exv10w9



 




p.2

EXHIBIT 10.9


	 	 	 
	COAL SUPPLY AGREEMENT

BETWEEN

WILLIAMS BULK TRANSFER INC. (“WBT”)

AND

LINCOLNWAY ENERGY, LLC (“LWE”)*

	 	





This coal supply agreement (“Agreement”) is made and entered into as
of this  14th day of July 2005, by and
between Williams Bulk Transfer Inc., an Iowa Corporation with offices in
Williams, Iowa (“WBT”), and Lincolnway Energy, LLC, an Iowa Corporation
with offices in Nevada, Iowa (“LWE”).



IN CONSIDERATION OF the following terms and mutual promises set forth
herein, WBT agrees to deliver Coal (as defined in Section 3) to LWE’s
ethanol plant near Nevada, Iowa (“Plant”), and LWE agrees to purchase
and accept delivery of such Coal at the price and on the terms and
conditions stated in this Agreement.




1. TERM



This Agreement shall commence on the day first signed above and expire as of
January 1, 2008 (“Term”).




2. QUANTITY



WBT shall provide to LWE up to 120,000 Tons of Coal per year at a per
Ton price equal to the Coal and Transportation Price for Coal (as
defined in Sections 5 and 8) plus any subsequent price adjustments (see
Sections 6 and 9) for the Term of this Agreement WBT shall make best
efforts to maintain at all times a minimum of a twenty (20) day supply
inventory of Coal at its terminal strictly for the benefit of LWE. If
LWE fails to purchase a minimum of 40,000 Tons of Coal for the calendar
year beginning January 1, 2006 and a minimum of 80,000 Tons of Coal for
the calendar year beginning January 1, 2007 (“Minimum Quantity
Requirement”), LWE shall pay WBT (i) $12.00 per Ton of Coal multiplied
by the difference between the Minimum Quantity Requirement and the
actual Tons of Coal purchased by LWE for the respective calendar year,
less (ii) any amounts that WBT recovers by mitigating its damages. For
purposes of this Agreement, “Ton” shall mean 2,000 pounds avoirdupois




3. SOURCE AND COAL



“Coal” shall mean a Sub-bituminous coal with a Standard Transportation
Commodity Code (STCC) as published in STCC-6001 (series), starting with
the digits 11-21 (series). Coal shall not include beneficiated,
enhanced, or synthetic coal; provided, however, coal treated with
additives used exclusively for dust control or to reduce freezing shall
not be considered “enhanced”.



“Source” shall mean the Powder River Coal Company’s North
Antelope/Rochelle complex located in Campbell or Converse County,
Wyoming. Source Coal shall comply with the specifications set forth in
Section 11 herein.






 




			
	*	 	Portion omitted pursuant to a request for confidential treatment and filed separately with
the Securities and Exchange Commission. 





 









 




p.3





WBT shall have the right, but not the obligation, to deliver raw subbituminous coal
from mines other than the Source (“Substitute Coal”) to LWE, with 120 days prior
written consent of LWE, which consent shall not be unreasonably withheld. The
Substitute Coal shall be of similar quality to the Source Coal.




4. BACKUP SUPPLY



Within 90 days of execution of this Agreement, WBT shall provide to LWE proposals
for procuring backup coal supplies. These proposals shall include the price,
quality, quantity and timeliness of receipt of any backup coal. Backup coal
proposals shall include coal of similar quality to that of the Source.




5. TRANSPORTATION PRICE



“Transportation Price” shall consist of the following components: (i) the cost of
transloading Coal at WBT (ii) the cost of transporting the Coal from the Source to
WBT via Burlington Northern Santa Fe Railroad (“BNSF”) and Canadian National
Railroad (“CN”) (iii) the cost of transporting the Coal from WBT to the Plant via
motor transportation. As of January 15, 2005, LWE’s Transportation Price for Coal
shall be [ * ] per Ton. This Transportation Price is subject to various price
adjustments as contained in Section 6 (“Transportation Price Adjustments”).




6. TRANSPORTATION PRICE ADJUSTMENTS





	 	A.	 	Beginning April 1, 2005, and each July 1, October 1, January
1 and April 1 thereafter, the Transportation Price will be adjusted by 100%
of the percentage change since the previous adjustment in the Rail Cost
Adjustment Factor, Unadjusted for Productivity (“RCAFU”), as approved by the
Surface Transportation Board pursuant to Ex Parte
No.290 (Sub-No.5) (“Adjusted Rates” or “Adjusted Charges”). In no case shall
the Adjusted Rates or Adjusted Charges fall below the level of the initial
Transportation Price.
	 
