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Exhibit 10.10
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COAL SALES AGREEMENT
Dated as of November 1, 1983
Between
NEW YORK STATE ELECTRIC & GAS CORPORATION
and
CONSOLIDATION COAL COMPANY
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TABLE OF CONTENTS
ARTICLE PAGE
ARTICLE I TERM OF AGREEMENT, RENEGOTIATION, AVERAGE PRICE, DIVERSION, AND TEST COAL..... 2
ARTICLE II SOURCE OF COAL................................................................ 9
ARTICLE III QUANTITY OF COAL............................................................. 11
ARTICLE IV LOADING...................................................................... 12
ARTICLE V WEIGHING, SAMPLING, AND ANALYSIS............................................. 17
ARTICLE VI COAL QUALITY................................................................. 22
ARTICLE VII PRICE........................................................................ 27
ARTICLE VIII PRICE ADJUSTMENT FOR HEATING QUALITY......................................... 29
ARTICLE IX ADJUSTMENT OF BASE MINE PRICE................................................ 30
ARTICLE X GOVERNMENTAL IMPOSITION...................................................... 38
ARTICLE XI FORCE MAJEURE................................................................ 41
ARTICLE XII RECORDS AND AUDITS........................................................... 43
ARTICLE XIII BILLING AND PAYMENT.......................................................... 45
ARTICLE XIV LAWS AND REGULATIONS......................................................... 46
ARTICLE XV ASSIGNMENT................................................................... 46
ARTICLE XVI WAIVERS AND REMEDIES......................................................... 48
ARTICLE XVII CONFIDENTIALITY.............................................................. 49
ARTICLE XVIII MISCELLANEOUS................................................................ 49
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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 #1"); 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;
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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 at 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 September 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 September 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 #1) 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.
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Section 1.3 - Renegotiation of Article VIII.
Beginning July 1, 1997 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 September 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.
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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.
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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.
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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 #1 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 #1 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 4.1.
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.
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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.
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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 1, 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.
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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
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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 #1 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 of 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 #l. 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:
(l) 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.
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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
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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 5.2 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 #1. 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 #l, 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 #1, the Standards and
Suspension Limits set forth in Sections 6.2 and 6.3 shall be revised.
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Section 6.2 ILLEGIBLE PAGE
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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.
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PAGE 23
ARTICLE VII
PRICE
Section 7.1 - 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 $1.173
excluding the cost of a freeze conditioning agent. The Base Mine Price shall be
adjusted beginning January 1, 1984 pursuant to Articles IX and X ("Adjusted Base
Mine Price).
Section 7.2 - Average Price and Adjusted Average Price.
An Average Price shall be calculated pursuant to Section 1.4 for each
shipment. The Average Price shall be further adjusted, on a per shipment basis,
for changes in heating quality of coal pursuant to Article VIII hereof
("Adjusted Average Price") and subject to a reduction as set forth in Article VI
hereof.
Section 7.3 - Billing Price.
The Billing Price per ton of coal, pursuant to this Agreement, to be
paid on a per shipment basis is determined by the following formula:
A x B x 2000
------------ +FC
Billing Price ($/ton) = 1,000,000
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-1, 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.
26
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:
27
PAGE 25
Adjusted Average Price = AP x PAF
Where: AP = Average Price
PAF = 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,
28
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-1 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 $l0.600 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).
29
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 percentage change in the materials and supplies
indices. The respective base indices and weighing factors that are used
to calculate the weighted average percent change in the materials and
supplies indices are as follows:
30
PAGE 28
BLS
Materials and Supplies Index Number Weight
Cost Component and Description Factor Base Index Value
-------------- --------------- ------ ----------------
Mining Machinery and Equipment Code 1192 0.200
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.
31
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 and Equipment Code 1143 0.082
Fluid Power & Equipment
Electrical Machinery Code 117 0.068
and Equipment Electrical Machinery &
Equipment
TOTAL: 1.000
32
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 preceeding 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.
33
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.
34
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 at $.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.
35
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.
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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.
37
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 its 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.
38
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.
39
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.
40
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.
41
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.
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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
43
PAGE 41
obligations and responsibilities of Buyer hereunder. If each such assignee is
(are) considered to be creditworthy as determined by Seller applying rea
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 assign 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.
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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.
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PAGE 43
ARTICLE XVIII
MISCELLANEOUS
Section 18.1 - Entirety and Titles.
Section 18.2 - Termination.
