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Exhibit 10.2
Tab B
Contract No. 78-AM-L1102
COAL SUPPLY AGREEMENT
THIS AGREEMENT is made as of this 15th day of June , 1989, by and
between TAIWAN POWER COMPANY, a corporation organized and existing under and by
virtue of the laws of the Republic of China, with its principal office at 242,
Roosevelt Road, Section 3, Taipei 10763, Republic of China (hereinafter referred
to as the "Buyer") and P & C "BITUMINOUS COAL", INC., a corporation organized
and existing under and by virtue of the laws of the State of Tennessee, U. S.
A., with its principal office at Third Floor, Center Court Building, 5110
Maryland Way, Brentwood, Tennessee 37027, U. S. A. (hereinafter called
"Seller").
WITNESSETH
WHEREAS, the Seller owns coal reserves in Wayne, Lincoln, and
Mingo Counties, West Virginia, referred to collectively as the Kiah
Creek Reserve, and produces coal therefrom through contract miners, and
has the authority to perform the obligations contemplated in this
Agreement; and
WHEREAS, the Buyer intends to purchase coal from the Seller
for its power plants; and
WHEREAS, the Seller is willing to supply coal to the Buyer in
accordance with the terms and conditions hereinafter set forth:
NOW THEREFORE, the Parties hereby agree as follows:
1. DEFINITIONS
The terms and expressions used in this Agreement shall have the
following meanings respectively assigned to them unless the context
shall otherwise require:
"Coal" means steam coal from Seller's Kiah Creek Reserve or from other
reserves with coal of similar qualities to those on the Kiah Creek
Reserve which Seller may from time to time acquire, provided however
that Buyer reserves the right to approve such newly acquired other
reserves, which approval shall not be unreasonably withheld. "Coal"
also means steam coal acquired by Seller from other sources in the
United States, but coal supplied from other sources shall not exceed
thirty percent (30%) of the coal shipped by Seller to Buyer in any
calendar year, unless otherwise agreed by both Parties.
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"C" means degree(s) centigrade or degrees(s) Celsius as defined in the
"International System of Units".
"Year" means a calendar year commencing 1st January and ending 31st
December.
"F.O.B.T." means free on board a vessel designated by the Buyer,
including trimming and stowage.
"Kcal" means Kilocalorie(s) as defined in the "International System of
Units".
"Kg" means Kilogram(s) as defined in the "International System of
Units".
The expression "mm" means Millimeter(s) as defined in the
"International System of Units".
"Port of Loading" means the loading facilities of Coal Monitor I or
International Marine Terminals near the Port of New Orleans at Seller's
option, or another suitable loading facility as may be agreed by Buyer
and Seller.
The term "pratique" means permission to do business at a port by a ship
that has complied with all applicable government regulations.
"Ton(s)" means metric ton(s) as defined in the "International System of
Units".
"United States dollar(s)" or U.S. dollar(s) or "US$" means the
dollar(s), the lawful currency of the United States of America.
A fraction of a cent in any calculation shall be rounded up to a cent
if such fraction is one-half of a cent or more, and shall be rounded
down otherwise.
"ASTM" means American Society for Testing & Materials.
The term "trimming" means any and all work of trimming by manpower,
spouts, or any such trimmers as may be available at the Port of
Loading.
2. PURPOSE
In reliance on Seller's representations and warranties in Articles 18
and 19, and subject to the terms and conditions herein, Buyer agrees to
purchase and Seller agrees to sell certain Coal as specified herein.
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3. QUANTITY
3.1 Quantity For the Term of This Agreement
The quantity of Coal to be supplied by the Seller and purchased by the
Buyer hereunder shall be as follows:
Year Quantity
- - - - - - - - - - - -
1994 1,100,000 Tons
1995 1,100,000 Tons
1996 1,100,000 Tons
1997 1,100,000 Tons
1998 1,100,000 Tons
1999 1,100,000 Tons
3.2 Annual Quantity
The nominal quantity of Coal for each year as determined pursuant to
Section 3.1 shall be subject to increase or reduction by an amount not
to exceed ten percent (10%) thereof at the sole option of the Buyer.
3.3 Dedicated Quantity
Seller hereby dedicates to this Agreement sufficient coal reserves from
its Kiah Creek Reserve, or from any other reserves which it may
hereafter acquire, as shall be required to enable Seller to meet its
ongoing obligations hereunder. If during the term of this Agreement
Seller desires to sell or otherwise dispose of its Kiah Creek Reserve,
or any part thereof, it shall first notify Buyer and shall provide
Buyer with satisfactory evidence, as Buyer may reasonably require, that
Seller retains ownership of coal reserves sufficient to satisfy its
ongoing obligations hereunder.
3.4 Reduced Need
In the event that Buyer's need for the Coal hereunder is reduced, as a
consequence of a reduction in Buyer's system electric load
requirements, a change in the construction schedule for a power plant,
a suspension, cessation, or interruption of the operation of a power
plant, environmental regulations, or other reasons beyond Buyer's
reasonable control, Buyer may reduce its purchases hereunder by more
than the contracted variance under Section 3.2 by giving written notice
not shorter than six months to the Seller. After such notice from Buyer
to Seller, and as long as Buyer continues to reduce purchases to less
than the minimum quantities otherwise to be delivered under this
Agreement,
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Buyer shall not enter into any new agreement for purchase of similar
coal to be delivered during such time as this Agreement remains in
effect. In the event of reduced need as a result of Buyer's general
reduction of coal supplies or purchasing, Buyer will allocate the
reduction ratably among all of its suppliers. In the event a reduced
need is produced for coal of specific characteristics, Buyer will
allocate the reduction ratably among all of its suppliers of coal of
those particular characteristics.
4. QUALITY
The Coal supplied hereunder shall be in accordance with the following
specifications, based on ASTM standards, determined under and pursuant
to Article 6 hereof:
Nominal Minimum/Maximum
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Gross Heating Value 6300 Kcal/Kg 6000 Kcal/Kg min
(as received)
Total Moisture 8% 13% max
(as received)
Inherent Moisture 2% 3% max
(air dried)
Ash Content 13% 16% max
(air dried)
Sulfur Content 1% 1.25% max
(air dried)
Volatile Matter 30% 28% min
(air dried)
Grindability 48 Index 45 Index
(H.G.I.) Points Points min
Na20 in Ash (dry) 0.5% 1.2% max
Ash Softening Temp. (H=W) 1400 C 1200 C min
(under reducing condition)
Size 40 mm max 50 mm max
Under 2 mm 23% max 30% max
5. PRICE
5.1 Base Price
Subject to Coal meeting the specifications in Article 4, the base price
for Coal to be delivered in a given year shall be as determined in this
Article 5 (hereinafter referred to as the "Base Price"). The Base Price
shall be per Ton of Coal having the nominal values listed in Article 4
FOBT Port of Loading. Adjustments to the Base Price for each shipment
of Coal and the actual price to be paid by Buyer for each shipment of
Coal shall be determined under and pursuant to Articles 6, 7 and 8
hereof.
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The Base Price for each year shall be determined by mutual agreement in
accordance with the following:
For each year during which Coal shall be delivered under this
Agreement, the parties shall commence negotiation of the Base Price on
or about October 1 of the immediately preceding year and shall attempt
in good faith to reach mutual agreement on the Base Price for a given
year not later than December 31 of the immediately preceding year. In
the event that the parties are unable to reach an agreement on or
before such date, either party may refer the price issue to arbitration
in accordance with the provisions in Article 16. In no event shall the
failure of the Parties to agree on a Base Price constitute grounds for
withholding shipments or termination of this Agreement.
