Exhibit 10.3

 

“Pages where confidential treatment has been requested are marked ‘Confidential
Treatment Requested.’ The redacted material has been separately filed with the
Commission, and the appropriate section has been marked at the appropriate place
with [REDACTED] and in the margin with a star (*).”

 

AMENDMENT NO. 1 TO THE AGREEMENT FOR

THE SUPPLY OF COAL TO MT. STORM POWER STATION BETWEEN

VIRGINIA ELECTRIC AND POWER COMPANY AND

METTIKI COAL CORPORATION

 

THIS AMENDMENT NO. 1 (the “Amendment”) is entered into this 17th day of January,
2005, by and between VIRGINIA ELECTRIC AND POWER COMPANY, a Virginia public
service corporation with its principal office located in Richmond, Virginia
(“Buyer”) and METTIKI COAL LLC, a Delaware limited liability company with its
principal office located in Tulsa, Oklahoma (“Seller”).

 

WHEREAS, Buyer and Seller entered into an agreement entitled “Agreement for the
Supply of Coal to Mt. Storm Power Station Between Virginia Electric and Power
Company and Mettiki Coal Corporation” dated January 15, 1996, (the “Agreement”);
and

 

WHEREAS, Buyer and Seller desire to amend the Agreement to clarify changes to
the arrangement between the parties that will result from the construction and
operation of synfuel processing facilities at Buyer’s Mount Storm Power Station
located in Grant County, West Virginia.

 

NOW, THEREFORE, in consideration of these premises and of the mutual covenants
and agreements herein set forth, Buyer and Seller hereby agree as follows:

 

1. Sale, Purchase, Quantity and Scheduling

 

Section 3.1 is amended to add a new subsection (h) as follows:

 

(h) From time to time, Buyer may request Seller to enter into new spot and/or
long term agreements to sell coal to a third party designated by Buyer who
intends to process, deliver, sell and/or resell to Buyer the coal which Seller
is authorized to sell and deliver to Buyer under this Agreement (a “Third Party
Seller”). Any such agreement with a Third Party Seller shall have substantially
the same terms and conditions as provided in this Agreement with respect to the
quality specifications, adjustments for quality variations, quality suspension
rights and other terms and conditions as mutually agreed to between Seller and a
Third Party Seller (a “Third Party Agreement”). If Seller does enter into a
Third Party Agreement, Buyer and Seller acknowledge that any coal sold under
such Third Party Agreement will automatically reduce the quantity of coal
required to be purchased by Buyer and/or supplied by Seller pursuant to this
Agreement. If the Third Party Agreement requires that the Third Party Seller pay
any additional amounts to Seller, including any purchase price premiums that are
in excess of the coal purchase price paid by

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Confidential Treatment Requested

 

    

Buyer hereunder, then Seller shall pay Buyer an amount equal to such purchase
price premiums for coal that is

delivered by Seller to the Station but not ultimately processed into synfuel,.
Upon any cancellation or termination

of any Third Party Agreement, at Buyer’s sole option, the Third Party Seller’s
rights, title, and interests in and to

the Third Party Agreement (including any coal shortfall make-up rights) shall be
transferred to Buyer. If any Third

Party Agreement is suspended or terminated or breached for any reason, there
shall be no basis to claim non-performance

or breach or exercise a right of offset, counterclaim or cancellation of,
against or under this Agreement. If any Third

Party Agreement is terminated and/or suspended for any reason, this Agreement
shall remain in full force and effect

with the remaining obligations for the sale and purchase of quantities of coal
to be the quantities set forth in this

Agreement, reduced by the amount of coal delivered under any Third Party
Agreement, if any, during each such

applicable calendar month.

2.    Buyer’s Right to Operate the Facility      The last sentence of Section
3.5(c) of the Agreement shall be deleted in its entirety and replaced with the
following:

 

 

 

 

 

 

 

 

 

 

 

*

  

“If Seller, in its sole discretion, determines it can provide Buyer with use of
the Facility to receive coal(s) from

sources other than from Seller’s Mine, and such use will not impact Seller’s
utilization of the Facility or Buyer’s

and Seller’s obligations under this Agreement, Buyer and Seller shall then
mutually agree to acceptable procedures

for the throughput of third party coal through the Facility. Unless otherwise
agreed by the parties in writing, any coal

delivered to the Facility from a source other than Seller’s Mine will be ratably
delivered during Seller’s normal

scheduled operating hours of the Facility. Seller shall have the right to
suspend or reject deliveries of coal from

sources other then from Seller’s Mine if they are not in compliance with the
legal load limits as then currently enforced

in the State of West Virginia including any permitted variances and tolerances,
and/or if the equipment is not compatible

with design and safe operation of the Facility as existing or modified to
accommodate the delivery of third party coal.

