seller specify the Annual Coal Tonnage Requirement ("Annual
Coal Tonnage Requirement") for Somerset Unit #l which is to be
delivered during the year 1985.
Not later than June 1, 1985, and each June 1 thereafter,
Buyer shall in writing to Seller (a) specify the Annual Coal
Tonnage Requirement of Somerset Unit #l for the ensuing year, and
(b) estimate the Annual Coal Tonnage Requirement for an
additional four (4) years. Such one-year specified quantity
shall constitute Buyer's and Seller's responsibility regarding
coal supply for the ensuing year less any quantity adjustments
arising from force majeure, or the provisions of Sections 1.6,
6.1 and 6.3. Should Buyer determine that it requires a greater
tonnage than is specified for any year, Buyer shall provide
Seller first opportunity to supply such additional tonnage under
the terms of this Agreement.
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Shipments scheduled by Buyer hereunder shall be, as far as
practicable, in approximately equal monthly quantities taking
into account Buyer's operations and transportation requirements
and the vacation period at Seller's Mines.
Section 3.3
Annual and/or monthly shipments, scheduled by Buyer pursuant
to Section 3.2, may be increased or decreased during any year or
month with the consent of both parties, which consent shall not
be unreasonably withheld.
ARTICLE IV
LOADING
Section 4.l
Seller shall load Buyer's trains at Seller's mines each day
of the year as required by Buyer except the vacation period and
holidays as defined in Seller's collective bargaining agreement
(currently the National Bituminous Coal Wage Agreement of 1981).
Loading on such excepted days and commencement of the loading of
more than one (1) of Buyer's trains on weekends shall be at
Seller's option. Weekends are defined as the period from 4:00
p.m. Friday until 8:00 a.m. Monday, with appropriate adjustments
for holiday weekends.
Page 11
Section 4.2
Except as provided in Section 4.3, Seller shall complete the
loading of each train within 6 hours from the time the carrier
designates that the train will be at the mine and available for
loading. Such 6-hour period shall be computed from the actual
time the train is made available for loading by the carrier,
unless Seller requests later placement of the train. In such
case, the duration of the requested delay shall be counted toward
Seller's 6-hour period.
Section 4.3
Bunching is defined as the concurrent arrival at one of
Seller's mines of two or more trains which creates a conflict in
the loading of Buyer's train(s). If the carrier must hold
Buyer's train short of a mine because of bunching, Seller shall
have up to three additional hours in excess of the 6-hour period
to receive and load Buyer's train. Seller shall, to the extent
reasonably possible, minimize any delays in loading Buyer's
trains.
Section 4.4
Whenever Seller fails to effect the loading of a train in the
required time period, Seller shall be charged with a service
failure. Such service failures will be accumulated by Buyer
throughout the year. For each six, or multiple of six service
failures that Seller incurs during the year, and provided that
such failures will, in Buyer's reasonable judgment, impair
Buyer's ability to transport the desired tonnage in such year in
Buyer's equipment, Buyer may invoke the penalty provisions in
Section 4.5 (A) and (C), except that, Seller shall not be charged
with a service failure whenever conditions of force majeure
prevent Seller from loading a train.
Page 12
Section 4.5
(A) Each time Seller incurs six, or a multiple of six, service
failures Seller shall, at Buyer's direction, provide Buyer
with a trainset of private rail cars, capable of moving 9000
tons of Seller's coal, similar to Buyer's cars and
compatible with Buyer's unloading equipment at no cost to
Buyer.
(B) In lieu of the penalty in Paragraph A Seller may, at
Seller's option request that Buyer secure a trainset of cars
capable of moving approximately 9000 tons of Seller's coal
and Seller will pay to Buyer the difference in
transportation costs between the per ton railroad car rate
and the per ton private car rate in effect at the time the
coal is shipped, multiplied by the number of tons of coal
shipped.
(C) Whenever the penalty in Paragraph A or Paragraph B is
invoked, Seller shall, in addition to the penalty in
Paragraph A or Paragraph B, remit to Buyer a charge of
$1,000. This charge is for the additional handling costs
Buyer incurs in uncoupling and dumping non-rotary coupled
cars. The charge shall be waived whenever Seller provides
cars under Paragraph A that do not require uncoupling or
extra handling by Buyer to unload. This $1,000 charge shall
be adjusted quarterly, beginning April l, 1984, by
application of the formula used to compute adjustments under
Section 9.2(D) hereof.
(D) In addition to the penalties contained in paragraphs A, B,
and C, Seller shall at all times be responsible for all
costs and/or charges imposed by a carrier for exceeding
allowable times pursuant to Conrail Tariff ICC 4828 or other
appropriate tariffs.
Page 13
Section 4.6
Buyer and Seller have designed the procedures set forth in
this Article for determining Seller's commitment to provide Buyer
with efficient and effective loading and utilization of its
equipment.
If at any time this Article does not benefit the parties as
intended, or imposes an unreasonable burden on either of the
parties, then the parties agree to renegotiate this Article and
to establish a new basis for determining Seller's commitment to
Buyer which is acceptable to both parties. Until such time as
agreement is reached on a new service commitment, the procedures
set forth in this Article shall remain in effect.
Section 4.7
Seller shall load cars so as not to exceed a maximum gross
weight of 263,000 pounds. Should Seller exceed this maximum and
should carrier require that the lading be removed from any car or
the car be removed from the train, any cost or additional charge
associated with such removal shall be borne by Seller.
Section 4.8
Seller shall not load coal which has an average temperature
greater than 131 degrees F.
Seller shall take every precaution to load coal which has an
average temperature which is less than 131 degrees F. Should
Buyer receive a car load(s) which has an average temperature in
excess of 131 degrees F and should such car load(s) require extra
care in unloading and handling at destinations, then Seller shall
reimburse Buyer for the cost of such extra
Page 14
handling and for any actual damages Buyer incurs attributable to
the condition of the coal. In addition, Buyer reserves the right
to reject or dispose of any shipment, or portion thereof, where
the average temperature of the coal exceeds 150 degrees F. Any
damage to Buyer's equipment resulting from the condition of the
coal shall be paid for by Seller, and Seller will indemnify Buyer
against any claim by a carrier against Buyer for resulting damage
to carrier's equipment.
ARTICLE V
WEIGHING, SAMPLING, AND ANALYSIS
Section 5.1 - Weighing
The weight of coal delivered hereunder shall be determined by
Buyer as soon as practicable after arrival of coal at Somerset
Unit #l on Buyer's scales which shall meet the standards set
forth by the Eastern Weighing and Inspection Bureau (EWIB).
Buyer shall advise Seller of weights shipped as soon as
practicable after receipt of the shipment. Buyer's scales will
be tested and calibrated to EWIB standards on a mutually agreed
to periodic basis. Buyer shall maintain its scales at all times
in accordance with good maintenance practice to insure a high
level of performance and accuracy.
Seller shall have the right to have a representative present
at the location of the scales of Buyer at any time to observe the
weighing of coal or to witness scale calibration and scale
maintenance techniques. If Seller shall at any time question the
accuracy of the scales, Seller shall so advise Buyer, and Buyer
shall demonstrate the accuracy of the scales to the reasonable
satisfaction of Seller. If Seller is not satisfied as to
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the accuracy or the scales thus demonstrated, Buyer shall have
the scales tested by a testing company recommended by the scale
manufacturer. If such tests show the scales to be in error
beyond EWIB standards, the scales shall be corrected accordingly,
and the cost of the testing and correction shall be borne by
Buyer. If such tests show the scales to be within EWIB
standards, the cost of the testing shall be borne by Seller.
In the event that Buyer's scales are unavailable for any
shipment for any reason, the individual net car weights
pertaining to such shipment shall be the per car average cubic
foot weight of the three (3) most recent similar shipments.
Section 5.2 - Sampling and Analysis
Sampling shall be performed by Buyer at essentially the same
time the coal is weighed at Somerset Unit #1. Sampling shall be
in accordance with ASTM Standard Method D2234-76, as revised from
time to time, or in accordance with methods and standards
agreeable to Buyer and Seller.
Buyer or Buyer's Representative shall obtain increments from
each shipment which shall be accumulated into composite samples
representing the shipment. The composite samples shall be split
into three (3) sets:
(1) One set for analysis by Buyer;
(2) One set to be sent to Seller; and
(3) One set retained by Buyer for a minimum of 30 days.
The methods and procedures for processing samples, and
conducting lab tests and analyses (collectively "analyses"), as
required under this Agreement shall be in accordance with the
applicable current standards of the American Society for Testing
and Materials (ASTM) or with methods agreeable to Buyer and
Seller. Buyer shall maintain its sampling and analytical
equipment at all times in accordance with good maintenance
practices to insure a high level of performance and accuracy.
Page 16
Seller or Seller's representative, at its sole risk and
expense, may observe and inspect the sampling equipment to be
used by Buyer in taking samples and the laboratory where analyses
are performed.
In the event that Buyer's sampling equipment is unavailable
for any shipment for any reason, Seller's samples, if available,
pertaining to such shipment shall be utilized. Seller shall
accumulate increments from each shipment at the mine into
composite samples representing the shipment. The composite
samples shall be split into three (3) sets:
(1) One set for analysis by Seller;
(2) One set to be sent to Buyer; and
(3) One set retained for a minimum of 30 days.
Buyer or Buyer's representative, at its sole risk and
expense, may observe and inspect the sampling equipment to be
used by Seller, in taking samples and the laboratory where
analyses are performed.
If neither Buyer nor Seller has taken samples for a shipment,
the quality characteristics of the coal shall be the average of
the analyses of such characteristics of the last three (3) most
recent similar shipments as determined by Buyer.
The cost of the analyses will be borne by the Buyer for the
Buyer's analyses and by the Seller for the Seller's analyses.
If Seller has substantial reason to believe there is a bias
in Buyer's sampling equipment ("sampler"), or if Buyer has
substantial reason to believe there is a bias in Seller's
sampler, the sampler in question shall be bias tested by
procedures and standards acceptable to both parties. If such
bias tests show the sampler to be in error beyond the agreed upon
standards, the sampler shall be corrected accordingly, and the
cost of the
Page 17
testing shall be borne by the party responsible for operation and
maintenance of the sampler. If such tests show the sampler to be
within the agreed upon standards, the cost of the testing shall
be borne by the party requesting the bias test.
Either party may elect to compare the analyses of samples
obtained pursuant to this Section S.2 for each shipment, and if
the two (2) sets of analyses from Buyer's sample, or Seller's
sample if Buyer did not take a sample, do not agree within 100
Btu/Lb. "Dry Basis" of each other, either party may provide
written notification to the other party within thirty (30) days
after the delivery of the shipment, otherwise payment will be
based on Buyer's analyses of samples obtained under Section 5.2.
