**Peabody COALSALES Company**

# **Contract No. LGE02011**

 

**EXHIBIT10.70**

 

**COAL SUPPLY AGREEMENT**

 

This is a coal supply agreement (the “Agreement”)effective as of January 1, 2002 between LOUISVILLE GAS AND ELECTRIC COMPANY, aKentucky corporation, 220 West Main Street, Louisville, Kentucky 40202(“Buyer”), and PEABODY COALSALES COMPANY, a Delaware corporation, 701 MarketStreet, Suite 830, St. Louis, Missouri 63101-1826  (“Seller”).

 

The parties hereto agree as follows:

 

**SECTION 1. GENERAL**.  Seller shall sell and deliver and Buyershall purchase and accept delivery of steam coal under all the terms andconditions of this Agreement.

 

**SECTION 2.  TERM.**  The term of this Agreement shall commence onJanuary 1, 2002 and shall continue through December 31, 2004.

 

**SECTION 3.  QUANTITY.**

§ 3.1  BaseQuantity**.**  Seller shall selland deliver and Buyer shall purchase and accept delivery of the followingannual base quantity of coal (“Base Quantity”):

 
| **YEAR** |   | **BASE  QUANTITY (TONS)** |
|----------|--------|---------------------------|
| 2002     |   | 750,000                   |
| 2003     |   | 600,000 *                 |
| 2004     |   | 600,000 *                 |

 

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* Parties shall meet starting June 1, 2002 tonegotiate pricing for an additional 250,000 tons of coal per year to besupplied during calendar year 2003.  Ifthe parties do not agree upon pricing for such additional tons by September 1,2002, then Buyer shall not be entitled to such additional tons, and the tonnageto be delivered during calendar year 2003 shall be the Base Quantity as definedabove.

Parties shall also meet starting June 1, 2003 tonegotiate pricing for an additional 250,000 tons of coal for 2004.  If the parties do not agree upon pricing forsuch additional tons by September 1, 2003, then Buyer shall not be entitled tosuch additional tons and the tonnage to be delivered during calendar year 2004shall be the Base Quantity as defined above.

 

§ 3.2 Delivery Schedule.  Shipments are to be made on a ratable basisas adjusted during the year to reflect outages.  Initial shipments shall begin on or about January 1, 2002.  Time is of the essence with respect to theschedule so established; and failure by Seller to deliver in a timely fashionshall constitute a material breach within the meaning of § 16 of thisAgreement.

 

**SECTION 4.         SOURCE.**

 

§ 4.1 Source. The coal sold hereunder, including coal purchased by Seller from thirdparties, shall be supplied from geological seam Western Kentucky #9 and #11,from Seller’s 

 

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affliliated company, Highland Mining Company’s (the “Producer”)Complex, Union County, Kentucky (the “Coal Property”).

 

§ 4.2 Assurance of Operation and Reserves.  Seller represents and warrants that the CoalProperty contains economically recoverable coal of a quality and in quantitieswhich will be sufficient to satisfy all the requirements of thisAgreement.  Seller agrees and warrantsthat it will have at the Coal Property adequate machinery, equipment and otherfacilities to produce, prepare and deliver coal in the quantity and of thequality required by this Agreement. Seller further agrees to operate and maintain such machinery, equipmentand facilities in accordance with good mining practices so as to efficientlyand economically produce, prepare and deliver such coal.  Seller agrees that Buyer is not providingany capital for the purchase of such machinery, equipment and/or facilities andthat Seller shall operate and maintain same at its sole expense, including allrequired permits and licenses.

 

§ 4.3 Non-Diversion of Coal.  Seller agrees and warrants that it will not,without Buyer’s express prior written consent, use or sell coal from the CoalProperty in a way that will reduce the economically recoverable balance of coalin the Coal Property to an amount less than that required to be supplied toBuyer hereunder.

 

§ 4.4  Seller’sPreparation of Mining Plan.  Sellershall have prepared a complete mining plan for the Coal Property with adequatesupporting data to demonstrate Seller’s capability to have coal produced fromthe Coal Property which meets the quantity and quality specifications of thisAgreement.  Seller shall, upon Buyer’srequest during Coal Property Inspections, if any (made pursuant to § 20),provide information to Buyer of such mining plan which shall contain 

 

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maps and a narrative depicting areas and seams of coal to be mined andshall include (but not be limited to) the following information: (i) reservesfrom which the coal will be produced during the term hereof and the miningsequence, by year (or such other time intervals as mutually agreed) during theterm of this Agreement, from which coal will be mined; (ii) methods of miningsuch coal; (iii) methods of transporting and, in the event a preparation plantis utilized by Seller, the methods of washing coal to insure compliance withthe quantity and quality requirements of this Agreement including a descriptionand flow sheet of the preparation plant; (iv) quality data plotted on the mapsdepicting data points and isolines by ash, sulfur, and Btu; (v) quality controlplans including sampling and analysis procedures to insure individual shipmentsmeet quality specifications; and (vi) Seller’s aggregate commitments to othersto sell coal from the Coal Property during the term of this Agreement.

 

Buyer’s receipt of information or data furnished bySeller (the “Mining Information”) shall not in any manner relieve Seller of anyof Seller’s obligations or responsibilities under this agreement; nor shallsuch review be construed as constituting an approval of Seller’s proposedmining plan as prudent mining practices, such review by Buyer being limitedsolely to a determination, for Buyer’s purposes only, of Seller’s capability tosupply coal to fulfill Buyer’s requirements of a dependable coal supply.

 

§ 4.5 Substitute Coal.  Notwithstanding the above representationsand warranties, in the event that Seller is unable to produce or obtain coalfrom the Coal Property in the quantity and of the quality required by thisAgreement, and such inability is not caused by a force majeure event as definedin § 10, then Buyer will have the option of requiring that Seller supplysubstitute coal 

 

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from other facilities and mines. Seller shall also have the right to supply substitute coal after havingreceived Buyer’s prior written consent (which shall not be unreasonablywithheld).  Such substitute coal shallbe provided under all the terms and conditions of this Agreement including, butnot limited to, the quantity provisions of § 3.1, the price provisions of § 8,the quality specifications of § 6.1, and the provisions of § 5 concerningreimbursement to Buyer for increased transportation costs.  Seller’s delivery of coal not produced fromthe Coal Property without having received the express written consent of Buyershall constitute a material breach of this Agreement.