	 	B.	 	A Fuel Surcharge shall apply to the Price. For every [ * ]
per gallon above [ * ], the Price shall increase by [ * ] per Ton. The Price
shall be adjusted once each month for fuel. The index governing the
surcharge is the Energy Information Administration’s average price in cents
per gallon for Retail On-Highway Diesel Fuel for the United States (US). The
parties agree that the price published on the last Monday of each month
shall apply to the following month. Diesel price information is available by
calling the Energy Information Administration’s Diesel Fuel Motor & Gasoline
Hotline at (202) 568-6966, or under “Featured Topics” on the
Administration’s web page at www.eia.doe.gov. The surcharge amount
shall be round to the nearest one hundredth.





7. DELIVERY INFORMATION



To enable LWE to track shipments of the Coal to its plant via rail or truck,
WBT shall provide delivery information to LWE upon reasonable written request
(“Delivery Information”). For purposes of this section, a request sent via
email or facsimile shall constitute a valid written request. In no event shall
WBT be required to provide this information to LWE on greater than a






 




			
	*	 	Portion omitted pursuant to a request for confidential treatment and filed separately with
the Securities and Exchange Commission.




 









 





p.4




daily basis. WBT shall also promptly notify LIVE of any potential delivery problems within
24 hours of when it becomes aware of the problem (e.g., damage to WBT terminal, train
derailment, etc.).




8. COAL PRICE



The “Coal Price” per calendar year shall be as follows based on a heat content of 8,880 Btu’s
per pound and subject to the Coal Price Adjustments in Section 9:




	 	 	 	 	 
	2005
	 	 [ * ] per ton
	2006
	 	[ * ] per ton
	2007
	 	[ * ] per ton






9. COAL PRICE ADJUSTMENTS



Coal Prices are subject to adjustments for changes in laws and regulations enacted and
in force or expiring during the Term of this Agreement that change Source’s cost of
producing, selling, loading, or shipping coal during the Term of this Agreement. Such
adjustments to the Coal Price because of changes in laws or regulations shall be added
to or subtracted from the Coal Price on a direct pass-through basis. The Coal Prices
stated in Section 6 includes reimbursement to Source of all environmental, land
restoration and regulatory costs, including without limitation
any reclamation costs required under applicable federal, state or local law in effect as
of December 10, 2004. The Coal Price shall also be subject to BTU and S02 adjustments as
set forth herein.



The federal statute (30 U.S.C. Section 1232) that provides for collection of the Federal
Reclamation Fee for Abandoned Mine Lands (“AML”) is scheduled to expire on June 30,
2005, except that portion of the statute that provides for collection of fees to be
transferred to the United Mine Workers of America Combined Benefit Fund. Notwithstanding
anything contained herein to the contrary, this scheduled partial expiration of the
statute and any change in regulations to implement it will have no effect on the base
price of coal purchased and sold pursuant to this Agreement. If the federal government
makes additional changes in the AML fees, beyond those now scheduled to take effect,
those changes shall be passed through to the base price of coal purchased and sold
pursuant to this Agreement only to the extent that they cause the AML fee to exceed
$0.350 per ton.



Adjustment for Inflation. The Coal Prices per ton set forth in Section 8 shall be
increased or decreased for each percentage point of change, or proportionately for
fractional parts of a percentage point of change, to reflect changes in the following
indices. The Coal Price will be allocated per the index weights detailed below. Changes
shall become effective semi annually as of January 1, and July 1 of each year, beginning
July 1, 2005, and shall be based upon the preliminary indices for November and May
respectively. The index base and base amounts shall be the following:






 




			
	*	 	Portion omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission. 





 









 





p.5





	 	 	 	 	 	 	 	 	 	 	 
	 	 	Index	 	 	 	 
	 	 	Weight	 	Index Base	 	 
	CPI (W) **
	 	 	30	%	 	 	186.8	 	 	Preliminary November 2004
	PPI industrial Commodities -
Less Fuel & Pwr**
	 	 	32	%	 	 	154.9	 	 	Preliminary November 2004
	#2 Diesel Fuel wpu 0573-
03**
	 	 	8	%	 	 	159.7	 	 	Preliminary November 2004
	GDP-1PD***
	 	 	15	%	 	 	108.452	 	 	Q3 2004
	Prime Rate****
	 	 	15	%	 	 	5.25	 	 	December 31, 2004








 




			
	**	 	U.S. Department of Labor, Bureau of Labor Statistics, Not Seasonally Adjusted.
	 
	***	 	U.S. Department of Commerce, Bureau of Economic Analysis, Price Indexes
for Gross Domestic Product, Expanded D / Table 1.5.4 / Seasonally Adjusted.
	 