Upon such written notification the retained set of samples
obtained under Section 5.2 for the shipment in question shall be
sent by the party which performed the sampling, to and analyzed
by, an independent testing company acceptable to Buyer and
Seller. The analyses by the independent testing company of the
retained set of samples shall be conclusive and binding upon both
parties hereto and constitute the "as received" analyses for the
purpose of establishing coal quality and for payment. The cost
of employing the independent testing company shall be shared
equally by Seller and Buyer.
ARTICLE VI
COAL QUALITY
Section 6.1
It is understood that the quality of coal specified hereunder
is to be suitable, in Buyer's sole judgment, for the full load
operation of Buyer's Somerset Unit #l. Buyer shall determine as
soon as practicable, but no later than January 1, 1986, that the
quality of coal specified hereunder is
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suitable for the full load operation of Buyer's Somerset Unit #l.
The January 1, 1986 date may be extended if due to reasons other
than coal quality Buyer has been unable to demonstrate the Unit's
full load operation to Buyer's satisfaction. In the event that
Buyer determines that full load operation is not attainable,
Buyer may, by telegraphic or written notice to Seller, suspend
future shipment of coal from Seller. Buyer shall give Seller
thirty (30) days, from the date of Buyer's notice of suspension
to Seller, to determine if Seller desires to provide substitute
coal, at no more than the delivered price per million Btu's which
Buyer would have paid if Seller had supplied Basic Source Coal
which, in Buyer's sole judgment, is suitable for full load
operation of Somerset Unit #1, failing which, this Agreement
shall terminate in accordance with Section 18.2. If Buyer
and Seller agree upon a substitute coal of a quality suitable for
full load operation of Somerset Unit #l, the Standards and
Suspension Limits set forth in Sections 6.2 and 6.3 shall be
revised.
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Section 6.2
The quality of coal supplied in each shipment by Seller
hereunder shall typically meet the following quality standards
("Standards") on an "as received" basis when sampled at Somerset
Unit #l and analyzed in accordance with Section 5.2.
Heating Value (Btu/lb) 13000
Total Moisture (% by weight) 5.0
Ash (% by weight) 10.0
Sulfur (% by weight) 2.70
Volatile Matter (% by weight) 36.0
Ash Fusion Temp. (Spherical, Reducing 2180
Atmosphere, degree F)
Grindability (Hardgrove Index) 55
Size* (Inches) 2 x 0
Chlorine** 0.10
* No more than 20 percent by weight passing 28 mesh.
** Ultimate Analysis (Dry) (By Weight)
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Section 6.3
In the event Buyer receives a shipment which is less than or
is in excess of, as the case may be, any of the following "as
received" quality limits ("Suspension Limits"), Buyer may take
the actions provided below:
Heating Value less than (Btu/Lb) 12600
Total Moisture in Excess of (% by weight) 8.0
Ash in Excess of (% by Weight) 12.0
Sulfur in Excess of (% by weight) 3.2
Volatile Matter Less than (% by weight) 30.0
Ash Fusion Temperature Less than
(Spherical, reducing atmosphere, degree F) 2160*
Grindability less than (Hardgrove Index) 48
Size - Minimum 1.) No more than 90%
Passing 3/4
round hole
screen.
2.) No more than 10%
Passing No.200
sieve.
- Maximum 100% passing 4"
Chlorine in excess of (dry, ultimate
analysis) (by weight) 0.25
*Suspension, termination and 90% payment, as provided below
may be invoked for failure to meet this Suspension Limit only
if such failure adversely affects boiler performance in
Buyer's sole judgment.
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Buyer shall specify, by certified mail, ("Notification") to
Seller, Suspension Limits violated in such shipment, and Buyer
shall pay for the shipment at ninety percent (90%) of the then
current Adjusted Average Price of the coal. If, during the sixty
(60) day period following the Notification, Buyer receives a
shipment which violates any of the Suspension Limits, Buyer may,
by certified mail to Seller, suspend future shipments of coal
from Seller until Seller provides written assurance, reasonably
acceptable to Buyer, that future shipments will be in accordance
with the Standards described in Section 6.2 and will not violate
any of the Suspension Limits. If such assurance is not provided
to Buyer within thirty (30) days of the date of Buyer's notice of
suspension to Seller, then Buyer may terminate this Agreement in
accordance with Section 18.2 by certified mail to Seller.
In the event Buyer does not elect to terminate this Agreement
by written notice of such election to Seller on or before the
fortieth (40th) day following the date of Buyer's notice of
suspension, Seller may, within ten (10) days thereafter, commence
providing Buyer Alternate Source Coal in lieu thereof, pursuant
to Article II hereof, and/or, Buyer may acquire substitute coal
by purchases on the open market. Any such coal purchased shall
be comparable in quality, in Buyer's reasonable judgment, to the
specifications set forth in Sections 6.2 and 6.3 of this
Agreement. Should Seller elect to provide Alternate Source Coal,
Seller's obligation to do so at no more than the delivered price
per million Btu which Buyer would have paid if Seller had
supplied Basic Source Coal shall not continue subsequent to
termination of this Agreement pursuant to this Section 6.3.
Should Buyer elect to acquire substitute coal in lieu of or in
addition to
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Alternate Source Coal, Seller shall reimburse Buyer for any
excess in the delivered cost of such substitute coal above the
delivered price per million Btu's which Buyer would have paid if
Seller had supplied Basic Source Coal. Seller's obligation to
reimburse Buyer for any such excess in the delivered cost of
substitute coal shall not continue subsequent to termination of
this Agreement pursuant to this Section 6.3.
In the event deliveries of Alternate Source Coal or
substitute coal hereunder result in any penalty or charge which
may be imposed on Buyer by a carrier pursuant to a carrier's
tariff or transportation contract, as applicable, Seller shall
reimburse Buyer the amount of such penalty or charge up to the
date of termination of this Agreement pursuant to this Section
6.3.
In the event Buyer elects to acquire substitute coal, Buyer
shall, in the selection of such coal, employ good faith efforts
to minimize any excess cost for which Seller is obligated to
reimburse Buyer.
Shipments suspended under the provisions of this Section 6.3
shall not be made up except by mutual consent of Buyer and Seller
and the Annual Coal Tonnage Requirement for that year will be
reduced by the amount of coal that would have been shipped but
for the suspension of shipments.
If this Agreement has not been previously terminated by
Buyer, either Buyer or Seller may, by certified mail to the
other, terminate this Agreement, in accordance with Section 18.2,
on or after the one hundred eightieth (180th) day following the
date of suspension of shipments of Basic Source Coal provided
that such shipments have not resumed as of the date such notice
is given.
Page 23
ARTICLE VII
PRICE
Section 7.l - Base Mine Price
The Base Mine Price per million Btu ($/MBtu) for Lot A, Lot B
and Lot C from the date hereof until renegotiated pursuant to
Article I is $1.173 excluding the cost of a freeze conditioning
agent. The Base Mine Price shall be adjusted beginning January
1, 1984 pursuant to Articles IX and X ("Adjusted Base Mine
Price").
Section 7.2 - Average Price and Adjusted Average Price
An Average Price shall be calculated pursuant to Section 1.4
for each shipment. The Average Price shall be further adjusted,
on a per shipment basis, for changes in heating quality of coal
pursuant to Article VIII hereof ("Adjusted Average Price") and
subject to a reduction as set forth in Article VI hereof.
Section 7.3 - Billing Price
The Billing Price per ton of coal, pursuant to this
Agreement, to be paid on a per shipment basis is determined by
the following formula:
A x B x 2000
------------
Billing Price ($/ton) = 1,000,000 + FC
Where A = The "as received" heating quality of the coal in
Btu's per pound as determined pursuant to Article
V.
Where B = The Adjusted Average Price and any reduction
pursuant to Article VI in dollars per million Btu.
Where FC = Buyer's share of the cost of freeze conditioning
agent.
Exhibit B-l, contained in Appendix B, attached hereto, sets
forth the calculation of the Billing Price per ton of coal to be
paid to Seller for each shipment pursuant to this Agreement.
Page 24
Section 7.4 - Freeze Conditioning
A freeze conditioning agent acceptable to Buyer will be
uniformly applied at an application rate of two (2) pints per ton
to all coal shipped to Buyer from November through March or as
directed by Buyer. The cost of this application will be shared
equally between Buyer and Seller. The Buyer's share of cost will
be reflected in the Billing Price per ton, effective with the
application of the freeze conditioning agent.
ARTICLE VIII
PRICE ADJUSTMENT FOR HEATING QUALITY
Section 8.1 - Introduction
The Average Price for each shipment hereunder is subject to a
premium or penalty based on the "as received" heating quality
expressed in Btu's/Lb. of coal. The Average Price will be
increased or decreased for Btu's/Lb. above or below a given
deadband which is + -200 Btu/Lb. of the Standard Btu/Lb.
specified in Section 6.2 according to the equations in Sections
8.2 or 8.3.
Section 8.2 - Penalty
The "as received" heating quality of the coal expressed in
Btu's/Lb. as determined pursuant to Article V for each shipment
which falls below the deadband will result in an Adjusted Average
Price calculated as follows:
Page 25
Adjusted Average Price = AP x PAF
Where: AP = Average Price
AF = Price Adjustment Factor
The PAF is calculated as follows:
PAF = 1.69 R - 0.69
Where: R = "as received" Btu's/Lb. divided by the Standard
Btu's/Lb.
Section 8.3 - Premium
The "as received" heating quality of the coal expressed in
Btu's/Lb. as determined pursuant to Article V for each shipment
which falls above the deadband up to a maximum of 13400 Btu's/lb.
will result in an Adjusted Average Price calculated as follows:
Adjusted Average Price = AP x PAF
Where: AP = Average Price
PAF = Price Adjustment Factor
The PAF is calculated as follows:
PAF = 0.738 R + 0.262
Where: R = "as received" Btu's/Lb. divided by the
Standard Btu's/Lb.
ARTICLE IX
ADJUSTMENT OF BASE MINE PRICE
Section 9.1
The Base Mine Price per ton as defined in Section 7.1,
expressed on a dollars per ton basis, is composed of the
following elements: (A) Labor and Labor Related Cost, (B) UMWA
Pension and Benefit Trusts Cost,
Page 26
(C) Materials and Supplies Cost, (D) General and Administrative
Cost, (E) Black Lung Excise Tax and Reclamation Fee Cost, and
(F) Firm. Exhibit A-l contained in Appendix A, attached hereto,
sets forth these elements. The Base Mine Price based upon these
elements shall be adjusted as described below, and as summarized
in Exhibit A-2 and as set forth in the example contained in
Exhibit A-9 contained in Appendix A, attached hereto. All
adjustment calculations shall be carried to four (4) decimal
places and rounded to three (3) decimal places.
