EXHIBIT (10)(i) 108
THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN
REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
CONTRACT
This Agreement, made and entered into as of the 1st day
of January, 1997 by and between Central ▇▇▇▇▇▇ Gas & Electric
Corporation (hereinafter referred to as "Buyer"), with its
principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, a New York corporation, and HPM Corporation
(hereinafter referred to as "Seller" or "Producer"), with an
office at Drennen, West Virginia a Delaware corporation, and
Integrity Coal Sales, Inc. (hereinafter referred to as "Sales
Agent"), with its principal office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, a New York corporation.
WITNESSETH:
WHEREAS, Seller controls coal reserves and has mining,
preparation and loading facilities known as the High Power
Mountain ("Operations"), located near Drennen, West Virginia and
which Operations (except as hereinafter provided) are the source
of coal to be sold and purchased hereunder; and,
WHEREAS, Sales Agent is the sales agent for Seller and
is duly authorized to contract to sell said coal and otherwise
represent Seller, all as hereinafter set forth; and,
WHEREAS, Buyer is a consumer of coal and, after
investigation and examination of the Operations and such coal
reserves, desires to purchase coal from Seller; and,
WHEREAS, the parties hereto wish to enter into a coal
supply agreement based on the terms and conditions hereof.
NOW THEREFORE, the parties hereto for good and valuable
mutual consideration, and intending to be legally bound, hereby
agree as follows:
ARTICLE I
TERM OF AGREEMENT
The term of this Agreement shall be for the period
commencing January 1, 1997 and continuing until midnight,
December 31, 1998, unless sooner terminated as provided for
herein. A Contract Year is defined as the period from January 1
of a year through December 31 of the same year. This Agreement
shall terminate automatically, without further obligation or
liability to either party, except for payments for coal
delivered, at the end of the Term.
ARTICLE II
DELIVERIES
Section 1. Quantities/Delivery Schedule: Except as
provided for below, the quantity of coal sold and purchased
hereunder shall be a firm tonnage of no less than 240,000 tons
per year ("Firm Tonnage"). In addition, there will be 120,000
tons per year called incremental tonnage ("Incremental Tonnage")
which will be sold and purchased hereunder provided that the
delivered cost per million Btu's of oil, natural gas or spot coal
usable at Buyer's Danskammer Point Plant ("Danskammer Plant" or
"Buyer's Plant") exceeds the applicable delivered Base Price of
coal in delivered cost per million Btu's.
The Sales Agent/Seller will assume that three trains of
approximately 12,000 tons each will be loaded for shipment during
odd numbered months (1, 3, 5, 7, 9, 11) and two trains of
approximately 12,000 tons each will be loaded in the even
numbered months (2, 4, 6, 8, 10, 12). Buyer will provide
scheduled loading dates to Sales Agent/Seller on or before the
twenty-fifth (25th) of the month preceding the loading month.
Every third train in a contract year will be an
incremental train subject to the provisions contained herein.
The Buyer must indicate to the Sales Agent not later than the
20th day of the first month of the calendar quarter preceding the
calendar quarter of each proposed Incremental Tonnage shipment if
the then-current delivered price of oil, natural gas or spot coal
to the Danskammer Plant is below the delivered Base Price of
coal. Note: Spot coal must meet or be adjusted to the
specifications contained herein. If such notice is not received
by the Sales Agent by the 20th day of the first month of the
calendar quarter preceding the calendar quarter of each proposed
Incremental Tonnage shipment then all trains will be shipped the
next quarter at the Base Price. In the event such a notice is
received, and the Sales Agent/Producer wishes to match the then-
current delivered price of oil, natural gas or spot coal, the
Sales Agent/Seller must notify the Buyer of the same not later
than the last working day of that notice month. In the event
that such notification is given, then the coal will be shipped,
with the Incremental Tonnage at the "matched price" and the Firm
Tonnage at the Base Price. If the notice to match the price is
not received by the Buyer by the last working day of the notice
month, the Incremental Tonnage trains will not be shipped. The
Sales Agent reserves the right to re-offer any unshipped
Incremental Tonnage to the Buyer at another time in the
ensuing 12 months (commencing with the month during which the
unshipped Incremental Tonnage would otherwise have been shipped)
at the Base Price. In each such instance, Buyer will then have
the option to accept that Incremental Tonnage or permanently
cancel that Incremental Tonnage.
