Exhibit 10.20
THIS COAL SUPPLY AGREEMENT ("Agreement") entered into this 19th day of
January, 2000 by and between SOUTHERN INDIANA GAS AND ELECTRIC COMPANY, a public
utility organized and existing under the laws of Indiana ("Buyer") and SIGCORP
FUELS, INC., an Indiana corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Buyer is an electric utility which desires to purchase a supply of
fuel of the quality hereafter described for use in its Generating Stations at
Yankeetown, Warrick County, Indiana, and West Franklin, Posey County, Indiana;
and
WHEREAS, Seller desires to sell fuel to Buyer and Buyer desires to buy such
fuel from Seller for the purposes of and in accordance with the provisions of
this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller agrees to sell and deliver and Buyer agrees to purchase and accept
delivery of fuel of the quality and quantity hereinafter described and in
accordance with the terms and conditions set forth herein as follows:
SECTION 1. TERM
Section 1.1 Term. This Agreement shall commence on the date first above
written, or upon Contract filing with the Indiana Utility Regulatory Commission
("IURC") and the Federal Energy Regulatory Commission ("FERC") (and inaction or
approval by the IURC and FERC,) whichever occurs earlier, and unless sooner
terminated as provided herein, shall continue until and including December 31,
2003.
Buyer and Seller acknowledge that a primary source of the fuel to be
furnished under this Agreement is a new mine operation (Prosperity) to be
developed subsequent to the execution of this Agreement. It is anticipated that
the production of coal from Prosperity will begin in mid-2000 with full
production during the fourth quarter of 2000. The provisions of this Agreement
shall be effective on July 1, 2000. Any coal produced from Mine properties owned
or controlled by Seller prior to July 1, 2000, which fully meets all quality
specifications of this Agreement, including development tonnage from Prosperity,
may be sold to SIGECO at the pricing provided for under this Agreement. Such
tonnage not to exceed 300,000 tons in the aggregate.
Buyer shall have the right, but not the obligation, to renew this Agreement
for an additional five (5) year period, such right to be exercised by notice in
writing to Seller no later than six (6) months prior to the expiration of the
initial term of this Agreement and subject to a revised purchase price as
provided in section 6.2
SECTION 2. QUANTITY, ANNUAL PRICE REVISION, DELIVERIES
Section 2.1 Quantity. Except as adjusted under Section 2.3, Seller shall
sell and deliver and Buyer shall purchase and accept delivery of 167,000 tons (a
"ton" being 2,000 lbs. avoirdupois) at Buyer's Generating Stations, per month
("Quantity").
Section 2.2 Rate of Shipment. The Quantity shall be shipped in accordance
with a quarterly delivery schedule, itemized by month, supplied by Buyer to
Seller as further provided in Section 2.3. Time is of the essence with respect
to the schedule so established and failure by Seller to deliver in timely
fashion shall constitute a default.
Section 2.3 Notification.
(a) Quarterly Delivery Schedule - By October 1 of each year, Buyer
shall specify by written notice to Seller the monthly quantities
to be delivered in the following calendar year subject to the
limitation contained in subparagraph (b). Quantities shall be
specified on quarterly schedules. Revisions to any quarterly
schedule shall be made by Buyer no later than the 1st of the
month preceding the start of that quarter. (E.g., March 1 for the
second quarter, etc.).
(b) Modification of Quantity - On or before October 1, Buyer may
change the Quantity to be delivered in any month of the following
year within a range of +/- 10% of the Quantity specified in
Section 2.1 above.
SECTION 3. SOURCE AND DELIVERY.
Section 3.1 Source - It is the intention of the Seller or an affiliate of
Seller to develop a new mining property, located in Pike and Knox Counties,
Indiana, known as the Prosperity Mine ("Prosperity"). Prosperity is the intended
source for a significant portion of the coal to be supplied under this
Agreement.
Other sources of the fuel to be provided under this arrangement would
include coal reserves owned or otherwise controlled by SFI, coal purchased from
third parties for resale to SIGECO, petroleum coke used as a partial blend and
fuels from other sources as determined by SFI. Any source may be provided as the
sole source of fuel or may be furnished in combination with other sources or in
a blend with other sources. All sources and blends are subject to:
(a) the quality specifications of this Agreement,
(b) the Buyer's right to test the coal and perform a reasonable test
burn,
(c) the Buyer's unilateral right to reject any coal source which does
not perform satisfactorily. The Buyer and Seller agree to
cooperate with each other in testing alternative fuels and fuel
blends, including but not limited to petroleum coke, so long as
the use of such fuels does not increasethe net cost of generation
at the Buyer's Generating Stations, nor increase the cost of fuel
delivered under this Agreement.
Section 3.2 Substitute Fuel. It is anticipated that most fuel delivered
under the Second Affiliate Agreement will originate from coal reserves owned or
controlled by Seller. From time to time, problems encountered in the mining of
coal (either quantity or quality related) or opportunities in the various fuel
markets may result in Seller acquiring a portion of the fuel to be furnished
under this Second Affiliate Agreement from sources not owned or controlled by
Seller. Any fuel acquired from non-owned or controlled sources will be termed
"Substitute Fuel."
The parties acknowledge that the pricing pursuant to Section 6.1 hereof is
based upon production from reserves owned or controlled by Seller, and this
agreement is the subject of a separate Letter Agreement with the Office of the
Utility Consumer Counselor (OUCC). The parties hereby agree that, so long as the
OUCC Letter Agreement is in effect, if Substitute Fuel is provided hereunder,
the pricing of such fuel shall be adjusted as follows:
(a) If the cost to Seller of Substitute Fuel exceeds the contract
price per Section 6.1, Buyer shall be charged only the contract
price. Any resulting loss on such purchase and resale by Seller
is to be for Seller's account.
(b) If the cost to Seller of Substitute Fuel delivered to Buyer, is
less than the contract price per Section 6.1, any profit earned
from the purchase and resale to Buyer of Substitute Fuel will be
shared between Buyer and Seller by reducing the price to Buyer by
33% of the difference between the cost to Seller of such
Substitute Fuel, delivered to the appropriate Buyer's generating
station, and the contract price per Section 6.1, hereof.
Section 3.3 Truck or Rail Delivery, Title, Risk of Loss. Buyer and Seller
hereby select truck or rail transportation as the method of shipment to Buyer's
A.B. Brown Generating Station and truck transportation as the method of shipment
for all fuel shipped to its Culley or Warrick Generating Stations. Fuel will be
delivered FOB Buyer's Generating Station, and title to and risk of loss of fuel
will pass to Buyer when the fuel is unloaded at the respective Generating
Station's coal stockpile (the "Delivery Point"). Seller will contact and pay for
transportation from the source to the Generating Stations and for unloading from
trucks onto Buyer's stockpile.
Section 3.4 Alternative Delivery Mode. Buyer shall be entitled, upon one
hundred twenty days (120) days prior to notice to Seller, to change the
specified mode of delivery at its option for all or a portion of the Quantity.
In the event any such change will result in an adjustment to Seller's costs
(increase or decrease), Seller shall give Buyer prompt written notice thereof,
such notice to include a detailed statement and itemization of such costs, and
Buyer and Seller shall jointly make an adjustment to the Base Price of fuel sold
hereunder if Buyer agrees to the adjustment, otherwise the mode of delivery
shall not change.
SECTION 4. QUALITY
Section 4.1 The fuel delivered hereunder shall conform to the
specifications in Exhibit A attached hereto. The specifications in Exhibit A are
hereby made a part of, are a fundamental basis of this Agreement, and create an
express warranty by Seller that the fuel shall conform in every respect to all
specifications. The fuel shall have a top size of not larger than two (2)
inches. Intermediate sizes shall not be removed. Not more than 55% by weight of
each delivery shall be less than 1/4 inch in size. The fine content of the fuel
shall be that resulting from the normal mining and preparation sizing of the
fuel, and no fine screenings or slurry shall be added. The fuel shall be
substantially uniform in quality and physical appearance and shall be free
flowing and substantially free from excess water and impurities such as, but not
limited to, rock, bone, wood, slate, earth, or metal.
Section 4.2 Change in Specification. Seller may, with the written
permission of Buyer, deliver fuel or fuel blends which do not conform to the
foregoing Section 4.1 and the specification sin Exhibit A, provided that Buyer
shall have the right to take such reasonable measures and precautions as it
deems necessary to assure itself that any divergence in specifications does not
adversely impact the costs or operation of Buyer's Generating Stations.
Section 4.3 Rejection.
(a) A "Shipment" is defined as the entire quantity of fuel prepared
for delivery for which sampling and analysis has been performed
pursuant to Section 5.2. A shipment shall not include more than
10,000 tons.
(b) Seller shall notify Buyer prior to Buyer's receipt of any
shipment if such shipment fails to conform to the specifications
in Exhibit A. Buyer shall then have the option to accept or
reject such shipment (a "Nonconforming Shipment"). If Seller
fails to notify Buyer of a Nonconforming Shipment, then Buyer may
reject a Nonconforming Shipment at any time or, if the
Nonconforming Shipment of coal is burnt, then Seller shall pay
Buyer all costs, expenses and damages therefor, including, but
not limited to, environmental costs, damages and expenses.
(c) In the event Buyer rejects any Nonconforming Shipment, Buyer
shall return the fuel to Seller or, at Seller's request, divert
such fuel to Seller's designee, all at Seller's cost. Buyer may
request replacement of the rejected fuel by Seller within five
(5) working days with fuel at least equal to the specifications
in Section 4.1 and Exhibit A. If Seller fails to replace the
rejected fuel within five (5) working days or the replacement
fuel is rejected, Buyer may purchase an equivalent amount of
conforming specification fuel from another source in order to
replace the rejected fuel and Seller shall reimburse Buyer for
any amount by which the total delivered cost to Buyer of such
conforming fuel purchased from another source exceeds the then
current delivered cost of fuel under this Agreement. Seller shall
reimburse Buyer for any and all freight or transportation
expenses that it incurs for rejected fuel.
(d) After receipt of notice from Seller of a Nonconforming Shipment,
or upon buyer's own discovery of a Nonconforming Shipment, Buyer
may, by notice to Seller, voluntarily elect to accept a
Nonconforming Shipment. If Buyer accepts a Nonconforming
Shipment, the price therefor shall be reduced by an amount
mutually agreed upon by Buyer and Seller, and the quantity Buyer
is obligated to purchase from Seller, shall be reduced in each
calendar year by the amount of any Nonconforming Shipments
voluntarily accepted by Buyer.
Section 4.4 Suspension and Termination.
(a) Buyer may, upon notice in writing, suspend future shipments if
sampling and analysis pursuant to Section 5.2 of this Agreement
indicates that a shipment of fuel fails to meet any of the
specifications in Section 4.1 and in Exhibit A. Seller shall,
within 15 days, provide Buyer with reasonable assurances that
subsequent deliveries of fuel shall meet or exceed such
specifications. If Seller fails to provide such assurances within
said 15 day period, or provides such assurance but does not
correct the violation(s) prior to the next scheduled shipment
after giving such assurance, Buyer may on 15 days notice,
terminate this Agreement without any cost or penalty to Buyer. If
Seller provides such assurances to Buyer's reasonable
satisfaction, shipments hereunder shall resume and any tonnage
deficiencies resulting from suspension may be made up by Seller,
with Buyer's approval, in accordance with a mutually agreed
schedule. Buyer shall not unreasonably withhold its acceptance of
Seller's assurances, or delay the resumption of shipments.
(b) Notwithstanding any other provisions of this Agreement, if the
fuel specifications set forth in Exhibit A are adjusted at any
time due to new or revised applicable laws, rules or regulations,
Seller and Buyer agree to enter into negotiations in good faith
to arrive at a mutually agreeable price adjustment under which
Seller can continue to supply coal that conforms with such new
laws, rules or regulations and meets the adjusted specifications.
The parties shall also negotiate an agreement as to any necessary
lead time to permit the receipt and delivery of coal conforming
to the new specifications. If mutually agreeable terms cannot be
negotiated, either party may on not less than thirty (30) days'
notice, terminate this Agreement.
Section 4.5 Remedies. Seller shall be responsible for all costs incurred by
Buyer resulting from Seller's failure to comply with this Agreement. Buyer, at
its option, may allow Seller to supply replacement fuel at the Base Price as
adjusted pursuant to Section 6; however, Buyer may procure fuel to replace all
of any part of the quantity of fuel which Seller has failed to deliver. The
Seller shall be liable to Buyer for the excess delivered cost occasioned by
Buyer's purchase of replacement fuel and any other loss or damage directly
caused by the Seller's breach of this Agreement. Buyer may also recover damages
for all losses sustained as a result of Seller's breach of Agreement based upon
any applicable legal theory, including, but not limited to, environmental costs,
expenses, penalties, losses and damages. Buyer may deduct the excess cost, loss,
or damage from any amount due Seller under this Agreement and, if such amount is
insufficient, Buyer shall recover the balance due from Seller directly through
appropriate legal action.
Remedies provided under this Agreement shall be cumulative and in addition
to other remedies provided by law or in equity.
SECTION 5. WEIGHING, SAMPLING AND ANALYSIS
Section 5.1 Weights. The weight of the coal delivered hereunder shall be
determined on a per shipment basis by Buyer on the basis of scale weights at the
generating station unless another method is mutually agreed upon by the parties.
Such scales shall be duly certified by an appropriate testing agency and
maintained in an accurate condition. Seller shall have the right, at Seller's
expense and upon reasonable notice, to have the scales checked for accuracy at
any reasonable time or frequency. If the scales are found to be inaccurate, over
or under a tolerance range of 0.5%, either party shall pay to the other any
amounts owed due to such inaccuracy for a period not to exceed thirty (30) days
before the time any inaccuracy of scales is determined.
Section 5.2 Sampling and Analysis. Unless otherwise mutually agreed, the
sampling and analysis of the fuel delivered hereunder shall be performed at
Seller's expense at the Mine by an independent commercial testing laboratory
("Independent Lab") mutually selected by Buyer and Seller. The results thereof
shall be accepted and used for the quality and characteristics of the fuel
delivered under this Agreement. All analyses shall be made in accordance with
American Society of Testing Materials ("A.S.T.M.") or other mutually agreed to
specifications. Samples for analysis shall be taken in accordance with A.S.T.M.
standards, may be composited, and shall be taken with a frequency and regularity
sufficient to provide accurate representative samples of the deliveries made
hereunder.
Each sample shall be divided into 3 parts and put into airtight containers,
properly labeled and sealed. One part shall be used for analysis by the
Independent Lab, one part shall be made available to Buyer as a check sample, if
Buyer in its sole judgment determines it is necessary, and one part ("Referee
Sample:) shall be retained for a period of 30 days. Buyer shall be given timely
and routine copies of all analyses made by the Independent Lab. Seller will fax
results and relevant coal quality information to Buyer's designee and to its
Plant Manager, 24 hours prior to shipment. Buyer, on reasonable notice to Seller
shall have the right to have a representative present to observe the sampling
and analysis. Unless Buyer requests a Referee Sample analysis, the Independent
Lab analysis shall be used to determine the quality of the coal delivered
hereunder.
If any dispute arises within 30 days of the date of sampling, the Referee
Sample shall be submitted for analysis to another independent commercial testing
laboratory ("Second Lab") selected by Buyer. The analysis of the Second Lab
shall control to the extent provided in this Section. A dispute shall be deemed
not to exist and the Independent Lab analysis shall prevail if such analysis
differs from the analysis of the Second Lab by an amount equal to or less than
any of the following ("as received"):
(i) 0.50% moisture or
(ii) 0.50% ash or
(iii) 100 Btu/lb. or
(iv) 0.25% sulfur
The cost of the analysis made by the Second Lab shall be borne by Buyer if
the Independent Lab analysis prevails and by Seller if the analysis of the
Second Lab prevails.
SECTION 6. PRICE
Section 6.1 Price. The Base Price of fuel per million BTU;s delivered to
Buyer's Generating Stations during the initial four (4) year term of the
Agreement is as follows:
Price
Year Per MMBTU
---- ---------
2000 98 cents
2001 99 cents
2002 99 cents
2003 100 cents
Section 6.2 Revised Renewal Period Price. The parties agree to commence
negotiations to establish the price of fuel to be provided during each year of
the renewal period (the "Revised Renewal Period Price"), not later than January
1, 2003, with July 1, 2003, as the agreed upon deadline to agree upon such
Revised Renewal Period Prices.
Section 6.3 Government Impositions. The Base Price and Revised Renewal
Period Price is inclusive of all federal, state, municipal and local taxes, fees
and costs of any kind whether arising from government law, rule, regulation or
otherwise, including, without limitation, all costs of conforming to federal and
state mining and reclamation laws, rules and regulations and all other and/or
additional mining and operating costs and expenses incurred during the term of
this Agreement. Price adjustment may be made under this Agreement for costs
occasioned by changes in any statute, rule or regulation, and any governmental
imposition(s) enacted or promulgated after the date of this Agreement, or the
effective date of any Revised Renewal Period Price, or for costs of compliance
with requirements of entirely new regulatory statues, rules and regulations,
which are enacted or promulgated after the date of this Agreement or the
effective date of any Revised Renewal Period Price. The Base Price shall be firm
and not subject to adjustment except as provided in this section and Sections
6.2, 8.4, 8.5 and 11.
SECTION 7. INVOICES, BILLING AND PAYMENT
Section 7.1 Invoice Procedures for Coal Shipments. Seller shall invoice
Buyer weekly at the current Base Price for all fuel unloaded in the previous
calendar week. In order to facilitate monthly record keeping for both Buyer and
Seller, Seller shall separately invoice Buyer for coal delivered in any partial
week at the beginning or end of each calendar month.
Section 7.2 Payment Procedures for Coal Shipments. Payment for fuel
unloaded shall be mailed within 10 days after receipt of invoice in form and
detail satisfactory to Buyer. Buyer shall mail all payments to Seller's account
as directed by Seller.
Section 7.3 Withholding. Buyer shall have the right to withhold from
payment of any billing or billings the amount of any sums which it is not able
in good faith to verify or which it otherwise in good faith disputes, such right
to withhold to continue for the duration of the dispute or inability to verify.
Buyer shall notify Seller promptly in writing of any such issue, stating the
basis of its claim and the amount it intends to withhold, and the parties agree
to review the matter in detail within ten (10) days after Seller's receipt of
such notice. In the event and to the extent that any dispute or verification
issue is resolved in Seller's favor, Seller shall add the unpaid amount to the
next invoice, plus interest at the prime rate of borrowed funds as published in
the most recently published edition of the Wall Street Journal for the period
between the date on which the amount would normally be paid and the actual
payment date, and Buyer shall pay such extra amount in accordance with the
procedures hereof. In the event and to the extent that any dispute or
verification issue is resolved in Buyer's favor, Seller shall promptly issue a
credit memorandum covering the amount in question.
Payment by Buyer, whether knowing or inadvertent, of any amount in dispute
shall not be deemed a waiver of any claims or rights by Buyer with respect to
any disputed amounts or payments made.
SECTION 8. FORCE MAJEURE
Section 8.1 EVENTS OF FORCE MAJEURE. Performance of the obligations of
either party hereto except as to any obligation by either party to make payment
to the other shall be excused to the extent prevented by an event of Force
Majeure. As used herein, an event of Force Majeure shall mean an act of God;
strike, lockout or other labor dispute; sabotage; fire; flood; war; riot or
insurrection; explosion; accident; embargo; blockade; inability to secure
supplies, fuel, power, governmental authorization or permit; unscheduled or
forced outages at the generating station (see Section 8.5 below); breakdown of
or damage to machinery, plants or equipment; interruption or shortage of
transportation arrangements or equipment; regulation, rule, law, order, act or
restraint of any civil or military authority; or any other event, whether of the
kind herein enumerated or otherwise, which is beyond the reasonable control and
without the fault or negligence of the party affected thereby and which wholly
or partially prevents, interrupts or delays performance hereunder. An event is
beyond the reasonable control of a party if it cannot be prevented or eliminated
by the exercise of due diligence or its prevention or elimination would be
accomplished only at an excessive or unreasonable cost.
The party claiming excuse hereunder shall give the other party prompt
notice of such event. As used herein, the term "Seller" shall include any party
mining, preparing, hauling, loading or transporting fuel to Seller for resale to
Buyer under this Agreement. The party experiencing the Force Majeure shall use
its best efforts to remedy the Force Majeure as soon as practicable.
Section 8.2 Notice and Suspension. If because of Force Majeure either Buyer
or Seller is unable to carry out its obligations under this Agreement, such
party shall promptly give the other party written notice of the Force Majeure,
whereupon the obligations and liabilities of the party giving such notice and
the corresponding obligations of the other party shall be suspended to the
extent made necessary by and during the continuance of such Force Majeure.
Subject to the provisions of this Section if (a) a condition of Force
Majeure occurs, (b) mutual obligations are suspended as contemplated by the
paragraph next hereinabove, (c) such condition (alone or extended by other
conditions of Force Majeure) continues so that the mutual obligations remain
suspended for a period of six months, and (d) at the end of said six months or
at any time thereafter either party, in the exercise of reasonable judgment,
concludes that there is no likelihood of ending the condition(s) in the
immediate future, then either party may terminate this Agreement without
liability to the other party by giving to the other 90 days' notice in writing
of its intention to terminate.
Section 8.3 Deficiencies in Shipments. In the event Seller is prevented, in
whole or in part, from producing, processing or shipping fuel hereunder due to
Force Majeure, deficiencies in shipments so resulting may be added to subsequent
shipments of like fuel but only if Seller is requested to do so by Buyer, and
then pursuant to a reasonable schedule provided to Seller by Buyer.
Section 8.4 Environmental Force Majeure. The parties recognize that, during
the continuance of this Agreement, legislative or regulatory bodies or the
courts may adopt laws, regulations, policies and/or restrictions relating to air
pollution or other environmental matters which will make it impossible or
commercially impracticable for Buyer to utilize this or like kind and quality
coal which thereafter would be delivered hereunder. If as a result of the
adoption of such laws, regulations, policies, or restrictions, or change in the
interpretation or enforcement thereof, Buyer decides that it will be impossible
or commercially impracticable (uneconomical) for Buyer to utilize such fuel,
Buyer shall so notify Seller, and thereupon Buyer and Seller shall promptly
consider whether corrective actions can be taken in the mining and preparation
of the fuel and/or in the handling and utilization of the fuel at Buyer's
generating station; and if in Buyer's judgment such actions will not, without
unreasonable expense to Buyer, make it possible and commercially practicable for
Buyer to so utilize fuel which thereafter would be delivered hereunder without
violating any applicable law, regulation, policy or order, Buyer shall have the
right, upon the later of 60 days' notice to Seller or the effective date of such
restriction, to terminate this Agreement without further obligation hereunder on
the part of either party. Any expense contemplated by this Section shall be
deemed unreasonable and the alternative under consideration shall thereby be
deemed impossible or commercially impracticable, if it would result in a total
cost to Buyer (including the cost of any equipment amortized over its useful
life), in using Seller's fuel, in excess of the total cost of using competitive
fuels including, without limitation, fuel from alternative sources which are
then reasonably available to Buyer and which can be utilized in conformity with
all such restrictions (including the cost of any addition or modification to
Buyer's generating station necessary to permit the delivery and utilization of
such fuel). The cost of using such fuels over the remainder of the term of this
Agreement, including anticipated increases in the price of such other fuel and
of any required modifications, adjustments or additions to Buyer's generating
station, shall be considered for purposes of this Section. Buyer's decisions and
opinions with respect to this Section 8.4 shall be final and not subject to
question or dispute by Seller.
Section 8.5 Redirection of Coal. Notwithstanding any other provision of
this section, Buyer will have the absolute right and discretion, but in no event
any obligation, during any period of Force Majeure, to redirect shipments of
fuel delivered under this Agreement to any of its generating stations, provided
that Buyer agrees to reimburse Seller for any additional transportation or
handling costs that are incurred by Seller to effect such redirected deliveries.
SECTION 9. AUDIT AND INSPECTION
Buyer shall have the right to inspect, review, and audit (or to have its
representatives inspect, review, and audit) at any time during regular business
hours, and upon reasonable notice so as not to disrupt any part of Seller's
operations, including, without limitation the source of Seller's fuel,
management, and/or processes by which fuel is mined, handled, processed, hauled,
sampled, analyzed and loaded hereunder.
Buyer shall maintain, and cause its representatives to maintain, all data
and information discovered pursuant to this Section in confidence except to the
extent that disclosure thereof may be required by law.
SECTION 10. NOTICES
Section 10.1 Form and Place of Notice. 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 if delivered in person, transmitted by telegraph, telex, or
telecopier, or dispatched in the United States mail, postage prepaid, for
mailing by first class, certified, or registered mail, return receipt requested
and addressed as follows:
If to Seller:
President
SIGCORP Fuels, Inc.
20 N.W. Fourth Street
Evansville, IN 47741
If to Buyer:
President
Southern Indiana Gas and Electric Company
20 N.W. Fourth Street
Evansville, Indiana 47741
Section 10.2 Change of Person or Address. Either party may change the
person or address specified above upon giving notice to the other party of such
change.
SECTION 11. RIGHTS TO USE
Buyer shall have the unqualified right to use any of the fuel purchased
under this Agreement in any of its generating stations including the transfer
from one plant to another, all in its absolute discretion, provided that Buyer
agrees to reimburse Seller for any additional transportation or handling costs
incurred by Seller to effect such deliveries.
SECTION 12. LIABILITY
Section 12.1 Indemnity - Seller agrees to indemnify and save harmless
Buyer, its officers, directors, employees and representatives from any
responsibility and liability for any and all claims, demands, losses (including
reasonable attorney's fees) arising out of or resulting from any failure of the
fuel sold hereunder to comply with any laws, regulations or ordinances,
including, without limitation, any laws, regulations or ordinances relating to
air quality or emissions standards, or which otherwise arise out of the acts or
omissions of Seller in the performance of this Agreement. Seller further agrees
to indemnify, defend and hold Buyer and its agents and employees harmless from
any claims, demands or liability of any kind or nature for injuries or damage to
any person or property arising out of or resulting from the performance of the
Agreement.
Section 12.2 Consequential Damages - In no event shall either party be
liable to the other or to any third party for any indirect, special or
consequential damages including, without limitation, those based on loss of
revenue, profit or business opportunity, whether or not either party had or
should have had any knowledge, actual or constructive, that such damages might
be incurred.
SECTION 13. STATUS AND RELIANCE OF BUYER
Seller recognizes that Buyer is a public utility which has power sales
contracts with other utilities and provides electrical service to customers
within the State of Indiana. Throughout this Agreement, Buyer, its customers and
such other utilities will be relying on the continued operation of the
generating station as a source of electricity for their various needs. Seller
further acknowledges that an adequate and continuous fuel supply to the
generating station, at prices reasonably in conformity to then prevailing market
prices for fuel comparable in quality to that sold hereunder, are essential to
Buyer's ability to provide electricity and services at affordable rates. By
signing this Agreement Buyer is placing reliance upon Seller to furnish a
significant portion of its fuel supply at competitive prices. Seller agrees, in
meeting its obligations hereunder, to give due consideration to the status and
reliance of Buyer and Buyer's customers.
SECTION 14. TERMINATION FOR DEFAULT
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 120 days' notice in writing of
its intention to do so, specifying the default complained of. At the expiration
of said 120 days, unless the party in default shall have made good such default,
the party not in default shall have the right at its election to terminate this
Agreement forthwith.
This right shall be in addition to the rights provided to either party in
other portions of this Agreement and by law, or in equity.
SECTION 15. CONSTRUCTION OF AGREEMENT
Section 15.1 Applicable Law. This Agreement shall be deemed to be executed
in the State of Indiana and shall be interpreted and enforced according to the
laws of the State of Indiana.
Only the courts in the State of Indiana shall have jurisdiction over this
Agreement and any controversies arising out of the Agreement. Any controversies
arising out of this Agreement shall be submitted only to the courts of the State
of Indiana.
Seller hereby submits to the jurisdiction of the courts in the State of
Indiana for the purposes of interpretation and enforcement of this Agreement.
Section 15.2 Headings. The paragraph headings appearing in this Agreement
are for convenience only and shall not affect the meaning or interpretation of
the Agreement.
Section 15.3 Waiver. The failure of either party to insist on strict
performance of any provision of this Agreement, or to take advantage of any
rights hereunder, shall not be construed as a waiver of such provision or right.
Section 15.4 Remedies Cumulative. Remedies provided under this Agreement
shall be cumulative and in addition to other remedies provided by law.
Section 15.5 Severability. If any provision of this Agreement is found
contrary to law or unenforceable by any court of law, the remaining provisions
shall be severable and enforceable in accordance with their terms, unless such
unlawful or unenforceable provision is material to the transactions contemplated
hereby, in which case the parties shall negotiate in good faith a substitute
provision.
Section 15.6 Binding Effect. This Agreement shall bind and inure to the
benefit of the parties and their successors and assigns.
Section 15.7 Assignment. Neither party may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party, which consent shall not be unreasonably withheld or denied; provided,
however, that Buyer shall have the right, without consent of Seller, to assign
all or any part of this Agreement to any company, controlling, controlled by, or
under common control with Buyer.
Section 15.8 Entire Agreement. This instrument contains the entire
Agreement between the parties as to fuel to be delivered and sold hereunder, and
there are no representations, understanding or agreements, oral or written,
which are not included herein.
Section 15.9 Amendments. Except as otherwise provided herein, this
Agreement may not be amended, supplemented or otherwise modified except by
written instrument signed by parties hereto.
SECTION 16. INDEPENDENT CONTRACTOR
Seller shall be an independent contractor with respect to the work to be
performed hereunder. Neither Seller nor its subcontractors, nor the employees of
either, shall be deemed to be the servants, employees or agents of Buyer.
SECTION 17. PERMITS AND LICENSES
Both parties shall, at their own expense, obtain any necessary permits and
licenses in connection with the performance of their work, unless otherwise
specified in this Agreement, and shall be responsible for conducting the work in
accordance with the provisions of such permits and licenses.
SECTION 18. CONFIDENTIALITY
Subject to Buyer's obligation of disclosure to AMAX Coal Company under a
pre-existing agreement, Seller and Buyer agree to retain in confidence this
Agreement and any information obtained as a result of negotiation and
performance of this Agreement which either party identifies to the other as
being proprietary in nature. It is agreed and understood, however, that such
information may be disclosed when requested by a court or government agency, to
consultants or subcontractors of either of the parties subject to the same
conditions of confidentiality as provided herein, or as otherwise provided by
law, regulation, or administrative requirement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
By: /s/ Ronald Jochum
-----------------------------------------
Ronald Jochum
Its: Vice President, Power Supply for SIGECO
ATTEST:
/s/ Susan Fester
- -------------------
Susan Fester
SIGCORP FUELS, INC.
By: /s/ Kent Stump
-----------------------------------------
Kent Stump
Its: President
ATTEST:
/s/ Kimberly Snow
- -------------------
Kimberly Snow
EXHIBIT A
SIGCORP FUELS, INC.
COAL SPECIFICATIONS
MONTHLY PER SHIPMENT
GUARANTEED REJECTION LIMITS
"As Received" "As Received"
- --------------------------------------------------------------------------------
BTU/LB 11,000 Min. 10,700 Min.
SO2LBS/mmBTU 7.5 Max 8.0 Max.
MOISTURE % 15 Max. 16 Max.
ASH % 13 Max. 14 Max.
ASH SOFTENING TEMP 2,100 Min. 2,100 Min.
(Reducing) H=1/2W)
GRINDABILITY 53 Min. 51.5 Min.
SIZE 2" x 0 Max. 2" x 0 Max.
FINES (1/4" x 0") 50% 55%
CHLORINE .05 Max % 0.1 Max %
A shipment shall consist of all of the fuel delivered to Buyer under this
agreement in a given day. Unless otherwise mutually agreed, a shipment shall not
include more than 15,000 tons.