Section 9.2
(A) Labor and Labor Related Cost
The Base Mine Price includes a Labor and Labor Related Cost
element ("LLR") of $10.600 per ton which shall be adjusted,
effective as of the date of each change pursuant to Seller's
controlling collective bargaining agreement (currently the
National Bituminous Coal Wage Agreement of 1981) or
applicable legislation for those items not covered in
Article X for changes in the average labor cost per manday,
including benefits of employees covered by such collective
bargaining agreement, including, but not limited to, changes
in wage rates, paid vacations, holidays, sick or other leave
pay, premium pay, overtime pay, shift differential rates,
health and retirement benefits, payroll taxes, black lung
benefits, sickness and accident benefits, worker's
compensation, and clothing and material allowances. The
adjustment shall be determined in accordance with the
following formula and such adjustment shall be used in
substitution for all previous LLR adjustments pursuant to
this Section 9.2(A).
Page 27
(Current Cost Per Manday - $193.381)
------------------------------------
LLR Adjustment = $10.600 x $193.381
Exhibits A-3 contained in Appendix A, attached hereto, set
forth the calculation of the LLR adjustment.
(B) UMWA Pension and Benefit Trusts Cost
The Base Mine Price includes an element of $1.60 per ton
required by Seller's collective bargaining agreement to be
paid into the UMWA Pension and Benefit Trusts ("PBT"). Any
adjustments in said per ton amount required by Seller's
collective bargaining agreement to be paid into the UMWA
Pension and Benefit Trusts shall be added to or subtracted
from, as the case may be, the Base Mine Price as of the
date Seller first incurs or is relieved from the cost
resulting from such change. Exhibit A-4, contained in
Appendix A, attached hereto, sets forth the calculation of
the PBT adjustment.
(C) Materials and Supplies Cost
The Base Mine Price includes a Materials and Supplies Cost
element of $7.625 per ton ("MS") which shall be adjusted in
each year as of January 1, April 1, July 1, and October 1,
commencing April 1, 1984. Materials and Supplies Cost
element shall be adjusted according to the weighted average
percent change in the materials and supplies indices.
The respective base indices and weighting factors that are
used to calculate the weighted average percent change in the
materials and supplies indices are as follows:
Page 28
BLS
Materials and Supplies Index Number Weight
Cost Component and Description Factor Base Index Value
Mining Machinery and Code 1192 0.200
Equipment Mining Machinery &
Equipment
Gen. Mat'l. & Supplies No Code # 0.273
Industrial
Commodit.
Less Fuel & Power
Found in Table 8
of the PP&PI
Lumber and Wood Code 0849-0102 0.070
Railway and Mine
Ties
Finished Steel Products No Code # 0.071
Finished Steel,
Including
Fabricated Wire
Products, Found
in Table 8 of the
PP&PI
Page 29
BLS
Materials and Supplies Index Number Weight
Cost Component and Description Factor Base Index Value
Mine Roof Bolts Code 1081-0241 0.050
Mine Roof Bolts
Wire and Cable Code 1026-03 0.039
10% AL 90% Copper
Power Code 0543-1514 0.114
Industrial Power,
South Atl.
Oil Code 0575 0.033
Lubricating Oil
Gen. Purpose Machinery Code 1143 0.082
and Equipment Fluid Power &
Equipment
Electrical Machinery Code 117 0.068
and Equipment Electrical
Machinery
& Equipment
TOTAL: 1.000
Page 30
The base index value for each component shall be the average of
the most recent final September, October, and November, 1983
values as published by the Bureau of Labor Statistics available
ten (10) days prior to the adjustment date ("Base Index Value").
The new index value for each component shall be the average of
the most recent final values available ten (10) days prior to the
adjustment date for the fourth, third and second months preceding
the adjustment date ("New Index Value").
The adjustment shall be the product of the MS multiplied by the
summation of the products of the weight factors of each component
and the percent change between the New Index Value and the Base
Index Value for each component.
The Material and Supplies Cost Adjustment shall be calculated as
follows and such adjustment shall be used in substitution for all
previous MS adjustments pursuant to this Section 9.2(C).
MS Adjustment = ($7.625) x
[Weight Factor of Respective Component x
(New Index Value of Component- Base Index Value of Component)]
- -------------------------------------------------------------
Base Index Value of Component
Exhibit A-5, contained in Appendix A, attached hereto, sets forth
the calculation of the MS adjustment.
Page 31
(D) General and Administrative Cost
The Base Mine Price includes a General and Administration
Cost element of $4.950 per ton ("G&AC"), which shall be
adjusted in each year as of January 1, April 1, July 1, and
October 1, commencing April 1, 1984, based upon changes in
the quarterly index Implicit Price Deflator for the Gross
National Product, seasonally adjusted ("IPD-GNP"), contained
in the Department of Commerce publication, "Survey of
Current Business". The G&AC Adjustment shall be the product
of the G&AC multiplied by the percentage change in the
IPD-GNP between the base period of the third quarter of
1983, which shall be the most recent final index value
available ten (10) days prior to the adjustment date, and
the most recent final index value available ten (10) days
prior to the adjustment date for the second quarter
preceding the applicable quarterly adjustment date,
calculated as follows.
$4.950 x (Current IPD-GNP - Base IPD-GNP) = G&AC
--------------------------------
Base IPD-GNP Adjustment
Such adjustment shall be used in substitution for all
previous G&AC adjustments pursuant to this Section 9.2 (D).
Exhibit A-6, contained in Appendix A, attached hereto, sets
forth the calculation of the G&AC Adjustment.
Page 32
(E) Black Lung Excise Tax and Reclamation Fee Cost
The Base Mine Price includes a cost element of $1.15 per ton
("BLR") for the sum of the United States Government
Reclamation Fee of $.15 and Black Lung Excise Tax of $1.00.
Any adjustments to the BLR will be separately identified to
Buyer and will be added to or subtracted from, as the case
may be, the Base Mine Price as of the date Seller first
incurs or is relieved from the cost resulting from such fee
or tax. Exhibit A-7, contained in Appendix A, attached
hereto, sets forth the calculation of the BLR adjustment.
(F) Firm
The Base Mine Price includes a cost element of $4.575 per
ton, which shall not be adjusted throughout the Term of the
Agreement, unless adjusted pursuant to the provisions of
Article I.
(G) Discontinuance or Change in Indexes
Should the then current base of any index referred to in
this Article be converted to a new base by the Bureau of
Labor Statistics (BLS) or by the Department of Commerce
(DOC), the new rebased index shall be used to calculate the
adjustments hereunder. The rebased index will be
substantiated by the BLS or DOC's rebased historical series
for the index. If the historical series is not available at
the time of billing, the conversion calculations for the
new index base period will be used to re-compute the value
of indexes contained in this Article. Should publication of
any index be discontinued or should the relative weights of
the components of an index change, an index that is most
closely equivalent to the applicable index referred to
herein shall be substituted by agreement of the parties
hereto.
Page 33
(H) Payment of Cost Adjustments
As soon as possible, Seller will notify Buyer in writing of
adjustments to the Base Mine Price pursuant to this Article
IX and Article X and submit therewith the amount of the
adjustments claimed and the basis and method of computation
of such amount claimed, together with any documentation that
may be required in support of such claim.
Said adjustments shall become part of the Adjusted Base
Mine Price for billing and payment purposes pursuant to
Article XIII immediately upon their effective date. Any
dispute as to any cost adjustment pursuant to Articles IX and
X shall not result in withholding of, or delay in, payment by
Buyer. If, after resolution of such dispute, it is
determined that the amount of the payment is an underpayment,
then Buyer shall pay to Seller the difference between the
amount paid and the total amount due. If, after resolution
of such dispute, it is determined that the amount of the
payment is an overpayment, then Seller shall pay to Buyer the
difference between the amount paid and the total amount due,
together with interest on such differences from the date of
overpayment to the date of repayment at the prime rate of
Morgan Guaranty Trust Company of New York in effect on the
first day of the calendar month in which the overpayment
occurred.
Page 34
ARTICLE X
GOVERNMENTAL IMPOSITION
Section 10.1
The parties recognize the possibility that during the Term of
this Agreement, legislative, judicial, or regulatory bodies may
(1) remove, revise, or alter existing legislation, regulations,
orders, requirements or the interpretation or enforcement thereof
("Rules") or (2) impose new Rules, which may pertain to Seller
and may require the adoption of new operating practices or
otherwise change the costs at Seller's Mines from which Basic
Source Coal is obtained.
In the event any such Rule is removed, revised, altered, or
imposed, the Seller shall take all reasonable measures to reduce
the impact of same on Seller's costs and shall so advise the
Buyer. The Buyer may, at its expense, have the matter reviewed
by a consultant to assure itself that the impact has been
minimized to the fullest practicable extent.
An estimate of the change in Seller's cost, pursuant to this
Section 10.1, and a price adjustment based on such estimate,
shall be made as soon as practicable after the effective date of
any change in Rules.
Once the full amount per ton of such change in Seller's cost
has been established and agreed upon, which shall be subject to
audit and verification by Buyer in accordance with the provisions
of Article XII, a settlement shall be made for any difference
between the estimated change and the actual change in Seller's
cost.
Page 35
In the event the full amount of change in Seller's costs and
subsequent price adjustment exceeds seven percent (7%) of the
then current Adjusted Base Mine Price and if Buyer determines
that such an adjustment to the price makes the continuation of
this Agreement economically unfeasible, then Buyer shall notify
Seller within thirty (30) days of the date upon which the amount
of adjustment is ascertained, and the parties shall attempt to
negotiate an alternate price adjustment. If the parties are
unable to agree upon an alternate price adjustment within thirty
(30) days of the date of such notification by Buyer, then this
Agreement shall terminate, in accordance with Section 18.2, at
the expiration of such thirty (30) days.
Section 10.2
The parties also recognize the possibility that, during the
term of this Agreement, legislative, judicial, or regulatory
bodies may (1) remove, revise, or alter existing Rules or (2)
impose new Rules which may pertain to Buyer, which make
economically unfeasible the continued shipping, storage, or
consumption of the coal under the terms and conditions specified
in this Agreement. In the event any such Rule is removed,
revised, altered, or imposed, the Buyer shall take all reasonable
measures to reduce the resulting impact and so advise the Seller.