Section 2. Limitations on Quantities: Notwith-
standing any of the above, Buyer will not be obligated to
purchase Firm Tonnage coal from Producer under this Contract if
Buyer is unable to utilize such coal at its Danskammer Plant
because of Economic Reasons. For the purposes as used herein,
Economic Reasons is defined as times when electrical energy is
available to Buyer, either from the Danskammer Plant when burning
oil or natural gas or from any other source, at a lower cost than
equivalent electrical energy which would otherwise be produced by
Buyer's Danskammer Plant when burning coal supplied by Seller at
the Base Price. If, because of Economic Reasons, the Danskammer
Plant does not at any time require any of the coal contracted for
hereunder, Buyer shall so notify the Seller in writing sixty days
in advance of the scheduled loading of the applicable firm
tonnage. If Buyer so notifies Seller, Seller shall have the
right to reduce the Base Price so that the cost of electrical
energy produced by Buyer's Danskammer Plant when burning coal
supplied hereunder is equivalent in cost to other lower cost
electrical energy then available to the Buyer. If Seller so
elects to reduce the Base Price, the Buyer shall be obligated to
purchase the Firm Tonnage contracted for herein.
In the event, upon receipt of such notice, the Seller
does not elect to reduce the Base Price, the Buyer shall have the
right to reduce the Firm Tonnage to that required by Economic
Reasons for the Danskammer Plant. If Buyer so reduces the Firm
Tonnage for more than thirty (30) days for Economic Reasons
during the term of this Contract, the Seller shall have the right
to:
1. Upon sixty days' prior written notice terminate
this Agreement.
2. Extend the Term of this Agreement until such
deferred Firm Tonnage has been shipped in total
quantities provided for in this Agreement. The
prices for the tonnage then shipped will be the
prices in effect at the time of shipment.
Section 3. Delivery Schedule Limitations: Two
trains of Firm Tonnage will be delivered for every single train
of Incremental Tonnage. Both Firm Tonnage and Incremental
Tonnage can be delivered during the same month, but Seller will
not be obligated to deliver more than three (3) 12,000-ton
shipments of coal during any one month, unless otherwise mutually
agreed. There shall be a minimum of seven (7) calendar days
between shipment releases from the Operations unless otherwise
mutually agreed.
Section 4. Passage of Title: The coal sold and
delivered to Buyer hereunder is f.o.b. railway car at the
Operations; and, title to and risk of loss of the coal supplied
hereunder shall pass to Buyer when Seller completes loading coal
and tenders the loaded cars to the carrier for destination to
Buyer's Plant.
Section 5. Initial Quality Notification: The
parties recognize the need to know the quality of the coal prior
to receipt of the shipment at the Danskammer Plant. Therefore,
the coal shall be sampled as it is loaded into railway cars and
analyzed by an independent coal testing laboratory that will
within 48 hours after the coal is loaded notify Seller and Buyer
by telephone, telegram, or TWX of the average "as received"
analytical results of each shipment.
Section 6. Shipping Notice: For each shipment of
coal hereunder, Seller shall promptly mail to Buyer's Danskammer
Plant and to Financial Records Section, Central ▇▇▇▇▇▇ Gas &
Electric Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, a shipping notice showing weight, type of car and
number of each railway car contained in the shipment, shipping
date and origin mine.
Section 7. Railroad: Except as otherwise expressly
provided herein, Seller shall deliver coal sold and purchased
hereunder in accordance with the contract between Buyer and
railroad (said price redacted contract to be provided to Seller)
and the applicable railroad tariff provisions. Buyer shall be
responsible for providing any applicable amendments or revisions
to said railroad tariff provisions to Sales Agent and/or Seller.
Buyer shall cooperate with Seller in the scheduling of
work at Seller's Operations and shall be responsible for
arranging and coordinating with the railroad (also referred to
herein as "carrier") the arrival of rail cars for loading. Buyer
shall pay carrier for all rail transportation charges for coal
purchased from Seller under this Agreement, except as provided
for in the remainder of this Section 7 and Article III Section 3.
SELLER SHALL INSPECT ALL COAL CARS FOR THE PRESENCE OF FOREIGN
MATERIAL PRIOR TO LOADING AND SHALL ONLY LOAD CLEAN COAL CARS.
Seller will pay all additional freight charges,
required by Buyer's rail transportation agreements or the
applicable railroad tariffs, on coal delivered hereunder that are
a result of Seller's failure to deliver the quantity of coal as
scheduled by Buyer, in accordance with this Agreement unless the
tonnage deficiency is excused by other provisions of this
Agreement.
Buyer shall be responsible for payment of any and all
increased freight charges which result solely from or on account
of the coal being shipped to more than one destination.
Seller shall pay all additional freight charges,
required by the applicable railroad tariffs or Buyer's rail
transportation agreements on coal delivered hereunder that are a
result of Seller's failure to notify the railroad, in writing, in
accordance with the applicable railroad tariffs or Buyer's rail
transportation agreement, of Seller's inability to make shipment
as scheduled.