5.2 Provisional Price
In the event that, prior to January 1 of any particular year, the
Parties are unable to agree upon a Base Price, shipments of Coal for
that year shall be made at a Provisional Price in the same manner as if
the Parties had agreed upon a Base Price. The Provisional Price for any
particular year shall be the Base Price in effect in the last year in
which a Base Price was established. In the event that the Parties are
unable to agree upon a Base Price for 1994, the Provisional Price for
1994 quantities shall be the average base price per Ton, weighted by
actual quantities delivered and adjusted for gross heating value, paid
by Taipower for Coal delivered in 1993 under its contracts for the
purchase of steam coal from U.S. East Coast and Gulf Coast suppliers,
except contracts in which the 1993 price was established with reference
to an escalation formula. Shipments at the Provisional Price shall
continue until a Base Price has been agreed upon or determined in
arbitration.
5.3 Retroactive Price Adjustment
To the extent that it is ultimately agreed or determined that the Base
Price for the period when the Provisional Price was in effect should
have been different from the Provisional Price, that difference (as
calculated for the quantities actually shipped) will be repaid by the
benefitted party to the other party with interest at the prime rate of
the Bank of America, San Francisco. With respect to each shipment of
Coal at a Provisional Price, interest shall be payable for the period
commencing on the date P & C draws down the letter of credit in payment
for the shipment and ending on the date upon which the Base Price is
agreed or determined. Should the Base Price be determined by a decision
in arbitration, the date of determination shall be deemed to be the
date of the decision. After the Base Price is agreed upon or
determined, the party that has the right to receive the difference plus
interest shall notify the benefitted party promptly by telex or telefax
of the amount due, and the benefitted party shall make its payment to
the other party within 21 days after receipt of said notice.
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5.4 Determination of Base Price
In determining the Base Price, the Parties and, in the event of
arbitration, the Arbitrators shall seek to approximate to the greatest
extent possible the current market price for similar quality U.S. steam
coal delivered through U.S. East Coast or Gulf Coast ports under
contracts requiring multiple shipments during a minimum term of one
year providing for annual price renegotiation. In making such
determination, the Parties, and the Arbitrators as appropriate, shall
use as a reference the current prices at which similar quality steam
coal is then actually being bought and sold in arms-length transactions
between willing buyers and sellers, adjusting such prices to make such
transactions comparable insofar as possible with the terms and
conditions of this Agreement.
6. DETERMINATION OF QUANTITY AND QUALITY:
6.1 Determination of Quantity and Expenses
The weight of each shipment of Coal shall be determined upon loading to the
vessel designated by the Buyer hereunder at the Port of Loading by an
independent licensed marine surveyor of international standing ("Marine
Surveyor"). On each vessel, the Buyer shall have the option:
(i) Buyer to nominate the Marine Surveyor subject to Seller's
agreement, which agreement shall not be unreasonably withheld.
All charges of survey to be for Seller's account, or
(ii) Seller to nominate Marine Surveyor subject to Buyer's
agreement, which agreement shall not be unreasonably withheld,
and survey charges to be for Buyer's account, provided that
under option (ii), Seller will rebate the Buyer the costs of
survey upon Buyer's submission of a copy of the paid invoice
for Marine Surveyor services.
The determination of the Marine Surveyor hereunder shall be final,
conclusive and binding on the Parties.
The weight of a shipment of Coal stated in the bills of lading shall
correspond to the weight stated in the certificate of weight given by
such Marine Surveyor. A fraction of a Ton shall be rounded up to a Ton
if the fraction is one half of a Ton or more, and shall be disregarded
if it is less than one half of a Ton.
The Marine Surveyor shall determine the weight of each shipment of Coal
on the basis, if reasonably possible, of a survey of the vessel's
draft, utilizing the vessel immersion scale weights. In the event that
the Marine Surveyor has been unable to carry out a successful draft
survey on the vessel which is to be loaded, then the certificate of
weight shall be based on a deadweight survey. The Seller will
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inform the Buyer as soon as possible of the situation. The Marine
Surveyor will produce a report detailing, with reference to the
standard procedure for undertaking draft surveys, the reasons why the
draft survey was not carried out successfully and a copy of this report
promptly will be forwarded to the Buyer.
6.2 Hold Cleaning Inspection Certificate
The Marine Surveyor shall also conduct inspection of all holds of the
vessel designated by the Buyer at the Port of Loading to ensure that
they have been thoroughly cleaned and are suitable for carrying that
shipment of Coal under this Agreement, and shall give a hold cleaning
inspection certificate.
6.3 Standards and Determination of Quality and Expenses
(a) The quality of each shipment of Coal shall be determined, subject to
Section 6.4, upon loading to the vessel designated by Buyer an
independent inspection company of international standing ("Inspection
Company"). On each vessel, the Buyer shall have the option:
(i) Buyer to nominate the Inspection Company subject to Seller's
agreement, which agreement shall not be unreasonably withheld.
All charges of inspection to be for Seller's account, or
(ii) Seller to nominate Inspection Company subject to Buyer's
agreement, which agreement shall not be unreasonably withheld,
and inspection charges to be for Buyer's account, provided
that under option (ii), Seller will rebate the Buyer the costs
of inspection upon Buyer's submission of a copy of the paid
invoice for inspection services.
(b) The quality of each shipment of Coal shall be determined in accordance
with the sampling and analysis procedure set out in the ASTM standards
for each characteristic specified in Article 4. Determination shall be
made to the nearest 0.01% and to the nearest degree, millimeter or
index point. For the first shipment of each quarter during the term of
this Agreement, Seller shall cause, at its cost, an analysis to be made
by the Inspection Company of the ash component to determine its
characteristics of that shipment of coal with the following compounds:
Si02 - - - - - - - - % Ca0 - - - - - - - %
K20 - - - - - - - - % P205 - - - - - - - %
A1203 - - - - - - - - % Mgo - - - - - - - %
Fe203 - - - - - - - - % MN304 - - - - - - - %
Ti02 - - - - - - - - % S03 - - - - - - - - %
Undetermined - - - - - - - - - - - - - - - - - -
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Buyer reserves the right to have performed an Ash Analysis on any
shipment at Buyer's cost.
(c) Determination of quality shall be by analysis of samples extracted from
each vessel shipment. The number of samples shall be as determined by
the Inspection Company to be representative of each vessel shipment.
The procedure for extraction and retention of samples shall be as
follows:
(i) Samples of each shipment of Coal shall be extracted in sublots
and prepared, all in accordance with ASTM standards and
requirements. The mechanical sampling method shall be used.
(ii) Samples so extracted and prepared shall be divided into three
parts, of which:
(A) One shall be used for analysis of that shipment of
Coal by the Inspection Company to determine its
quality and characteristics pursuant to the
requirements set out in Section 6.3(b);
(B) One shall be delivered at the Seller's cost to the
Buyer in a suitable airtight container, properly
sealed, by air parcel or in such other manner as the
Buyer may direct; and
(C) One shall be retained by the Inspection Company in a
suitable airtight container (hereinafter referred to
as "Umpire Sample"), properly sealed and labeled, for
a period of eighty-four (84) days after completion of
loading, trimming and stowage of that shipment of
Coal F.O.B.T. vessel.
6.4 Umpire Sample
Either party may, within sixty-three (63) days from the date of its
receipt of the Inspection Company's report, challenge the determination
of the quality of a shipment of Coal. In such an event, the Umpire
Sample shall be sent to an independent laboratory ("Umpire Laboratory")
agreeable to both Parties for analysis, and the determination by such
Umpire Laboratory, based on its analysis of the Umpire Sample, of the
quality and characteristics of said shipment of the Coal shall be
final, conclusive and binding on the Parties hereto; provided, however,
that if the difference between such Umpire Laboratory's determination
and the determination of the Inspection Company under Section 6.3
hereof is within the tolerance level recognized under the ASTM
standards for "Reproducibility," such difference shall be disregarded
for all purposes and the Inspection Company's determination shall be
final, conclusive and binding on the Parties hereto, the cost of the
analysis by such Umpire Laboratory shall be borne and paid for by the
party requesting such further determination.