The Seller may, at it own expense, have the matter reviewed by a
mutually-acceptable consultant in order to assure itself that the
impact has been minimized to the fullest extent possible. The
Buyer and Seller shall attempt to negotiate a price adjustment to
reflect the removal, revision, alteration, or imposition of any
such Rule.
Page 36
If the parties are unable to reach agreement on any such
price adjustment and/or the parties mutually determine that
continued shipping, storage, or consumption of coal hereunder is
economically unfeasible, then either party may terminate this
Agreement in accordance with Section 18.2 on a date no earlier
than the effective date of the Rule.
Section 10.3
Should action by legislative, judicial, or regulatory bodies
prohibit the continued mining, processing, shipping, storage, or
consumption of the coal under the terms and conditions specified
in this Agreement, then this Agreement shall be terminated in
accordance with Section 18.2 on a date no later than
the effective date of the Rule.
ARTICLE XI
FORCE MAJEURE
Section 11.1
The term "force majeure" shall mean any causes beyond the
reasonable control of the party affected thereby, such as acts of
God, acts of the public enemy, insurrections, riots, strikes,
labor disputes, walkouts or lockouts, vandalism or sabotage,
fires, explosions, floods, breakdown of or damage to plants,
equipment, or facilities, accidents of or interruptions to
transportation, any governmental or agency action, or other
causes of a similar or dissimilar nature which wholly or partly
prevent the mining, delivering, and/or loading of the coal by
Seller, or the receiving, transporting, and/or delivering the
coal by the carrier of the coal, or the accepting, utilizing,
storing and/or unloading of the coal by the Buyer.
Page 37
The term force majeure shall also include a default by a carrier
under Buyer's Transportation Agreement. The doctrine of ejusdem
generis shall not be applied to exclude any event dissimilar to
the enumerated events but which is beyond the reasonable control
of a party.
The provisions of the above paragraph shall not excuse a
party from performance unless such party shall give written
notice to the other party; 1) of its inability to perform within
ten (10) calendar days and, 2) to furnish full information as to
the cause of its inability to perform and probable extent and
duration thereof within thirty (30) calendar days, after such
cause occurs.
If, because of force majeure, either party is unable to carry
out any of its responsibilities under this Agreement, then the
responsibilities of the party giving such notice shall be
suspended (other than the payment of monies due) to the extent
made necessary by force majeure and during its continuance,
provided that such force majeure and/or its effects are
eliminated insofar as possible with all reasonable dispatch, but
a party shall not be required to settle any labor dispute, except
on terms it deems acceptable in its absolute discretion.
Any deficiencies in deliveries of coal hereunder caused by
force majeure shall not be made up except by mutual consent.
In the event Seller's performance is curtailed by reason of
force majeure, Buyer shall have the right to obtain coal from
another supplier and such tonnage as is so supplied shall be
included in the Annual Coal Tonnage Requirement.
In the event Buyer's performance is curtailed by reason of
force majeure, Seller shall have the right to sell to others any
quantity of coal which Buyer cannot accept due to such force
majeure.
Page 38
ARTICLE XII
RECORDS AND AUDITS
Seller shall maintain a system of accounting in accordance
with general industry practices and generally accepted accounting
principles consistently applied, and appropriate to permit the
development of the calculations, reports, accountings, and
statements required by this Agreement, and to facilitate the
review and audit by Buyer or its Representative of Seller's
records and accounts for the purposes of this Agreement.
Seller shall maintain appropriate property maps, mine maps, and
engineering records for the Basic Source Coal which shall be
available at all reasonable times for inspection by Buyer. Buyer
shall at all reasonable times be afforded complete access to such
records and accounts for inspection, audit, and review. Buyer
shall have the right to inspect and audit all of Seller's
internal costing used to support any adjustments to the Base Mine
Price and any adjustments to the elements or other components of
the Base Mine Price. Buyer also reserves the right to inspection
and audit of the Seller's internal costing records for the
General and Administrative Cost element of the Base Mine Price if
adjusted as a result of renegotiation between the parties
pursuant to Article I. Seller shall make appropriate adjustments
as may be required and as are mutually agreed to reflect the
results of Buyer's audit. Seller shall preserve and have subject
to audit, all pertinent records for a period of two (2) years
after final payment pursuant to this Agreement. Buyer shall at
all reasonable times have the right to inspect the mine,
preparation facilities, loading facilities, and related
facilities of Seller utilized for production of coal under this
Agreement.
Page 39
ARTICLE XIII
BILLING AND PAYMENT
Section 13.1
Billing and payment for each shipment received from Seller
shall be based upon the quantity and quality of coal as
determined hereunder.
Section 13.2
On receipt of the "as received" analysis as determined under
Article V, hereunder, of each shipment of coal, Buyer will
prepare a "Coal Purchase Advice" which shall include the Average
Price, including adjustments pursuant to Article VIII and any
reduction pursuant to Article VI resulting in the Billing Price
and will submit copy of same as soon as practicable, to Seller
at:
Consolidation Coal Company
Consol Plaza
1800 Washington Road
Pittsburgh, Pennsylvania 15241
Attention: Sales Contract Administration
Department
Payment for each shipment of coal shall be due within 30 days
after receipt thereof and shall be made by Federal Reserve Wire
Transfer of same day funds to Mellon Bank, N.A., Pittsburgh,
Pennsylvania, for credit to Consolidation Coal Company, Account
Number 127-7247, or such other account that Seller may from time
to time select on thirty (30) days notice to Buyer.
Page 40
ARTICLE XIV
LAWS AND REGULATIONS
Section 14.1
This Agreement shall be governed by and construed under the
laws of the State of New York.
Section 14.2
Seller agrees to abide by the Equal Employment Opportunity
Compliance Requirements in Appendix C of this Agreement.
ARTICLE XV
ASSIGNMENT
Section 15.1
This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
assigns; but this Agreement may not be assigned by either party
without the prior written consent of the other, which consent
shall not be unreasonably withheld, except that either party may,
without written consent of the other, assign to any financing
institution or institutions any monies due or to become due
hereunder. Buyer may also, without the consent of the Seller,
assign this Agreement (in whole or in part), to any subsidiary or
affiliated company(ies) of Buyer or to any other company having a
financial interest in Somerset Unit #1. Upon such assignment,
each assignee or assignees shall expressly assume in writing, to
the extent of such assignment, the
Page 41
obligations and responsibilities of Buyer hereunder. If each
such assignee(s) is (are) considered to be creditworthy as
determined by Seller applying reasonable standards, Seller shall
to the extent of such assignment release Buyer from all further
obligations and responsibilities under this Agreement. For
financing purposes only, Buyer may also, without the consent of
Seller, assign this Agreement in whole or in part to any
financial corporation with which Buyer or any of its subsidiary
or affiliated companies may contract, but no such assignment
shall relieve Buyer of its obligations and responsibilities under
this Agreement to make payments to Seller for coal delivered by
Seller under this Agreement, in the event that the assignee
shall not make such payments. Written consent to one or more
assignments shall not be construed as waiving the necessity of
obtaining written consent to other and/or additional assignments.
ARTICLE XVI
WAIVERS AND REMEDIES
Section 16.1
The failure of either party to insist in any one or more
instances upon strict performance of any provision of this
Agreement by the other party, or to take advantage of any of its
rights hereunder, shall not be construed as a waiver by it of any
such provision or the relinquishment by it of any such rights in
respect of any subsequent non-performance of such provision, but
the same shall continue and remain in full force and effect.
Page 42
Section 16.2
Except for Buyer's remedies pursuant to Section 6.3, which
shall be Buyer's sole and exclusive remedies for Seller's failure
to deliver coal of the quality specified herein, each remedy
specifically provided for under this Agreement shall be taken and
construed as cumulative and in addition to every other remedy
provided for herein or by law.
Section 16.3
In no event shall either party be responsible to the other
for consequential, incidental or special damages as a result of a
default in the performance of any of its covenants or obligations
hereunder except as specifically provided herein.
ARTICLE XVII
CONFIDENTIALITY
Section 17.1 - Confidentiality
To the extent practicable the parties shall keep confidential
the terms and conditions hereof, the transactions provided for
herein, and any documents or other information delivered in
connection herewith unless such is readily ascertainable from
public information or sources, requested by regulatory
commission, necessary for financing or other business purposes,
or otherwise required by law to be disclosed. In the event
either party so discloses any such information to a regulatory
commission, financial institution, or otherwise as required by
law, it shall promptly and fully advise the other of such
disclosure.
Page 43
ARTICLE XVIII
MISCELLANEOUS
Section 18.1 - Entirety and Titles
This Agreement contains the entire agreement between the
parties, and no alteration or modification thereof shall be
binding unless in writing and signed by Buyer and Seller. The
titles of the Articles and Sections in this Agreement have been
inserted as a matter of convenience of reference only, and shall
not control or affect the meaning or construction of the terms
and provisions hereof.
Section 18.2 - Termination
In the event of termination of this Agreement, neither party
shall have, after the effective date of such termination, any
further obligations or responsibilities under this Agreement
provided, however, that such termination shall not affect any
rights or obligations of Buyer or Seller hereunder solely for
coal shipped or required to be shipped prior to the date of such
termination.
Section 18.3 - Damage
Whenever any loss of, damage to or destruction of Buyer's
and/or Somerset Railroad Corporation (SOM) coal car(s) occurs
while it is on the property of Seller and is caused in whole or
in part by the fault, failure, negligence, misconduct,
malfeasance or misfeasance of Seller, its agents, or employees,
Seller shall settle all claims arising therefrom, and shall
indemnify Buyer from and assume liability for such loss of,
damage to, or destruction of, Buyer's and/or SOM's coal car(s).
Page 44
Section 18.4 - Severability
If any part, term, or provision of this Agreement is held by
the courts or by any agency purporting to have jurisdiction over
the Agreement or the parties hereto, to be unenforceable,
illegal, against public policy, or in conflict with any Federal,
State, or local laws, and such, part, term or provision does not
affect the substantive rights of the parties to this Agreement,
then such part, term or provision shall be severable from the
rest of this Agreement and the Agreement shall be construed as if
the invalid part, term, or provision did not exist. If such
part, term or provision does affect the substantive rights of one
or both parties to this Agreement, then the parties hereto shall
renegotiate the terms of this Agreement as shall be necessary to
continue the benefits to both parties of this Agreement. If
agreement cannot be reached on such terms, then any party
whose substantive rights pursuant to this Agreement are affected
may terminate this Agreement, pursuant to Section 18.2, on sixty
days prior written notice by certified mail to the other party.