Seller shall pay all detention and switching charges at
Seller's Operations resulting from Seller's failure to load and
ship the coal in accordance with the applicable railroad tariffs
or Buyer's rail transportation agreement. Seller shall load coal
so as to permit loading of 12,000-ton trains within a 6-hour
period.
Seller shall pay all charges resulting from overloading
or underloading cars in accordance with the applicable tariffs or
Buyer's rail transportation agreement.
ARTICLE III
SPECIFICATIONS & QUALITY & WEIGHT
Section 1. Origin: The coal shall be from the
▇▇▇▇▇▇▇▇ Seam and other such seams meeting the specifications
herein. Coals from other sources shall not be shipped without
prior written approval of Buyer.
Section 2. Quality Specifications: The quality of
coal sold and purchased hereunder shall meet the following
specifications:
Expected Minimum Maximum ASTM Method
As Received:
Moisture % 6 4 8 D 3173
Volatiles % 35 30 36 D 3175
Fixed Carbon % 51 47 60 D 3172
Ash % 8.0 -- 10 D 3174
BTU/LB. 13,100 12,500 -- D 3286
Sulphur % 0.66 0.47 0.70 D 3177/4239
SO2 (LBS./MMBTU) 1.0 -- 1.1 Calculated
Grind (HGI) 42 40 60 D 409-85
Ash Fusion (I.D., F) 2,700 2,300 D 1587
THIS COAL SHALL BE FREE OF EXTRANEOUS MATERIAL AND
SHALL HAVE A MAXIMUM TOP SIZE OF TWO INCHES.
Section 3(a). Buyer's Remedies Related to Quality
Specifications: In lieu of any other remedies related to
Seller's failure to meet the quality specifications provided for
herein, except for the price adjustments for quality provided for
in Article VI herein, Buyer shall have the rights and remedies
described in this Section 3 upon Seller's failure to deliver coal
in accordance with the specifications set forth in Sections 2 and
3 of this Article III.
(b). Buyer's Right to Reject Shipments:
Buyer's ability to use the coal being dependent on the coal
meeting the specifications set forth above, it is agreed that
Buyer shall have the right to reject any and all shipments which
fail to meet any of the individual shipment rejection limits
shown below:
INDIVIDUAL SHIPMENT REJECTION LIMITS
Sulphur (As Received) 0.7% Maximum
Volatiles (As Received) 30% Minimum
Ash Fusion (I.D.) 2,300 F Minimum
BTU/LB (As Received) 12,500 Minimum
SO2/Million BTU 1.1 LBS. Maximum
Grind 40 Minimum
The delivered coal must meet the following weighted
average specifications for three consecutive shipments:
THREE CONSECUTIVE SHIPMENTS LIMITS
Grind 42 Minimum
Ash (As Received) 8.51% Maximum
Moisture (As Received) 8% Maximum
If the weighted average grind, ash or moisture of coal
in a series of three consecutive shipments delivered hereunder,
as determined by sampling and analysis, does not meet the above
Three Consecutive Shipments Limits, Buyer shall have the right to
reject the immediately following shipment in the event that such
shipment does not meet said limitation. The basis of any such
rejection shall be the averaged results of 2 different
independent laboratories as provided for in Article VIII. One of
the independent laboratories is that providing the initial
testing results.
(c). Seller shall pay all freight, diversion,
demurrage, testing and other expenses in connection with any such
rejected shipment, or shipments found by Buyer to be nonconform-
ing, unless such shipment is accepted by Buyer. Furthermore,
Seller certifies that it will not make any shipment shown by
sampling and analysis (as provided for in Article VIII) to exceed
the individual shipment rejection limits.
Section 4. Seller's Duty of Care: Seller shall, at
all times exercise reasonable care and diligence in its efforts
to ship to Buyer coal which conforms to the specifications set
forth in above Section 2 and 3. Nothing in this Article III
shall be construed to relieve Seller of its obligation to conduct
its mining and coal cleaning operations in a competent manner,
consistent with good industry practices, so as to produce coal
which will meet the specifications set forth above.
Section 5. Weight Measurement: The weight of coal
sold hereunder shall be determined on Buyer's certified track
scales at the Danskammer Plant, which scales shall be maintained
and certified in accordance with the provisions of the U.S.
Department of Commerce National Bureau of Standards Handbook 44.
If such scales are inoperative at the time of any coal delivery,
the weight of coal shall be the weight as determined by Seller's
batch weighing system at the High Power Mountain loadout.