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6.5 Buyer's Right to Attend Survey and Inspection
The Buyer, at Buyer's expense, shall have the right to appoint
representative(s) to attend and observe the survey and inspection of
the weight and/or quality of any shipment of the Coal at the Port of
Loading at any time.
7. ADJUSTMENT OF PRICE BASED ON QUALITY; REJECTION OF SHIPMENT
Base Price per Ton as applicable to a shipment of Coal shall be adjusted
pursuant to this Article 7 to account for quality variations determined in
accordance with Article 6. Adjustments under this Article 7 initially shall be
made in accordance with, and the initial commercial invoice to Buyer under
Section 9.1(a) shall be based upon, the quality determinations made by the
Inspection Company. Further adjustments to the Base Price and the invoice as may
be necessitated by determinations of the umpire Laboratory under Section 6.4
shall be made as provided in Section 8.2. As used in this Article 7, the
"applicable Base Price" shall be deemed to be the Base Price applicable to a
particular shipment of Coal as determined under Article 5.
7.1 Gross Heating Value
(a) If the gross heating value ("GHV") of a shipment of Coal as determined
by the Inspection Company is in the range of 6200 Kcal/Kg and 6800
Kcal/Kg, inclusive, the Base Price of that shipment of Coal shall be
increased or decreased in accordance with the formula set forth below:
Base Price Increase or Decrease =
applicable actual GHV thereof - Contract Nominal GHV (6300)
Base Price x - - - - - - - - - - - - - - - - - - - - - - - -
Contract Nominal GHV (6300)
(b) If the GHV of a shipment of Coal as determined as by the Inspection
Company is in the range of 6000 Kcal/Kg to 6199 Kcal/Kg, inclusive, the
Base Price of that shipment of Coal shall be reduced in accordance with
the formula set forth below:
Base Price reduction =
applicable (Contract Nominal GHV (6300) - actual GHV thereof)
Base price x - - - - - - - - - - - - - - - - - - - - - x 1.2
Contract Nominal GHV (6300)
(c) The Buyer shall have the right to reject any shipment of Coal if the
GHV of that shipment of Coal as determined by the Inspection Company is
below 6000 Kcal/Kg. If Buyer determines not to reject such shipment of
Coal, further price reduction shall be made as mutually agreed by the
Parties.
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(d) If the GHV of a shipment of Coal as determined by the Inspection
Company exceeds 6800 Kcal/Kg, it shall be deemed to be 6800 Kcal/Kg for
the purpose of determining the GHV Base Price adjustment for that
shipment of Coal.
7.2 Ash Content
(a) If the ash content of a shipment of Coal as determined by the
Inspection Company is in the range of 16 % and 14 %, inclusive, price
reductions in the Base Price of that shipment of Coal shall be made as
follows:
The applicable Base price shall be reduced in an amount computed at the rate of
0.7 % for each 1 % difference between the actual ash content percentage and 14
%, pro rata reduction to be made for differences less than one percent.
(b) The Buyer shall have the right to reject any shipment of Coal if, based
on the Inspection Company's determination, the ash content of that
shipment exceeds 16 %. If Buyer determines not to reject such shipment
of Coal, a further price adjustment for such shipment shall be made as
mutually agreed by the Parties.
7.3 Sulfur Content
(a) If the sulfur content of a shipment of Coal as determined by the
Inspection Company is in the range of 1.1 % and 1.25 %, inclusive,
price reductions in the Base Price of that shipment of Coal shall be
made as follows:
The applicable Base Price shall be reduced in an amount computed at the
rate of 0.7 % for each 0.1 % difference between the actual sulfur
content percentage and 1.1 % pro rata reduction to be made for
differences less than point one percent.
(b) The Buyer shall have the right to reject any shipment of Coal if, based
on the Inspection Company's determination, the actual sulfur content is
above 1.25 %. If Buyer determines not to reject such shipment of Coal,
then a further price reduction shall be made as mutually agreed by the
Parties.
7.4 Volatile Matter
(a) If the volatile matter of a shipment of Coal as determined by the
Inspection Company is in the range of 30 % and 28 %, inclusive, then
price reduction in the Base Price of that shipment of Coal shall be
made as follows: the applicable Base Price shall be reduced in an
amount computed at the rate of 0.1 % for each 1 % difference between 30
% and the actual volatile matter percentage, pro rata reduction to be
made for differences less than one percent.
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(b) The Buyer shall have the right to reject any shipment of Coal if, based
on the Inspection Company's determination, the volatile matter therein
is below 28 %. If Buyer determines not to reject such shipment of Coal,
a further price reduction shall be made as mutually agreed by the
Parties.
7.5 Grindability
The Buyer shall have the right to reject any shipment of Coal if, based
on the Inspection Company's determination, the grindability of that
shipment of Coal is below 45, provided however; Buyer shall not
exercise the right of rejection if the value determined by the
Inspection Company is within the tolerance level recognized under the
ASTM standards for "Reproducibility"; provided further however, a price
reduction shall be made as mutually agreed by the Parties.
7.6 Total Moisture
(a) If the total moisture percentage of a shipment of Coal as determined by
the Inspection Company is in the range of 10% and 13% inclusive, then
adjustment of total weight for invoice and price of that shipment of
Coal pursuant to Section 8.1 shall be made as follows:
(i) If the total moisture of a shipment of Coal exceeds 10 %, the
exceeded percentages shall be applied to and deducted from the
total weight of Coal for calculation of the total invoice
amount.
(ii) If the total moisture of a shipment of Coal exceeds 11.5 %,
the price of that shipment of Coal pursuant to Section 8.1 (i)
shall be further reduced by the following amount to compensate
for additional ocean freight payable by the Buyer for that
shipment of Coal by reason of such excessive moisture content:
Ocean Freight Quantity per M - 11.5 %
Rate per Ton X Section 6.1 X - - - - - - - -
100 % - 11.5 %
Where "M" represents the actual total moisture percentage of
that shipment of Coal as determined by the Inspection Company.
The deduction and charge in (i) and (ii) above shall be cumulative.
(b) The Buyer shall have the right to reject any shipment of Coal if, based
on the Inspection Company's determination, the total moisture exceeds
13 %. If Buyer determines not to reject such shipment of Coal, a
further price reduction for such shipment shall be made as mutually
agreed by the Parties.
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7.7 Combined Total Moisture and Ash
The Buyer shall have the right to reject any shipment of Coal if, based
on the Inspection Company's determination, the combined total moisture
percentage and the ash content percentage on as received basis exceed
twenty-five (25%) percent . If Buyer determines not to reject such
shipment of Coal, a further price reduction for such shipment shall be
made as mutually agreed by the Parties.
7.8 Other Coal Characteristics
If the quality for a shipment of Coal does not meet the minimum or
maximum specifications as set forth in Article 4 for Ash Softening
Temperature, Na20 in Ash, Inherent Moisture or Size, the Seller shall
be liable to the Buyer for any and all damages, losses, or other costs
caused by or related to failure to meet such specifications.