Section 18.5 - Notice
Except as otherwise herein provided all notices under this
Agreement shall be in writing, and shall be sufficient in all
respects if delivered in person to the Vice-President, Purchasing
of Buyer, for Buyer, the Vice-President - Sales, of Seller, for
Seller, or if sent by regular mail, addressed to the respective
parties as follows:
For Buyer: New York State Electric & Gas Corporation
4500 Vestal Parkway East
Binghamton, New York 13903
Attn: Vice President - Purchasing
Page 45
For Seller: Consolidation Coal Company
Consol Plaza
1800 Washington Road
Pittsburgh, PA 15241
Attn: Vice-President - Sales
Copy to: Consolidation Coal Company
Rochester Sales Office
3380 Monroe Avenue
Rochester, New York 14618
or at any subsequent address of which either party may notify the
other in the manner herein provided.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
ATTEST: NEW YORK STATE ELECTRIC & GAS
CORPORATION
Dolores R. Hix By James A. Carrigg
Asst. Secretary President
ATTEST: CONSOLIDATION COAL COMPANY
Roland H. Burns Jr. By Ronald R. Palmer
Assistant Secretary
Page 1 of 20
APPENDIX "A"
BASE MINE PRICE ADJUSTMENT
(Attached to and made a part of that certain Coal Supply
Agreement dated as of the 1st day of November, 1983, entered into
by and between: CONSOLIDATION COAL COMPANY, as Seller, and NEW
YORK STATE ELECTRIC & GAS CORPORATION as Buyer).
Page 2 of 20
EXHIBIT A-l
ELEMENTS OF BASE MINE PRICE PER TON OF COAL
Base
Price Adjustment Base Mine Price Elements Mine Price Elements
Exhibits Cost Per Ton Ident. Symbol
A-3A, A-3B Labor & Labor Related Cost 10.600 LLR
A-4 UMWA Pension & Benefit 1.600 PBT
Trusts cost
A-5 Materials & Supplies Cost 7.625 MS
A-6 General & Administrative 4.950 G&AC
Cost
A-7 Black Lung Excise Tax and 1.150 BLR
Reclamation Fee Cost
Firm 4.575 F
Total Base Mine
Price Per Ton $30.500
Page 3 of 20
EXHIBIT A-2
Except for LLRCA, which shall be adjusted as of the date of
each change in Seller's collective bargaining agreement
(currently the National Bituminous Coal Wage Agreement of 1981),
the following calculations will be submitted by the Seller on a
quarterly basis to substantiate the Adjusted Base Mine Price per
ton of coal.
Base Mine Price of Coal Per Ton $30.50
Base Mine Price Adjustment
Labor & Labor Related Cost Adjustment
LLRCA (From Exhibit A-3A and A-3B) = $
UMWA Pension and Benefit Trust Cost Adjustment
PBTCA (From Exhibit A-4) = $
Material & Supplies Cost Adjustment
MSCA (From Exhibit A-5) = $
General & Administrative Cost Adjustment
G& ACA (From Exhibit A-6) = $
Black Lung Excise Tax & Reclamation Fee
Cost Adjustment
BLRCA (From Exhibit A-7) = $
Total Price Adjustment $
Adjusted Base Mine Price Per Ton $
Adjusted Base Mine Price Per MBtu (From Exhibit $
A-8)
Page 4 of 20
EXHIBIT A-3
Page 1
LABOR AND LABOR RELATED COST ADJUSTMENT
Labor and Labor Related Cost Adjustment is based on changes
in Seller's collective bargaining agreement (currently the
National Bituminous Coal Wage Agreement of 1981) or applicable
legislation.
If there is a change in the amount to be paid by Seller for
Labor and Labor Related costs after the effective date of this
Agreement, the revised calculations as computed in accordance
with Exhibit A-3, Pages 2 through 4, attached hereto, along with
support for the revised costs, are to be submitted to Buyer. The
method of calculating the Labor and Labor Related Cost Adjustment
is as follows:
LLRCA = LLR x (L2-Ll)
-----
L1
LLRCA = Labor and Labor Related Cost
Adjustment
LLR = Base Mine Price Element Cost Per Ton
from Exhibit A-1
L1 = Base Cost Per Manday for Labor and
Labor Related Costs as of the
Effective Date of this Agreement
contained in Exhibit A-3, Pages 2
through 4
L2 = Current Cost Per Manday for Labor and
Labor Related Costs as Computed in
Accordance with Exhibit A-3, Pages 2
through 4
Page 5 of 20
EXHIBIT A-3
Page 2
LABOR COST PER MANDAY
Average Cost Per Manday Without Shift Differential and Overtime
Pay Rates Percent** Weighted
Pay Grade at 12/7/83 of Mandays Cost/Manday
Underground 5 $109.72 36.3% $39.828
4 $106.48 16.5% $17.569
3 $103.54 19.0% $19.673
2 $101.76 6.8% $ 6.920
1 $101.18 15.1% $15.278
Surface 4 $ 99.07 3.5% $ 3.467
3 $ 97.30 1.2% $ 1.168
2 $ 95.25 - -
1 $ 94.67 1.6% $ 1.515
------ -------
100.0% $105.418
OVERTIME
Average Wage Rate Paid Versus Straight Time Average Wage Rate
10.0 Percent**
SHIFT DIFFERENTIAL
Average Cost Per Manday of Shift Differential
Amounts Percent** Weighted
Shift Per Day of Mandays Cost/Manday
Underground Midnight-8 A.M. $3.200 29.9% $ .957
8 A.M.-4 P.M. - 31.4% -
4 P.M.-Midnight $2.400 32.4% $ .778
Surface Midnight-8 A.M. $2.900 1.7% $ .049
8 A.M.-4 P.M. - 2.7% -
4 P.M.-Midnight $2.175 1.9% $ .041
----- -----
100.0% $ 1.825
**These percentage figures shall remain fixed unless there is a
change in Seller's collective bargaining agreement or
legislation which necessitates a change such as a change in the
number of pay grades or mandatory rules related to overtime.
Page 6 of 20
EXHIBIT A-3
Page 3
Cost Per Manday
$105.418 (Straight Time)
1.825 (Shift Differential)
- --------
$107.243
x 1.10 (Overtime)
- --------
$117.967
FRINGE BENEFITS
Days of Pay - Assumes each man receives maximum entitled under
the collective bargaining agreement, except graduated vacation
days.
Regular Vacation 12 days
Floating Vacation 4 days
Graduated Vacation 3 days
Holidays 11 days
Allowance for Birthday Worked 1 day
Bereavement 3 days
Personal Days 5 days
--
39 days
39 days x $107.243 = $4,182.477
$4,182.477 divided by 222 days* = $18.840 per manday
Clothing Allowance
$150.00 x 1.08 (Assumed Turnover Factor) = $162.000
$162.000 divided by 222 days* = $.730 per manday
Total Labor Cost Per Manday
$117.967 (Straight Time, Overtime, Shift Differential)
18.840 (Fringe Benefit - Days of Pay)
- --------
$136.807 (Subtotal Labor Cost Per Manday)
.730 (Fringe Benefit - Clothing Allowance)
- --------
$137.537 (Total Labor Cost Per Manday)
* 365 Days Per Year
- - 104 Saturdays and Sundays
- - 39 Fringe Days
---
222
Base work year per man will change as the number of Fringe
Days changes per the controlling collective bargaining
agreement(s).
Page 7 of 20
EXHIBIT A-3
Page 4
Labor Related Costs Per Manday
F.I.C.A. Tax:
[l]
6.70% x $136.807 = $9.166 per Manday
Federal Unemployment Insurance:
[2]
1.4% x $7,000/222 days = .441
State Unemployment Insurance:
[3]
3.9% x $8,000/222 days = 1.405
Black Lung Self-Insurance:
[4]
5.91% x $136.807 = 8.085
Health and Retirement Benefits:
1. Medical Benefits
[4]
$353.80 per man per month x 12/222
days = 19.124
2. Pension Cost Per Hour
$1.017 per hour x 7.95 hours = 8.085
[(93.7% x 8 hrs.) + (6.3% x 7.25 hrs.)]
Sickness and Accident:
[4]
$17.00 per man per month x 12/222
mandays = .919
Worker's Compensation:
[4]
6.3% x $136.807 = 8.619
------
Total Labor Related Cost Per Manday $55.844
Total Labor Cost Per Manday $137.537
-------
TOTAL COST PER MANDAY $193.381
[1] Rate applicable to maximum base annual wages.
[2] Rate and maximum base annual wages applicable to the State
of W. Virginia.
[3] Seller's rate and maximum base annual wages applicable to
the State of W. Virginia.
[4] Includes self-insured accrual rates. Each January 1 and
periodically during each calendar year, the current rate for
these costs will be substituted for the prior rate. As soon
as possible after the end of each calendar year, the actual
average rate for said calendar year will be substituted for
the prior rates and any necessary adjustment will be made,
retroactive to January 1 of said calendar year.
Page 8 of 20
EXHIBIT A-4
UMWA PENSION AND BENEFIT TRUSTS COST ADJUSTMENT
The only charges to be included in the UMWA Pension and
Benefit Trusts Cost Adjustment are specific dollar amounts
required by Seller's collective bargaining agreement to be paid
into the UMWA Pension and Benefit Trusts.
If there is a change in the amount to be paid into the UMWA
Pension and Benefits Trusts after the effective date of this
Agreement, the revised calculations, along with support for the
revised costs, are to be submitted to Buyer. The method of
calculating UMWA Pension and Benefit Trusts Cost Adjustment is as
follows:
PBTCA = PBT1 - PBT
PBTCA = UMWA Pension and Benefit Trusts Cost Adjustment
PBT = Base Mine Price Element Cost Per Ton from
Exhibit A-1
PBTl = Current Cost Per Ton for UMWA Pension and
Benefit Trusts
Page 9 of 20
EXHIBIT A-5
MATERIALS AND SUPPLIES COST ADJUSTMENT
Materials and supplies shall be adjusted according to the
weighted average percent change in the material and supplies
indices. Indices included in the materials and supplies are
published in the BLS publication "Producer Prices and Price
Indexes".
MSCA = MS x [ WAPC] / 100
MSCA = Materials and Supplies Cost Adjustment.
MS = Base Mine Price Element Cost Per Ton from Exhibit
A-l.
WAPC = Weighted average percent change of materials and
supplies indices.