	****	 	Prime Rate of interest as reported in the money rates section of
the Wall Street Journal for the last business day of the quarter — as
published on the subsequent business day.




The impact of the semi-annual escalations, on a net basis, as weighted above
shall not impact
the Base Price until they exceed an Embedded Escalation Deadband, on a
semi-annual basis, as follows:




EMBEDDED ESCALATION DEADBAND

2005-2007




	 	 	 	 	 	 	 	 	 
	 	 	Semi-Annual	 	Cumulative
	Escalation Date	 	Increase	 	Increase
	Jul 1, 2005
	 	 	[ * ]	 	 	 	[ * ]	 
	Jan 1, 2006
	 	 	[ * ]	 	 	 	[ * ]	 
	Jul 1, 2006
	 	 	[ * ]	 	 	 	[ * ]	 
	Jan 1, 2007
	 	 	[ * ]	 	 	 	[ * ]	 
	Jul 1, 2007
	 	 	[ * ]	 	 	 	[ * ]	 





Notwithstanding anything contained herein to the contrary, in no event shall
the Coal Price as adjusted pursuant to this agreement at any time be less
than the original Coal Price stated in Section 8, by calendar year, as set
forth above .



If the basis for any of the index numbers is changed, said index shall be
adjusted to take into account such changed basis. In the event any designated
index is discontinued or altered, becomes unavailable, or is no longer
applicable, the Parties shall undertake to agree on a substitute index or a
substitute method of cost adjustment which most closely matches the economic
structure of the discontinued or altered index. If the Parties fail to reach
agreement on the substitute index or method within 90 days, then the
substitute index or substitute method of






 




			
	*	 	Portion omitted pursuant to a request for confidential treatment and filed separately with
the Securities and Exchange Commission. 





 









 






p.6




cost adjustment shall be submitted to arbitration and resolved. The values
to perform the calculations set forth in this section shall be rounded to three
decimal places.



A hypothetical Coal Price escalation for illustration purposes only is attached hereto
as Exhibit B.



Adjustments for BTU and Sulfur Dioxide., The Coal Price delivered
during a calendar month shall also be adjusted for variations in calorific value and
sulfur dioxide. Adjustments shall be added to or subtracted from, as the case may
be, the Coal Price determined in accordance with Section 8 hereof. The adjustments
shall be calculated as follows:




	 	 	 	 	 
	 

	 	 	 	 
	Btu Adjustment Per Ton = (P + $10.00 ) x

	 	( AR – BB )	 	 
	 

	 	 	 	 
	 

	 	BB	 	 






     Where:



	 	 	 	 	 	 	 
	 

	 	P
	 	=
	 	The Price of coal per ton delivered during the month per Section 6,
	 
	 	 	 	 	 	 
	 

	 	AR
	 	=
	 	The monthly weighted average “As-Received” Btu’s per
pound of the respective coal delivered to Buyer; and,
	 
	 	 	 	 	 	 
	 

	 	BB
	 	=
	 	The Base Btu’s per pound of the respective coal
delivered to Buyer during the month; the BB value = [8,800]





SO2 Adjustment PerTon= ((BSD-ARSD)* (Monthly SO2 value/2000))
* 17.6




     Where:



	 	 	 	 	 	 	 
	 	 	Monthly SO2 value = The simple arithmetic average of all
SO2 allowance prices published in Air Daily for the
	 

	 	 	 	 	 	applicable month.
	 
	 	 	 	 	 	 
	 

	 	ARSD
	 	=
	 	The monthly weighted average “As-Received Sulfur
Dioxide” expressed in pounds per million BTU of the respective coal
delivered to Buyer; and,
	 
	 	 	 	 	 	 
	 

	 	BSD
	 	=
	 	The Base Sulfur Dioxide per pound of the respective coal
expressed in pounds per million BTU during the month. BSD = .55






10. COAL ANALYSIS



The Coal Analysis shall be determined by representative samples of each train which
shall be taken at the Source in accordance with ASTM Standard D2234, employing
increment collection method, Classification I-B-1. Samples shall be analyzed in
conformance with current ASTM standards by Source’s independent contractor. The
contractor shall perform a short proximate and sodium analysis on one sample split
from each trainload on an “as received” basis in accordance with ASTM standards. WBT
shall provide LWE with these results as reasonably requested.



