Exhibit 10.23
COAL SUPPLY AGREEMENT
THIS COAL SUPPLY AGREEMENT ("Agreement") is entered into effective the 1st
day of January, 2004 between Vectren Fuels, Inc., an Indiana corporation
("Seller"), whose principal business address is 20 N.W. Fourth Street,
Evansville, Indiana 47708, and Vectren Energy Delivery of Indiana, Inc. a/k/a
Southern Indiana Gas and Electric Company ("Buyer"), whose principal business
address is 20 N.W. Fourth Street, Evansville, Indiana 47708.
WITNESSETH, That:
WHEREAS, Buyer desires to secure to the extent of the quantities and for
the period hereinafter stated, a supply of bituminous coal or synfuel of the
quality hereinafter set forth, for use in its Warrick Unit 4 generating plant
("Plant"); and
WHEREAS, Seller represents that it is experienced in the commercial
production and preparation of coal and that it owns, has leased, or controls the
hereinafter mentioned reserves of bituminous coal which are assigned to its
Prosperity Mine located near Hazelton, Indiana (in Gibson County) ("Seller's
Mine" or "Mine"), with the quality and characteristics hereinafter set forth;
and
WHEREAS, Seller desires to sell coal or synfuel to Buyer and Buyer desires
to buy coal or synfuel from Seller, upon the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller agrees to sell and deliver coal or synfuel to Buyer and Buyer agrees to
purchase and accept delivery of coal or synfuel from Seller, pursuant to the
terms and conditions set forth as follows:
ARTICLE I
AGREEMENT OF SALE AND PURCHASE
1.1 Sale and Purchase; Source of Coal. Seller agrees to sell and Buyer
agrees to purchase, the quantity and quality of coal or synfuel (hereinafter
collectively referred to as "coal") specified herein, on the terms and subject
to the conditions hereinafter set forth. The source of coal to be supplied under
this Agreement shall be the Seller's Mine. Alternate Source Coal (as defined
hereinafter) may be supplied by Seller, subject to the provisions of Section 6.5
of this Agreement.
1.2 Dedication of Reserves. Seller represents that it owns, or has leased,
and will dedicate and set aside for this Agreement, such quality and quantity of
coal reserves in Seller's Mine, as are required for full performance of Seller's
obligations hereunder. Seller represents and warrants that it has the legal
right to mine and sell such coal reserves. Seller will not sell, nor contract to
sell to others, coal from said reserves in such quantity as to jeopardize
Seller's ability to deliver the total quantity of coal Seller is obligated to
deliver to Buyer under this Agreement.
1.3 Title and Risk of Loss. The sale of coal under this Agreement shall
occur, and ownership and risk of loss shall pass from Seller to Buyer, upon
delivery of the coal at the Plant.
ARTICLE II
TERM
2.1 Term. The term of this Agreement shall commence on January 1, 2004, and
shall continue until and including December 31, 2004 (the "Term"). No suspension
of an obligation under this Agreement by reason of Force Majeure shall extend
the Term of this Agreement, except upon mutual agreement of Seller and Buyer.
ARTICLE III
QUANTITY AND OPTION
3.1 Quantity. Seller shall sell and deliver, and Buyer shall purchase and
accept delivery of, coal at the Plant in the amount of 25,000 tons per month
during each month of the Term of this Agreement. Buyer may adjust the tonnage to
be delivered in any month to any amount within a range from 22,500 to 27,500
tons with fifteen (15) days' advance notice to Seller. Unless otherwise agreed
by Buyer at least twenty-four (24) hours in advance, no daily delivery of coal
shall exceed 1,500 tons.
3.2 Option Quantity. If Seller is able to produce more than 25,000 tons of
coal per month at Seller's Mine that meets the quality specifications set forth
on Exhibit A, Buyer shall have the option, but not the obligation, to purchase
all, or a portion of, such additional production at the pricing, terms and
conditions set forth in this Agreement. In order to permit Buyer to effectively
exercise such option, Seller shall provide reasonable prior notice of any such
anticipated additional production.