Page 10 of 20
Exhibit A-5 (CONTINUED)
MATERIALS AND SUPPLIES COST ADJUSTMENT
EXAMPLE CALCULATION TABLE
(6) (7)
% Change Weighted %
(1) (2) (3) (4) (5) (Column Change
Mat.& Supplies BLS Index Weight Base Index New Index 5-4 x 100) (Column 3x6)
Cost Component Code Factor Value Value 4
Mining Machinery & 1192 0.200
Equipment
General Material PP & PI, 0.273
& Supplies Table 8
Lumber & Wood 0849-0102 0.070
Finished Steel PP & PI,
Products Table 8 0.071
Mine Roof Bolts 1081-0241 0.050
Wire & Cable 1026-03 0.039
Power 0543-1514 0.114
Oil 0575 0.033
General Purpose 1143 0.082
Machinery and
Equipment
Electrical Mach. 117 0.068
& Equipment -----
1.000 Materials & Supplies Weighted =
Average % Change (WAPC)
Page 11 of 20
EXHIBIT A-6
GENERAL AND ADMINISTRATIVE COST ADJUSTMENT
Cost adjustment will be based on the quarterly index Implicit
Price Deflator for the Gross National Product, seasonally
adjusted as published in the Department of Commerce publication
"Survey of Current Business".
G & ACA = G&AC X (IPD2 - IPDl)
-------------
IPDl
G & ACA = General and administrative cost adjustment
G&AC = Base Mine Price Element Cost Per Ton from
Exhibit A-l
IPDl = Most current index available ten (10) days
prior to the adjustment date for the base
quarter of this Agreement.
(originally third quarter of 1983)
IPD2 = Most current quarterly index available ten (10)
days prior to the adjustment date for the
second quarter preceding the appropriate
adjustment date of January 1, April 1, July 1,
or October 1.
Page 12 of 20
EXHIBIT A-7
BLACK LUNG EXCISE TAX AND RECLAMATION FEE COST ADJUSTMENT
The only charges to be included in Black Lung Excise Tax and
Reclamation Fee Cost Adjustment are specific dollar amounts of
Black Lung Excise Tax and Reclamation Fee involved in producing a
ton of coal that are legislated by the Government.
If there is a change in the Black Lung Excise Tax or
Reclamation Fee after the effective date, the revised
calculations, along with support for the revised rates, are to be
submitted to the Buyer. The method of calculating BLR adjustment
is as follows:
BLRCA = BLR1 - BLR
BLRCA = Black Lung Excise Tax and Reclamation Fee
Cost Adjustment
BLR = Base Mine Price Element Cost Per Ton from
Exhibit A-l
BLR1 = Current cost per ton for Black Lung Excise
Tax & Reclamation Fee
Page 13 of 20
EXHIBIT A-8
ADJUSTED BASE MINE PRICE PER MBTU
The Adjusted Base Mine Price per million Btu shall be
calculated based on 13,000 Btu/Lb. "as received" coal quality as
follows:
Adjusted Base Mine Price C x 1,000,000
per MBtu -------------
13000 x 2000
Where C = The Adjusted Base Mine Price Per Ton from Exhibit
A-2, contained in Appendix A.
Page 14 of 20
EXHIBIT A-9
SAMPLE ADJUSTMENT CALCULATIONS
Except for LLRPA, which shall be adjusted as of the date of
each change in Seller's collective bargaining agreement
(currently the National Bituminous Coal Wage Agreement of 1981),
the following calculations will be submitted by the Seller on a
quarterly basis to substantiate the Adjusted Base Mine Price per
ton of coal.
Base Mine Price of Coal Per Ton $30.50
Base Mine Price Adjustment
Labor & Labor Related Cost Adjustment
LLRCA (From Exhibit A-3A and A-3B) = $ .027
UMWA Pension and Benefit Trust Cost Adjustment
PBTCA (From Exhibit A-4) = $ .050
Material & Supplies Cost Adjustment
MSCA (From Exhibit A-5) = $ .074
General & Administrative Cost Adjustment
G& ACA (From Exhibit A-6) = $ .233
Black Lung Excise Tax & Reclamation Fee
Cost Adjustment
BLRCA (From Exhibit A-7) = $ 0.000
Total Price Adjustment $ .384
Adjusted Base Mine Price Per Ton $ 30.884
Adjusted Base Mine Price Per MBtu (From Exhibit A-8) $ 1.188
Page 15 of 20
EXHIBIT A-9
Page 2
LABOR COST PER MANDAY
Average Cost Per Manday Without Shift Differential and Overtime
Pay Rates Percent** Weighted
Pay Grade at 12/7/83 of Mandays Cost/Manday
Underground 5 $109.72 36.3% $39.828
4 $106.48 16.5% $17.569
3 $103.54 19.0% $19.673
2 $101.76 6.8% $ 6.920
1 $101.18 15.1% $15.278
Surface 4 $ 99.07 3.5% $ 3.467
3 $ 97.30 1.2% $ 1.168
2 $ 95.25 - -
1 $ 94.67 1.6% $ 1.515
----- -------
100.0% $105.418
OVERTIME
Average Wage Rate Paid Versus Straight Time Average Wage Rate
10.0 Percent**
SHIFT DIFFERENTIAL
Average Cost Per Manday of Shift Differential
Amounts Percent** Weighted
Shift Per Day of Mandays Cost/Manday
Underground Midnight - 8 A.M. $3.700 29.9% $ 1.106
8 A.M. - 4 P.M. - 31.4% $ -
4 P.M. - Midnight $2.900 32.4% $ .940
Surface Midnight - 8 A.M. $3.400 1.7% $ .058
8 A.M. - 4 P.M. - 2.7% $ -
4 P.M. - Midnight $2.675 1.9% $ .051
---- -------
100.0% $ 2.155
**These percentage figures shall remain fixed unless there is a
change in Seller's collective bargaining agreement or legislation
which necessitates a change such as a change in the number of pay
grades or mandatory rules related to overtime.
Page 16 of 20
EXHIBIT A-9
Page 3
Cost Per Manday
$105.418 (Straight Time)
2.155 (Shift Differential)
--------
$107.573
x 1.10 (Overtime)
--------
$118.330
FRINGE BENEFITS
Days of Pay - Assumes each man receives maximum entitled
under the collective bargaining agreement, except graduated
vacation days.
Regular Vacation 12 days
Floating Vacation 4 days
Graduated Vacation 3 days
Holidays 11 days
Allowance for Birthday Worked 1 day
Bereavement 3 days
Personal Days 5 days
---
39 days
39 days x $107.573 = $4,195.347
$4,195.347 divided by 222 days* = $18.898 per manday
Clothing Allowance
$150.00 x 1.08 (Assumed Turnover Factor) = $162.000
$162.000 divided by 222 days = $.730 per manday
Total Labor Cost Per Manday
$118.330 (Straight Time, Overtime, Shift Differential)
18.898 (Fringe Benefit - Days of Pay)
--------
$137.228 (Subtotal Labor Cost Per Manday)
.730 (Fringe Benefit - Clothing Allowance)
--------
$137.958 (Total Labor Cost Per Manday)
* 365 Days Per Year
- - 104 Saturdays and Sundays
- - 39 Fringe Days
---
222
Base work year per man will change as the number of Fringe
Days changes per the controlling collective bargaining
agreement(s).
Page 17 of 20
EXHIBIT A-9
Page 4
Labor Related Costs Per Manday
F.I.C.A. Tax:
[1]
6.70% x $137.228 = $9.194 per Manday
Federal Unemployment Insurance:
[2]
1.4% x $7,000/222 days = .441
State Unemployment Insurance:
[3]
3.9% x $8.000/222 days = 1.405
Black Lung Self-Insurance:
[4]
5.91% x $137.228 = 8.110
Health and Retirement Benefits:
1. Medical Benefits
[4]
$353.80 per man per month x 12/222 days = 19.124
2. Pension Cost Per Hour
$1.017 per hour x 7.95 hours = 8.085
[(93.7% x 8 hrs.) + (6.3% x 7.25 hrs.)]
Sickness and Accident:
[4]
$17.00 per man per month x 12/222 = .919
mandays
Worker's Compensation:
[4]
6.3% x $137.228 = 8.645
------
Total Labor Related Cost Per Manday $55.923
Total Labor Cost Per Manday $137.958
-------
TOTAL COST PER MANDAY $193.881
[1] Rate applicable to maximum base annual wages.
[2] Rate and maximum base annual wages applicable to the State
of W. Virginia.
[3] Seller's rate and maximum base annual wages applicable to
the State of W. Virginia.
[4] Includes self-insured accrual rates. Each January l and
periodically during each calendar year, the current rate for
these costs will be substituted for the prior rate. As soon
as possible after the end of each calendar year, the actual
average rate for said calendar year will be substituted for
the prior rates and any necessary adjustment will be made,
retroactive to January 1 of said calendar year.
Page 18 of 20
EXHIBIT A-9
Page 5
LABOR AND LABOR RELATED COST ADJUSTMENT
LLRCA = LLR x L2-Ll
-----
L1
LLRCA = Labor and Labor Related Cost Adjustment
LLR = Base Mine Price Element Cost Per Ton from
Exhibit A-l
L1 = Base Cost Per Manday for Labor and Labor Related
Costs as of the Effective Date of this Agreement
contained in Exhibit A-3, Pages 2 through 4
L2 = Current Cost Per Manday for Labor and Labor
Related Costs as Computed in Accordance with
Exhibit A-3, Pages 2 through 4
LLRCA = $10.600 x 193.881 - 193.381
-----------------
193.381
LLRCA = $.027
UMWA PENSION AND BENEFIT TRUSTS COST ADJUSTMENT
PBTCA = PBTl - PBT
PBTCA = UMWA Pension and Benefit Trusts Cost Adjustment
PBT = Base Mine Price Element Cost Per Ton from
Exhibit A-l
PBT1 = Current Cost Per Ton for UMWA Pension and Benefit
Trusts
PBTCA = $1.650 - $l.600
PBTCA = $.050
Page 19 of 20
EXHIBIT A-9
Page 6
MATERIALS AND SUPPLIES COST ADJUSTMENT
MSCA = MS x [ WAPC] / 100
MSCA = Materials and Supplies Cost Adjustment.
MS = Base Mine Price Element Cost Per Ton from Exhibit A-l.
WAPC = Weighted average percent change of materials and
supplies indexes.