Section 18.3 - Damage.
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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
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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
_________________________________ By _________________________________
Assistant Secretary President
ATTEST: CONSOLIDATION COAL COMPANY
_________________________________ By _________________________________
Assistant Secretary
48
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).
49
PAGE 2 OF 20
EXHIBIT A-1
ELEMENTS OF BASE MINE PRICE PER TON OF COAL
Base Mine Price
Price Adjustment Base Mine Price Elements Elements Ident.
Exhibits Cost Per Ton Symbol
---------------- ------------------------ ---------------
A-3A, A-3B Labor & Labor Related Cost 10,600 LLR
-------
A-4 UMWA Pension & Benefit Trusts Cost 1,600 PBT
-------
A-5 Materials & Supplies Cost 7,625 MS
-------
A-6 General & Administrative Cost 4,950 G&AC
-------
A-7 Black Lung Excise Tax and BLR
Reclamation Fee Cost 1,150
-------
Firm 4,575 F
-------
Total Base Mine Price Per Ton $30,500
=======
50
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) $______
51
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-L1)
-------
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
52
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% $l9.673
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.
53
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)
- --------
$117.96?
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
- ---------------------------
$l17.967 (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).
54
PAGE 7 OF 20
EXHIBIT A-3
PAGE 4
Labor Related Costs Per Manday
- ------------------------------
F.I.C.A. Tax:
6.70%[1] x $136.807 = $9.166 per Manday
Federal Unemployment Insurance:
1.4% x $7,000[2] (divided by) 222 days = .441
State Unemployment Insurance:
3.9% x $8000[3] (divided by) 222 days = 1.405
Black Lung Self-Insurance:
5.91%[4] x $136.807 = 8.085
Health and Retirement Benefits:
1. Medical Benefits
$353.80 per man per month[4] x 12 (divided by) 222 days = 19.124
2. Pension Cost Per Hour
$1.017 per hour x 7.95 hours
[(93.7% x 8 hrs.) + (6.3% x 7.25 hrs.)] = 8.085
Sickness and Accident:
$17.00 per man per month x[4] 12 (divided by) 222 mandays = .919
Worker's Compensation:
6.3% x[4] $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.
55
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
PBTI = Current Cost Per Ton for UMWA Pension and Benefit Trusts
56
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
at Price Indexes".
MSCA = MS x [WAPC] + 100
MSCA = Materials and Supplies Cost Adjustment.
MS = Base Mine Price Element Cost Per Ton from Exhibit A-1.
WAPC = Weighted average percent change of materials and supplies indice
57
PAGE 10 OF 20
EXHIBIT A-5 (CONTINUED)
MATERIALS AND SUPPLIES COST ADJUSTMENT
--------------------------------------
EXAMPLE CALCULATION TABLE
(1) (2) (3) (4) (5) (6) (7)
% Change
(Column
5-4 x 100 Weighted %
Mat. & Supplies Cost BLS Index Weight Base Index New Index --- Change
Component Code Factor Value Value 4 (Column 3x6)
- ---------- --------- ------ ---------- --------- --------- ------------
Mining Machinery & 1192 0.200
Equipment
General Material & Supplies PP & PI, 0.273
Table 8
Lumber & Wood 0849-0102 0.070
Finished Steel Products PP & PI, 0.071
Table 8
Mine Roof Bolts 1081-0241 0.050
Wire & Cable 1026-03 0.039
Power 0543-1514 0.114
Oil 0575 0.033
General Purpose Machinery 1143 0.082
and Equipment
Electrical Mach. & 117 0.068
----- ------------
Equipment
1.000 Materials & Supplies Weighted =
Average % Change (WAPC) ------------
58
PAGE 11 OR 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 - IPDI)
-------------
IPDI
G & ACA = General and administrative cost adjustment
G&AC = Base Mine Price Element Cost Per Ton from Exhibit A-1
IPD1 = 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.
59
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-1
BLR1 = Current cost per ton for Black Lung Excise Tax & Reclamation Fee
60
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.
61
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 = $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
------
Adjustment Base Mine Price Per Ton $30.884
------
Adjustment Base Mine Price Per MBtu (From Exhibit A-8) $ 1.188
------
62
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% $l9.673
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.
63
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).