ARTICLE IV
PRICE AND ADJUSTMENT; INVOICING AND PAYMENT
4.1 Price. Effective January 1, 2004, the price of coal shall be $23.20 per
ton plus $5.30 per ton for transportation charges to deliver the coal to the
Plant. The transportation charges specified herein shall be adjusted on a
monthly basis to adjust for fluctuations in the price of diesel fuel. The
adjustments made by Seller shall be identical to the adjustments made by
Seller's contract carrier under the contract carrier's Coal Hauling Contract
with Seller.
4.2 Invoicing. Seller shall invoice Buyer semi-monthly. Invoices, without
backup data, shall be telecopied to Buyer promptly after the last shipment of
the pertinent semi-monthly period and promptly thereafter the original invoice
shall be mailed along with appropriate backup data. As used herein,
"semi-monthly period" means the first fifteen (15) days of a calendar month or
the days remaining in a calendar month following the 15th day of the month.
4.3 Payment. Buyer shall mail payment within fifteen (15) days following
Buyer's receipt of Seller's semi-monthly invoices. In the event that Buyer does
not mail payment in accordance with the terms of this Agreement, then delinquent
payments shall bear interest at the prime rate of interest reported in the
"Money Rates" section of "The Wall Street Journal" (the "Prime Rate"), as of the
first day of any such delinquency.
4.4 Errors or Omissions. In the event that any Seller's invoice can be
demonstrated by Buyer to contain a material error or omission which unavoidably
delays Buyer's ability to process payment of such invoice in a timely manner,
Seller shall extend the payment due date for the portion of the invoiced amount
which is affected, by the same number of days (from the time Buyer first
notified Seller of the error or omission) as it takes Seller to provide the
corrected or additional data required by Buyer.
4.5 Disputed Amount. If Buyer disagrees with the amount of any invoice for
reasonable cause, Buyer shall promptly notify Seller by facsimile transmission,
followed promptly by written confirmation which shall set forth the basis for
such disagreement, so that the dispute may be resolved before the payment due
date. If any portion of an invoice is not reconciled prior to the payment due
date, the undisputed amount shall be paid when due and the disputed portion
shall be held in abeyance until the dispute is resolved. Buyer may, at its
option, pay the disputed portion of any invoice without thereby waiving its
right to contest such disputed portion of the invoice. Upon final resolution of
the dispute, any adjustment due either Buyer or Seller shall bear interest at
the Prime Rate in effect as of the date upon which Buyer notifies Seller of the
existence of a dispute.
ARTICLE V
QUALITY
5.1 Quality; Specifications. The coal supplied under this Agreement shall
meet the quality specifications set forth on Exhibit A on an "as received"
basis. If Moisture %, Ash % or SO2 lb/mmbtu monthly weighted averages specified
in Exhibit A are not met for any reason, the Buyer shall impose penalties on the
Seller as outlined in Exhibit B. If the Seller is able to exceed these same
monthly weighted averages, the Buyer shall pay a premium to the Seller as
indicated in Exhibit B. The term "as received" for purposes of this Agreement
shall have that meaning defined in specifications promulgated by the American
Society for Testing and Materials. The coal supplied under this Agreement shall
be washed, crushed to two (2) inch maximum top size, and shall be substantially
free of impurities, such as bone, slate, rock, wood, tramp metal, and mine
debris. In the event that the coal supplied hereunder contains non-authorized
components, Seller shall indemnify, defend and hold harmless Buyer from and
against any and all claims, liabilities, damages, fines, penalties, costs and
expenses, including reasonable attorney fees, that Buyer may incur as a result
of any non-conforming coal delivered hereunder. Such indemnification shall
include, but shall not be limited to, any costs, fines and penalties associated
with environmental remediation incurred by Buyer.
Seller recognizes that Buyer must comply with applicable state and federal
environmental regulations, including sulfur and particulate standards, and that
Buyer is required to receive a substantially uniform coal quality on a
day-to-day basis in order to comply with such regulations. Seller agrees to
carefully utilize proper mining techniques and procedures, and to properly
maintain and operate the preparation plant at the Mine, so as to minimize
day-to-day deviations in quality.