MSCA = $7.625 x [.976] / 100
MSCA = $.074
EXAMPLE CALCULATION TABLE
(6) (7)
% Change Weighted %
( 1) (2) (3) (4) (5) (Column Change
Mat. & Supplies BLS Index Weight Base Index New Index 5-4 x 100 (Column 3x6)
Cost Component Code Factor Value Value ---
4
Mining Machinery & 1192 0.200 368.500 372.625 1.119 .224
Equipment
General Material PP & PI, 0.273 277.667 277.667 0.000 0.000
& Supplies Table 8
Lumber & Wood 0849-0102 0.070 97.500 98.300 .821 .057
Finished Steel PP & PI, 0.071 347.425 346.815 (.176) (.012)
Products Table 8
Mine Roof Bolts 1081-0241 0.050 187.333 188.100 .409 .020
Wire & Cable 1026-03 0.039 206.133 212.300 2.992 .117
Power 0543-1514 0.114 419.600 438.825 4.582 .522
Oil 0575 0.033 798.775 800.333 .195 .006
General Purpose 1143 0.082 251.500 250.300 (.477) (.039)
Machinery and
Equipment
Electrical Mach. 117 0.068 236.100 238.900 1.186 .081
& Equipment -----
1.000 Materials & Supplies Weighted = .976
Average % Change (WAPC)
Page 20 of 20
EXHIBIT A-9
Page 7
GENERAL AND ADMINISTRATIVE COST ADJUSTMENT
G & ACA = G&AC X IPD2 - IPDl
-------------
IPDl
G & ACA = General and administrative cost adjustment
G&AC = Base Mine Price Element Cost Per Ton from Exhibit
A-l
IPDl Base Index = Most current index available ten (10) days
prior to the adjustment date for the base
quarter of contract (originally third quarter
of 1983)
IPD2 Current = Most current quarterly index available ten
(10) days prior to the adjustment date for
the second quarter preceding the appropriate
adjustment date of January 1, April 1, July
1, or October l.
G & ACA = $4.951 x 213.26 - 203.68
---------------
203.68
G & ACA = $.233
RECLAMATION FEE AND BLACK LUNG EXCISE TAX COST ADJUSTMENT
BLRCA = BLR1 - BLR
BLRCA = Black Lung Excise Tax and Reclamation Fee Cost
Adjustment
BLR = Base Mine Price Element Cost Per Ton from
Exhibit A-l
BLR1 = Current cost per ton for Black Lung Tax &
Reclamation Fee
BLRCA = $1.150 - $1.150
BLRCA = $0.00
ADJUSTED BASE MINE PRICE PER MBTU
The Adjusted Base Mine Price per million Btu shall be
calculated based on 13,000 Btu/Lb. "as received" coal quality as
follows:
Adjusted Base Mine Price C x 1,000,000
per MBtu -------------
13000 x 2000
Where C = The Adjusted Base Mine from
Exhibit A-2, contained in Appendix A.
Adjusted Base Mine Price per MBtu = $30.884 x 1,000,000
-------------------
13,000 x 2,000
Adjusted Base Mine Price Per MBtu = $1.188
Page 1 of 9
APPENDIX "B"
COAL PRICE AND PAYMENT
(Attached to and made a part of that certain Coal Supply
Agreement dated as of the 1st day of November, 1983, entered into
by and between CONSOLIDATED COAL COMPANY, as Seller, and NEW YORK
STATE ELECTRIC & GAS, as Buyer).
Page 2 of 9
EXHIBIT B-1
PRICE
The method of calculating the Billing Price in dollars per
ton, to be paid by Buyer to Seller, for the coal tonnage
delivered in each shipment is as follows:
Step 1 - Start with the Base Mine Price of each lot
represented in the shipment as determined
pursuant to Articles I and VII.
Step 2 - Determine the Adjusted Base Mine Price of each
lot represented in the shipment pursuant to
Articles IX and X.
Step 3 - Determine the Average Price for the shipment
pursuant to Article I.
Step 4 - Determine the Adjusted Average Price due to coal
quality pursuant to Article VIII.
Step 5 - Apply any penalty pursuant to Article VI, if
applicable.
Step 6 - Determine the Billing Price in dollars per ton
pursuant to Section 7.3.
The following examples 1 through 6 set forth the method of
calculating the Billing Price in dollars per ton.
Page 3 of 9
EXAMPLE 1
Basis:
A shipment is received containing 9855 tons of coal with an
"as received" analysis of:
% Moisture - 6.50
% Ash - 8.50
% Volatile - 37.50
As Received Btu/Lb - 13150
% Sulfur - 3.10
Ash Fusion degree F - 2200
Grind - 54
At the time of receipt of this shipment the following lots and
respective Base Mine Prices per million Btu are assumed:
Lot A = $1.195
Lot B = $1.219
Tot C = $1.173
At the time of receipt, the Adjusted Base Mine Price pursuant to
Article IX for each lot and the Average Price is assumed to have
been calculated to be:
Lot A = $1.215
Lot B = $1.256
Lot C = $1.234
------
$3.705/3 = $l.235
Calculations:
Step 1 - The Base Mine Price of each lot is:
Lot A = $1.195/MBtu
Lot B = $1.219/MBtu
Lot C = $1.173/MBtu
Step 2 - The Adjusted Base Mine Price of each lot is:
Lot A = $l.215/MBtu
Lot B = $1.256/MBtu
Lot C = $1.234/MBtu
Step 3 - The Average Price is $1.235/MBtu
Step 4 - Since the "as received" Btu/Lb of 13150 is within
the deadband of 13000 + - 200 Btu/Lb, a premium or
penalty calculation pursuant to Article VIII is not
required and the Adjusted Average Price is the same
as the Average Price ($1.235/MBtu).
Page 4 of 9
Step 5 - Since the "as received" analysis is not less than or
in excess of any of the Suspension Limits pursuant
to Article VI there are no penalties.
Step 6
Billing Price ($/ton) = A x B x 2000
------------ + FC
1,000,000
Where A = 13150
Where B = l.235
Where FC = 0.000
Billing Price ($/ton) = 13150 x 1.235 x 2000
-------------------- + 0.000
1,000,000
= $32.481/ton
Page 5 of 9
EXAMPLE 2
Basis:
All conditions of Example l are the same except the "as
received" Btu/Lb is 12850.
Calculations:
Step 1
Step 2 These are all the same as Example 1 and the
Step 3 Adjusted Average Price is $1.235/MBtu.
Step 4
Step 5
Step 6 - Billing Price ($/ton) = A x B x 2000
------------- + FC
1,000,000
Where A = 12850
Where B = 1.235
Where FC = 0.000
Billing Price ($/ton) = 12850 x 1.235 x 2000
-------------------- +0.000
1,000,000
= $31.740/ton
Page 6 of 9
EXAMPLE 3
Basis: All conditions of Example 1 are the same except the "as
received" Btu/Lb is 13250.
Calculations:
Step 1 These are the same as Example 1 and the Average
Step 2 Price is $1.235/MBtu.
Step 3
Step 4 - Since the "as received" Btu/Lb of 13250 is above
the deadband of 13000 + - 200 Btu/Lb, a premium
calculation pursuant to Article VIII is required as
follows:
Adjusted Average Price = AP x PAF
Where AP = 1.235
Where PAF = 0.738 (13250)
------- + 0.262 = 1.014
(13000)
Adjusted Average Price = 1.235 x 1.014
= 1.252
Step 5 Since the "as received" analysis is not less than
or in excess of any of the Suspension Limits
pursuant to Article VI, there are no penalties.
Step 6
Billing Price ($/ton) = A x B x 2000
------------ + FC
1,000,000
Where A = 13250
Where B = 1.252
Where FC = 0.000
Billing Price ($/ton) = 13250 x 1.252 x 2000
-------------------- + FC
1,000,000
= $33.178/ton
Page 7 of 9
EXAMPLE 4
Basis: All conditions of Example l are the same except the "as
received" Btu/Lb is 12750.
Calculations:
Step 1 These are the same as Example l and the
Step 2 Average Price is $1.235/MBtu.
Step 3
Step 4 - Since the "as received" Btu/Lb of 12750 is
below the deadband of 13000 + - 200 Btu/Lb, a
penalty calculation pursuant to Article VIII
for each lot is required as follows:
Adjusted Average Price = AP x PAF
Where AP = l.235
Where PAF = 1.69 (12750)
------- - 0.69 = 0.968
(13000)
Adjusted Average Price = 1.235 x 0.968
= 1.195
Step 5 Since the "as received" analysis is not less
than or in excess of any of the Suspension
Limits pursuant to Article VI, there are no
penalties.
Step 6
Billing Price ($/ton) = A x B x 2000
------------ + FC
1,000,000
Where A = 12750
Where B = 1.195
Where FC = 0.000
Billing
Price ($/ton) = 12750 x 1.195 x 2000
-------------------- + 0.000
1,000,000
= $30.473/ton
Page 8 of 9
EXAMPLE 5
Basis: All conditions of Example l are the same except the "as
received" Btu/Lb is l2550.
Calculations:
Step 1 These are the same as Example l and the
Step 2 Average Price is $l.235/MBtu.
Step 3
Step 4 - Since the "as received" Btu/Lb of 12550 is
below the deadband of 13000 + - 200 Btu/Lb, a
penalty calculation pursuant to Article VIII
is required as follows:
Adjusted Average Price = AP x PAF
Where AP = l.235
Where PAF = 1.69 (12550)
------- - 0.69 = 0.942
(13000)
Adjusted Average Price = l.235 x 0.942
= 1.163
Step 5 Since the "as received" Btu/Lb of 12550 is
less than the Suspension Limit of 12600
pursuant to Article VI, a penalty of 10% of
the Adjusted Average Price is required.
1.163 x 0.90 = l.047
Step 6
Billing Price ($/ton) = A x B x 2000
------------ + FC
1,000,000
Where A = 12550
Where B = 1.047
Where FC = 0.000
Billing
Price ($/ton) = 12550 x 1.047 x 2000
-------------------- + 0.000
1,000,000
= $26.280/ton
Page 9 of 9
EXAMPLE 6
Basis: All conditions of Example l are the same except the "as
received" Btu/Lb is 13450 and freeze conditioning has
been applied at the rate of 2 pints/ton and a cost of
$0.75 per pint or $1.50 per ton.
Calculations:
Step l These are the same as Example 1 and the
Step 2 Average Price is $1.235/MBtu.
Step 3
Step 4 - Since the "as received" Btu/Lb of l3450 is
above the deadband of 13000 + - 200 Btu/Lb, a
premium calculation pursuant to Article VIII
is required as follows:
NOTE: Since the "as received" Btu/Lb of
13450 is above the upper limit of
13400, the premium is calculated on
the basis of 13400 Btu/Lb.