64
Page 17 of 20
EXHIBIT A-9
Page 6
Labor Related Costs Per Manday
F.I.C.A. Tax:
6.70% [1] x $137.228 = $9.194 per Manday
Federal Unemployment Insurance:
1.4% x $7,000 [2] / 222 days = .441
State Unemployment Insurance:
3.9% x $8,000 [3] / 222 days = 1.405
Black Lung Self-Insurance:
5.91% [4] x $137.228 = 8.110
Health and Retirement Benefits:
1. Medical Benefits
$353.80 per man per month [4] 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:
$17.00 per man per month x [4] 12 / 222 mandays = .919
Worker's Compensation:
6.3% x [4] $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
- --------------
[l] 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.
65
Page 18 of 20
EXHIBIT 1-9
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-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 Coat 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 = PBTI - PBT
PBTCA = UMWA Pension and Benefit Trusts Cost Adjustment
PBT = Base Mine Price Element Cost Per Ton from Exhibit A-1
PBT1 = Current Cost Per Ton for UMWA Pension and Benefit
Trusts
PBTCA = $1.650 - $1.600
PBTCA = $.050
-----
66
Page 19 of 20
EXHIBIT A-9
Page 6
MATERIALS AND SUPPLIES COST ADJUSTMENT
---------------------------------------
MSCA = MS x [WAPC] /OBJECT OMITTED/ 100
MSCA = Materials and Supplies Cost Adjustment.
MS = Base Mine Price Element Cost Per Ton from Exhibit
A-1.
WAPC = Weighted average percent change of materials and
supplies index.
MSCA = $7.625 x [.976] + 100
MSCA = $.074
-----
EXAMPLE CALCULATION TABLE
(6)
(1) (2) (3) (4) (5) % Change (7)
Mat. & Supplies BLS Index Weight Base Index New Index Value (Column Weighted %
Cost Component Code Factor Value 5-4 x 100 Change
--- (Column 3x6)
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) ---------
67
Page 20 of 20
EXHIBIT A-9
Page 7
GENERAL AND ADMINISTRATIVE COST ADJUSTMENT
G & ACA = G&AC x IPD2 - IPD1
------------
IPDl
G & ACA = General and administrative cost adjustment
G&AC = Base Mine Price Element Cost Per Ton from Exhibit A-1
IPD1 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
Index = preceding the appropriate adjustment date of January 1, April 1, July
1, or October 1.
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-1
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
------
68
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).
69
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 I.
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.
70
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
Lot 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 = $1.235
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 = $l.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 ($1.235/MBtu).
71
Page 4 of 9
Step 5 - Since the "as received" analysis is nor less than
or in excess of any of the Suspension Limits pursuant
to Article VI there are no penalties.
Step 6 -
Billing Price ($/ton) = A x B x 2000 + FC
------------
1,000,000
Where A = 13150
Where B = 1.235
Where FC = 0.000
Billing Price ($/ton) = 13150 x 1.235 x 2000 + 0.000
--------------------
1,000,000
= $32.481/ton
72
Page 5 of 9
EXAMPLE 2
Basis:
All conditions of Example 1 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 Adjusted
Step 3 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
73
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 Price
Step 2 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
74
Page 7 of 9
EXAMPLE 4
Basis: All conditions of Example 1 are the same except the "as received" Btu/Lb
is 12750.
Calculations:
Step 1 These are the same as Example 1 and the Average Price
Step 2 is $1.235/MBtu.
Step 3
Step 4 - Since the "as received" Btu/Lb of 12750 is above the deadband
of 13000+/-200 Btu/Lb, a premium calculation pursuant to
Article VIII for each lot is required as follows:
Adjusted Average Price = AP x PAF
Where AP = 1.235
Where PAF = 1.69 (12750)
------ - 0.69 = 0.968
(13000)
Adjusted Average Price = 1.235 x 0.968
= 1.195
Step 5 Since the "as received" analysis is not less
than or in excess of any of the Suspension Limits
pursuant to Article VI, there are no penalties.
Step 6 Billing Price ($/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
75
Page 8 of 9
EXAMPLE 5
Basis: All conditions of Example 1 are the same except the "as received"
Btu/Lb is 12550.
Calculations:
Step 1 These are the same as Example 1 and the Average Price
Step 2 is $1.235/MBtu.
Step 3
Step 4 - Since the "as received" Btu/Lb of 12550 is above the
deadband of 13000+/-200 Btu/Lb, a penalty calculation
pursuant to Article VIII is required as follows:
Adjusted Average Price = AP x PAF
Where AP = 1.235
Where PAF = 1.69 (12550) - 0.69 = 0.942
-------
(13000)
Adjusted Average Price = 1.235 x 0.942
= 1.163
Step 5 Since the "as received" Btu/Lb of 12550 is less than the
Suspension Limit of 12600 pursuant to Article VI, a penalty of
10% of the Adjusted Average Price is required.