7.9 Rejection of Shipment
The Seller shall be liable for any and all losses and damages suffered
by the Buyer resulting from the Buyer's rejection of any shipment of
Coal under this Article 7, which losses and damages shall include,
without limitation, any and all amounts payable by the Buyer under or
in connection with the Buyer's charter of any vessel for the carriage
of that shipment of Coal, her voyage to the Port of Loading and any and
all amounts payable to the port authorities in that regard. Without
prejudice to the foregoing, if the Buyer rejects a shipment of Coal
under this Article 7 after the vessel with that shipment of Coal on
board has sailed from the loading terminal, the Buyer and the Seller
shall immediately confer with each other with a view to reaching
commercial arrangements satisfactory to them so as to minimize
resultant losses to either or both of them. In the absence of
agreement, Buyer's determination shall control. In the event a total of
two shipments of Coal either are subject to rejection under this
Article 7 during any two consecutive calendar years (whether or not
actually rejected), then the Buyer shall have the right to terminate
this Agreement and claim all losses and damages the Buyer may suffer as
a result of or in connection with such rejection of shipments and
termination of this Agreement.
8. DETERMINATION AND ADJUSTMENT OF PRICE OF EACH SHIPMENT OF COAL
8.1 The price for each shipment of Coal shall be determined in the
following two steps:
(i) the price per Ton shall be multiplied by the total tonnage of
the shipment of Coal as determined by the Marine Surveyor
under Section 6.1 and adjusted pursuant to Paragraph (i) of
Section 7.6(a); and
(ii) the resulting amount shall be reduced, as appropriate, by the
Freight Rate Adjustment specified in Paragraph (ii) of Section
7.6(a).
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As used in this Section 8.1, the price per Ton shall be the Base Price for a
shipment of Coal under Article 5 as adjusted pursuant to Article 7, all as
determined utilizing the Inspection Company's determinations under Article 6.
The adjustments to Base Price under Article 7 shall be cumulative.
The Seller shall advise the Buyer by telex, telefax or telegram of the price so
determined, stating in such telex, telefax or telegram the contract number of
this Agreement. Such price shall be stated in the Seller's commercial invoice
("Initial Commercial Invoice") to the Buyer, which shall be paid by the Buyer in
accordance with Section 9.1.
8.2 If a characteristic of the quality of a shipment of Coal is adjusted in
accordance with Section 6.4 and such characteristic is covered by
Article 7, then the calculations in Article 7 shall be reperformed
utilizing the quality determinations of the Umpire Laboratory, and the
price of Initial Commercial Invoice for that shipment of Coal shall be
further adjusted utilizing the revised calculations based on the
quality determinations of the Umpire Laboratory in place of the
determinations of the Inspection Company. Upon such further adjustment
of the price of the shipment of Coal, the Seller shall prepare and
submit to the Buyer another commercial invoice, setting out the price
of the shipment of Coal as so adjusted ("the New Invoice"). The New
Invoice shall supersede the Seller's Initial Commercial Invoice to the
Buyer under Section 9.1(a) for the same shipment of Coal. Upon the
Buyer's receipt of the New Invoice, the Parties hereto shall
immediately determine the difference between the amounts of the Initial
Commercial Invoice and the New Invoice. Such difference shall be paid
to the party to whom it is due, free of interest, within twenty-one
(21) days of the Buyer's receipt of the New Invoice.
9. PAYMENT
9.1 Payment by Letter of Credit
Not later than seven (7) days prior to the scheduled date of arrival of
the carrying vessel at the Port of Loading, the Buyer shall have
established an unconfirmed irrevocable sight letter of credit or sight
Buyer's usuance letter of credit through a first class bank in favor of
the Seller negotiable at any bank in the U.S.A. for an amount in U.S.
currency adequate to pay the Seller for the contract price of the Coal
to be shipped on that vessel in accordance with the terms of the
Agreement. The Seller shall receive payment under the the above letter
of credit upon presentation to the negotiating bank of the following
documents.
(a) The Seller's signed Initial Commercial Invoice in duplicate, setting
out the total quantity of Coal shipped (determined in accordance with
Section 6.1), the price of that shipment of Coal as determined in
accordance with Section 8.1, the applicable Base Price, all adjustments
made under Article 7 , and the calculations and data on which the price
is based, the name of the vessel, and the bills of lading date.
(b) Original clean on-board bills of lading in triplicate.
(c) Cargo manifest in duplicate.
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(d) Stowage plan in duplicate.
(e) The certificate of weight and the hold cleaning inspection certificate,
each in duplicate, issued by the marine Surveyor under Sections 6.1 and
6.2.
(f) The certificate of analysis in duplicate, issued by the Inspection
Company under Section 6.3.
(g) One copy of the Seller's telex advice to the Buyer regarding the
particulars of relevant shipment.
(h) Statement of fact in duplicate.
(i) A certificate of origin endorsed by a Chamber of Commerce certifying
that the Coal is of U.S. origin.
(j) Seller's certificate stating that, with respect to this Agreement and
that shipment of Coal: (1) no person has been employed or retained upon
an agreement or understanding for a commission, percentage, brokerage
or contingent fee in violation of the warranty in Section 19(a) of this
Agreement; (2) no commission, percentage, brokerage or contingent fee
has been paid in violation of the warranty in Section 19(a) of this
Agreement; and (3) no person has been or will be admitted to any share
or part of this Agreement or that shipment of Coal, or to any benefit
that may accrue therefrom, in violation of the warranty in Section
19(b) of this Agreement.
9.2 Shipment Advice
Upon completion of loading of a shipment of Coal on board the vessel
designated by the Buyer hereunder, the Seller shall by telex, telefax
or telegram immediately advise the Buyer of the contract number of this
Agreement, the letter of credit number and Republic of China import
permit number applicable to that shipment of Coal, details of
commercial invoice as set out in Section 9.1(a) above, the date of
completion of loading, trimming and stowage, and the full text of the
certificate given by the Inspection Company under Section 6.3. Within
five (5) days after completion of loading of a shipment of Coal, the
Seller shall forward to the Buyer by express registered air-mail one
original and one copy of the bills of lading, together with a copy of
each of other documents listed in Section 9.1. The face of the envelope
shall be marked "Shipping Documents", stating clearly the name of
carrying vessel and the contract number of this Agreement.
9.3 Seller's Default
If the Buyer is unable to receive or unload the Coal in the Republic of
China hereunder, or encounters difficulties in such receipt or
unloading or in clearing Republic of China customs of such a shipment
of Coal, as a result of the Seller's delay in making available to the
Buyer, pursuant to Section 9.2, one or more of the shipping documents
or the telex, telefax or telegram advice to the Buyer, or as a result
of any such document, upon presentment, failing to conform to the
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requirements stated in Section 9.1, regardless of whether that document
is acceptable to the negotiating bank upon the Seller's presentment of
indemnities, quarantees, undertakings and/or demurrage collaterals, or
otherwise, then in any such event, all costs, expenses, charges,
losses, damages and liabilities incurred by the Buyer in respect of
that shipment of Coal and/or the carriage thereof arising from such
delay or failure shall be borne and paid for by the Seller.
9.4 Banking Charges
Banking charges outside of Taiwan, Republic of China, if any, in
respect of or in connection with this payment under this Article 9
shall be for the Seller's account.
10. FOREIGN MATERIALS CONTAMINATION
10.1 Each shipment of the Coal hereunder will be of good grade meeting the
requirements set out in Article 4 hereof and substantially free of
impurities such as wood, iron, nonferrous materials, blast materials or
other foreign materials, whether emanating from mining operations,
storage, handling, loading or otherwise.
10.2 The Seller shall be liable to the Buyer for any and all damages,
losses, or other costs caused by or related to foreign materials found
in a shipment of Coal.
10.3 Buyer may suspend deliveries or terminate this Agreement if the weight
of foreign materials in any one shipment exceeds 10 Tons or the weight
of foreign materials in any two shipments within any twelve-month
period exceeds a total of 15 Tons.