5.2 Weights. The weight of the coal delivered hereunder shall be determined
by Buyer on the basis of certified scales maintained at the Plant. Empty and
full truckload weights shall be ascertained for each truckload delivery of coal.
Buyer shall furnish to Seller the weight of each shipment of coal to be received
by Buyer within twenty-four (24) hours after delivery to the Plant.
5.3 Sampling and Analysis. Each daily shipment of coal shall be sampled and
analyzed within twenty-four (24) hours of delivery to the Plant. Such analysis
of the coal designated for delivery to Buyer shall be undertaken as a "quick
analysis" by an independent laboratory acceptable to Buyer. Seller shall furnish
the results of such analysis by facsimile transmission to the Warrick Power
Plant at (812) 491-4701, within twenty-four (24) hours of delivery to the Plant.
Such analyses shall govern for the purposes of determining compliance with the
quality specifications required under this Agreement, except as otherwise
provided herein below:
A. All sampling and analysis shall meet ASTM Standards. Seller shall
retain sample splits at Seller's Mine for a period of ninety (90)
days. Upon Buyer's request, the retained sample split shall be sent to
an independent laboratory for analysis and the results of such
analysis shall govern as to the quality of the coal shipment as to
which such sample pertains.
B. Sampling and analysis shall be performed on not greater than 1,500-ton
batches.
C. If it is determined that samples have been obtained incorrectly,
Seller and Buyer shall attempt to determine the effect, if any, on
quality determinations as the same may apply to the price for coal
paid by Buyer with respect to samples previously used by Buyer and
Seller in their analyses. If required, a reasonable adjustment shall
be made in amounts invoiced and payments made to compensate for any
differences in the gross calorific value of coal tested versus that of
the coal which should have been tested. If it is determined that
sample analyses are in error, whether due to improper preparation of
samples to be analyzed, faulty analytical equipment, or faulty
laboratory methods, an appropriate adjustment shall be made in amounts
invoiced and payments made to correct for errors in gross calorific
values determined by the sample analyses. However, no adjustment
hereunder shall be retroactive for a period in excess of ninety (90)
days prior to either (i) the date that either party first questioned
in writing the correctness of the sampling procedures or the accuracy
of the sample analyses, or (ii) the date that the inaccuracy was first
determined, whichever was the earlier date.
D. Coal not complying with the quality specifications set forth herein
will not be accepted by Buyer unless authorized prior to shipment. At
the option of the Buyer, acceptance of non-conforming coal may be
conditioned upon reductions in price which shall be agreed upon in
writing prior to delivery of any such non-conforming coal.
5.4 Limitation of Seller's Warranties. Seller agrees to fully meet Buyer's
specifications for all coal provided pursuant to this Agreement. Provided that
Seller strictly complies with Buyer's specifications, then Buyer agrees that
Seller makes no other warranty, express or implied, including, but not limited
to, warranties of merchantability or of fitness for a particular purpose.
5.5 Buyer's Extraordinary Termination Rights. If Buyer is suffering damages
at the Plant from (a) unit derating; (b) increased forced outage rates; or (c)
other abnormal operating conditions, due to characteristics of the coal supplied
by Seller, although the coal supplied by Seller hereunder may be meeting the
quality specifications set forth in Exhibit A, Buyer shall notify Seller of the
nature of the operating problem, and the specific coal characteristic(s) that is
(are) causing such problem. Buyer and Seller shall promptly undertake good faith
efforts to determine if there are practical methods to eliminate or
substantially mitigate any such problem and, with mutual agreement by Buyer and
Seller, shall take appropriate corrective action. If, after a period of one (1)
month from the date Buyer notifies Seller of a problem with burning the coal of
the quality being supplied, the parties have not reached agreement and executed
a document defining a mutually acceptable way to eliminate or mitigate such
problem, which agreement and execution shall not be unreasonably withheld, Buyer
shall have the option of terminating this Agreement by giving written notice to
Seller, with such termination to be effective one (1) month after the giving of
such notice.