1.163 x 0.90 = 1.047
Step 6 Billing Price ($/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
76
Page 9 of 9
EXAMPLE 6
Basis: All conditions of Example 1 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 $1.5O per ton.
Calculations:
Step 1 These are the same as Example 1 and the Average Price
Step 2 is $1.235/MBtu.
Step 3
Step 4 - Since the "as received" Btu/Lb of 13450 is above the deadband
of 13000+/-200 Btu/Lb, a premium calculation pursuant to
Article VIII is required as follows:
NOTE: Since the "as received" Btu/Lb of 13450 is above the
upper limit of 13400, the premium is calculated on the
basis of 13400 Btu/Lb.
Adjusted Average Price = AP x PAF
Where AP = 1.235
Where PAF = 0.738 (13400) + 0.262 = 1.023
-------
(13000)
Adjusted Average Price = 1.235 x 1.023
= 1.263
Step 5 Since the "as received" analysis is not less than or in excess
of any of the Suspension Limits pursuant to Article VI, there
are no penalties required.
Step 6 Billing Price ($/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
77
Page 1 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).
78
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 Class - (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 it 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 from
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-I (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 no 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
by reference.
8. Utilization of Women-Owned Business Concerns - (Applicable to Contracts
and Orders 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 as
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 $10,000 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. Contractor 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: \s\ [Illegible] VP and General Manager - Human Resources
---------------------------------------------------------
(Title)
Date 12/15/93
---------------------------------------------------------
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
79
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 Americans, 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 substantially 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
/s/ Roger M. Haynes
- ---------------------------------- -----------------------------
VENDOR'S ADDRESS SIGNATURE
12/15/83
-----------------------------
DATE
80
Page 1 of 2
APPENDIX "D"
TERM
(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.)
81
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
82
ASSIGNMENT AND AMENDMENT TO COAL SALES AGREEMENT
THIS ASSIGNMENT AND AMENDMENT, made and entered into on
January 1, 1995, 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 Delaware corporation ("CCC"), CONSOL
PENNSYLVANIA COAL COMPANY, a Delaware Corporation ("CPCC"), NINEVEH COAL
COMPANY, a Delaware corporation ("NCC"), GREENON COAL COMPANY, a Delaware
corporation ("GCC"), McELROY COAL COMPANY, a Delaware corporation ("MCC"), and
QUARTO MINING COMPANY, an Ohio corporation ("QMC").
WITNESSETH:
WHEREAS, Buyer and CCC are parties to a Coal Sales Agreement
made and entered into as of November 1, 1983 (the "Agreement");
WHEREAS, CCC desires to assign a joint and several interest in
its rights and obligations under the Agreement to each of CPCC, NCC, GCC, MCC
and QMC, each of which desires to accept and assume such interest;
WHEREAS, Buyer desires to consent to such assignments; and
83
WHEREAS, Buyer and Seller wish to amend the Agreement in certain
respects.
NOW THEREFORE, in consideration of the premises and mutual covenants
and undertakings of the parties herein contained, Buyer and Seller, intending to
be legally bound hereby, agree as follows:
1. Effective January 1, 1992, CCC hereby assigns to each of CPCC, NCC,
GCC, MCC and QMC and CPCC, NCC, GCC, MCC and QMC hereby accepts, a joint and
several interest in the rights and obligations of "Seller" under the Agreement.
Buyer hereby consents to such assignments.
2. CPCC, NCC, GCC, MCC and QMC hereby assume, jointly and severally
with CCC all rights and obligations of "Seller" under the Agreement. CCC shall
remain principally liable with respect to all obligations and rights assumed by
CCC under the Agreement.
3. The parties agree that, effective January 1, 1992, all references to
"Seller" in the Agreement shall be understood to refer to CCC, CPCC, NCC, GCC,
MCC and QMC.
-2-
84
4. Effective January 1, 1995, the Agreement is amended in the following
respects:
A. Except as specifically provided in this Assignment and Amendment,
all references in the Agreement to "Somerset Unit #1" shall be deleted and
replaced by "Kintigh Unit #1".