10.4 Buyer will immediately notify Seller of the presence and weight of
foreign materials in any vessel for which damages, losses or other
costs or for which suspension of deliveries or termination of the
Agreement is sought. Buyer shall immediately segregate said foreign
materials for Seller's inspection, which inspection Seller shall
conduct, if at all, within fourteen (14) days after Seller's receipt of
Buyer's notice pursuant to this Section 10.4. Buyer shall have no
obligation to retain the segregated materials after the expiration of
such period.
11. RISK AND DELIVERY
11.1 Delivery
Prior to the first day of March in each year in which Coal is to be
supplied under this Agreement, Buyer shall provide Seller with a
tentative shipping schedule for that year, which schedule shall be
mutually agreed by both Parties. Seller shall deliver Coal to Buyer in
accordance with such schedule, as the schedule may be adjusted by Buyer
and as further specified in Buyer's shipment instructions pursuant to
Section 11.5. The schedule as adjusted by Buyer shall provide for
shipments in reasonable cargo lots evenly throughout the year on a
quarterly basis, meaning that approximately one-fourth of the annual
quantity (plus or minus twenty percent (20%) thereof at Buyer's option)
shall be lifted during each quarter of the year. Unless otherwise
agreed by the Parties in writing or unless caused by Force Majeure or
by P&C's refusal to accept nominations, failure by
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Taipower to lift approximately one-fourth of the annual quantity (plus
or minus twenty percent (20%) thereof at Buyer's option) in each
quarter of the year shall constitute a material breach of this
Agreement. This provision shall in no way increase or decrease the
annual quantity otherwise provided for in the Agreement.
11.2 Transfer of Title and Risk of Loss
Title to and risk of loss of each shipment of the Coal shall remain
with the Seller until the completion of loading, trimming and stowage
of that shipment as a whole F.O.B.T. vessel. At such time title and
risk of loss shall pass to Buyer and therafter insurance shall be
Buyer's responsibility. For Coal that is rejected hereunder, title and
risk of loss shall revert to Seller immediately upon rejection by
Buyer.
11.3 Seller's Responsibilities
The Seller shall be solely responsible for inland transportation and
insurance of the Coal and other related matters up to the point of
delivery F.O.B.T. vessel(s) at the Port of Loading and for the timely
delivery and orderly and proper loading, trimming and stowage of each
shipment of Coal hereunder on board the vessel designated by the Buyer.
The Seller shall be responsible for the loading, trimming and stowage
of each shipment of Coal on board the vessel to the satisfaction of the
shipmaster of that vessel. The Seller shall also provide free of charge
to the Buyer a safe berth with minimum draft at least equal in depth to
the depth of the Southwest Pass below New Orleans unless prevailing
river conditions mandate a lesser draft as determined by the Pilots'
Associations where a vessel either laden with a full and complete cargo
of the Coal or in ballast can safely reach and leave, and where it can
always lie safely afloat, and where the loading, trimming and stowage
of a cargo of Coal can be carried out as contemplated herein. In the
event the Pilots' Associations require a lesser draft at Coal Monitor I
north of New Orleans, Seller will move or cause to be moved Coal
Monitor I to a point south of Baton Rouge, but north of the Southwest
Pass, to a reasonable anchorage allowing a minimum draft equal in depth
to the depth of the Southwest Pass if such an anchorage is available.
11.4 Buyer's Responsibilities
The Buyer shall be solely responsible for the ocean transportation of
the Coal and shall arrange for single deck bulk carriers suitable to
enter, berth at and leave the Port of Loading. The Buyer shall be
entitled to make such arrangements under which the vessel designated by
it to carry any amount of Coal hereunder may take the Coal as a part of
her cargo or may load the Coal together with the coal not covered by
this Agreement. The Buyer shall ensure that each vessel designated by
it for the carriage of the Coal hereunder will: (a) provide the Seller
with free use of winches and related electricity power required by the
Seller during loading, trimming and stowage of the Coal on board such
vessel; and (b) have lighting facilities and crew available during the
loading operation.
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11.5 Buyer's Shipment Instructions
Not later than thirty (30) days before the estimated time of arrival at
the Port of Loading of the vessel designated by the Buyer, the Buyer
shall give written notice to the Seller of the matters stated below and
the Seller shall within two (2) working days after receipt of such
notice confirm to the Buyer that the vessel specified by Buyer is
acceptable to the shipping terminal and shall designate a safe berth
for vessel to load:
(i) The name and the particulars of the vessel;
(ii) A fourteen (14) - day laydays spread and the estimated time of
arrival ("ETA") of said vessel at the Port of Loading; and
(iii) The amount of Coal to be loaded on board said vessel, with ten
percent (10%) more or less at shipmaster's option.
The Buyer shall by telefax, telex or telegram immediately advise the
Seller of any change to the abovementioned notice.
The Buyer shall ensure that the shipmaster of each vessel designated by
it to carry the Coal hereunder will advise the Seller by radio of that
vessel's ETA at the nominated loading berth in the Port of Loading
approximately 168 hours, 72 hours and 24 hours in advance. The Buyer
shall also ensure that, not later than 72 hours prior to the vessel's
ETA at the nominated loading berth in the Port of Loading, the
shipmaster will provide Seller with written notice of the maximum
tonnage of Coal which vessel will load.
11.6 Delivery Obligations and Loading Rates
The Seller shall cause and ensure that:
(a) The amount of Coal for each shipment hereunder shall be as specified by
the Buyer in its notice given under Section 11.5 (subject to adjustment
at shipmaster's option pursuant to Section 11.5 (iii)) and shall be
available and ready for loading at the nominated loading berth, and
(b) The loading rates shall be agreed upon by the Parties at the time of
the negotiation on the Base Price for 1994. Thereafter, the loading
rates shall be reviewed annually.
11.7 Loading and Laytime
(a) Each vessel designated by the Buyer to carry any shipment of Coal may
tender the notice of readiness to load to the Seller or its agent at
any time upon that vessel's arrival at the Port of Loading, whether in
berth or not; provided that the vessel is in free pratique and ready in
all respects to load the Coal. The Seller shall confirm in writing its
receipt of such notice of readiness on the day when such notice is
tendered, if such notice is tendered between 0600 and 1800 hours on
that day; otherwise the Seller's written confirmation shall be given
during those hours of the day immediately following; provided however,
that if the Buyer's notice is tendered on a Christmas Day (December
25), the Seller's
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written confirmation shall be given during those hours on the day
immediately following. If the vessel is prevented from entering the
commercial limits of the Port of Loading because loading berth or
layberth or anchorage is not available under the order of Seller's
agent or the Port Authorities and the vessel is ready in all respects
to load, the notice of readiness may be tendered by radio within the
hours stated above.
(b) Laytime shall commence to run twenty-four (24) hours after the notice
of readiness to load is tendered and received, whether the vessel is in
berth or not; provided that if loading commences before the expiry of
such 24-hour period, laytime then commences to run upon commencement of
loading.
(c) Time required for shifting from anchorage to the berth shall not be
included in the laytime if the vessel was ordered by the Port Authority
or terminal to wait for the berth. Otherwise, all shifting time shall
be counted as laytime used.
(d) Time required for loading of vessel's bunkers and lubricants shall not
be included in the laytime except to the extent that the loading of the
Coal is carried out concurrently. Laytime shall end upon the completion
of loading, trimming and stowage of the relevant shipment of Coal on
board the vessel, provided that time required for vessel draft survey
pursuant to Section 6.1 shall be counted as part of the laytime.
(e) Time lost due to any cause described in Article 12, of which Seller has
given the Buyer written notice in accordance with that Article, shall
not be counted as laytime; provided, however, that time between the
occurrence of such Force Majeure and receipt of notice of its
occurrence by Buyer shall count as laytime.