Adjusted Average Price = AP x PAF
Where AP = l.235
Where PAF = 0.738 (l3400)
------- + 0.262 = 1.023
13000
Adjusted Average Price = 1.235 x 1.023
= 1.263
Step 5 Since the "as received" analysis is not less
than or in excess of any of the Suspension
Limits pursuant to Article VI, there are no
penalties required.
Step 6
Billing Price ($/ton) = A x B x 2000
------------ + FC
1,000,000
Where A = 13450
Where B = 1.263
Where FC = $1.50/ton / 2 = $0.75
Billing
Price per ton = 13450 x 1.263 x 2000
-------------------- + 0.75
1,000,000
= $34.725/ton
Page l of 2
APPENDIX "C"
EQUAL EMPLOYMENT OPPORTUNITY COMPLIANCE (EEOC) REQUIREMENTS
(Attached to and made a part of that certain Coal Supply
Agreement dated as of the 1st day of November, 1983, entered into
by and between CONSOLIDATION COAL COMPANY, as Seller, and NEW
YORK STATE ELECTRIC & GAS CORPORATION, as Buyer).
EXHIBIT C-1
NEW YORK STATE ELECTRIC & GAS CORPORATION
EQUAL EMPLOYMENT OPPORTUNITY CERTIFICATE OF COMPLIANCE
It is understood that this supplement is a part of all existing
contracts or purchase orders or those which may be entered into
between NEW YORK STATE ELECTRIC & GAS CORPORATION and the
undersigned (hereinafter called Contractor) within one year from
the date of this supplement to the extent that such contracts or
purchase orders are covered by applicable law and rules and
regulations issued thereunder.
1. Equal Opportunity Clause - (Applicable to Contracts and
Orders Amounting to $10,000 or More). Contractor is aware
of and is fully informed of Contractor's responsibilities
under Executive Order 11246 as prescribed in Section 60-1.4
of 41 CFR and shall be bound by and agrees to the
provisions as contained in Section 202 of said Executive
Order, incorporated herein by reference pursuant to Section
60-1.4(d).
2. Segregated Facilities Certificate - (Applicable to
Contracts and Orders Amounting to $10,000 or More).
Contractor certifies that is does not and will not maintain
any facilities it provides for its employees in a
segregated manner, or permit its employees to perform their
services at any location, under its control, where
segregated facilities are maintained and that Contractor
will obtain a similar certification form its proposed
subcontractors in the form approved by the Federal
Government prior to the award of any non-exempt
subcontract.
3. Employer Information Report - (Applicable to Contracts and
Orders Amounting to $50,000 or More and if Contractor has
50 or More Employees). If Contractor is required by
federal regulations to file Employer Information Report
EEO-1 (Standard Form 100). Contractor hereby certifies
that it has done so or will file such reports in accordance
with applicable instructions and will continue to file such
reports unless or until on longer required by law or
regulation.
4. Affirmative Action Program - (Applicable to Contracts and
Orders Amounting to $50,000 or More and if Contractor has
50 or More Employees). If Contractor has 50 or more
employees and contracts or orders are $50,000 or more,
Contractor is required under federal regulations to develop
a written affirmative action program for each of its
establishments. If Contractor is so required, it certifies
that it has such a program or will prepare one not later
than 120 days after first contracts or orders become
effective and maintain such program until no longer
required by law or regulation.
5. Employment of Disabled Veterans and Veterans of the Vietnam
Era - (Applicable to Contracts and Orders Amounting to
$10,000 or More). Contractor shall be bound by and agrees
to the provisions of the Affirmative Action for Disabled
Veterans of the Vietnam Era clause set forth in Section 60-
250.4 of 41 CFR promulgated under the Vietnam Era Veterans
Readjustment Assistance Act of 1974, incorporated herein by
reference pursuant to Section 60-250.22.
6. Employment of the Handicapped - (Applicable to Contracts
and Orders Amounting to $2,500 or More, Executive Order
11758). Contractor shall be bound by and agrees to the
provisions of the Affirmative Action for Handicapped
Workers clause set forth in Section 60-741.4 or 41 CFR
promulgated under Section 503 of the Rehabilitation Act of
1973, incorporated herein by reference pursuant to Section
741.22.
7. Utilization of Minority Business Enterprises - (Applicable
to Contracts and Orders Amounting to $10,000 or More)
Contractor shall be bound by and agrees to the provisions
of the Utilization of Minority Business Enterprises clause
following Section 1-1.1310-2 of 41 CFR, incorporated herein
by reference.
8. Utilization of Women-Owned Business Concerns - (Applicable
to Contracts Amounting to $10,000 or More, Federal Register
Vol. 45, No. 92, 5/9/80). It is the policy of the United
States Government that women-owned businesses shall have
the maximum practicable opportunity to participate in the
performance of contracts awarded by any Federal Agency.
Contractor shall be bound by and agrees to the provisions
of the Utilization of Women-owned Business Concerns clause
set forth at Temporary Regulation 54 of the Federal
Procurement Regulations Chapter 1, Appendix of 41 CFR,
incorporated herein by reference.
9. Utilization of Small Business Concerns and Small Business
Concerns Owned and Controlled by Socially and Economically
Disadvantaged Individuals - (Applicable to Contracts and
Orders Amounting to $10,000 or More, ASPR Section 7-
104.14(a)). It is the policy of the Government that a fair
proportion of the purchases and contracts for supplies and
services for the Government be placed with small business
concerns.
Contractor shall be bound by and agrees to the provisions
of the Utilization of Small Business Concerns and Small
Disadvantaged Business Concerns clause set forth at
Temporary Regulation 50, Supplement 2, of the Federal
Procurement Regulations, Chapter 1, Appendix of 41 CFR,
incorporated herein by reference.
10. Utilization of Labor Surplus Area Concerns - (Applicable to
Contracts and Orders Amounting to $10,0000 or More). It is
the policy of the Government to award contracts to labor
surplus area concerns that have been so identified pursuant
to ASPR Section 1-805. Constracor shall be bound by and
agrees to use its best efforts to place its subcontracts in
accordance with this policy pursuant to ASPR Section
1-1.805-3(a), incorporated herein by reference.
11. New York Equal Opportunity Clause - (Applicable to
Contracts and Orders Amounting to $50,000 or More as to the
Contractor's workforce within the State of New York).
Contractor is aware of and is fully informed of
Contractor's responsibilities under Executive Order No. 45
and shall be bound by and agrees to the provisions as
contained in Section 3.1 of said Executive Order
incorporated herein by reference.
Company Consolidation Coal Company
Address Consol Plaza
Pittsburgh, PA 15241
By: R. M. Haynes VP & General Mgr-Human Resources
(Title)
Date 12/15/83
IMPORTANT: Please be sure to show your Company name and address
above the signature block:
Please remit to: New York State Electric & Gas Corporation
4500 Vestal Parkway East
Binghamton, New York 13902
Att: H. M. Vinci - Manager Contract
Administration
It is necessary to identify your firm as to whether it is in any
of the following categories. Please take a moment to answer the
questions below, as this may benefit us both considerably.
NO X YES Our firm is a MINORITY BUSINESS ENTERPRISE.
A "minority business enterprise" is defined as a business, at
least fifty percent (50%) of which is owned by minority group
members or, in the case of a publicly owned business at least
fifty-one percent (51%) of the stock of which is owned by
minority group members. For the purpose of the definition,
minority group members are Blacks, Hispanics, Asian America,
American Indians and Aleuts.
NO X YES Our firm is a WOMEN-OWNED BUSINESS.
A "women-owned business" is a business which is, at least
fifty-one percent (51%) owned, controlled and operated by a
woman or women. Controlled is defined as exercising the power to
make policy decisions. Operated is defined as actively
involved in the day-to-day management. For the purposes of this
definition, businesses which are publicly owned, joint stock
associations, and business trusts are exempted. Exempted
businesses may voluntarily represent that they are or are not,
women-owned if this information is available.
NO X YES Our firm is a SMALL BUSINESS CONCERN.
A "small business concern " is a small business as defined in
Section 3 of the Small Business Act and the regulations of the
Small Business Administration.
NO X YES Our firm is a SMALL BUSINESS CONCERN OWNED
AND CONTROLLED BY SOCIALLY AND ECONOMICALLY
DISADVANTAGED INDIVIDUALS
A "small business firm owned and controlled by socially and
economically disadvantaged individuals" is a small business
concern of which at least fifty-one (51%) is owned by one or more
socially and economically disadvantaged individuals, or in the
case of a publicly owned business, at least fifty-one percent
(51%) of the stock is owned by one or more socially and
economically disadvantaged individuals, and whose management and
daily business operations are controlled by one or more of such
individuals.
NO YES X Our firm is a LABOR SURPLUS AREA CONCERN.
A "labor surplus area concern" is defined as a concern that,
together with its first tier subcontractors, will perform sub-
stantially in labor surplus areas. A "labor surplus area" is
defined as a geographical area identified by the Department of
Labor as an area of concentrated unemployment or an area of labor
surplus.
Roger M. Haynes
VENDOR'S NAME AUTHORIZED NAME
Roger M. Haynes
VENDOR'S ADDRESS SIGNATURE
DATE 12/15/83
Page l of 2
APPENDIX "D"
TERM
(Attached to any made a part of that certain Coal Supply
Agreement dated as of the 1st day of November, 1983, entered into
by and between CONSOLIDATION COAL COMPANY, as Seller, and NEW
YORK STATE ELECTRIC & GAS CORPORATION, as Buyer.)
Page 2 of 2
EXHIBIT D-1
The total coal purchased for Somerset Unit #1, including but
not necessarily limited to this Agreement, is defined as the sum
of Lot A, Lot B and Lot C. After the initial term of each lot,
as specified in Article I, Section 1.2, each lot will come up for
renegotiation as set forth in the following schedule.
Ending Date
Date Renegotiation Beginning Date of Term
Lot Notice Required By of Term ("Termination Date")
A July 1, 1985 January 1, 1986 December 31, 1988
B July 1, 1986 January 1, 1987 December 31, 1989
C July 1, 1987 January 1, 1988 December 31, 1990
A July 1, 1988 January 1, 1989 December 31, 1991
B July 1, 1989 January 1, 1990 December 31, 1992
C July 1, 1990 January 1, 1991 December 31, 1993
A July 1, 1991 January 1, 1992 December 31, 1994
B July 1, 1992 January 1, 1993 December 31, 1995
C July 1, 1993 January 1, 1994 December 31, 1996
A July 1, 1994 January 1, 1995 December 31, 1997
B July 1, 1995 January 1, 1996 December 31, 1997
C July 1, 1996 January 1, 1997 December 31, 1997