 

§ 4.6 Implied Warranties.  EXCEPT AS EXPRESSLY SET FORTH THEREIN,SELLER EXPRESSLY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WRITTEN ORORAL, EXPRESS OR IMPLIED, INCLUDING MECHANTABILITY, OR FITNESS FOR ANYPARTICULAR PURPOSE.  No waiver ofremedies or damages herein shall apply to claims of anticipatory repudiation orremedies therefor provided by law except that neither Seller nor Buyer shall beliable to the other for consequential, incidental, punitive, exemplary orindirect damages, lost profits, or business interruption damages, whether bystatue, in tort or in contract, under any indemnity provision or otherwise.

 

**SECTION 5.  DELIVERY.**

 

§ 5.1 Barge Delivery.  The coal shall be delivered to Buyer F.O.B. barge at the CampComplex, Mile Point 841.6 on the Ohio River, or at Seller’s option as asubstitute, the Gibraltar Dock at Mile Point 85.9 on the Green River (either the“Delivery Point”).  Seller may deliverthe

 

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coal at a location different from the Delivery Point, provided,however, that Seller shall reimburse Buyer for any resulting increases in thecost of transporting the coal to Buyer’s generating stations.  Any resulting savings in such transportationcosts shall be retained by Buyer.

 

Title to and risk of loss of coal sold will pass toBuyer and the coal will be considered to be delivered when barges containingthe coal are disengaged by Buyer’s barging contractor from the loadingdock.  Buyer or its contractor shallfurnish suitable barges, clean and ready for loading, in accordance with adelivery schedule provided by Buyer to Seller, and in sufficient number and ina timely manner in order for Seller to meet any previously agreed upon deliveryschedule as provided for in § 3.2. Seller shall arrange and pay for all costs of transporting the coal fromthe mines to the loading docks and loading the coal into barges.  Buyer’s barging contractor shall beresponsible for trimming the coal into barges to the proper draft and theproper distribution within the barges, and the release and movement of thebarges during loading.  Buyer shallarrange for transporting the coal by barge from the loading dock to itsgenerating station(s) and shall pay for the cost of such transportation.  For delays caused by Seller in handling thescheduling of shipments with Buyer’s barging contractor, Seller shall beresponsible for any demurrage or other penalties assessed by said bargingcontractor (or assessed by Buyer) which accrue at the Delivery Point, forSeller’s failure to provide coal for the barges in a timely manner and in thespecified minimum tonnage, including the demurrage, or other penalties.   Buyer shall be responsible to deliverbarges in as clean and dry condition as practicable.  Seller shall require of the loading dock operator that the bargesand towboats provided by Buyer or Buyer’s barging contractor be provided convenientand safe berth free of wharfage, dockage and 

 

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port charges; that while the barges are in the care and custody of theloading dock, all applicable U.S. Coast Guard regulations and other applicablelaws, ordinances, rulings, and regulations shall be complied with, includingadequate mooring and display of warning lights; that the loading operations beperformed in a workmanlike manner and in accordance with the reasonable loadingrequirements of Buyer and Buyer’s barging contractor; and that the loading dockoperator carry landing owners or wharfinger’s insurance with basic coverage ofnot less than $300,000.00 and total of basic coverage and excess liabilitycoverage of not less than $1,000,000.00, and provide evidence thereof to Buyer inthe form of a certificate of insurance from the insurance carrier or anacceptable certificate of self-insurance with requirement for thirty (30) daysadvance notification of Buyer in the event of termination of or materialreduction in coverage under the insurance.

 

**SECTION 6. QUALITY.**

 

§ 6.1  Specifications.  The coal delivered hereunder shall conformto the following specifications on an “as received” basis:

 

 
| **Specifications**                         |   | **Guaranteed Monthly  Weighted Average** |   | **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/SULFUR 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                                   |   | min.                                     |   | 30                                   |   | < |   | 29 |   |
| FIXED CARBON                               |   | min.                                     |   | 43                                   |   | < |   | 40 |   |
| GRINDABILITY  (HGI)                        |   | min.                                     |   | 50                                   |   | < |   | 48 |   |
|                                       |   |                                     |   |                                 |   |   |   |   |   |
| BASE ACID RATIO  (B/A)                     |   |                                     |   | 0.40                                 |   |   |   | .50 |   |
|                                       |   |                                     |   |                                 |   |   |   |   |   |
| SLAGGING  FACTOR**                         |   | max.                                     |   | 1.32                                 |   | > |   | 1.80 |   |
| FOULING  FACTOR***                         |   | max.                                     |   | 0.32                                 |   | > |   | 0.40 |   |

 

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| 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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* All the coal will be of such size that it will passthrough a screen having circular perforations three (3) inches in diameter, butshall not contain more than fifty per cent ( 50%) by

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weight of coal that will pass through a screen having circularperforations one-quarter (1/4) of an inch in diameter.

 

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

 

***         FoulingFactor (Rf)=(B/A) x (Percent Na2O by WeightDry)

 

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

 
| BASE ACID RATIO (B/A) =           |   | (Fe2O3   +    CaO   +   MgO    +   Na2O   +    K2O) |
|-----------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|                              |   | (SiO2  +   A12O3   +  TiO2)                                                                                     |   |
|                              |   |                                                                                                                                |
| Note:   As  used herein | >   | means greater than:                                                                                                                 |
|                              | <   | means less than.                                                                                                                    |

 

§ 6.2        Definitionof “Shipment”.  As used herein, a“shipment” shall mean one barge load, a barge lot load, in accordance withBuyer’s sampling and analyzing practices.

 

§ 6.3        Rejection.