ARTICLE VI
DELIVERY
6.1 Deliveries. Coal conforming to Buyer's specifications shall be supplied
to Buyer at the Plant. Truck delivery will normally be between the hours of 6:00
A.M. and 6:00 P.M., Monday thru Friday, except during periods when the Plant is
closed due to scheduled vacations, holidays, or periods of Force Majeure, unless
special restricted or extended hours are mutually agreeable to Buyer and Seller.
Seller shall obtain all applicable tariffs or transportation contracts for the
truck movement of coal hereunder. Buyer shall pay all transportation costs per
the terms specified in this Agreement, and Seller shall bear all risk of loss
until the coal is delivered to the Plant.
6.2 Rejection. Buyer shall have the right to reject coal which does not
conform to the specifications set forth in Exhibit A, on a per shipment basis. A
"shipment" is the quantity of coal delivered to Buyer on a given day, upon which
ASTM sampling and analysis have been performed. A shipment shall not exceed
1,500 tons, unless Buyer shall agree to the delivery of quantities in excess
thereof. Any shipments rejected by Buyer shall be returned to Seller, at
Seller's expense, and shall be credited against Buyer's purchase requirements
hereunder.
6.3 Redirection of Deliveries. Buyer shall have the right to redirect the
delivery of coal purchased under this Agreement to any destination other than to
the Plant, so long as Buyer agrees to reimburse Seller for any additional
transportation or handling costs incurred by Seller to effectuate such
redirected deliveries.
6.4 Failure of Seller's Trucks to Perform. In the event that any person
retained by Seller to deliver coal to the Plant fails to provide adequate
equipment and drivers to deliver coal purchased under this Agreement, and such
failure to perform shall continue for a period of thirty (30) days, Buyer may
arrange for an alternate trucker to provide trucking services to make-up
shortfall tonnage caused by Seller's contracted trucker's failure to perform.
Seller shall reimburse Buyer for trucking costs incurred to deliver such
shortfall tonnage so long as the cost per ton incurred by Buyer's alternative
trucker does not exceed the price paid to Seller's contracted trucker.
6.5 Alternate Supply Source. The source of coal subject to this Agreement
shall be Seller's Mine. Seller, with Buyer's prior written approval, may deliver
to Buyer coal conforming to the specifications set forth in Exhibit A, from an
alternate source ("Alternate Source Coal"). Buyer shall retain the right to
revoke such approval at Buyer's discretion upon providing Seller with seven (7)
days' prior written notification. The Alternate Source Coal will be delivered to
the Plant at the same delivered cost per million BTU as the delivered cost per
million BTU of coal from Seller's Mine, unless otherwise mutually agreed.
Delivered cost from the Alternate Source Coal shall be computed on the actual
monthly weighted average BTU per pound of the coal supplied from the Alternate
Source Coal.
ARTICLE VII
MINING FACILITIES AND PRACTICES
7.1 Seller's Warranty. Seller shall maintain at the Mine, efficient
machinery, equipment, and other facilities required to produce, prepare, supply
and deliver the quality and quantity of coal contemplated by this Agreement.
Seller further agrees to operate and maintain the machinery, equipment and
facilities at the Mine in accordance with good mining practices so as to
efficiently produce, prepare and deliver the coal. In addition, Seller shall
conduct all operations at the Mine in compliance with any and all applicable
federal, state and local laws, rules and regulations, and Seller shall observe
and perform all terms and provisions of any contract or agreement with third
parties relative to the recovery and sale of coal from the reserves dedicated to
this Agreement.
ARTICLE VIII
FORCE MAJEURE
8.1. Definition. The term "Force Majeure", as used herein, shall mean any
causes beyond the control of the party affected thereby, such as acts of God;
acts of the public enemy; insurrections; riots; strikes; labor disputes; fires;
explosions; floods; breakdown of or damage to plants, equipment, or facilities
through no fault, error or omission of the party asserting Force Majeure;
accidents of navigation; interruptions to transportation; embargoes; orders or
acts of military or civil authority (executive, judicial, or legislative),
including, but not limited to, any regulation, direction, order, or request
(whether valid or invalid) made by any governmental authority or person acting
therefor, which is complied with in good faith; or other such 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 of the coal by the carrier of the coal, or the accepting,
utilizing and/or unloading of the coal by Buyer. The doctrine of ejusdem generis
shall not be applied to exclude any event dissimilar to the enumerated events,
but which is beyond the control of a party.