B. Section 1.1 of the Agreement is deleted in its entirety and replaced
by the following new Section 1.1:
Section 1.1 - Term of Agreement
The term of this Agreement shall extend from the date hereof
("Effective Date") through December 31, 2003 (the "Term"). No later
than June 30, 2003 the parties shall meet to determine if the Agreement
is to be extended under mutually agreeable terms and conditions.
C. The second and third paragraphs of Section 1.2 of the Agreement are
deleted in their entirety and replaced by the following new paragraphs:
The Base Mine Price, and adjustments thereto pursuant to
Article IX and X, shall initially apply as follows: for Lot A from
January 1, 1995 through December 31, 1997, for Lot B from
-3-
85
January 1, 1995 through December 31, 1998 and for Lot C from January 1,
1995 through December 31, 1999. 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, 1997
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 VIII - "Price"
Article IX - "Adjustment of Base Mine Price"
Such renegotiation shall apply to the lot, either A,
B or C, currently up for renegotiation. Prior to January 1, 1997, Buyer
and Seller shall explore a methodology for determining an evaluated
replacement price. If a new methodology cannot be agreed upon, then the
terms and conditions of this Agreement shall remain in effect.
D. Section 1.2 of the Agreement is further amended by
changing the date "July 1, 1985" in the seventh paragraph therein to
"July 1, 1997".
-4-
86
E. Section 1.3 of the Agreement is amended by
changing the date "July 1, 1985" in the first paragraph therein to
"July 1, 1997".
F. Section 1.5 of the Agreement is amended by
deleting all references to "Somerset Unit #1" therein and replacing
them with "Kintigh Unit #1 and the Milliken Station".
G. The first paragraph of Section 2.1 of the
Agreement is deleted in its entirety and replaced with the following
new paragraph:
The source of coal subject to this Agreement
("Basic Source Coal") for Kintigh Unit #1 shall be Seller's
Blacksville No. 2 Mine and for the Milliken Station shall be
Seller's Blacksville No. 2 Mine, Bailey Mine and Enlow Fork
Mine (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 Kintigh Unit #1 or to the Milliken
Station, as the case may be, 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
-5-
87
Sections 6.1, 6.2, 6.3 and 6.4, and is otherwise suitable, in
Buyer's judgment, for use at Kintigh Unit #1 or the Milliken
Station, as the case may be.
H. Section 3.1 of the Agreement is deleted in its entirety and replaced by
the following new Section 3.1:
Section 3.1
Subject to Articles I and VI, Buyer shall order, accept and pay for,
and Seller shall sell and deliver, (a) the Annual Coal Tonnage' Requirement of
Kintigh Unit #1, (b) the Annual Coal Tonnage Requirement of the Milliken Station
during calendar years 1995 through 1997, and (c) a minimum of 70% of the Annual
Coal Tonnage Requirement of the Milliken Station during calendar years 1998
through 2003.
Commencing with calendar year 1998, if the parties' obligations with
respect to one or more lots of coal to be delivered to Kintigh Unit #1 ceases
pursuant to Section 1.2 or Section 1.3 of this Agreement, then the parties'
obligations with respect to deliveries of coal to the Milliken Station during
such calendar year shall also change as follows:
-6-
88
Deliveries to Deliveries to the
Kintigh Unit #1 Milliken Station
--------------- ----------------
3 Lots 70% of Annual Coal Tonnage Requirement
2 Lots 50% of Annual Coal Tonnage Requirement
1 Lot 50% of Annual Coal Tonnage Requirement
0 0
I. Section 3.2 of the Agreement is amended deleting
the reference to "Somerset Unit #1" in the third paragraph thereof and
replacing it with "Kintigh Unit #1 and the Milliken Station".
J. Article V of the Agreement is amended by deleting
all references to "Somerset Unit #1" therein and replacing them with
"Kintigh Unit #1 or the Milliken Station".
K. Article VI of the Agreement is amended by adding
the following new Section 6.4 thereto:
Section 6.4
Unless otherwise mutually agreed by Buyer and
Seller, coal delivered to the Milliken Station shall
meet the quality specifications included in Sections
6.2 and 6.3 of this Agreement, except that the sulfur
content of coal delivered to the Milliken Station shall
average no greater than 1.7 pounds per million Btu
during the period January 1, 1995 through June 30,
1995.
-7-
89
L. Section 7.1 of the Agreement is amended by adding the
following new second paragraph thereto:
During the period January 1, 1995 through June 30,
1995, the Base Mine Price per million Btu, for coal supplied
for the Milliken Station, is $.808 excluding the cost of a
freeze conditioning agent. Effective as of July 1, 1995, the
Base Mine Price per million Btu, for coal supplied for the
Milliken Station shall be the Average Price as defined in
Section 1.4.
M. Section 13.2 of the Agreement is amended by changing the
reference to "Consolidation Coal Company" in two places therein to
"CONSOL Inc." and changing the reference to "Account Number 127-7247"
to "Account Number 107-3965".
N. Article XVIII of the Agreement is amended by adding the
following new Section 18.6 thereto:
Section 18.6 - Administration
CONSOL Inc. ("CONSOL") shall administer this Agreement
exclusively on behalf of Seller to include, without limitation, the
following activities: (a) all actions and decisions to be taken or
made by Seller as provided in this
-8-
90
Agreement, including those relating to administration, enforcement or
termination of the Agreement, shall be taken or made by CONSOL, (b)
all payments by Buyer shall be made to CONSOL, and (c) any amendment,
supplement or modification to or renegotiation of this Agreement shall
be negotiated by CONSOL, on behalf of Seller, before execution.
O. Exhibit D-1, page 2 of 2, to the Agreement is deleted in its
entirety and replaced by a new Exhibit D-l, page 2 of 2, attached hereto.
5. All of the parties hereto have obtained all necessary approvals
from their respective Boards of Directors and are authorized by their
bylaws and other corporate documents to enter into this Assignment and
Agreement. The Vice President - Sales of CONSOL Inc. has the authority as
Attorney in Fact to act for those corporations comprising "Seller" herein
in executing this Assignment and Amendment.
6. All other terms and conditions of the Agreement shall remain in
full force and effect.
-9-
91
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Amendment effective as of the day and year first above written.
ATTEST: NEW YORK STATE ELECTRIC & GAS
CORPORATION
/s/ Paul Williams By: /s/ Jeffrey K. Smith
- ------------------ ---------------------------
ATTEST: CONSOLIDATION COAL COMPANY
CONSOL PENNSYLVANIA COAL COMPANY
NINEVEH COAL COMPANY
GREENON COAL COMPANY
McELROY COAL COMPANY
QUARTO MINING COMPANY
/s/ By: /s/ John W. Dailey
- ------------------ ---------------------------
Vice President - Sales
CONSOL Inc.
Attorney in Fact
-10-
92
Page 2 of 2
EXHIBIT D-1
The total coal purchased for Kintigh 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, 1997 January 1, 1998 December 31, 2000
B July 1, 1998 January 1, 1999 December 31, 2001
C July 1, 1999 January 1, 2000 December 31, 2002
A July 1, 2000 January 1, 2001 December 31, 2003
B July 1, 2001 January 1, 2002 December 31, 2003
C July 1, 2002 January 1, 2003 December 31, 2003
So by the end of 2001 we can have all 3 lots renegotiated.
-11-
93
AMENDMENT NO. 2 TO COAL SALES AGREEMENT
THIS AMENDMENT, made and entered into on October 15, 1996, 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 Delaware corporation, CONSOL PENNSYLVANIA COAL COMPANY, a
Delaware corporation, NINEVEH COAL COMPANY, a Delaware corporation, GREENON COAL
COMPANY, a Delaware corporation, McELROY COAL COMPANY, a Delaware corporation,
and QUARTO MINING COMPANY, an Ohio corporation (collectively, "Seller").
WITNESSETH:
WHEREAS, Buyer and Seller are parties to a Coal Sales
Agreement made and entered into as of November 1, 1983 and amended by the
Assignment and Amendment to Coal Sales Agreement dated January 1, 1995 (the
"Agreement");
WHEREAS, Buyer and Seller wish to further amend the Agreement
in certain respects.