ARTICLE IV
PAYMENT
Section 1. Price: For coal delivered and accepted,
Buyer shall pay Seller the Base Price herein provided.
Section 2. Submission of Weight to Seller: Buyer
shall submit to Sales Agent the certified weights within five (5)
working days after the certified weights become available.
Section 3. Invoice: Thereafter, an invoice for any
adjustments for quality as hereinafter defined, FCA application
and all coal shipped from the Operations based on certified
weights will be submitted by the Sales Agent to the Buyer. The
coal shipped will be invoiced at the Base Price (hereinafter
defined).
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS
BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
Section 4. Payment: Buyer shall make payment to
Seller within twenty-five (25) calendar days from shipment of the
coal from the Operations.
Payment to Seller shall be made by wire transfer, as
follows:
Chase Manhattan Bank in New York
Account 323363199
ABA # ▇▇▇▇▇▇▇▇▇
The above address may be changed by Seller upon written notice to
Buyer.
ARTICLE V
BASE PRICE
The Base Price for the Term of this Agreement for Firm
Tonnage and Base Priced Incremental Tonnage shall be $xx.xx (U.S.
Dollars) per net ton, f.o.b. railcar at Seller's loading
facility. Match Priced Firm or Incremental tonnage shall be
priced in accordance with the provisions of Article II.
The Base Price is based on the use of Buyer's track
scales to determine the weight of coal on each train delivered
hereunder. If the delivering railroad determines accurate car
tare weights at delivery, the Base Price charged to Buyer will be
decreased by $.xx per ton. If Buyer's track scales are
inoperative and Seller's batch weights are used for weight
determination, then the Base Price charged to Buyer will be
reduced by $.xx per ton. This reduction relative to weight
determination will also apply to incremental tonnage shipped at
either the Base Price or a Matched Price.
The Base Price shall be adjusted for all costs incurred
by Seller to comply with any Federal, State or Local law,
regulation or order enacted, promulgated, repealed or altered,
after January 1, 1997, including, without limitation, laws
regulations or orders relating to health, safety, conservation,
reclamation, environmental protection, pollution control and air,
water and soil standards. Laws, legislation, rules, regulations
or orders or a new application, interpretation or implementation
of same which are pending as of January 1, 1997 and which are
enacted, repealed, altered, promulgated or effective after
January 1, 1997 shall be considered enacted or promulgated prior
to January 1, 1997.
ARTICLE VI
ADJUSTMENT IN BASE PRICE FOR QUALITY
Section 1. BTU Value: The Base Price to be paid to
Seller by Buyer is based upon coal with xx,xxx BTU/LB heat
content (BTU Value) for each ton of coal in each shipment. The
BTU Value of the coal sold hereunder may vary, and the Base Price
for such coal shall be adjusted to compensate for variations in
BTU Value, as described below.
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X" HAS
BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
Section 2. Adjustment for BTU Value: If the BTU
Value of the coal shipment is between xx,xxx BTU/LB and xx,xxx
BTU/LB there will be no adjustment for BTU Value variation. If
the BTU Value is less than xx,xxx BTU/LB or greater than xx,xxx
BTU/LB, the Base Price for a shipment shall be adjusted, based
upon variations from the xx,xxx BTU/LB BTU Value, as follows:
(a) For a coal shipment with a BTU Value greater than
xx,xxx BTU/LB, a premium shall be paid by Buyer to Seller at the
rate of $x.xx per xxx BTU/LB, fractions pro rata; or
(b) For a coal shipment with a BTU Value less than
xx,xxx BTU/LB, a penalty shall be deducted from the Base Price at
the rate of $x.xx per xxx BTU/LB, fractions pro rata.
Section 3. Adjustments for Ash Value: The Base
Price to be paid to Seller by Buyer is based upon coal with an
ash content (Ash Value) of xxxxx percent (x%) by weight of the
"as received" analysis of the coal. If the Ash Value is between
x.x% and x.x% there will be no adjustment for Ash Value. If the
Ash Value is less than x.x% then a premium of $▇.▇▇▇ per ton
shall be paid to Seller for each x.x% Ash Value variation below
x.x%. If the Ash Value is greater than x.x% then a penalty of
$▇.▇▇▇ per ton shall be deducted from the Base Price for each
x.x% Ash Value variation in excess of x.x%.
ARTICLE VII
FREEZE CONDITIONING
Section 1. Freeze Conditioning Agent: Seller shall
apply a freeze conditioning agent ("FCA") at cost to coal
purchased and delivered hereunder as directed by Buyer and in the
manner set forth herein.