 

Buyer has the right, but not the obligation, to rejectany shipment(s) which fail(s) to conform to any of the Rejection Limits setforth in § 6.1 or contains a material amount of extraneous materials.  Buyer must reject such coal withinseventy-two (72) hours of receipt of the coal analysis provided for in § 7.2 orsuch right to reject is waived.  In theevent Buyer rejects such non-conforming coal, title to and risk of loss of thecoal shall be considered to have never passed to Buyer and Buyer shall return thecoal to Seller or, at Seller’s request, divert such coal to Seller’s designee,all at Seller’s cost and risk.  Sellershall replace the rejected coal within five (5) working days from notice ofrejection with coal conforming to the Rejection Limits set forth in §6.1.  If Seller fails to replace the rejected coalwithin such five (5) working day period or the replacement coal is rejected forfailure to meet any of the Rejection Limits (per shipment) set 

 

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forth in § 6.1, Buyer may purchase coal from another source in order toreplace the rejected coal.  Seller shallreimburse Buyer for (i) any amount by which the actual price plustransportation costs to Buyer of such coal purchased from another source exceedthe price of such coal under this Agreement plus transportation costs to Buyerfrom the Delivery Point; and (ii) any and all transportation, storage,handling, or other expenses that have been incurred by Buyer for the rejectedcoal.  This remedy is in addition to allof Buyer’s other remedies under this Agreement.

 

If Buyer fails to reject a shipment of non-conformingcoal which it had the right to reject for failure to meet any or all of theRejection Limits set forth in § 6.1 or because such shipment contained amaterial amount of extraneous materials, then such non-conforming coal shall bedeemed accepted by Buyer; however, the quantity Seller is obligated to sell toBuyer under the Agreement may or may not be reduced by the amount of each suchnon-conforming shipment at Buyer’s sole option and the shipment shallnevertheless be considered “rejectable” under § 6.4.  Further, for shipments containing extraneous materials, whichinclude, but are not limited to, slate, rock, wood, corn husks, mining materials,metal, steel, etc., the estimated weight of such materials shall be deductedfrom the weight of that shipment.

 

§ 6.4  Suspensionand Termination.

 

If the coal sold hereunder fails to meet one or moreof the Guaranteed Monthly Weighted Averages set forth in § 6.1 for any two (2)consecutive months or a total of three (3) months in a six (6) month period, orif four (4) barge shipments in a thirty (30) day period are rejectable byBuyer, Buyer may upon notice confirmed in writing and sent to Seller bycertified mail, suspend future shipments except shipments already loaded intobarges.  Seller shall, within ten (10)days,

 

 

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provide Buyer with reasonable assurances that subsequent monthlydeliveries of coal shall meet or exceed the Guaranteed Monthly WeightedAverages set forth in § 6.1 and that the coal will conform to all of theRejection Limits set forth in § 6.1.  IfSeller fails to provide such assurances within said ten (10) day period, Buyermay terminate this Agreement by giving written notice of such termination atthe end of the ten (10) day period.  Awaiver of this right for any one period by Buyer shall not constitute a waiverfor subsequent periods.  If Sellerprovides such reasonable assurances to Buyer, shipments hereunder shall resumeand any tonnage deficiencies resulting from suspension may be made up atBuyer’s sole option.  Buyer shall notunreasonably withhold its acceptance of Seller’s assurances, or delay theresumption of shipment(s).  If Seller,after providing such assurances, fails to meet any of the Guaranteed MonthlyWeighted Averages for any one (1) month within the next six (6) months or ifthree (3) barge shipments are rejectable within any one (1) month during suchsix (6) month period, then Buyer may terminate this Agreement and exercise allits other rights and remedies under applicable law and in equity for Seller’sbreach.

 

**SECTION 7.         WEIGHTS,SAMPLING AND ANALYSIS.**

 

§ 7.1  Weights.  The weight of the coal delivered hereundershall be determined on a per shipment basis by Buyer on the basis of scaleweights at the generating station(s) unless another method is mutually agreedupon by the parties.  Such scales shallbe duly reviewed by an appropriate testing agency and maintained in an accuratecondition.  Seller shall have the right,at Seller’s expense and upon reasonable notice, to have the scales checked foraccuracy at any

 

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reasonable time or frequency. If the scales are found to be over or under the tolerance rangeallowable for the scale based on industry accepted standards, either partyshall pay to the other any amounts owed due to such inaccuracy for a period notto exceed thirty (30) days before the time any inaccuracy of scales isdetermined.

 

§ 7.2  Samplingand Analysis.  The sampling andanalysis of the coal delivered hereunder shall be performed by Buyer and theresults thereof shall be accepted and used for the quality and characteristicsof the coal delivered under this Agreement. All analyses shall be made in Buyer’s laboratory at Buyer’s expense inaccordance with industry-accepted standards. Samples for analyses shall be taken by any industry-accepted standard,mutually acceptable to both parties, may be composited and shall be taken witha frequency and regularity sufficient to provide reasonably accuraterepresentative samples of the deliveries made hereunder.  Seller represents that it is familiar withBuyer’s sampling and analysis practices, and finds them to be acceptable.  Buyer shall notify Seller in writing of anysignificant changes in Buyer’s sampling and analysis practices.  Any such changes in Buyer’s sampling andanalysis practices shall, except for industry accepted changes in practices,provide for no less accuracy than the sampling and analysis practices existingat the time of the execution of this Agreement, unless the Parties otherwisemutually agree.

 

Each sample taken by Buyer shall be divided into 4parts and put into airtight containers, properly labeled and sealed.  One part shall be used for analysis byBuyer; one part shall be used by Buyer as a check sample, if Buyer in its solejudgment determines it is necessary; one part shall be retained by Buyer untilthe twenty-fifth (25th) of the month following the month of

 

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unloading (the “Disposal Date”) and shall be delivered to Seller foranalysis if Seller so requests before the Disposal Date; and one part (“RefereeSample”) shall be retained by Buyer until the Disposal Date.  Seller shall be given copies of all analysesmade by Buyer by the twelfth (12th) business day of the month following themonth of unloading.  Seller, onreasonable notice to Buyer shall have the right to have a representativepresent to observe the sampling and analyses performed by Buyer.  Unless Seller requests a Referee Sampleanalysis before the Disposal Date, Buyer’s analysis shall be used to determinethe quality of the coal delivered hereunder. The Monthly Weighted Averages shall be determined by utilizing theindividual shipment analyses.