11.8 Demurrage
(a) In the event that the Seller is unable to complete the loading,
trimming and stowage of a shipment of Coal F.O.B.T. vessel within the
laytime allowed hereunder, the Seller shall pay to the Buyer demurrage
at the rates shown below per running day (pro rata for fractions of a
day) for all time lost after expiry of the laytime allowed.
PARCEL SIZE IN THE RANGE DEMURRAGE/DESPATCH RATES
( Tons ) (U.S. Dollars/Day)
- - - - - - - - - - - - - - - - - - - - - - - - - -
45,000 - 75,000
75,001 and above subject to annual review
In the event that the loading, trimming and stowage of a shipment of
the Coal F.O.B.T. vessel are completed before the expiry of the laytime
allowed, the Buyer shall pay to the Seller despatch money at 50% of the
demurrage rate for all laytime saved. All claims for demurrage or
despatch money, as the case may be, in respect of the loading, trimming
and stowage of Coal F.O.B.T. vesssel shall be settled within 60 days
after the completion of loading, trimming and stowage of that shipment.
The demurrage rates shall be reviewed by the Parties hereto on an
annual basis.
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(b) Without limitation by any other provision in this Agreement including
the preceding Section 11.7 but as limited by Section 11.10, once the
vessel is on demurrage, all time lost, including time lost due to Force
Majeure, shall continue to count as demurrage.
(c) The Statement of Facts for presentment to the Buyer as one of the
documents required under the Buyer's payment by letter of credit under
Section 9.1 hereof shall be prepared by Seller's agent at Seller's cost
and confirmed by vessel's agent.
11.9 Overtime
The expense required for overtime work shall be borne by the party who
has requested same. If overtime work is ordered by the port
authorities, the expenses therefor shall be borne by the Seller;
provided however, the expenses for overtime of the officers and crew of
the vessel shall always be borne by the owner or operator of the
vessel.
11.10 Warping and Shifting of the Vessel
If warping and shifting alongside the wharf is necessary after the
vessel has berthed thereat, the time required therefor shall be
included in the laytime and demurrage, and the costs required for the
warping and/or shifting shall be borne by the Seller; provided that if
the shipmaster decides to shift the vessel after it has berthed
alongside the wharf for any reason other than the request, order or
recommendation of the Seller or the port authorities, the time required
for the shifting shall not be included in the laytime or demurrage, and
the costs required therefor shall be for the Buyer's account.
11.11 Cost of Delivery
The Seller shall bear all of the costs and expenses of and relating to
the loading of the Coal on the vessel, wharfage, export and other
taxes, imposts and other charges imposed by any Government or its
agencies having jurisdiction at Port of Loading, as well as other
similar costs which are normally considered to be for the Seller's
account. The Buyer shall bear the shipping agency, berthage, pilotage,
tugboat and line-handling fees, port charges and other similar costs
which normally are considered to be for the vessel's account. If there
is doubt as to which party should bear particular costs or expenses
related to the delivery, the Parties hereto agree that costs or
expenses directly related to the vessel shall be borne by the Buyer,
with all other costs and expenses borne by the Seller.
11.12 Seller's Shipment Default
In the event that the amount of Coal which the Seller has for any
shipment hereunder is insufficient to meet the Buyer's requirement for
that shipment stated in the Buyer's notice given under Section 11.5
(after taking into account the effect of any action by the shipmaster
in accordance with Section 11.5(iii), the Seller shall pay for all
losses and damages (including, without limitation, dead freight and
other expenses claimed by the shipping company) suffered by the Buyer
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arising from such insufficiency, and shall in addition pay for all
damages for delay in making that shipment.
12. FORCE MAJEURE
12.1 Events Constituting Force Majeure
Neither party hereto shall be liable for any delay or failure in the
performance of its obligations under this Agreement if and to the
extent that such delay or failure is directly caused by any event of
Force Majeure. The expression "Force Majeure," as used in this
Agreement, means cause or causes not within the control of the party or
parties claiming Force Majeure and includes, but is not limited to:
(a) Acts of God, War (declared or undeclared), blockage, riots, revolution,
insurrection, civil commotions, mobilizations, strikes, plagues,
epidemics, fires, floods, landslides, obstruction of navigation at the
Port of Loading, acts of government including court orders of any
branch or subdivision thereof, acts of public enemies; and major
break-downs of or damages to plants, equipment or facilities at mines,
railroads or ports, or other locations directly connected with
supplying, loading, or conveying the cargo from the mines to the
vessel, and
(b) Major breakdown of or damage to vessels nominated by the Buyer, however
caused, including, without limitation, acts of God, perils of the seas,
fire, barratry of the Master and/or crew, pirates, collisions,
strandings and accidents of navigation or latent defects in or
accidents to hull and/or machinery and/or boilers, whether occasioned
by the negligence, default or error of judgement of the pilot, Master,
mariners or other persons employed by the shipowner, or for those acts
the shipowner is responsible, and other causes of whatsoever kind or
nature beyond the control of the Buyer.
During any period in which mining or delivery of Coal is suspended or
curtailed at Seller's mines as a result of Force Majeure, Seller shall
allocate Coal shipped from the Seller's mines among Seller's customers
under contract from Seller's mines, including Buyer, in a fair and
reasonable manner.
12.2 Notices
The party whose performance of any obligation is directly affected by a
Force Majeure event under Section 12.1 shall, within three (3) working
days after the occurrence thereof, give notice thereof to the other
party by telex, telefax or telegram, and shall also within ten (10)
days thereafter as well as after the termination of such events, notify
the other party concerned in writing of particulars of the relevant
events and supply supporting evidence. The party affected by Force
Majeure shall use best efforts to mitigate the adverse effect thereof
on its performance hereunder, and shall resume, with the least possible
delay, performance of its obligations upon cessation of such cause.
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12.3 Affected Deliveries
With respect to any quantity of Coal as to which delivery was delayed
by Force Majeure, the party who has received the notice under Section
12.2 shall have the option to cancel such quantities or to take or
deliver same at a later date, such option to be exercised within six
(6) months after the Force Majeure event is terminated. The timing of
any such later deliveries shall be as reasonably specified by the party
who received notice of the Force Majeure.
12.4 Obligations Unaffected by Force Majeure
Should either Seller or Buyer declare Force Majeure, nothing in this
Article 12 shall relieve either the Seller or the Buyer from any of its
obligations under this Agreement (such as, but not limited to, the
obligation of the Buyer or the Seller to pay any amount which has
become due and payable under this Agreement) which are unaffected by
such declaration.
12.5 Extended Force Majeure
In the event Force Majeure events persist in the aggregate for more
than 300 days in any 365-day period, then the party not claiming Force
Majeure within a reasonable time thereafter may terminate this
Agreement by giving no less than 60 days prior notice to the other
party. No such termination shall excuse either party from performing
all obligations which became due under this Agreement before the date
of such termination.
13. TERMINATION
Without prejudice to and in addition to the Buyer's right of
termination of this Agreement under other articles hereof, if any of
the following events occurs, the Buyer shall have the right to
terminate this Agreement, holding Seller responsible for all resulting
damages, by serving on the Seller written notice of termination with
immediate effect.
(a) If all or a substantial portion of the Seller's property is subject to
a court order for disposal by public sale, disposal for failure to pay
taxes or any other similar disposal by a public authority; or if the
Seller files a petition or has a petition filed against it by any
person for reorganization, bankruptcy or other similar proceedings for
the rehabilitation of debtors; or
(b) the Seller undertakes a dissolution, a transfer of all or a substantial
portion of its business or a material alteration or abandonment of its
business as is presently conducted; or
(c) If the Seller is unable to meet any payment obligation as and when it
becomes due; or
(d) If the Seller ceases or loses the right to own or operate the Kiah
Creek Reserve and has no other substitute reserve approved by Buyer, or
if at any time the proven recoverable Kiah Creek Reserve or approved
substitute reserve is
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insufficient to satisfy the full remaining delivery requirements under
this Agreement.