NOW THEREFORE, in consideration of the premises and mutual
covenants and undertakings of the parties herein contained, Buyer and Seller,
intending to be legally bound hereby, agree as follows:
94
I. Section 5.1 of the Agreement is deleted in its entirety and replaced by
the following new Section 5.1:
Section 5.1 - Weighing
The weight of coal delivered hereunder shall be determined by Buyer as
soon as practicable after arrival of coal at Kintigh Unit #1 or Milliken
Station on Buyer's scales which shall meet the standards set forth by the
Association of American Railroads (AAR). 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 AAR standards on a mutually
agreed to periodic basis. Buyer shall maintain its scales at all times in
accordance with good maintenance practice to ensure 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 Buyer's pay
scales, then Seller shall so advise Buyer in writing and Buyer shall
demonstrate the accuracy of Buyer's scales with an unofficial material test
within a tolerance of +/-0.5% for a belt scale, or weigh car within a
tolerance of +/-0.2% for the platen scale at Milliken Station. Buyer shall
conduct said test on the first or second train received after receipt of
Seller's written notification. If Buyer's scale is found to be within the
above tolerance, then Buyer shall resume using the scale. If Buyer's scale
is out of the above tolerance or Buyer is unable to demonstrate the
accuracy of the scale by
-2-
95
the first or second train delivery following notification, then all weights
for shipments after said notification shall be determined on an alternative
scale mutually agreed upon by Buyer and Seller that meets AAR standards.
Such scale shall continue to be used until such time that Buyer
demonstrates to Seller that Buyer's pay scale is within AAR tolerances.
Buyer is responsible for any weighing charges that may result from use of
an alternate scale other than Buyer's or Seller's.
In the event that Buyer's weights are unavailable for any shipment for
any reason, other than as provided for in the above paragraph, the total
weight of the shipment shall be determined by multiplying the number of
cars received in the shipment by the average individual net car weight
determined from the three (3) most recent similar shipments.
2. All of the parties hereto have obtained all necessary approvals from
their respective Boards of Directors and are authorized by their bylaws and
other corporate documents to enter into this Amendment No. 2. The Vice President
- - Sales of CONSOL Inc. has the authority as Attorney in Fact to act for those
corporations comprising "Seller" herein in executing this Amendment No. 2.
3. All other terms and conditions of the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2
-3-
96
effective as of the day and year first above written.
ATTEST: NEW YORK STATE ELECTRIC & GAS
CORPORATION
Mary P. Sayman By: Jeffrey K. Smith
- ------------------------------ ----------------------------
ATTEST: CONSOLIDATION COAL COMPANY
CONSOL PENNSYLVANIA COAL
COMPANY
NINEVEH COAL COMPANY
GREENON COAL COMPANY
McELROY COAL COMPANY
QUARTO MINING COMPANY
By: John W. Dailey
- ------------------------------ ----------------------------
Vice President - Sales
CONSOL Inc.
Attorney in Fact
-4-
97
AMENDMENT NO. 3 TO COAL SALES AGREEMENT
THIS AMENDMENT, made and entered into on April 17, 1997, 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
Delaware corporation, CONSOL PENNSYLVANIA COAL COMPANY, a Delaware corporation,
NINEVEH COAL COMPANY, a Delaware corporation, GREENON COAL COMPANY, a Delaware
corporation, McELROY COAL COMPANY, a Delaware corporation, and QUARTO MINING
COMPANY, an Ohio corporation (collectively, "Seller").
WITNESSETH:
WHEREAS, Buyer and Seller are parties to a Coal Sales Agreement made and entered
into as of November 1, 1983 and amended by the Assignment and Amendment to Coal
Sales Agreement dated January 1, 1995 and Amendment No. 2 to Coal Sales
Agreement dated October 15, 1996 (the "Agreement");
WHEREAS, Buyer and Seller wish to further amend the Agreement in certain
respects.
NOW THEREFORE, in consideration of the premises and mutual covenants and
undertakings of the parties herein contained, Buyer and Seller, intending to be
legally bound hereby, agree as follows:
1. Delete "October 1" and replace with "September 1" in Article I, Section 1.2 -
Renegotiation of Articles VII and IX, Paragraphs 4 and 5.
2. All other terms and conditions of the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3
effective as of this day and year first above written.
ATTEST NEW YORK STATE ELECTRIC & GAS
CORPORATION
By: Mary McGlone By: Jeffrey K. Smith
- ------------------- ----------------------
98
ATTEST: CONSOLIDATION COAL COMPANY
CONSOL PENNSYLVANIA COAL
COMPANY
NINEVEH COAL COMPANY
GREENON COAL COMPANY
McELROY COAL COMPANY
QUARTO MINING COMPANY
By: Will McKay By: John W. Dailey
------------------ -----------------------------
Vice President, CONSOL Inc.