 

If any dispute arises before the Disposal Date, theReferee Sample retained by Buyer shall be submitted for analysis to anindependent commercial testing laboratory (“Independent Lab”) mutually chosenby Buyer and Seller.  For each coalquality specification in question, a dispute shall be deemed not to exist andBuyer’s analysis shall prevail and the analysis of the Independent Lab shall bedisregarded if the analysis of the Independent Lab differs from the analysis ofBuyer by an amount equal to or less than:

 

(i)            0.50%moisture

(ii)           0.50%ash on a dry basis

(iii)          100Btu/lb. on a dry basis

(iv)          0.10%sulfur on a dry basis.

 

For each coal quality specification in question, ifthe analysis of the Independent Lab differs from the analysis of Buyer by anamount more than the amounts listed above, then the analysis of the IndependentLab shall prevail and Buyer’s analysis shall be disregarded.  The cost

 

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of the analysis made by the Independent Lab shall be borne by Seller tothe extent that Buyer’s analysis prevails and by Buyer to the extent that theanalysis of the Independent Lab prevails.

 

**SECTION 8.         PRICE**.

 

§  8.1 BasePrice.  The base price (“BasePrice”) of the coal to be sold hereunder will be firm and will be determined bythe year in which the coal is delivered as defined in § 5 in accordance withthe following schedule:

 
| **YEAR** |   | **BASE  QUANTITY PRICE (F.O.B. Barge)** |             |   |
|----------|--------|-----------------------------------------|------------------|--------|
| 2002     |   | $                                       | 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 |   |
|          |        |                                         |                  |        |  |  |  |  |

 

§ 8.2        QualityPrice Discounts.

 

(a)           TheBase Price is based on coal meeting or exceeding the Guaranteed Monthly WeightedAverage specifications as set forth in § 6.1. Quality price discounts shall be applied for each specification eachmonth to reflect failures to meet the Guaranteed Monthly Weighted Averages setforth in § 6.1, as determined pursuant to § 7.2, subject to the provisions setforth below.  The discount values usedare as follows:

 
| DISCOUNT VALUES |   |        |
|-----------------|--------|-------------|
|            |   | $/MMBTU     |
| BTU/LB.         |   | 0.2604      |
|            |   |        |
|            |   | $/LB./MMBTU |
| SULFUR          |   | 0.1232      |
| ASH             |   | 0.0083      |
| MOISTURE        |   | 0.0016      |

 

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(b)           Notwithstandingthe foregoing, for each specification each month, there shall be no discount ifthe actual Monthly Weighted Average meets the applicable Discount Point setforth below.  However, if the actualMonthly Weighted Average fails to meet such applicable Discount Point, then thediscount shall apply and shall be calculated on the basis of the differencebetween the actual Monthly Weighted Average and the Guaranteed Monthly WeightedAverage pursuant to the methodology shown in Exhibit A attached hereto.

 
|      |   | **Guaranteed Monthly  Weighted Average** |   | **Discount Point** |   |
|-----------|--------|------------------------------------------|--------|--------------------|--------|
|      |   |                                     |   |               |   |
| BTU/LB    |   | min.                                     | 11,400 |               | 11,200 |   |
|      |   |                                     |   |               |   |   |
| LB/MMBTU: |   |                                     |   |               |   |   |
| SULFUR    |   | max.                                     | 2.89   |               | 2.98   |   |
| ASH       |   | max.                                     | 8.33   |               | 8.69   |   |
| MOISTURE  |   | max.                                     | 10.53  |               | 11.25  |   |

 

For example, if the actual Monthly Weighted Average ofsulfur equals 3.00 lb/MMBTU, then the applicable discount would be (3.00 lb. –2.89 lb.) X $.1232/lb/MMBTU = $.0136/MMBTU.

 

§ 8.3  NewImpositions.  The above Base Priceshall be subject to adjustment only in the event that new applicable Federal orstate statues, regulations, or other governmental impositions

 

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on the coal to be supplied hereunder, including but not limited to taxincreases or decreases, occur after July 31, 2001, which cause Seller’s costfor providing coal to Buyer under this Agreement to increase or decrease bymore than $.10 per ton.  Seller shallpromptly notify Buyer of any such changes and supply sufficient documentationfor Buyer to verify any such change. Either Buyer or Seller may request a Base Price adjustment, which shallbe comprised of no more than the reasonable costs directly associated with theeffect of such change on the coal to be supplied hereunder.  If the non-requesting party agrees to therequested price adjustment, such adjustment shall be made effective on thefirst day of the calendar month following the effective date of any change,(except when such change is effective on the first day of the month in whichcase the adjustment shall be made as of such date).  If the non-requesting party rejects the request of the requestingparty for a Base Price adjustment, the requesting party, at its option, mayterminate the contract without liability due to such termination for eitherparty.

 

§ 8.4 Payment Calculation.  Exhibit A attached hereto shows themethodology for calculating the coal payment and quality price discounts forthe month Seller’s coal was unloaded by Buyer. If there are any such discounts, Buyer shall apply credit to amountsowed Seller for the month the coal was unloaded.

 

**SECTION 9.         INVOICES,BILLING AND PAYMENT.**

 

§ 9.1        InvoicingAddress.  Invoices will be sent toBuyer at the following address:

 

Louisville Gas and Electric Company

220 West Main Street

P.O. Box 32010

Louisville, KY 40232

Attention: Manager LG&E/KU Fuels

 

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§ 9.2  InvoiceProcedures for Coal Shipments. Seller shall invoice Buyer at the Base Price, minus any quality pricediscounts, for all coal unloaded in a calendar month by the fifteenth  (15th) of the following month.

 

§ 9.3  PaymentProcedures for Coal Shipments.  Forall coal unloaded at the Buyer’s generating station(s) between the first (1st)and fifteenth (15th) days of any calendar month.  Buyer shall make preliminary payment for seventy-five percent(75%) of the amount owed for the coal (based on the assumption that the coalwill meet all guaranteed monthly quality parameters) by the twenty-fifth (25th)day of such month of unloading, except that, if the twenty-fifth (25th) is nota regular work day, payment shall be made on the next regular work day.  For all coal unloaded at the Buyer’sgenerating station(s) between the sixteenth (16th) and the last day of anycalendar month, Buyer shall make preliminary payment for seventy-five percent(75%) of the unloaded coal by the tenth (10th) day of the month following themonth of unloading, except that, if the tenth (10th) is not aregular work day, payment shall be made on the next regular work day.

 

Preliminary payment shall be in the amount ofseventy-five percent (75%) of the then current price on a dollar per ton basisas calculated by the guaranteed monthly weighted average BTU/lb. and the thencurrent Base Price in cents per MMBTU.

 

A reconciliation of amounts paid and amounts owedshall occur by the twenty-fifth (25th) day of the month following the month ofunloading.  (For example, Buyer willmake one initial

 

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payment by September 25 for seventy-five (75%) percent of coal unloadedSeptember 1 through 15, and another initial payment by October 10 forseventy-five percent (75%) of coal unloaded September 16 through 30.  A reconciliation will occur by October 25for all unloadings made in September.) The reconciliation shall be made as follows: Seller shall invoice Buyeron or before the fifteenth (15th) day of the month following themonth of delivery.  The amount due forall coal (based on the Base Price minus any Quality Price Discounts) deliveredand unloaded and accepted by Buyer during any calendar month shall becalculated and compared to the sum of the preliminary payments made for coaldelivered and unloaded and accepted during such month.  The difference shall be paid by or paid toSeller, as applicable, by the twenty-fifth (25th) day of the month followingthe month of delivery, except, that, if the twenty-fifth (25th) is not aregular work day, payment shall be made in the next regular work day.  Buyer shall electronically transfer allpayments to Seller’s account at:

 

Peabody COALSALES, St Louis

PNC Bank of N.A.

ABA # 043000096

Account # 1008971287

 

§ 9.4  Withholding.  Buyer shall have the right to withhold frompayment of any billing or billings (i) any sums which it is not able in goodfaith to verify or which it otherwise in good faith disputes, (ii) any damagesresulting from or likely to result from any breach of this Agreement by Seller,and (iii) any amounts owed to Buyer from Seller.  Buyer shall notify Seller promptly in writing of any such issue,stating the basis of its claim and the amount it intends to withhold.

 

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Payment by Buyer, whether knowing or inadvertent, ofany amount in dispute shall not be deemed a waiver of any claims or rights byBuyer with respect to any disputed amounts or payments made.

 

**SECTION 10.       FORCEMAJEURE.**

 

§ 10.1  GeneralForce Majeure.  If either partyhereto is delayed in or prevented from performing any of its obligations orfrom utilizing the coal sold under this Agreement due to acts of God, war,riots, civil insurrection, acts of the public enemy, strikes, lockouts, fires,floods or earthquakes, which are beyond the reasonable control of the partyaffected thereby, then the obligations of both parties hereto shall be suspendedto the extent made necessary by such event; provided that the affected partygives written notice to the other party as early as practicable of the natureand probable duration of the force majeure event.  The party declaring force majeure shall exercise due diligence toavoid and shorten the force majeure event and will keep the other party advisedas to the continuance of the force majeure event.

 

During any period in which Seller’s ability to performhereunder is affected by a force majeure event, Seller shall not deliver anycoal to any other buyers to whom Seller’s ability to supply is similarlyaffected by such force majeure event unless contractually committed to do so atthe beginning of the force majeure event; and further shall deliver to Buyerunder this Agreement at least a pro rata portion (on a per ton basis) of itstotal contractual commitments to all its buyers to whom Seller’s ability tosupply is similarly affected by such force majeure event in place at thebeginning of the force majeure event. An event which affects the Seller’s ability 

 

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to produce or obtain coal from a mine other than the Coal Property willnot be considered a force majeure event hereunder.

 

Tonnage deficiencies resulting from a force majeureevent shall be made up at Buyer’s sole option on a mutually agreeable schedule.

 

§ 10.2  EnvironmentalLaw Force Majeure.  The partiesrecognize that, during the continuance of this Agreement, legislative orregulatory bodies or the courts may adopt or reinterpret environmental laws,regulations, policies and/or restrictions which will make it impossible orcommercially impracticable for Buyer to utilize this or like kind and qualitycoal which thereafter would be delivered hereunder.  If as a result of the adoption or reinterpretation of such laws,regulations, policies, or restrictions, or change in the interpretation orenforcement thereof, Buyer decides that it will be impossible or commerciallyimpracticable (uneconomical) for Buyer to utilize such coal, Buyer shall sonotify Seller, and thereupon Buyer and Seller shall promptly consider whethercorrective actions can be taken in the mining and preparation of the coal atSeller’s mine and/or in the handling and utilization of the coal at Buyer’sgenerating station; and if in Buyer’s sole judgment such actions will not,without unreasonable expense to Buyer, make it possible and commerciallypracticable for Buyer to so utilize coal which thereafter would be delivered hereunderwithout violating any applicable law, regulation, policy or order, Buyer shallhave the right, upon the later of 60 days notice to Seller or the effectivedate of such restriction, to terminate this Agreement without furtherobligation hereunder on the part of either party.

 

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**SECTION 11.  CHANGES**.  Either party may, at any time by writtennotice pursuant to § 12 of this Agreement, propose changes within the generalscope of this Agreement in any one or more of the following: quality of coal orcoal specifications; quantity of coal; method or time of shipments; place ofdelivery (including transfer of title and risk of loss); method(s) of weighing,sampling or analysis; or any such other provision as may affect the suitabilityand amount of coal to be delivered to Buyer’s generating stations.

 

If any such changes makes necessary or appropriate anincrease or decrease in the then current price per ton of coal, or in any otherprovision of this Agreement, an equitable adjustment shall be made in:  price, whether current or future or both,and/or in such other provisions of this Agreement as are affected directly orindirectly by such change, and the Agreement shall thereupon be modified inwriting accordingly.

 

Any claim by the Seller for adjustment under this § 11shall be asserted within thirty (30) days after the date of Seller’s receipt ofthe written notice of change, it being understood, however that Seller shallnot be obligated to proceed under this Agreement as changed until an equitableadjustment has been agreed upon.  Theparties agree to negotiate promptly and in good faith to agree upon the natureand extent of any equitable adjustment.

 

**SECTION 12.       NOTICES.**

 

§ 12.1  Formand Place of Notice.  Any officialnotice, request for approval or other document required to be given under thisAgreement shall be in writing, unless otherwise provided herein, and shall bedeemed to have been sufficiently given when delivered in person,

 

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transmitted by facsimile or other electronic media, delivered to anestablished mail service for same day or overnight delivery, or dispatched inthe United States mail, postage prepaid, for mailing by first class, certified,or registered mail, return receipt requested, and addressed as follows:

 
| If to Buyer:  |   | Louisville Gas and Electric Company                    |
|---------------|--------|--------------------------------------------------------|
|          |   | P.O. Box 32010                                         |
|          |   | Louisville, Kentucky 40232                             |
|          |   | Attn.:   Director Corporate Fuels and By Products |
|          |   |                                                   |
| If to Seller: |   | Peabody COALSALES Company                              |
|          |   | 701 Market Street, Suite 930                           |
|          |   | St. Louis, Missouri 63101                              |
|          |   | Attn:   Vice-President, Sales                     |
|          |   |                                                   |

 

§ 12.2  Changeof Person or Address.  Either partymay change the person or address specified above upon giving written notice tothe other party of such change.

§ 12.3  ElectronicData Transmittal.  Seller herebyagrees, at Seller’s cost, to electronically transmit shipping notices and/orother data to Buyer in a format acceptable to and established by Buyer uponBuyer’s request.  Buyer shall provideSeller with the appropriate format and will inform Seller as to the electronicdata requirements at the appropriate time.

 

**SECTION 13.       CREDITRATING.**  If thecredit rating of either Buyer (if Buyer has a public rating) or Buyer’saffiliates that have public ratings falls below investment grade (BBB - asdefined by Standard & Poor’s or the equivalent as defined by other publicratings agencies), Buyer shall, within thirty (30) days after Seller’s writtenrequest, provide Seller with a mutually agreed upon form of credit enhancement(e.g., letter of credit, guaranty from an

 

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investment grade entity, etc.). Until the mutually acceptable assurances of good credit are received,Seller has the right to require payment in cash at the time of delivery. Suchmutually acceptable assurances of good credit shall not be more than theaverage monthly outstanding net balance.

 

**SECTION 14.       RIGHTTO RESELL.**  Buyershall have the unqualified right to resell all or any of the coal purchasedunder this Agreement.

 

**SECTION 15.       INDEMNITYAND INSURANCE.**

 

§ 15.1  Indemnity.  Seller agrees to indemnify and save harmlessBuyer, its officers, directors, employees and representatives from anyresponsibility and liability to Buyer or third parties for any and all claims,demands, losses, legal actions for personal injuries, property damage andpollution (including reasonable inside and outside attorney’s fees) (i)relating to the trucks, barges or railcars provided by Buyer or Buyer’scontractor while such trucks, barges or railcars are in the care and custody ofthe loading dock or loading facility, (ii) due to any failure of Seller tocomply with laws, regulations or ordinances, or (iii) due to the acts oromissions of Seller in the performance of this Agreement.

 

Buyer agrees to indemnify and save harmless Seller,its officers, directors, employees and representatives from any responsibilityand liability to third parties for any and all claims, demands, losses, legalactions for personal injuries, and property damage (including reasonable insideand outside attorney’s fees); (i) due to any failure of Buyer to comply withlaws,

 

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regulations or ordinances, or (ii) due to the negligence of anyrepresentatives, agents or employees of Buyer (collectively, “Visitors”) whoinspect the Coal Property; or (iii) due to the acts or omissions of Buyer inthe performance of this Agreement.

 

§ 15.2  Insurance.  Seller agrees to carry insurance coveragewith minimum limits as follows:

 

(1)           CommercialGeneral Liability, including Completed Operations and Contractual Liability,$1,000,000 single limit liability.

 

(2)           AutomobileGeneral Liability, $1,000,000 single limit liability.

 

(3)           Inaddition, Seller shall carry excess liability insurance covering the foregoingperils in the amount of $4,000,000 for any one occurrence.

 

(4)           Workers’Compensation and Employer’s Liability with statutory limits.

 

If any of the above policies are written on a claimsmade basis, then the retroactive date of the policy or policies will be nolater than the effective date of this Agreement.  Certificates of Insurance satisfactory in form to the Buyer andsigned by the Seller’s insurer shall be supplied by the Seller to the Buyerevidencing that the above insurance is in force and that not less than thirty(30) calendar days written notice will be given to the Buyer prior to anycancellation or material reduction in coverage under the policies.  The Seller shall cause its insurer to waiveall subrogation rights against the Buyer respecting all losses or claimsarising from performance hereunder. Evidence of such waiver satisfactory in form and substance to the Buyershall be exhibited in the Certificate of Insurance mentioned above.  Seller’s liability shall not be limited toits insurance coverage.

 

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**SECTION 16.       TERMINATIONFOR DEFAULT.**

 

Subject to § 6.4, if either party hereto commits amaterial breach of any of its obligations under this Agreement at any time,including, but not limited to, a material breach of a representation andwarranty set forth herein, then the other party has the right to give writtennotice describing such breach and stating its intention to terminate thisAgreement no sooner than thirty (30) days after the date of the notice (the“notice period”).  If such materialbreach is curable and the breaching party cures such material breach within thenotice period, then the Agreement shall not be terminated due to such materialbreach.  If such material breach is notcurable or the breaching party fails to cure such material breach within thenotice period, then this Agreement shall terminate at the end of the noticeperiod in addition to all the other rights and remedies available to theaggrieved party under this Agreement and at law and in equity.