14. CONFIDENTIALITY
The Parties shall treat this Agreement as confidential and neither
Party shall disclose its terms without the prior written consent of the
other, except to the extent required to carry out the obligations
herein, or to remedy any breach or as otherwise required by the laws,
rules, regulations and directions of the Governments of the Republic of
China and the Government of the United States or of any of the states
of the United States or any branch or subdivision thereof.
15. NO ASSIGNMENT
Except to the extent as the Parties may agree in writing, which
agreement shall not be unreasonably withheld , no assignment shall be
made by either Party or by operation of law of any of the Parties
rights or interest in this Agreement. Seller may not delegate any part
or all of its obligations hereunder to any third party. Seller shall
not be prohibited from hiring the services of contract miners, trucking
companies, barging companies, stevedoring companies, or of any other
companies which may be required for supplying coal to Buyer's vessel.
16. ARBITRATION
Except as to decisions identified as final and binding in other
provisions of this Agreement and except as otherwise provided herein,
all disputes arising in connection with the present Agreement shall be
finally settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by three arbitrators appointed in
accordance with the procedure set forth below and the said Rules. In
the Request for Arbitration and the Answer to the Request respectively,
each party shall appoint a party-appointed arbitrator. In the absence
of such an appointment by either of the Parties, the Court of
Arbitration of the International Chamber of Commerce shall make the
appointment.
Within thirty (30) days (or any extended period upon which the parties
agree) of the appointment of the second party-appointed arbitrator, the
two arbitrators so appointed shall select a third arbitrator to serve
as Chairman of the panel. If the two party-appointee arbitrators are
unable to agree upon a third arbitrator within the said 30-day period ,
the third arbitrator shall be selected by the ICC Court of Arbitration.
The arbitration shall take place in New York, New York, U.S.A. The
arbitration award shall be final and binding on the Parties and a
judgment may be entered thereon.
17. NOTICE
Any service of process, notice, certificate, statement, report,
declaration or other communication which either Party hereto will give
or make or may be required to give or make to the other Party hereunder
shall, unless otherwise mutually agreed or specifically provided
herein, be in writing and sent to such other Party's address specified
below or to such other address as the other Party by written notice may
specify, and shall be deemed to be properly given or made: (i) if
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delivered by hand, when received; (ii) if sent by registered mail (air
mail, if international), postage prepaid, when received; and (iii) if
given or made by telefax, telegram or telex on the day (which is a
business day at such place of receipt) following the date on which the
telefax, telegram or telex is dispatched; provided that in the case of
notice by telex, it was given with confirmed answerback, and provided
further that service of process may only be made by hand or by
registered mail.
To Seller: P & C "Bituminous Coal," Inc.
Third Floor, Center Court Building
5110 Maryland Way
Brentwood, Tennessee 37027
U.S.A.
Telex No. 555187 Answerback: P&K INTL NAS
Telefax No. (615) 377-1179
To Buyer: Taiwan Power Company
Fuel Department
9th Floor, Taipower Building
No. 242, Roosevelt Road, Section 3,
Taipei, 10763, Republic of China
Telex No. 27254 Answerback: TPCFUEL
Cable Address: TPCFUEL
Telefax No. (2) 341-0597
18. REPRESENTATIONS AND WARRANTIES
(a) This Agreement is entered into by the Buyer in reliance on the Seller's
representations and warranties as follows:
(i) As to Coal to be furnished from Seller's reserves, Seller has
and at all times will continue to have all right, title and
interest in and to the Coal; as to Coal which may come from
other sources, Seller will have at the time of delivery of
said Coal all right, title and interest therein.
(ii) Seller has the corporate right and governmental authority to
enter into and perform its obligations under this Agreement;
(iii) The Coal purchased hereunder will be delivered to Buyer free
and clear of any liens and encumbrances, claims of third
parties or restrictions regarding its use;
(iv) The proven recoverable mine reserves dedicated to this
Agreement in accordance with Section 3.3 are, and at all times
during the term of this Agreement will be, sufficient to
satisfy all delivery requirements under this Agreement; and
have not been and will not be sold to third parties;
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(v) As of the date of this Agreement, Seller is 100% owned by Pen
Holdings, Inc., a corporation organized and existing under and
by virtue of the laws of the State of Tennessee, U.S.A. with
its principal office at 3rd Floor, Center Court Building, 5110
Maryland Way, Brentwood, Tennessee 37027 U.S.A.; and
(vi) During the term of this Agreement if there is any change in
the percentages of ownership mentioned above, the Seller shall
immediately notify the Buyer in writing of such change.
These representations and warranties constitute the basis of this
Agreement, and if all or part thereof was incorrect when made or
becomes incorrect hereafter for whatever reason, the Buyer shall be
entitled to forthwith rescind, cancel or terminate this Agreement at
its option, and upon such rescission, cancellation or termination, in
addition to other remedies available to the Buyer, all of the Buyer's
obligations under this Agreement shall immediately cease and terminate.
(b) Seller represents and warrants that the production from the Kiah Creek
Reserve and from any other reserve approved by Buyer shall equal or
exceed 1.1 million Tons each year during the term of this Agreement. If
the production from Seller's reserves as aforesaid should in any year
for any reason, including Force Majeure, breach or otherwise, become
insufficient to satisfy such portion of the tonnage required to be
furnished from Seller's reserves, then in addition to other rights
Buyer may have, the following shall apply:
At Buyer's request, Seller shall use its best efforts to make up the
deficit by supplying substitute coal in accordance with the quality,
price and other terms and conditions of this Agreement from alternative
sources available to Seller.
(c) At the end of each year during the term of this Agreement, Seller's
Chief Production Officer shall provide the Buyer with written
certification under oath that all Coal required to be furnished in that
year from Seller's reserves was in fact furnished from such reserves.
(d) At any time during the course of this Agreement, and during any
arbitration under Article 16 or other litigation, Seller shall provide
Buyer at the request of Buyer such documentation, including related
documentation reasonably requested by Buyer, as establishes that Seller
meets the above representations and warranties. Further, Seller grants
Buyer and Buyer's authorized representative(s) the right to visit
Seller's mines and related facilities, from time to time, during normal
business hours and upon reasonable notice, to witness and review with
Seller its operations, mining plans, and shipping and other facilities,
and to examine mine reserves and review pertinent documents concerning
mine reserves.
19. WARRANTY AGAINST CONTINGENT FEES AND BENEFITS
(a) The Seller warrants that no person has been employed or retained to
solicit, secure or administer this Agreement or one or more shipments
of Coal upon an agreement or understanding for a commission,
percentage, brokerage or contingent fee, excepting bona fide full time
employees employed by the Seller
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for the purpose of securing or administering business and no such
commission, percentage, brokerage or contingent fee has been paid. For
breach or violation of this warranty the Buyer shall have the right to
annul this Agreement without liability and at the Buyer's discretion,
to deduct from the contract price the amount of consideration, or
otherwise recover, the full amount of such commission, percentage,
brokerage, or contingent fee.
(b) The Seller warrants that no officials or employees of the Government of
the Republic of China, including any subdivision or branch thereof, no
employees of the Buyer, and no consultants (or employees of a
consultant) retained by the Buyer whose service is in any way related
to the Buyer's selection of coal, coal mines or coal producers have
been or will be admitted, directly or indirectly, to any share or part
of this Agreement or to any one or more shipments of Coal or to any
benefit that may arise therefrom. Violation of this warranty will
subject the Seller to penalties under applicable law as well as give
the Buyer the right to annul this Agreement without liability and at
the Buyer's discretion to deduct from the contract price the amount of
consideration, or otherwise recover, the full amount of such benefit to
which any party has been admitted in violation of this warranty.