Attorney in Fact
99
[Consol Inc. Letterhead]
December 8, 1997
Mr. Gary L. Sickles
Vice President Generation
New York State Electric & Gas Corporation
P.O. Box 5224
Corporate Drive
Kirkwood Industrial Park
Binghamton, NY 13902-5224
Re: Coal Sales Agreement Dated November 1, 1983, as amended January 1, 1995 and
October 15, 1996 (the "Agreement")
Dear Mr. Sickles:
This letter will confirm and document our discussions wherein
we have reached agreement on the quantity, price and quality to be applicable
under the Agreement during the period January 1, 1998 through December 31, 2000.
1. The Base Mine Price for Lot A, Lot B and Lot C shall be
$0.868 per million Btu, subject only to adjustment
pursuant Article VIII and Article X.
2. The Standard Heating Value in Section 6.2 shall be 13200
Btu/lb.
3. The Suspension Limit Heating Value in Section 6.3 shall be
12800 Btu/lb.
4. The maximum Btu for calculating adjustments pursuant to
Section 8.3 shall be 13600 Btu/lb.
Except as modified above, all the provisions of the Agreement
shall remain in full force and effect.
100
Mr. Gary L. Sickles -2- December 8, 1997
If you are in agreement with the above, then please sign the
original and two copies of this letter and return. Upon execution by CONSOL, two
fully executed copies will be returned for your files.
Sincerely,
J. W. Dailey
ATTEST: NEW YORK STATE ELECTRIC & GAS
CORPORATION
By: Mary K. McGlone By: Gary L. Sickles
----------------------- -------------------------
ATTEST: CONSOLIDATION COAL COMPANY
CONSOL PENNSYLVANIA COAL
COMPANY
NINEVEH COAL COMPANY
GREENON COAL COMPANY
McELROY COAL COMPANY
QUARTO MINING COMPANY
Robert J. Zarecky By: John W. Dailey
- --------------------------- ------------------------
Asst. Secretary Vice President, CONSOL Inc.
Attorney in Fact
101
AMENDMENT NO. 4 TO COAL SALES AGREEMENT
THIS AMENDMENT, made and entered into on March 3, 1998, 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
Delaware corporation, CONSOL PENNSYLVANIA COAL COMPANY, a Delaware corporation,
NINEVEH COAL COMPANY, a Delaware corporation, GREENON COAL COMPANY, a Delaware
corporation, McELROY COAL COMPANY, a Delaware corporation, and QUARTO MINING
COMPANY, an Ohio corporation (collectively, "Seller").
WITNESSETH:
WHEREAS, Buyer and Seller are parties to a Coal Sales Agreement made and entered
into as of November 1, 1983 and amended by the Assignment and Amendment to Coal
Sales Agreement dated January 1, 1995, Amendment No. 2 to Coal Sales Agreement
dated October 15, 1996 and Amendment No. 3 to Coal Sales Agreement dated April
17, 1997 (the "Agreement");
WHEREAS, Buyer and Seller wish to further amend the Agreement in certain
respects.
NOW THEREFORE, in consideration of the premises and mutual covenants and
undertakings of the parties herein contained, Buyer and Seller, intending to be
legally bound hereby, agree as follows:
1. Delete "Section 17.1 - Confidentiality" in its entirety and replace with the
following new Section 17.1:
Section 17.1 - Confidentiality
The terms and conditions (including prices) set forth in this
Agreement, and information exchanged during negotiation and performance of this
Agreement, are considered by both Buyer and Seller to be confidential and
proprietary. Neither Buyer nor Seller shall disclose any of the terms and
conditions hereof nor any such information to any third party without the prior
written consent of the other except when disclosure in the sole judgment of the
party making the disclosure is required or appropriate (a) by statute, (b) by
regulation, order or request of a governmental agency, (c) in connection with a
judicial or administrative proceeding, (d) to Seller's lending institutions so
long as
102
Seller's lending institutions agree in writing to keep the contents of this
Agreement confidential and use it solely in connection with its loans to Seller
or (e) in connection with a sale or potential sale of Buyer's assets or stock.
2. All other terms and conditions of the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 4
effective as of this day and year first above written.
ATTEST: NEW YORK STATE ELECTRIC & GAS
CORPORATION
By: Mary McGlone By: Gary L. Sickles
-------------------- ------------------------------------
ATTEST: CONSOLIDATION COAL COMPANY
CONSOL PENNSYLVANIA COAL COMPANY
NINEVEH COAL COMPANY
GREENON COAL COMPANY
McELROY COAL COMPANY
QUARTO MINING COMPANY
By: Varlitt Beff By: Robert J. Zarecky
-------------------- ------------------------------------
Executive Vice President-Marketing
Attorney in Fact