Section 2. Method of Application: When application
of a FCA is directed, it will be applied to the full coal stream
as coal is loaded into railroad cars at the Operations at a rate
specified by Buyer. At any time Buyer may have a representative
present to observe and monitor the application of the FCA and to
obtain a sample of the FCA.
Section 3. Buyer's Approval: Seller shall utilize
an FCA with a Diethylene Glycol base that has been approved in
writing by Buyer. Seller shall have the right to use any of the
approved FCA's but shall not change from one FCA to another
without notifying Buyer, such notification to be confirmed in
writing.
Section 4. Price: For application of the FCA,
Buyer shall pay Seller at Seller's cost per gallon of FCA at the
rate of application (pints per ton) as specified by Buyer on each
ton of coal shipped. Buyer shall have the right to purchase and
supply FCA to Seller, in which case there shall be no charge by
Seller to Buyer for application.
ARTICLE VIII
SAMPLING AND ANALYSES
A recognized independent laboratory ("Independent
Lab"), experienced in the sampling and analyzing of coal, shall
be mutually agreed upon by Buyer and Sales Agent/Producer, and
shall be engaged by each Party to perform the sampling and
analysis of all coal shipped hereunder. Independent Lab shall
sample shipments at the Operations, located near Drennen, West
Virginia. The Independent Lab shall perform its sampling and
analysis in accordance with standards approved by the American
Society for Testing and Materials ("ASTM"). The Independent
Laboratory shall divide the sampled material into four (4) sample
splits identified as follows: (a) Laboratory analyses, (b)
Referee split, (c) Seller's split and (d) Buyer's split. The
Independent Laboratory shall provide upon request the sample
splits to Buyer and/or Seller as soon as the sample is prepared.
A proximate and grind analysis shall be done by the
Independent Lab for each shipment. Except as hereinafter
provided the results of the sampling and analyses by the
Independent Lab with respect to samples taken from any shipment
shall be accepted as the quality and characteristics of that
shipment. The cost of the Independent Lab's services for such
sampling and analyzing of the coal in each shipment shall be paid
for by the Buyer and the Seller equally.
Buyer shall have the right to have a representative
present at any and all times to observe the sampling, inspect the
Independent Lab and take check samples at the Operations, and
Buyer may also analyze the coal either from its own samples or
from samples taken by Independent Lab. The Independent Lab shall
retain for a period of 60 days the Referee split coal sample
taken so that Buyer and/or Seller or a commercial laboratory of
their choice may analyze such sample.
If the Buyer or Seller should question the correctness
of the analyses made by the Independent Laboratory, they may,
within 30 days after the train's unloading, notify the other
Party in writing to request that the Referee split be analyzed by
a second mutually agreeable Independent Laboratory. This
notification should specify which analytical parameter or
parameters are in dispute. The Independent Laboratory shall
provide the Referee Laboratory with the properly identified
sealed sample.
The integrity of the moisture in reserve samples is the
most difficult to preserve. Therefore, if the moisture value is
in dispute, the governing result will be the higher of the values
reported by the Independent and Referee Laboratory. Other
analytical parameters shall be determined on a 'dry basis' and
corrected to the 'as received' basis using the governing
moisture.
The following are the acceptable tolerance for other
test parameters: Ash +/- 0.3%; Sulphur +/- 0.03%; Volatile +/-
0.5%; Calorific Value +/- 100 BTU/LB; Ash Fusion Temperature I.D.
+/- 75 Degrees F. and HGI 3. Should the results fall within
these tolerances, the results of the Independent Laboratory will
stand. Should the results fall outside the tolerance, the
average dry basis analyses of the Independent Laboratory and
Referee analyses shall be the governing result.
Should the grindability (HGI) result be in dispute, the
Referee Laboratory will prepare a physical composite sample from
the Referee sample, then distribute a split of the physical
composite sample to an additional laboratory. If the HGI test
result of the second laboratory is within tolerance, the original
laboratory result will stand. If out of tolerance, the average
of the two Referee results will be the governing analysis.
The cost of this Referee analysis will be paid by the
Party requesting the check analysis.
Neither Party shall require the other Party to use
equipment or procedures which exceed the requirements of ASTM.
ARTICLE IX
GOVERNMENTAL LEGISLATION, REGULATIONS AND ORDERS
Section 1. Compliance with Law: Each party shall
use its best efforts to comply with the provisions of all
applicable federal, state and other governmental laws and any
applicable orders and/or regulations, or any amendments or
supplements thereto, which have been, or may at any time be,
issued by a governmental agency.