Buyer will provide to Seller a detailed tabulation of the certified weights for
each truck load of coal delivered to the

Facility from a source other than the Seller’s Mine. Buyer shall pay Seller
$[REDACTED] for each ton of third party

coal throughput through the Facility that is delivered during Seller’s scheduled
operating hours of the Facility. If

requested by Buyer, Seller shall exert reasonable efforts to extend the normal
scheduled operating hours of the Facility

to accommodate the deliver of third party coal and in such event Buyer shall
reimburse Seller for all costs incurred by

Seller in operating the Facility during such period of time. In the event Buyer
requests modifications to the Facility to

accommodate deliveries of third party coal, including but not limited to
modifications to allow delivery of triaxle and

tractor/trailer combinations, Seller shall exert all reasonable efforts to
comply with Buyer’s request and any such

modifications to the Facility shall be at Buyer’s sole cost and expense and
Buyer will reimburse Seller for such costs

upon completion of the modifications.”

    

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[REDACTED] denotes confidential information with respect to which a separate
confidential treatment request has

been filed with the Securities and Exchange Commission.

 

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Confidential Treatment Requested

 

3. Sampling and Analysis

 

All references within the Agreement relating to sampling of Seller’s coal
delivered from Seller’s Mine to the Station will be amended by reference, to be
sampled by Seller at the Station’s receiving point or the Mine, as applicable.

 

4. Payment

 

Section 6.1(e) is deleted in its entirety and replaced with the following:

 

“(e) Payment to Seller shall be made by check to the following address:

 

  * [REDACTED]

  * [REDACTED]

  * [REDACTED]”

 

5. Third Party Seller Coal Price

 

Article 7 is amended to add a new Section 7.8 as follows:

 

“7.8 Third Party Seller Coal Price

 

The price of coal sold by Seller to a Third Party Seller under any Third Party
Agreement shall be equal to the then existing price of coal sold by Seller to
Buyer under this Agreement, plus any purchase price premiums paid by a Third
Party Seller under the Memorandum Of Understanding between the Buyer and Seller
dated January 17, 2005.”

 

6. Notices

 

Article 13 is amended to delete Seller’s notices address in its entirety and
replace with the following:

 

“In the case of Seller to:

Alliance Coal, LLC

1717 South Boulder Avenue

Tulsa, OK 74119

Attention: General Manger – Contract Administration

Telephone No. 918-295-7619

Telecopy No. 918-295-7360

 

(b) Article 13 is amended to delete the numbers “273-4140” in the twenty-second
line thereof and replace them with the following: “273-4138”.

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[REDACTED] denotes confidential information with respect to which a separate
confidential treatment request has been filed with the Securities and Exchange
Commission.

 

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(c) Article 13 is amended to insert the following words after the words
“Seller’s General Manager of Operations at the Mine:”

 

“Mettiki Coal Company

Dwight Kreiser, Manager of Operations

293 Table Rock Road

Oakland, MD 21550”

 

7. Annex D. Sampling and Analysis Procedures and Requirements

 

Annex D, Attachment A (a) is amended to delete the words “truck dump receiving
facility at the Station” in the first and second lines and replace them with
“truck dump receiving facility at the Station and/or the Mine”.

 

8. Buyer agrees to indemnify and hold harmless Seller, for Buyer’s
non-compliance with any of Buyers permit obligations relating to any daily,
weekly, monthly and/or annual volumes of coal that can be delivered to the truck
dump receiving facility at the Station.

 

9. Entire Agreement

 

Except as provided in this Amendment, the Parties acknowledge and agree that,
notwithstanding any other term or provision contained in this Amendment, neither
Buyer or Seller will have any greater, reduced, additional or changed
obligation, liability or duty to the other than as specified in the Premises
Lease, Equipment Lease, Operating Agreement or the Agreement.

 

10. Existing Agreement

 

In all other respects, the provisions of the Agreement are hereby ratified and
remain unchanged. This Amendment shall not amend, modify or in any way affect
the rights and obligations of the Parties prior to the effective date of this
Amendment.

 

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed
by their duly authorized officers this 17th day of January, 2005.

 

VIRGINIA ELECTRIC

  

METTIKI COAL, LLC

AND POWER COMPANY

    

By

 

/s/ David A. Heacok

  

By

 

/s/ Gary J. Rathburn

Name:

 

David A. Heacock

  

Name:

 

Gary J. Rathburn

Title:

 

Vice President - Fossil & Hydro

  

Title:

 

Senior Vice President - Marketing

 

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