8.2 Excuse of Performance. If, because of Force Majeure, either party
hereto is reasonably prevented from performing its obligations under this
Agreement, or Buyer is reasonably prevented from receiving or utilizing that
coal at the Plant, and if such party promptly gives to the other party notice of
the Force Majeure, the obligations of the party giving such notice shall be
excused as of the commencement of the Force Majeure event to the extent affected
by the Force Majeure and its continuance, provided the effect of such Force
Majeure is eliminated insofar as possible with all reasonable dispatch. Any
deficiencies in deliveries of coal hereunder, which are excused by Force
Majeure, shall not be made up except by mutual written consent of the parties.
Nothing herein shall be construed as requiring either party to settle any labor
dispute or as requiring Buyer to treat or alter the characteristics of the coal
or blend the coal with any other fuel including other coal, or to make any
modifications to the Plant to utilize such coal, or to change Seller's then
existing arrangements for transportation.
8.3 Notice. Notice of a Force Majeure event must be confirmed in writing
within fifteen (15) days of the commencement of the Force Majeure event, and
shall specify the nature of the event and include a good-faith estimate of the
period of time for which, and the degree to which, performance will be affected.
During the estimated period of time, the other party may make other arrangements
to sell or purchase the estimated quantity of coal so affected for the estimated
time period.
8.4 Allocation in Event of Reduced Capability. If Force Majeure occurs and
results in, or is projected to result in, (i) a reduction or limitation of
Seller's ability to supply coal from Seller's Mine or (ii) the inability of
Buyer to accept or utilize coal at the Plant, then in the case of Seller, Seller
shall allocate available supplies of coal from Seller's Mine on a pro-rata basis
among its customers, or others as required by law, to the extent that its
contracts with other customers give Seller the right to reduce its supply
obligations as a result of the Force Majeure. In the case of Buyer, it will
spread its reduced ability to accept or utilize coal at the Plant among all its
suppliers to the Plant, committed at the time the Force Majeure occurred, on a
pro-rata basis to the extent that its contracts with other suppliers give Buyer
the right to reduce purchase obligations as a result of the Force Majeure. Any
such allocation shall be determined on the basis of the number of tons of coal
which Seller is obligated to deliver to its committed customers or Buyer is
obligated to receive from its committed suppliers at the time the Force Majeure
occurred.
ARTICLE IX
RIGHT TO TERMINATE AGREEMENT; SPECIFIC PERFORMANCE
9.1 Non-Exclusive Remedy. The rights of one party or the other, or of both,
to terminate this Agreement without liability, which are specifically stated in
this Article and other parts of this Agreement, are not exclusive, but are in
addition to any other rights recognized at law or in equity which may accrue to
one party or the other by reason of circumstances and conditions not dealt with
in these specific provisions.
9.2 Force Majeure. If a Force Majeure event prevents the delivery or
purchase of more than fifty percent (50%) of the minimum tons of coal to be
supplied or received during a one (1) month period or longer, then the party not
suffering the Force Majeure, may, on fifteen (15) days written notice terminate
this Agreement; provided, that if the event of Force Majeure on which the right
of termination was based is eliminated prior to the effective date of
termination, the termination right is voided.
9.3 Change in Regulations. In the event that Buyer determines that it
either is or will be at a future date unable to burn the coal supplied under
this Agreement due to the quality of the coal and legally imposed regulations,
Buyer shall promptly notify Seller in writing. The parties agree to make a
good-faith effort to resolve the problem in a manner to allow Buyer to continue
using Seller's coal. If after thirty (30) days the parties have not reached
agreement on a mutually acceptable solution, then Buyer shall have the right by
written notice given as early as possible to terminate this Agreement on the
future date after which it cannot legally burn coal from Seller's Mine. Nothing
herein shall be construed as requiring Buyer to incur any significant added
expense or significant capital investment to (i) treat or alter the
characteristics of the coal, (ii) blend the coal with any other fuel including
other coal, or (iii) make any modifications to the Plant to utilize Seller's
coal.
9.4 Default. Subject to the provisions of Article XX, in the event of the
failure of either party to comply with any material obligation of this
Agreement, either party shall have the right to terminate this Agreement at any
time by giving to the other fifteen (15) days' notice in writing of its
intention to so terminate, specifying in reasonable detail the nature of the
default. At the expiration of said fifteen (15) days, unless the party in
default shall have cured such default, the party not in default shall have the
right at its election to terminate this Agreement forthwith. Such right to
terminate shall be in addition to any other remedies at law or equity that the
non-defaulting party may have against the defaulting party.
9.5 Specific Performance. It is expressly recognized and understood between
the parties that prompt and full deliveries by the Seller in accordance with
this Agreement are essential to Buyer. Therefore, the parties agree that in
addition to, and not in limitation of, any and all other remedies to which Buyer
may be entitled by law, Buyer shall have the right to require specific
performance of this Agreement by the Seller, and Buyer shall have the right, if
necessary, to enter any appropriate judicial forum and, without bond or other
security, to obtain injunctions or other appropriate remedies against Seller to
prevent deliveries of any coal by the Seller to any third parties while Seller
is in default of or threatens default in the delivery of coal in quantities and
of a quality conforming to the specifications provided in this Agreement.
ARTICLE X
INDEMNIFICATION
10.1 Scope. The Seller agrees to indemnify, defend and hold harmless the
Buyer, its affiliates, and their agents and employees from any claims, demands,
loss, cost, damages, expense or liability of any kind or nature, including
attorneys' fees, resulting from the performance of this Agreement or arising in
any manner from any product supplied or activity required by this Agreement,
unless such claim, demand, loss, cost, damage, or liability arises from the sole
negligence or intentional misconduct of the Buyer.
10.2 Effect of Release. If the Seller obtains a release from any person for
damages resulting from the performance of this Agreement, it shall not affect
the Buyer's rights nor the Seller's obligations herein.
10.3 Notice. The Seller agrees to immediately notify the Buyer in the event
any accident, injury, or damage occurs during the course of performance of this
Agreement, or in the event that anyone makes any claim for damages alleged to
have resulted from the performance or nonperformance of this Agreement, or from
the negligence of the Seller, its agents, or employees.
ARTICLE XI
RESERVED
ARTICLE XII
NOTICES
12.1 Notices. Any official notice, request for approval or other document
required to be given under this Agreement shall be in writing, unless otherwise
provided herein, and shall be deemed to have been sufficiently given (i) on the
date of delivery in person or transmitted by facsimile or other electronic
media, (ii) one business day after delivery to an established mail service for
overnight delivery, or (iii) two (2) business days after dispatch in the United
States mail, postage prepaid, for mailing by certified mail, return receipt
requested, and addressed as follows:
If the notice is to Seller:
Randy Beck
Vectren Fuels, Inc.
20 N.W. Fourth Street
Evansville, IN 47708
If the notice is to Buyer:
Vectren Energy Delivery of Indiana, Inc.
Attention: Ron Jochum
20 N. W. Fourth Street
Evansville, IN 47741
With a copy to:
Ronald E. Christian
Executive Vice President, General Counsel and Secretary
Vectren Corporation
20 N.W. Fourth Street
Evansville, IN 47741
ARTICLE XIII
GOVERNING LAW; FORUM
13.1 Governing Law. This Agreement and any questions concerning its
validity, construction or performance shall be governed by the laws of the State
of Indiana without reference to any choice of law provisions. Any action which
may be commenced based upon this Agreement, shall be brought only in the
Vanderburgh Superior Court or Circuit Court, in Evansville, Vanderburgh County,
Indiana.
ARTICLE XIV
RELATIONSHIP OF THE PARTIES
14.1 Relationship. The Seller, and any person or entity performing on its
behalf, shall not be an employee of the Buyer, but shall operate as and have the
status solely as that of a vendor. The Buyer shall not be required to withhold
or pay FICA tax, unemployment, workers' compensation, or other insurance or tax
on behalf of the Seller, its agents or employees. The Seller shall not at any
time hold itself out as an employee of the Buyer. This Agreement does not
create, nor shall it be deemed to create, as between Seller and Buyer any
relationship other than that of vendor and purchaser.
ARTICLE XV
ASSIGNMENT
15.1 Assignment. Either party may assign this Agreement and its rights
hereunder to its parent company, or any affiliate or subsidiary of its parent
company or of itself, and only to such a party, without the consent of the other
party. Otherwise, this Agreement may not be assigned wholly or in part by either
party without the written consent of the other party, which consent shall not be
unreasonably withheld. No assignment shall release the assignor from its
financial responsibility hereunder, unless expressly agreed to in writing by the
other party. Subject to the foregoing limitations, all of the provisions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their successors, and assigns. Nothing stated herein shall be construed to limit
Buyer's unilateral right to resell, transfer, pledge or assign the delivery
right to any coal delivered under this Agreement after Buyer takes title
thereto.
ARTICLE XVI
BUYER'S INSPECTION RIGHTS
16.1 Inspection. The Buyer and it duly authorized representatives shall
have the right during regular business hours to make reasonable inspections of
the Seller's records pertaining to this Agreement, which shall include Seller's
records pertaining to the quantity and quality of the coal supplied hereunder,
along with shipping records relating to said coal. Buyer and its duly authorized
representatives shall also at all reasonable times have the right and privilege
to inspect the Mine and its facilities. The Buyer shall provide the Seller with
reasonable notice before exercising any of the foregoing inspection rights.
ARTICLE XVII
COMPLETE AGREEMENT AND CONFIDENTIALITY
17.1 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto, and no alteration or modification thereof shall be binding
unless in writing and signed by Buyer and Seller. The titles of the Articles and
Sections in this Agreement have been inserted as a matter of convenience for
reference only and shall not control or affect the meaning or construction of
the terms and provisions thereof.
17.2 Confidentiality. Buyer and Seller agree to use reasonable efforts to
maintain this Agreement (including attachments) as confidential and not to
disclose, without the consent of the other party, the terms of this Agreement to
any third parties (other than consultants, legal counsel, and accountants
retained by a party) except in response to or to avoid the issuance of legal
process; provided that the parties may, without the consent of the other party,
disclose this Agreement, with the request that it be treated as confidential, in
connection with securing or maintaining any permits or license, in connection
with any financing of securities, complying with reporting or filing
requirements with any local, state, or federal agencies, or responding to any
inquiries or requests by any state, local, or federal agencies, Neither party
shall incur any monetary damage or liability to the other party for failure of
or breach of the provisions of this Section 17.2.
ARTICLE XVIII
HEADINGS
18.1 Headings. The headings of the Articles and Sections of this Agreement
are included only as reference and shall not limit or alter the meaning or any
of the terms and conditions of this Agreement.
ARTICLE XIX
SEVERABILITY
19.1 Severability. The provisions of this Agreement are severable, and the
invalidity or unenforceability of any one or more provision shall not affect or
limit the validity of the remaining provisions. Should any particular provision
be held to be unreasonable or unenforceable for any reason, then such provision
shall be given effect and enforced to whatever extent would be reasonable and
enforceable under the applicable law.
ARTICLE XX
DISPUTE RESOLUTION; TERMINATION
20.1 Moratorium on Actions. Except as otherwise specifically provided in or
permitted by this Agreement, all disputes, differences of opinion, or
controversies arising in connection with this Agreement shall be resolved first,
by the use in good faith for a period of ten (10) days, of mutual best efforts
to arrive at an agreeable resolution.
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed in their respective corporate names by their respective proper corporate
officer.
Vectren Fuels, Inc.
By: /s/ Randy L. Beck
-----------------------------------------
Randy L. Beck
Its: President
-----------------------------------------
(Printed Name and Title)
VECTREN ENERGY DELIVERY OF INDIANA, INC.
By: /s/ Ronald G. Jochum
----------------------------------------
Ronald G. Jochum
Its: Vice President, Power Supply for SIGECO
-----------------------------------------
(Printed Name and Title)
EXHIBIT A
COAL QUALITY SPECIFICATIONS
The following coal quality specifications must be met with respect to
each shipment of coal prepared for daily shipment during the Term of this
Agreement. All of the following specifications are on an "as received" basis.
Specifications Monthly Shipment
Weighted Rejection
COAL CHARACTERISTICS Average Limits
- ---------------------------------------------- ------------------------- -------------------- --------------------
Calorific value, as received Min. 10,750 BTU/lb 11,400 BTU/lb <10,750 BTU/lb
% Moisture, as received Max. 15.0% 15.0% >15.0%
% Ash, as received Max. 10.5% 10% >10.5%
SO2 (lb/mmBTU) Max. 4.0 lb SO2/mmbtu 3.85 lb/mmbtu >4.0 lb SO2/mmbtu
Ash Fusion, softening, H=W red Min. 2100 deg, F 2200 deg, F <2100 deg, F
Hardgrove Grindability Index Min. 55 55 <55
Slagging Index Max. 2.0 1.0 >2.0
Nominal Size Max. 2" x 0" 2" x 0" >2" x 0"
Percent passing 1/4 inch screen Max. 45% 45% >45%
Mineral Analysis of Ash:
Ferric Oxide, Fe203 Max. 25% 18% >25%
Coal Seam: #5
County coal mined in: Pike
The above coal quality specifications must be met with respect to each shipment
of coal prepared for daily shipment against this Agreement with, such shipment
not to exceed 1,500 tons.
EXHIBIT B
Penalties:
Penalty per Unit for Exceedance
or any portion thereof (Penalty
Monthly Weighted Average Unit of Exceedance per MMBTU)
- ------------------------------------- ----------------------------------- -----------------------------------
Moisture % 1% $.01
Ash % 1% $.01
SO2 lb/MMBTU .1 lb $.01
Premiums:
Premium per Unit for
Overachievance or any portion
Monthly Weighted Average Unit of Overachievance thereof (Premium per MMBTU)
- ------------------------------------- ----------------------------------- -----------------------------------
Moisture % 1% $.005
Ash % 1% $.005
SO2 lb/MMBTU .1 lb $.005
EXAMPLE OF HOW PENALTIES WILL BE CALCULATED
1 - Moisture 2 - Ash 3 - SO2
- ----------------------- --------------------- -------------------- --------------------- --------------------
Hypothetical Monthly
Weighted Average A 15.4% 10.2% 4.05#
Monthly
Weighted Average Per B 15.0% 10% 3.85#
Exhibit A
Exceedance A - B .4% .2% .2#
# of Exceedance Units
or Portion Thereof C .4 .2 2
Penalty Per
Exceedance Units D .01 .01 .01
Penalty Per MMBTU
C x D .004 .002 .02
Penalty on 3,000
tons (assumes 11,400 $273.60 $136.80 $1368.00
BTUs per lb)
EXAMPLE OF WHEN & HOW PREMIUMS WILL BE CALCULATED
1 - Moisture 2 - Ash 3 - SO2
- ----------------------- --------------------- -------------------- --------------------- --------------------
Hypothetical Monthly
Weighted Average A 14.6% 9.8% 3.65#
Monthly Weighted
Average Per Exhibit A B 15.0% 10.0% 3.85#
Overachievance B - A .4% .2% .2#
# of Overachievance
Units or Portion C .4 .2 2
Thereof
Premium Per
Overachievance Units D .005 .005 .005
Premium Per MMBTU
C x D .002 .001 .01
Premium on 3,000 tons
(assumes 11,400 BTUs $136.80 $68.40 $684.00
per lb)