Section 2. Effect Upon Buyer's Obligations: The
parties hereto recognize the possibility that, during the
continuance of this Agreement, federal, state or local
legislative or regulatory bodies or the courts may impose or
enforce regulations, restrictions or standards, or revise
existing regulations, restrictions or standards which in Buyer's
sole discretion will make it impossible or impractical for Buyer
to utilize the coal hereafter to be delivered hereunder at the
Danskammer Plant. Such regulations or restrictions could pertain
to, but would not necessarily be limited to coal quality. If any
such regulations or restrictions are imposed and if as a result
thereof Buyer, in its sole discretion, decides that it will be
impossible or impractical for Buyer to utilize the coal, Buyer
shall so advise Seller and thereupon Buyer and Seller shall
promptly consider what corrective steps they can take in the
mining and preparation of the coal and in the handling and
combustion of the coal at the Danskammer Plant; and if in Buyer's
judgement such steps will not, without unreasonable expense to
Buyer, make it possible and practical for Buyer to utilize the
coal thereafter to be delivered hereunder without violating such
regulations or restrictions, Buyer shall have the right, upon
written notice to Seller, to terminate this Agreement without
further obligation to Seller hereunder.
Section 3. Effect Upon Seller's Obligations: In
the event of the enactment of any new federal, state or other
governmental law, or the promulgation of any regulation or order
thereunder which may prohibit (or restrict so as effectively to
prohibit) mining, or processing or shipping, as may be
applicable, of the coal specified in this Agreement, Seller shall
be relieved of its obligation upon the effective date of
implementation (compliance date) of such law, regulation or order
to deliver the total quantity of coal to be delivered under this
Agreement to the extent of the amount of tonnage represented by
the percentage of production of such mining, processed or shipped
coal so affected by such law, regulation or order to the total
amount of coal produced and processed to meet the quantity
requirements of this Agreement.
Section 4. Election to Reduce Tonnage or Terminate:
In the event any party elects to invoke Section 2 or 3, above,
the party so invoking shall notify the other parties in writing
and said notice shall state the notifying party's election to
terminate this Agreement or reduce the tonnage to be delivered
under this Agreement, effective on a specified date, which said
date shall not be earlier than the effective date of the
implementation (compliance date) of such law, regulation or order
giving rise to the termination; provided, however, that
notwithstanding anything to the contrary herein, said specified
date shall in no event be earlier than sixty (60) days after the
date of delivery of notice.
Section 5. Effect of Termination: If any party
elects to terminate this Agreement under the provisions of
Section 2, 3, or 4 of this Article IX, then no party shall have,
after the effective date of such termination, any further
obligation or liability under this Agreement, provided, however,
that such termination shall not affect any rights or obligations
of the parties existing under this Agreement for coal shipped or
required to be shipped prior to the effective date of said
termination.
ARTICLE X
FORCE MAJEURE
No party shall be subject to liability to the other
party for the failure to perform in conformity with this Agree-
ment where such failure results from an event or occurrence
beyond the control of the party affected thereby, whether
foreseen, foreseeable or unforeseeable, which wholly or partially
prevents the mining, preparation, loading or shipping of coal by
Seller or the receiving, unloading or utilization of coal by
Buyer. Such events shall include, by way of illustration but not
by way of limitation, acts of God, war, insurrection, riots,
nuclear disaster, strikes, labor disputes, labor and material
shortages, fires, explosions, floods, river freezeups, breakdowns
or damage to mines, plant equipment or facilities (including
emergency outages of equipment or facilities to make repairs to
avoid breakdowns thereof or damage thereto), interruptions to
transportation, railway car shortages, embargoes, orders or acts
of civil or military authority, laws, regulations or administra-
tive rulings. The provisions of the above sentence shall not
excuse a party from performing unless such party shall give
reasonable notice to the other party and furnish reasonable
information as to the cause of inability to perform and probable
extent thereof within thirty (30) calendar days after such cause
occurs. Failure to give such notice and furnish such information
within the time specified shall be deemed a waiver of all rights
under this Article for such period of time during which notice
was not given. No suspension or reduction by reasons of force
majeure shall invalidate the remainder of this Agreement but, on
the removal of the cause, shipments shall resume at the specified
rate. During such periods when force majeure conditions result
in a reduction in deliveries,Seller shall equitably prorate
shipments among its customers. Buyer shall equitably prorate
acceptance of deliveries of coal it purchases for the Danskammer
Plant. Nothing herein contained shall be construed as requiring
Seller or Buyer to accede to any demands of labor, or labor
unions, or suppliers, or other parties which Seller or Buyer
considers unacceptable. Deficiencies in shipments so caused
shall not be made up except by mutual consent. Deficiencies in
shipments caused by an event or occurrence within the control of
either party shall, at the option of the other party, extend the
term of this Agreement to the extent necessary to make up such
deficiency except as otherwise herein provided.
Seller shall furnish Buyer a monthly statement by the
fifteenth (15th) day of the calendar month setting forth the
amount of tonnage not shipped because of force majeure causes
asserted during the preceding calendar month.
ARTICLE XI
RESERVES
The coal reserves owned by or otherwise available to
Seller are located near Drennen, West ▇▇▇▇▇▇▇▇ and are accessible
to the Conrail Railway and are part of the mining properties
constituting the Producer's mines. The total quantity of
suitable and economically recoverable coal of the quality
required to meet Sales Agent/Seller's maximum annual obligation
to Buyer under this Agreement is 360,000 tons. Sales
Agent/Seller shall not enter into other agreements for the
production and sale of coal from the above reserves which
production and sale would reduce or impair the amount of reserves
required to meet its obligations during the term of this
Agreement.
Buyer shall have the right from time to time, whenever
deemed desirable by Buyer, to audit at Buyer's expense (1) said
reserves owned by or otherwise available to Seller and (2)
Seller's commitments for the purpose of determining if Seller has
sufficient reserves which are not otherwise committed to comply
with the reserve requirements of this Agreement. Buyer may at
its discretion have any such audit conducted by an independent
firm or firms acceptable to Sales Agent/Seller.
ARTICLE XII
EMPLOYEE INTEREST
Seller represents to Buyer that Seller has not given
and will not give, directly or indirectly, anything of value to
any employee or other representative of Central ▇▇▇▇▇▇ Gas &
Electric Corporation with the view of securing this Agreement or
obtaining favorable treatment with respect to the performance of
this Agreement. If such representation is untrue, or becomes
untrue, Buyer shall have the right to declare this Agreement null
and void or to terminate it, to ▇▇▇ for damages and to take such
other action as may be provided by law. If Seller obtains
knowledge at any time that any such employee has a direct or
indirect interest in Seller or its affiliates, (excluding routine
purchases in the open market by such employee of securities
issued by Seller or its parent corporations) it will immediately
inform Buyer of such fact.
ARTICLE XIII
WAIVER
The failure of any party to insist in any one or more
instances upon strict performance of any of the provisions of
this Agreement or to take advantage of any of its rights
hereunder shall not be construed as a future waiver of any such
provisions or the relinquishment of any such rights, but the same
shall continue and remain in full force and effect for the term
of this Agreement.
ARTICLE XIV
NOTICES
Notices and other communications provided for or
required herein shall be given (effective, if written, when
presented for delivery by postal authorities when sent by postage
prepaid, certified mail) as follows:
TO BUYER:
CENTRAL ▇▇▇▇▇▇ GAS & ELECTRIC CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTENTION: MANAGER OF FUELS RESOURCES
TO SALES AGENT:
INTEGRITY COAL SALES, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
TO SELLER:
HPM CORPORATION
P. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ARTICLE XV
GOVERNING LAW
This Agreement shall be construed, enforced and
performed in accordance with the laws of the State of New York.
ARTICLE XVI
AMENDMENTS
This Agreement may be modified or amended at any time
by mutual agreement of the parties, provided that such
modification or amendment shall be in writing and executed by the
duly authorized representatives of the parties.
ARTICLE XVII
FINALITY
This Agreement is intended as the final, complete and
exclusive statement of the terms of the Agreement among the
parties. The parties agree that parole or extrinsic evidence may
not be used to vary or contradict the express terms of this
Agreement. No waiver of any provision hereof shall be effective,
unless set forth in a written instrument authorized and executed
with the same formality as this Agreement.
ARTICLE XVIII
TITLES
The titles of the articles and sections of this
Agreement have been inserted as a matter of convenience for
reference only.
ARTICLE XIX
AGREEMENT FOR BENEFIT OF PARTIES ONLY
Buyer agrees to indemnify, including reasonable
attorneys fees, defend, and hold Sales Agent/Seller harmless from
any and all claims of any broker, consultant, finder or like
agent with whom Buyer has dealt, or is alleged to have dealt,
regarding this Agreement. Sales Agent/Seller agrees to
indemnify, including reasonable attorneys' fees, defend, and hold
Buyer harmless against any and all claims of any broker,
consultant, finder or like agent with whom Sales Agent/Seller has
dealt, or is alleged to have dealt regarding this Agreement.
ARTICLE XX
TRANSPORTATION AGREEMENTS
If Buyer is unable to conclude and maintain rail
transportation agreements on terms satisfactory to Buyer, Buyer
shall notify Sales Agent/Producer and these parties will use
their best efforts to make the terms satisfactory.
