**EXHIBIT 10.64**

 

**Peabody COALSALES CompanyContract #LGE 02011Amendment No. 3**

 

**AMENDMENT NO. 3 TO COAL SUPPLY AGREEMENT**

 

**THISAMENDMENT NO.**3 **TO COAL SUPPLY AGREEMENT**(“Amendment No.3”) is entered into effective as of September 15, 2003, by and between LOUISVILLEGAS AND ELECTRIC COMPANY, a Kentucky corporation, 220 West Main Street,Louisville, Kentucky 40202 (Buyer”), and PEABODY COALSALES COMPANY, a Delawarecorporation, 701 Market Street, Suite 830, St. Louis, Missouri 63101-1826(“Seller”). In consideration of the agreements herein contained, the partieshereto agree as follows.

 

**1.0AMENDMENTS**

 

The Agreement heretoforeentered into by the parties, dated effective January 1, 2002 and identified bythe Contract Number set forth above, as amended by Amendment No. 1 datedeffective June 1, 2002, and Amendment No. 2 dated effective January 1, 2003 ishereby further amended as follows, the January 2, 2002 Agreement, as amended byAmendment No. 1, Amendment No. 2, and Amendment No. 3 is hereafter referred toas the “Agreement”:

 

**2.0QUANTITY**

 

2.1                                 Section 3.1 **Quantity,**is deleted in its entirety and replaced with thefollowing:

 

3.1                                 **Quantity.**

 

3.1.1 Seller shall sell anddeliver and Buyer shall purchase and accept delivery of the following annualquantities of coal and/or coal synfuel:

 
| **YEAR** |   | **BASE  QUANTITY (TONS)** |
|----------|--------|---------------------------|
|     |   |                      |
| 2002     |   | 600,000                   |   |
| 2003     |   | 350,000                   | - Quality A |
|     |   | 250,000                   | - Quality B |
|     |   | 400,000                   | - Coal Synfuel |
| 2004     |   | 600,000                   | - Coal Synfuel/Coal |
|     |   | 250,000                   | - Quality B |

 

3.1.2 In the event all orpart of the Coal Synfuel quantities set forth in Section 3.1.1 above (i) cannotbe unloaded or otherwise handled by Buyer without additional expense to Buyer,or (ii) causes adverse effects on the operation of Buyer’s generating stations(hereinafter referred to as an “Adverse Effect”), without limiting

 

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any of theremedies of Buyer hereunder, Buyer shall have the right to elect to take all orpart of such Coal Synfuel tonnage listed above as coal designated as Quality A.

 

3.1.3 In theevent all or part of the Coal Synfuel quantities set forth in Section 3.1.1above cannot be timely delivered by Seller or otherwise becomes unavailable asa result of the curtailing, reduction and/or ending of production at theGilbraltar Coal Synfuel facility, Seller shall timely supply all or part ofsuch Coal Synfuel tonnage listed above as coal designated as either Quality Aor Quality B, at Seller’s option.

 

**3.0 SOURCE**

 

3.1                                                                                 Section4.1 **Source,**is deleted inits entirety and replaced with the following:

 

4.1                                 **Source.**The coal sold hereunder,including coal purchased by Seller from third parties, shall be supplied fromthe geological seams known as the Western Kentucky #9 and #11 seams. Coaldesignated as Quality A, as defined below, shall be supplied from the miningcomplex in Union County, Kentucky which is owned and operated by Seller’saffiliated company, Highland Mining Company (“Highland”). Coal designated asQuality B, as defined below, shall be supplied from: (i) the “Patriot MiningComplex” in Henderson County which consists of the Patriot Mine (a surfacemining operation which is owned and operated by Seller’s affiliated company,Patriot Coal Company, LP (“Patriot”)) and the “Freedom Mine” (which is operatedby Seller’s affiliated company, Ohio County Coal Company (“Ohio County”)); (ii)the Camp Complex in Henderson County, or (iii) the Gibraltar Mine in MuhlenbergCounty. Coal Synfuel sold hereunder shall be supplied from the Gibraltar CoalSynfuel Plant located in Muhlenberg County, Kentucky. The Camp Complex and theGibraltar Mine are both owned and operated by Seller’s affiliated company,Peabody Coal Company (“Peabody Coal”). All of the foregoing sources of coal arehereinafter referred to as the “Coal Properties”. Highland, Patriot, OhioCounty and Peabody shall be referred to collectively herein as “Producer.”

 

**4.0 QUALITY**

 

4.1                                 Section 6.1.1 **Quality A,**is deleted in its entiretyand replaced with the following:

 

**QualityA.**The coal delivered hereunder which is designated asQuality A and the coal synfuel delivered hereunder shall conform to thefollowing specifications on an “as received” basis:

 

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**QUALITY A**

 
| **Specifications**                             |   | **Guaranteed Monthly  Weighted Average (1)** |   | **Rejection Limits  (per shipment)** |
|------------------------------------------------|--------|----------------------------------------------|--------|--------------------------------------|
| BTU/LB.                                        |   | min.  11,400                                 |   | <  10 800                         |
|                                           |   |                                         |   |                                 |
| LBS/MMBTU:                                     |   |                                         |   |                                 |
| MOISTURE                                       |   | max. 10.53                                   |   | > 12.00                           |
| ASH                                            |   | max. 8.33                                    |   | > 9.00                            |
| SULFUR                                         |   | max. 2.89                                    |   | > 3.10                            |
| SULFUR                                         |   | min. 2.30                                    |   | < 2.00                            |
| CHLORINE                                       |   | max. 0.009                                   |   | > .015                            |
| FLUORINE                                       |   | max.                                         |   |                                 |
| NITROGEN                                       |   | max. 1.32                                    |   | > 1.70                            |
|                                           |   |                                         |   |                                 |
| ASH/SULFER RATIO                               |   | min 3.22:1                                   |   | > 3:1                             |
|                                           |   |                                         |   |                                 |
| SIZE (3” x 0”):                      |   |                                         |   |                                 |
| Top size (inches)*                             |   | max. 3x0                                     |   | > 4x0                             |
| Fines  (% by wgt)  Passing 1/4” screen    |   | max. 60                                      |   | > 65                              |
|                                           |   |                                         |   |                                 |
| BY  WEIGHT:                                    |   |                                         |   |                                 |
| VOLATILE                                       |   | max. 30                                      |   | >29                               |
| FIXED CARBON                                   |   | max. 43                                      |   | >40                               |
| GRINDABILITY (HGI)                             |   | min. 50                                      |   | <48                               |
| BASE ACID RATIO (B/A)                          |   | 0.40                                         |   | 0.50                                 |
| SLAGGING FACTOR**                              |   | max. 1.32                                    |   | > 1.80                            |
| FOULING FACTOR***                              |   | max. 0.32                                    |   | > 0.40                            |
|                                           |   |                                         |   |                                 |
| ASH FUSION TEMPERATURE  (°F) (ASTM D1857) |   |                                         |   |                                 |
|                                           |   |                                         |   |                                 |
| REDUCING ATMOSPHERE                            |   |                                         |   |                                 |
| Initial Deformation                            |   | min. 1990                                    |   | min. 1990                            |
| Softening (H=W)                                |   | min. 2065                                    |   | min. 2050                            |
| Softening (H=1/2W)                             |   | min. 2105                                    |   | min. 2075                            |
| Fluid                                          |   | min. 2225                                    |   | min. 2200                            |
|                                           |   |                                         |   |                                 |
| OXIDIZING  ATMOSPHERE                          |   |                                         |   |                                 |
| Initial  Deformation                           |   | min. 2330                                    |   | min. 2300                            |
| Softening  (H=W)                               |   | min. 2355                                    |   | min. 2325                            |
| Softening  (H=1/2W)                            |   | min. 2400                                    |   | min. 2370                            |
| Fluid                                          |   | min. 2480                                    |   | min. 2400                            |

 

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(1) An actualMonthly Weighted Average will be calculated for each specification for coaldelivered to the Buyer’s generating stations.

* All the coalwill be of such size that it will pass through a screen having circularperforations three (3) inches in diameter, but shall not contain more thanfifty (50) per cent (50%) by weight of coal that will pass through a screenhaving circular perforations one-quarter (1/4) of an inch in diameter.

 

**                                  SlaggingFactor (Rs)=(B/A) x (Percent Sulfur by WeightDry)

 

***                           Fouling Factor (Rf)=(B/A) x(Percent Na2O by WeightDy)

 

The Base AcidRatio (B/A) is herein defined as:

 
| BASE ACID  RATIO (B/A) = |   | Fe2O3 + CaO + MgO + Na2O + K2O |   |
|--------------------------|--------|--------------------------------|--------|
|                     |   | (Si02 + Al2O3 + T1O2)          |   |

 
| Note: As  used herein |   | > |   | means  greater than: |
|-----------------------|--------|------|--------|----------------------|
|                  |   | < |   | means less  than.    |

 

**5.0 PRICE**

 

5.1                                 Section 8.1 **Base Price**is deleted and replaced withthe following:

 

The base price(“Base Price”) of the coal and coal synfuel to be sold hereunder will be firmand will be determined by the criteria set forth in Section 5 in accordancewith the following schedule:

 
| **Year** |   | **Coal  Synfuel Base Price (F.O. B. Barge)** |
|----------|--------|----------------------------------------------|
|     |   |                                         |
| 2003     |   |                                         | $1.0557 per  MMBtu | $24.07 per  ton |
| 2004     |   |                                         | $1.0886 per  MMBtu | $24.82 per  ton (1) |

 

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(1)Any shortfall of tonnage from calendar year 2003 will be the first tonsshipped and unloaded in calendar year 2004. Such carryover tonnage will bepriced at the 2003 price until all of the carryover tonnage has been deliveredand unloaded.

 

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| **Year** |   | **Coal Base  Price Quality A (F.O.B. Barge)** |
|----------|--------|-----------------------------------------------|
|     |   |                                          |
| 2002     |   |                                          | $1.1224 per MMBtu | $25.59 per ton |
| 2003     |   |                                          | $1.1224 per MMBtu | $25.59 per ton* |
| 2003     |   |                                          | $1.1351 per MMBtu | $25.88 per ton** |
| 2004     |   |                                          | $1.1680 per MMBtu | $26.63 per ton |

 

 

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* The Base Price for thefirst 150,000 tons of Quality A delivered in 2003

** The Base Price for theremainder of the tons of Quality A delivered in 2003

 
| **Year** |   | **Coal Base  Price Quality B (F.O.B. Barge)** |
|----------|--------|-----------------------------------------------|
|     |   |                                          |
| 2003     |   |                                          | $0.90 per MMBtu | $19.53 per ton |
| 2004     |   |                                          | $0.91 per MMBtu | $19.75 per ton |

 

**IN WITNESSWHEREOF,**the partieshereto have executed this Amendment No. 3 on the day and year below written,but effective as of the day and year first set forth above.

 
| **LOUISVILLE  GAS AND ELECTRIC  COMPANY** | **PEABODY  COALSALES COMPANY** |
|-------------------------------------------|--------------------------------|
|                                      |                           |
| BY:                                       |                           |   | BY: |   |   |
|                                      | SVP  - Energy Marketing        |   |   |
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| DATE:                                     |                           |   | DATE: |   |   |
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