20. NO WAIVER; CUMULATIVE REMEDIES
(a) The failure of either party to enforce at any time any of the
provisions of this Agreement, or to require at any time performance by
the other party of any of the provisions hereof, shall in no way be
construed to be a waiver of such provision, nor in any way to affect
the validity of this Agreement or any part hereof, or the right of
either party thereafter to enforce each and every provision.
(b) All remedies afforded under this Agreement shall be taken and construed
as cumulative and in addition to every other remedy provided for herein
or otherwise available to a party.
21. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement of the Parties with
respect to the subject matter hereof and shall supersede any prior
expression of intent or understanding with respect to the transactions
contemplated herein. This Agreement may be amended or modified only in
writing, signed by the duly authorized representatives of the Parties
hereto.
22. SEVERABILITY
If any of the provisions of the Agreement shall be held to be illegal
or unenforceable, the validity, legality and enforceability of the
remaining provisions of the Agreement shall not in any way be affected
or impaired thereby.
23. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, U.S.A.
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24. SURVIVAL
The provisions of Article 14 (Confidentiality), Article 16
(Arbitration), Article 18 (Representations and Warranties), Article 19
(Warranty Against Contingent Fees and Benefits), and Article 23
(Governing Law), as well as any other provisions of this Agreement
affording a party a remedy hereunder, shall survive the termination or
expiration of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
by their respective authorized representatives.
SELLER: P&C "BITUMINOUS COAL", BUYER: TAIWAN POWER COMPANY
INC.
By: /s/ EDDIE P. S. PEN By: /s/ J. H. CHEN
------------------------- ---------------------------
Name: Eddie P. S. Pen Name: J. H. Chen
Title: President Title: President
ATTESTED:
By: /s/ S. M. CHANG
-----------------------
Name: S. M. Chang
TPC Contract
26
27
ADDENDUM NO. 1 OF CONTRACT NO. 78-AM-L1102
DATE: March 28, 1990
This Addendum, made by the undersigned parties, is based upon the
following premises:
A. The above-referenced contract (the "Contract") was entered into on
June 15, 1989 by Taiwan Power Company, as Buyer, and P & C "Bituminous Coal",
Inc., as Seller.
B. Effective January 15, 1990, the name of P & C "Bituminous Coal",
Inc. was changed to Pen Coal Corporation.
C. The parties hereto wish to amend the Contract to recognize the
change of name from P & C "Bituminous Coal", Inc. to Pen Coal Corporation.
In consideration of the premises recited above, the parties agree as
follows:
1. All references in the Contract to "Seller" shall be deemed from
January 15, 1990 forward to be references to Pen Coal Corporation.
2. All other terms and conditions of the Contract shall remain
unaltered.
IN WITNESS WHEREOF, the parties have executed this Addendum by their
duly authorized representatives.
SELLER: BUYER:
PEN COAL CORPORATION TAIWAN POWER COMPANY
By: /s/ JAMES R. MORRIS By: /s/ S. C. HSI
--------------------------- -------------------------
James R. Morris S. C. Hsi
Executive Vice President Vice President
& Chief Operating Officer
28
ADDENDUM NO. 2 OF CONTRACT NO. 78-AM-L1102
DATE: June 17, 1994
In accordance with the provisions of Clause 5.1, the Seller and Buyer
mutually agree that the Base Price for the year 1994 shall be FOBT USD36.60 per
metric ton.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date
indicated by their duly authorized representatives. All other terms and
conditions of the original Contract and Addendum No. 1 remain unaltered.
SELLER: BUYER:
PEN COAL CORPORATION TAIWAN POWER COMPANY
BY: /s/ WILLIAM E. BECKNER BY: /s/ S. C. HSI
---------------------- -------------------------
WILLIAM E. BECKNER S. C. HSI
PRESIDENT VICE PRESIDENT
29
ADDENDUM NO. 3 OF CONTRACT NO. 78-AM-L1102
DATE: SEP 26, 1994
In accordance with the provisions of Clause 11.6 (b), and Clause 11.8
(a), the Seller and Buyer mutually agree that the Loading Rate and the
Demurrage/Dispatch Rates for the year 1994 shall be as follows:
(1) at loading facilities of Coal Monitor 1
Parcel Size Loading Rate Demurrage/Dispatch
(Tons) (Ton/Day) (US$/Day)
--------------- ------------- ------------------
45,000 - 75,000 19,000 5,000/2,500
PWWD SSHINC
(2) at International Marine Terminals
Parcel Size Loading Rate Demurrage/Dispatch
(Tons) (Ton/Day) (US$/Day)
--------------- ------------- ------------------
45,000 - 75,000 30,000 5,000/2,500
75,001 and above 35,000 6,000/3,000
PWWD SSHINC
PWWD SSHINC means per weather working days of 24 consecutive
Hours, Saturdays, Sundays, Holidays included.
IN WITNESS WHEREOF, the parties have executed this Addendum on the
date indicated by their duly authorized representatives. All other terms and
conditions of the original Contract and Addenda No. 1 and No. 2 remain
unaltered.
SELLER: BUYER:
PEN COAL CORPORATION TAIWAN POWER COMPANY
BY: /s/ WILLIAM E. BECKNER BY: /s/ C. T. HSU
-------------------------- -------------------------
WILLIAM E. BECKNER C. T. HSU
PRESIDENT CHIEF ENGINEER
30
ADDENDUM NO. 4 OF CONTRACT NO. 78-AM-L1102
DATE: June 1, 1995
In accordance with the provisions of Clause 5.1, the Seller and Buyer
mutually agree that the Base Price for the year 1995 shall be FOBT USD38.10/MT
per metric ton.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date
indicated by their duly authorized representatives. All other terms and
conditions of the original Contract and Addendum Numbers 1, 2 and 3 remain
unaltered.
SELLER: BUYER:
PEN COAL CORPORATION TAIWAN POWER COMPANY
By: /s/ WILLIAM E. BECKNER By: /s/ S. Y. LEE for
--------------------- ---------------------
William E. Beckner S. C. Lai
President Vice President
31
ADDENDUM NO. 5 OF CONTRACT NO. 78-AM-L1102
DATE: OCTOBER 9, 1996
In accordance with the provisions of Clause 5.1, the Seller and Buyer
mutually agree that the Base Price for the year 1996 shall be FOBT USD37.71/MT
per metric ton.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date
indicated by their duly authorized representatives. All other terms and
conditions of the original Contract and Addendum Numbers 1, 2, 3 and 4 remain
unaltered.
SELLER: BUYER:
PEN COAL CORPORATION TAIWAN POWER COMPANY
By: /s/ WILLIAM E. BECKNER By: /s/ S. C. LAI
----------------------- -------------------------
William E. Beckner S. C. Lai
President Vice President
32
ADDENDUM NO. 6 OF CONTRACT NO. 78-AM-L1102
DATE: DECEMBER 8, 1997
In accordance with the provisions of Clause 5.1, the Seller and Buyer
mutually agree that the Base Price for the year 1997 shall be FOBT USD38.05/MT
per metric ton.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date
indicated by their duly authorized representatives. All other terms and
conditions of the original Contract and Addendum Numbers 1, 2, 3, 4 and 5 remain
unaltered.
SELLER: BUYER:
PEN COAL CORPORATION TAIWAN POWER COMPANY
By: /s/ WILLIAM E. BECKNER By: /s/ S. C. LAI
----------------------- -------------------------
William E. Beckner S. C. Lai
President Vice President