LWE may perform, at its discretion, its own analysis of the calorific value and
sulfur dioxide content of the Coal. The Coal Analysis shall be performed and
analyzed pursuant to the same procedures and standards as at the Source. If the
results from LWE’s testing conflict with the




 









 




p.7



results provided by WBT, then LWE may require that the same analysis be
performed by a third contractor the identity of which the parties shall mutually
agree upon in good faith and without unreasonable delay. The third party may
consider the data and conclusions from the first two analyses when reaching its own
independent results. The results of the third party’s analysis shall determine the
quality of the subject Coal. If the third party determines that its results are
substantially similar to the results provided by WBT, then LWE shall be responsible
for all costs associated with performing the third analysis. However, if the third
party determines that its
results are not substantially similar to the results provided by WBT, then (i) WBT
shall be responsible for all cost associated with performing the third analysis,
and (ii) the Coal Price for all of the Coal delivered to LWE in the train
containing the subject Coal shall be adjusted for the variations in calorific value
and sulfur dioxide in accordance with Section 9 and any other significant
diminutions in value.




11. COAL QUALITY



Exhibit A, which is incorporated herein by this reference, identifies the coal
quality specifications for the coal from the Source Mine.




12. METHOD OF PAYMENT



WBT shall invoice LWE for then current combined Coal and Transportation Price
when Coal is delivered to the Plant, and calculated based on the outbound
certified scale weights at WBT. Such invoices shall occur at least twice
monthly as agreed between WBT and LWE.



LWE shall pay WBT within ten (10) days after LWE’s receipt of such invoices.
Late payments shall carry a delinquent charge of one and one-half percent (1.5%)
of the amount invoiced per month with interest accruing the day after the due
date.




13. OPERATING PROCEDURE



WBT and LWE have agreed to use their best efforts in good faith to jointly
develop a written operating plan containing Coal delivery schedules and other
plans and procedures for development of the most efficient and effective Coal
delivery system. The operating plan shall be completed by the parties within 200
days of execution of this Agreement.




14. REMEDY AND LIMITATIONS OF LIABILITY



LWE’s sole remedy for breach of the Agreement by WBT shall be the remedy of damages

specified in this Agreement. NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INCIDENTAL, SPECIAL, EXTRAORDINARY, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF
POWER SYSTEM OR OTHER SYSTEMS, COST OF CAPITAL, COST OF PURCHASED OR REPLACEMENT
POWER, OR FUEL COST DIFFERENTIAL.



The remedy set forth in these general provisions are exclusive, and the sum total
liability of WBT to LWE with respect to this Agreement, or anything done in
connection therewith, such as the




 









 





p.8


performance or breach thereof, whether in contract, in tort (including negligence)
or under any warranty or otherwise, shall not exceed the total amount of fees for
Coal paid by LWE to WBT under this Agreement.




15. INDEMNIFICATION



LWE agrees to assume all risk of loss and to defend, indemnify and hold WBT, its
officers, directors, employees, agents and representatives harmless from and
against any and all claims, liabilities, damages, losses, costs or expenses of
whatever nature or character for all injuries or damage of any type to any person
or property, including, without limitation, injuries or damage of third parties
or employees of both parties and damages to LWE’S property, the Plant, or LWE’s
equipment or facilities, occasioned wholly or in part as a result of LWE’s
willful misconduct, negligence, or purchase and burning of Coal purchased under
this Agreement or relating to pollution, contamination or adverse effects on the
environment, due to, but not limited to, the disposal, discharge, escape,
dispersal, release or saturation of smoke, vapors, soot, fumes, acids, alkalies,
toxic chemicals, liquids, gases, or hazardous substances as defined under 455B of
the Code of Iowa, into the atmosphere, or on, onto, in or into the surface or
subsurface soil, ground water, or surface waters.



Notwithstanding the foregoing, any pollution, contamination or adverse effects on
the environment that result either during or from the Transportation of Coal
shall be the sole responsibility of WBT. Transportation of Coal shall be deemed
complete once a truck is at LWE’s coal receiving hopper and ready to discharge
coal. WBT agrees to assume all risk of loss and to defend, indemnify and hold
LWE, its officers, directors, employees, agents and representatives harmless from
and against any and all claims, liabilities, damages, losses, costs or expenses
of whatever nature or character for all injuries or damage of any type to any
person or property, including, without limitation, injuries or damage of third
parties or employees of both parties and damages to WBT’s property or WBT’s
equipment or facilities, occasioned wholly or in part as a result of WBT’s
willful misconduct, negligence, or transportation of Coal to LWE’s facilities.




16. COMMUNICATION BETWEEN THE PARTIES



All communications related to this Agreement shall be to the persons listed below or to
such other persons as the parties may specify in writing:



General Manager

Lincolnway Energy, LLC

975 West Lincoln Highway

Nevada, Iowa 50201


Williams Bulk Transfer

Attn: Craig Kundert, Superintendent

100 Railroad Road

Williams, Iowa 50271


With Copies To:

Williams Bulk Transfer

Attn: Paul Treangen, President

233012 Street SW



 









 





p.9



Cedar Rapids, Iowa 52404



Any notice, request, or demand pertaining to matters of an operating nature may be
delivered by mail, messenger, telephone, telegraph, facsimile or verbally to such
agent of the party being notified as may be appropriate, and if given by telephone,
telegraph or through other or verbal communications, said communications shall be
confirmed in writing upon request.




17. NO THIRD PARTY BENEFICIARIES



Nothing in this Agreement is intended to confer, nor shall it be asserted or
construed as conferring, any rights or benefits upon any other person or entity
not a party to this Agreement, including, but not limited to, any such rights or
benefits which may be asserted by any person or entity as a purported third party
beneficiary.




18. FORCE MAJEURE



It is understood that unavoidable delays may result from causes which are
reasonably beyond the control of the parties, including, but not limited to, the
following: acts of providence, floods, fortuitous events, unavoidable accidents,
riots, strikes, lockouts, and any other unforeseen act beyond the reasonable
control of either party, and not due to either party’s negligence, which
interferes with the production, loading, transportation, unloading, or consumption
of the Coal (“Force Majeure”). Force Majeure shall include the occurrence or
declaration of force majeure by the Source Mine, Burlington Northern and Santa Fe
Railway Company, Canadian National
Railroad, Williams Bulk Transfer, or Ben Shinn Trucking, as limited by the
definition of such term under WBT’s agreement with the party declaring force
majeure attached as additional Exhibits
hereto. Should the progress of the delivery of Coal be delayed at any time for such
causes, the affected party shall at once notify the other party in writing of the
occurrence. If because of Force Majeure either LWE or WBT is unable to carry out
its obligations under this Agreement, except obligations to pay or expend money for
Coal already delivered, then the obligations of such party shall be suspended to
the extent made necessary by such Force Majeure and during its continuance,
provided such Force Majeure is removed, remedied and/or damages there from
mitigated through good faith and reasonable efforts insofar as possible and
economically practicable with all reasonable dispatch and further provided, that
such party shall not be excused from tendering partial performance if the same is
possible.



Notwithstanding the foregoing, it is agreed that neither party shall be required to
settle, resolve or interfere in a strike or lock-out. Any deficiency in Coal
Tonnage to be delivered under this Agreement caused by Force Majeure shall made up
by mutual consent of LWE and WBT.




19. ASSIGNMENT



This Agreement shall be binding upon and shall inure to the benefit of the
respective successors and permitted assigns of the parties, but shall not be
assigned without the written consent of the other, which consent shall not be
unreasonably withheld.




17. INDEPENDENT TERMS




 









 




p.10

Each term and condition of this Agreement is deemed to have independent effect and the invalidity
of any partial or whole paragraph or article shall not invalidate the remaining paragraphs or
articles.




21. DISPUTES AND GOVERNING LAW



Any controversy or claim arising out of or relating to this Agreement, or the breach thereof,
unless such dispute can be amicably settled by the parties, shall be settled by
arbitration in Iowa in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court
having
jurisdiction thereof.. This Agreement shall be governed by the laws of the State of Iowa,
notwithstanding its conflict of law rules.




22. INDEPENDENT CONTRACTOR



The relationship of LWE to the WBT shall be that of a provider of coal acting as an
independent contractor for purposes of this Agreement.




23. CONTRACT DOCUMENTS



This Agreement constitutes the entire understanding between the parties making all other
representations null and void.