 

**SECTION 17.       TAXES,DUTIES AND FEES.**

 

Seller shall pay when due, and the price set forth in§ 8 of this Agreement shall be inclusive of, all taxes, duties, fees and otherassessments of whatever nature imposed by governmental authorities with respectto the transactions contemplated under this Agreement.

 

**SECTION 18.       DOCUMENTATIONAND RIGHT OF AUDIT.**

 

Seller shall maintain all records and accounts pertainingto payments, quantities, quality analyses, and source for all coal suppliedunder this Agreement for a period lasting through the

 

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term of this Agreement and for two years thereafter.  Buyer shall have the right at no additionalexpense to Buyer to audit, copy and inspect such records and accounts at anyreasonable time upon reasonable notice during the term of this Agreement andfor 2 years thereafter.

 

**SECTION 19.       EQUALEMPLOYMENT OPPORTUNITY**. To the extent applicable, Seller shall comply with all of the followingprovisions which are incorporated herein by reference: Equal Opportunityregulations set forth in 41 CFR § 60-1.4(a) and (c) prohibiting discriminationagainst any employee or applicant for employment because of race, color,religion, sex, or national origin; Vietnam Era Veterans Readjustment AssistanceAct regulations set forth in 41 CFR § 50-250.4 relating to the employment andadvancement of disabled veterans and veterans of the Vietnam Era; andRehabilitation Act regulations set forth in 41 CFR § 60-741.4 relating to theemployment and advancement of qualified disabled employees and applicants foremployment; the clause known as “Utilization of Small Business Concerns andSmall Business Concerns Owned and Controlled by Socially and EconomicallyDisadvantaged Individuals” set forth in 15 USC § 637(d)(3); and subcontractingplan requirements set forth in 15 USC § 637(d).

 

**SECTION 20.       COALPROPERTY INSPECTIONS. **Buyerand its representatives, and others as may be required by applicable laws,ordinances and regulations shall have the right at all reasonable times and attheir own expense to inspect the Coal Property, including the loadingfacilities, scales, sampling system(s), wash plant facilities, and mining

 

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equipment for conformance with this Agreement.  Seller shall cause Highland Mining Companyto undertake reasonable care and precautions to prevent personal injuries toany representatives, agents or employees of Buyer (collectively, “Visitors”)who inspect the Coal Property.  Any suchVisitors shall make every reasonable effort to comply with Seller’s regulationsand rules regarding conduct on the work site, made known to Visitors prior toentry, as well as safety measures mandated by state or federal rules,regulations and laws.  Buyer understandsthat mines and related facilities are inherently high-risk environments.  Buyer’s failure to inspect the Coal Propertyor to object to defects therein at the time Buyer inspects the same shall notrelieve Seller of any of its responsibilities nor be deemed to be a waiver ofany of Buyer’s rights hereunder.

 

**SECTION 21.       MISCELLANEOUS.**

 

§ 21.1  ApplicableLaw.  This Agreement shall beconstrued in accordance with the laws of the Commonwealth of Kentucky, and allquestions of performance of obligations hereunder shall be determined inaccordance with such laws.

 

§ 21.2  Headings.  The paragraph headings appearing in thisAgreement are for convenience only and shall not affect the meaning orinterpretation of this Agreement.

 

§ 21.3        Waiver.  The failure of either party to insist onstrict performance of any provision of this Agreement, or to take advantage ofany rights hereunder, shall not be construed as a waiver of such provision orright.

 

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§ 21.4  RemediesCumulative.  Remedies provided underthis Agreement shall be cumulative and in addition to other remedies providedunder this Agreement or by law or in equity.

 

§ 21.5        Severability.  If any provision of this Agreement is foundcontrary to law or unenforceable by any court of law, the remaining provisionsshall be severable and enforceable in accordance with their terms, unless suchunlawful or unenforceable provision is material to the transactionscontemplated hereby, in which case the parties shall negotiate in good faith asubstitute provision.

 

§ 21.6  BindingEffect.  This Agreement shall bindand inure to the benefit of the parties and their successors and assigns.

 

§ 21.7        Assignment.

 

A.  Sellershall not, without Buyer’s prior written consent, which may be withheld inBuyer’s discretion, make any assignment or transfer of this Agreement, byoperation of law or otherwise, including without limitation any assignment ortransfer as security for any obligation, and shall not assign or transfer theperformance of or right or duty to perform any obligation of  Seller hereunder; provided, however, thatSeller may assign the right to receive payments for coal directly from Buyer toa lender as part of any accounts receivable financing or other revolving creditarrangement which Seller may have now or at any time during the term of thisAgreement.

 

B.            Buyershall not, without Seller’s prior written consent, which may not beunreasonably withheld, assign this Agreement or any right for the performanceof or right or duty to perform any obligation of Buyer hereunder; except that,without such consent, Buyer may

 

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assign this Agreement in connection with a transfer by Buyer of all ora part interest in the generating station comprising the Delivery Point, or aspart of a merger or consolidation involving Buyer, or to an affiliate of Buyer.

 

C.  In theevent of an assignment or transfer contrary to the provisions of this section,the non-assigning party may terminate this Agreement immediately.

 

§ 21.8  EntireAgreement.  This Agreement containsthe entire agreement between the parties as to the subject matter hereof, andthere are no representations, understandings or agreements, oral or written,which are not included herein.

 

§ 21.9  Amendments.  Except as otherwise provided herein, thisAgreement may not be amended, supplemented or otherwise modified except bywritten instrument signed by both parties hereto.