ARTICLE XXI
ASSIGNMENT - TERMINATION
All of the rights and obligations of this Agreement
shall inure to and be binding upon the legal representatives,
successors and permitted assigns of the parties hereto. No
assignment shall impose upon the non-assigning party any
obligation or burden in excess of those obligations or burdens as
exist between the original parties to this Agreement. This
Agreement or any interest herein shall not be assigned without
the prior written consent of the other parties, which consent
shall not be unreasonably withheld.
Subject to the provisions of the Federal Bankruptcy
Code, this Contract shall not be deemed an asset of either Seller
or Buyer and, upon five (5) days prior written notice, either
such Party may terminate this Agreement without penalty at any
time in the event the other such Party enters into any voluntary
or involuntary receivership, bankruptcy, or insolvency
proceedings.
ARTICLE XXII
COUNTERPARTS
This Agreement is being executed in several
counterparts, each of which is an original and all of which
together constitute but one and the same agreement.
ARTICLE XXIII
BUYER'S RIGHT TO ADEQUATE ASSURANCE-TERMINATION
If, during the Term of this Agreement, the Producer's
ability to meet its obligations under this Agreement become
impaired to the point that Buyer has reasonable grounds for
believing that Producer may not be able to meet such obligations,
then Buyer, by a written notice to Producer, may require that
Producer provide adequate assurance that Producer is able to
continue to meet its obligations under this Agreement. If such
adequate assurance is not received by Buyer within fifteen (15)
days from Producer's receipt of Buyer's request thereof, Buyer
shall have the right to immediately reduce, by the amount in
question, Buyer's obligation to purchase coal pursuant to this
Agreement. Buyer may obtain the amount of said reduction through
purchases from third parties; such reduction to be reflected in a
notice from Buyer to Sales Agent and Producer, which thereupon
shall become an amendment to this Agreement. In the event that
Producer cannot offer such adequate assurance to Buyer upon
Buyer's request or in the event Producer and/or Sales Agent has
made a material misrepresentation with respect to its Warranties
and Representations in Article XXV herein, Buyer shall also have
the right at its option to immediately terminate this Agreement
by written notice to Sales Agent and Producer.
ARTICLE XXIV
FAILURE TO PERFORM
In the event of failure to perform by either Seller or
Buyer, the nondefaulting party shall have available, except as
herein otherwise provided, all remedies provided at law or in
equity. These remedies shall include, without limitation, the
right of Buyer to obtain specific performance and/or injunctive
relief where default by Seller would deprive Buyer of a necessary
supply of coal and, because of market conditions or otherwise,
the collection of damages does not afford Buyer an adequate
remedy. In that regard 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.
These remedies also shall include, without limitation,
except as herein otherwise provided, the right of Seller to
obtain specific performance and/or injunctive relief where
default by Buyer would deprive Seller of a necessary market for
its coal and, because of market conditions or otherwise, the
collection of damages does not afford Seller an adequate remedy.
In that regard it is expressly recognized and understood between
the parties that prompt and full acceptance of deliveries and
scheduling of transportation therefore in accordance with this
Agreement are essential to Seller. Notwithstanding any other
provision of this Agreement, neither party shall be entitled to
recover incidental or consequential damages as a result of the
other's failure to perform.
ARTICLE XXV
REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
Each party warrants and represents to the other that:
(i) it has all requisite power, authority, licenses,
permits, permissions, approvals and franchises, corporate or
otherwise, to execute and deliver this Agreement and perform its
obligations hereunder;
(ii) its execution, delivery, and performance of this
Agreement has been duly authorized by, or is in accordance with,
its organic instruments, this Agreement has been duly executed
and delivered for it by the signatories so authorized, and this
Agreement constitutes its legal, valid and binding obligation
enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights in general and by general
principles of equity;
(iii) its execution, delivery, and performance of this
Agreement will not result in a breach or violation of, or
constitute a default under, any agreement, lease or instrument to
which it is a party or by which it or its properties may be bound
or affected; and
(iv) it has not received any notice, nor to the best
of its knowledge is there pending or threatened any notice, of
any violation of any applicable laws, ordinances, regulations,
rules, decrees, awards, permits or orders which would materially
adversely affect its ability to perform hereunder.
IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be executed in its behalf by its proper officer
thereunder duly authorized, all as of the day and year first
above written.
BUYER: CENTRAL ▇▇▇▇▇▇ GAS & ELECTRIC CORPORATION
BY ___________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
ITS President and Chief Operating Officer
SELLER: HPM CORPORATION
BY ___________________________________________
▇▇▇ ▇▇▇▇▇▇
ITS President
SALES AGENT: INTEGRITY COAL SALES, INC.
BY ___________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ITS General Manager