24. CONFIDENTIALITY OF AGREEMENT



LWE and WBT consider this document and its content to be proprietary .The parties agree to exert
the same efforts to prevent or limit disclosure as it would on behalf of similar proprietary
information of their own. The parties agree to make reasonable efforts to prevent or limit
disclosure, and, where disclosure is permitted herein or required by law, to limit the extent of
inspection of this Agreement by third parties to the extent possible. The parties also agree to
notify the other of any intended disclosure at the earliest opportunity. Notwithstanding the
foregoing, WBT may disclose the terms of this Agreement to the Source, the Burlington Northern and
Santa Fe Railway Company, Canadian National Railroad, and ! or Ben Shinn Trucking or their
successors and assigns and either party may disclose the terms of this Agreement in
order to comply with any applicable law, order, regulation, or rule and to the extent necessary for
the enforcement of this Agreement.



IN WITNESS WHEREOF, the parties have executed this Agreement in their respective corporate names as
of the date first above written.




	 	 	 	 	 	 	 	 	 
	WILLIAMS BULK TRANSFER, INC.	 	 	 	LINCOLNWAY ENERGY, LLC
	 
	 	 	 	 	 	 	 	 
	BY:

	 	/s/ Paul Treangen
	 	 	 	BY:
	 	/s/ Richard J. Brehm
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ITS:

	 	President
	 	 	 	ITS:
	 	CEO
	 
	 	 	 	 	 	 	 	 
	ALLIANT ENERGY CORPORATION	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BY:

	 	/s/ William D. Harvey	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ITS:

	 	President & CEO	 	 	 	 	 	 






 









 




p.11

EXHIBIT A



GUARANTEED COAL QUALITY SPECIFICATIONS


North Antelope Rochelle Mine (“NARM”)



	 	 	 
	 

	 	Typical Monthly Weighted 
	 

	 	Average, As-Received Basis, from
	 

	 	NARM
	 
	 	 
	Gross Calorific Value, Btu/lb

	 	8,800
	Moisture, %

	 	27.40
	Ash, %

	 	4.5
	Sulfur Dioxide, Ib/MMBtu

	 	0.52
	Fines

	 	27%
	 
	 	 
	 

	 	REJECT QUALITY on a 
	 

	 	Trainload, as-received basis 
	 

	 	from NARM
	 
	 	 
	Btu/lb

	 	Less than 8,500 Btu/lb
	Moisture, %

	 	Greater than 29%
	Ash, %

	 	Greater than 8.0%
	Sulfur Dioxide, lb/MMBTU

	 	Greater than 1.2 Ib/MMBtu
	Fines (<1/4 inch)

	 	Greater than 35%






 









 




p.12

EXHIBIT B


HYPOTHETICAL ESCALATION

July, 2005



	 	 	 	 	 
	Base Price
	 	 	[ * ]	 
	Laws Adjustment
	 	 	[ * ]	 
	 
	Subtotal
	 	 	[ * ]	 
	Government Imposition (5)
	 	 	[ * ]	 
	 
	Escalation Price
	 	 	[ * ]	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Year One	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Adjusted	 
	 	 	Index	 	 	Base	 	 	Base (1)	 	 	Revised (2)	 	 	Adjustment	 	 	Base	 
	Index Utilized	 	Weight	 	 	Amount	 	 	Index	 	 	index	 	 	Amount	 	 	Price	 
	CPI (W)
	 	 	30	%	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	 	 
	PPI
	 	 	32	%	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	 	 
	#2 Diesel (057303)
	 	 	8	%	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	 	 
	GDP-1PD
	 	 	15	%	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	 	 
	Prime Rate
Embedded Escalation
	 	 	15	%	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	[ * ]	 	 	 	 	 
	Deadband (3)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[ * ]	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	 	[ * ]	 	 	 	 	 	 	 	 	 	 	$	[ * ]	(4)	 	$	[ * ]	 
	Laws Adjustment
	 	 	 	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	0.000	 	 	 	—	 
	Government Imposition
(5)
	 	 	 	 	 	 	[ * ]	 	 	 	 	 	 	 	 	 	 	$	[ * ]	 	 	$	[ * ]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	[ * ]	 	 	 	 	 	 	 	 	 	 	$	[ * ]	 	 	$	[ * ]	 








 




			
	(1)	 	Base indices are established per Coal Supply Agreement
	 
	(2)	 	Index for the date established per Coal Supply Agreement
	 
	(3)	 	Per Section 7 of Coal Supply Agreement.
	 
	(4)	 	The sum of the above adjustment or zero, whichever is greater.
	 
	(5)	 	Assumes portions of the Abandoned Mining Land Fee expire July 1, 2005, as per
Section 7 of Coal Supply Agreement
	 
	*	 	Portion omitted pursuant to a request for confidential treatment and filed separately with
the Securities and Exchange Commission.