 

IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed as of the date first above written.

 
| **LOUISVILLE  GAS AND ELECTRIC COMPANY** |                       | **PEABODY  COALSALES COMPANY** |
|------------------------------------------|----------------------------|--------------------------------|
|                                     |                       |                           |   |   |
| By:                                      |                       |                           | By: |   |
|                                     | Paul Thompson              |                           |   | Richard A. Navarre |
|                                     | SVP — Energy Services |                           |   | President |
|                                     |                       |                           |   |   |
| Date:                                    |                       |                           | Date: |   |
|                                          |                            |                                |  |  |  |

 

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**Exhibit A**

**EXHIBIT A**

**SAMPLE COAL PAYMENT CALCULATIONS**

**Total Evaluated Coal Costs for Contract No. LGE02011**

For contracts suppliedfrom multiple “origins”, each “origin will be calculated individually.
|                                                                                              |   | **Section I**                          |   | **Base Data** |   |       |   |
|---------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|---------------|--------|------------|--------|
|                                                                                              |   |                                   |   |          |   |       |   |
| 1)                                                                                                |   | Base F.O.B. price per ton:             |   | $             | 25.59  |       | /ton   |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 1a)                                                                                               |   | Tons of coal delivered:                |   |          |   | tons       |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 2)                                                                                                |   | Guaranteed average heat content:       |   | 11,400        |   | BTU/LB.    |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 2r)                                                                                               |   | As received monthly avg. heat content: |   |          |   | BTU/LB.    |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 2a)                                                                                               |   | Energy delivered in MMBTU:             |   |          |   | MMBTU      |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| [(Line 1a) *2,000 lb./ton*(Line 2r)]  *MMBTU/1,000,000 BTU                                        |   |                                   |   |          |   |
| [(    ) *2,000 lb./ton*(    )]*MMBTU/1,000,000 BTU                  |   |                                   |   |          |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 2b)                                                                                               |   | Base F.O.B. price per MMBTU:           |   | $             | 1.1224 |       | MMBTU  |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| {[(Line 1)/(Line 2)]*(1 ton/2,000 lb.)]}*1,000,000  BTU/MMBTU                                     |   |
| {[(     /ton)/(    BTU/LB)]*(1  ton/2,000 lb.)}*1,000,000 BTU/MMBTU |   |
| 3)                                                                                                |   | Guaranteed monthly avg. max. sulfur    |   | 2.89          |   | LBS./MMBTU |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 3r)                                                                                               |   | As received monthly avg. sulfur        |   |          |   | LBS./MMBTU |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 4)                                                                                                |   | Guaranteed monthly avg. ash            |   | 8.33          |   | LBS./MMBTU |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 4r)                                                                                               |   | As received monthly avg. ash           |   |          |   | LBS./MMBTU |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 5)                                                                                                |   | Guaranteed monthly avg. max. moisture  |   | 10.53         |   | LBS./MMBTU |   |
|                                                                                              |   |                                   |   |          |   |       |   |
| 5r)                                                                                               |   | As received monthly avg. moisture      |   |          |   | LBS./MMBTU |   |
|                                                                                                   |        |                                        |        |               |        |            |        |  |  |

 
|   |   | **Section II**                                                                                                                                                              |   | **Discounts** |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|
|   |   | Assign a (-) to all discounts (round to (5) decimal  places)                                                                                                                |   |          |   |   |   |
|   |   |                                                                                                                                                                        |   |          |   |   |
| 6d)    |   | BTU/LB.:  If  line 2r <11,200BTU/lb. then:  {1 - (line 2r) / (line 2)} * $0.2604/MMBTU  {1 - (    ) / (    )} * $0.2604 =             |   | $             |   | /MMBTU |   |
|   |   |                                                                                                                                                                        |   |          |   |   |
| 7d)    |   | SULFUR:  If  line 3r is greater than 2.98 lbs./MMBTU  [ (line 3r) - (line 3) ] * 0.1232/lb. Sulfur  [ (    ) - (    ) ] * 0.1232 =  |   | $             |   | /MMBTU |   |
|   |   |                                                                                                                                                                        |   |          |   |   |
| 8d)    |   | ASH: If line 4r is greater than 8.69 lbs./MMBTU  [ (line 4r) - (line 4) ] * 0.0083/MMBTU   [ (    ) - (    ) ] * 0.0083 =                |   | $             |   | /MMBTU |   |
|   |   |                                                                                                                                                                        |   |          |   |   |   |
| 9d)    |   | MOISTURE:  If line 5r is greater than 11.25lbs./MMBTU  [ (line 5r) - (line 5) ] * 0.0016/MMBTU  [ (    ) - (    ) ] * 0.0016 =           |   | $             |   | /MMBTU |   |

 

 

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**ExhibitA**

 

 
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **Total  Price  Adjustments** |   |   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|--------|
|   |   | **Section III**                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                          |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   | Determine total Discounts  as follows:                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                          |   |   |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   | Assign  a (-) to all discounts (round to (5) decimal places)                                                                                                                                                                                                                                                                                                                                                                                           |   |                          |   |   |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   | Line 6d:                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $                             |   |   | /MMBTU |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   | Line 7d                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                             |   |   | /MMBTU |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   | Line 8d                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                             |   |   | /MMBTU |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   | Line 9d                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                             |   |   | MMBTU |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
| 10)    |   | Total Discounts (-):                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
|   |   | Algebraic sum of above:                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                             |   |   | /MMBTU |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
| 11)    |   | Total evaluated coal price  = (line 2b) + (line 10)                                                                                                                                                                                                                                                                                                                                                                                                    |   |                          |   |   |   |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
| 12)    |   | Total discount price  adjustment for Energy delivered:  (line 2a) * (line 10 (-)  $/MMBTU                                                          + |   | $                             |   |   | /MMBTU  = |   | $ |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
| 13)    |   | Total base cost of coal   (line 2a) * (line 2b)  $/MMBTU                                                          +                                  |   | $                             |   |   | /MMBTU  = |   | $ |   |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                          |   |   |   |   |   |
| 14)    |   | Total coal payment for  month   (line 12) + (line 13)  $/MMBTU                                                          +                            |   | $                             |   |   | = |   | $ |   |     |

 

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