EXHIBIT 10.64


 


Peabody COALSALES Company

Contract #LGE 02011

Amendment No. 3


 


AMENDMENT NO. 3 TO COAL SUPPLY AGREEMENT


 


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


 


1.0
AMENDMENTS


 


The Agreement heretofore
entered into by the parties, dated effective January 1, 2002 and identified by
the Contract Number set forth above, as amended by Amendment No. 1 dated
effective June 1, 2002, and Amendment No. 2 dated effective January 1, 2003 is
hereby further amended as follows, the January 2, 2002 Agreement, as amended by
Amendment No. 1, Amendment No. 2, and Amendment No. 3 is hereafter referred to
as the “Agreement”:


 


2.0
QUANTITY


 


2.1                                 Section 3.1 Quantity,  is deleted in its entirety and replaced with the
following:


 


3.1                                 Quantity.


 


3.1.1 Seller shall sell and
deliver and Buyer shall purchase and accept delivery of the following annual
quantities 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 or
part of the Coal Synfuel quantities set forth in Section 3.1.1 above (i) cannot
be 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


 

















 


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


 


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


 


3.0 SOURCE


 


3.1                                                                                 Section
4.1 Source,  is deleted in
its entirety and replaced with the following:


 


4.1                                 Source.  The coal sold hereunder,
including coal purchased by Seller from third parties, shall be supplied from
the geological seams known as the Western Kentucky #9 and #11 seams. Coal
designated as Quality A, as defined below, shall be supplied from the mining
complex in Union County, Kentucky which is owned and operated by Seller’s
affiliated company, Highland Mining Company (“Highland”). Coal designated as
Quality B, as defined below, shall be supplied from: (i) the “Patriot Mining
Complex” in Henderson County which consists of the Patriot Mine (a surface
mining operation which is owned and operated by Seller’s affiliated company,
Patriot Coal Company, LP (“Patriot”)) and the “Freedom Mine” (which is operated
by Seller’s affiliated company, Ohio County Coal Company (“Ohio County”)); (ii)
the Camp Complex in Henderson County, or (iii) the Gibraltar Mine in Muhlenberg
County. Coal Synfuel sold hereunder shall be supplied from the Gibraltar Coal
Synfuel Plant located in Muhlenberg County, Kentucky. The Camp Complex and the
Gibraltar Mine are both owned and operated by Seller’s affiliated company,
Peabody Coal Company (“Peabody Coal”). All of the foregoing sources of coal are
hereinafter referred to as the “Coal Properties”. Highland, Patriot, Ohio
County 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 entirety
and replaced with the following:


 


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


 

















 


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

  



 

















 












(1) An actual
Monthly Weighted Average will be calculated for each specification for coal
delivered to the Buyer’s generating stations.


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


 


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


 


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


 


The Base Acid
Ratio (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 with
the following:


 


The base price
(“Base Price”) of the coal and coal synfuel to be sold hereunder will be firm
and will be determined by the criteria set forth in Section 5 in accordance
with 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)

  



 












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


 

















 


	
  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

  



 


 












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


** The Base Price for the
remainder 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 WITNESS
WHEREOF, the parties
hereto 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

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TITLE:

  	
   

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  	
  DATE: