Document:

EXHIBIT 10.63

 

Contract #96-412-026

Hopkins County Coal, LLC

Amendment No. 2

 

AMENDMENT NO. 2 TO AMENDED AND RESTATED COAL SUPPLY AGREEMENT

 

THIS
AMENDMENT NO. 2 TO AMENDED AND RESTATED COAL SUPPLY AGREEMENT (“Amendment No. 2”) is entered into effective
as of September 15, 2000, by and between LOUISVILLE GAS AND ELECTRIC COMPANY
(hereinafter referred to as “Buyer”), whose address is 220 West Main Street,
Louisville, Kentucky 40202, and HOPKINS COUNTY COAL, LLC, a Delaware limited
liability company and WEBSTER COUNTY COAL, LLC, a Delaware limited liability
company (successor to WEBSTER COUNTY COAL CORPORATION, a Kentucky corporation),
both having an address of 1717 South Boulder Avenue, Tulsa, Oklahoma
74119-4886, (the foregoing companies hereinafter referred to as “Seller”). In
consideration of the agreements herein contained, the parties hereto agree as
follows.

 

RECITALS

 

A.           On even date herewith, Buyer entered into
Coal Synfuel Purchase Order LGE00024, which is governed by the terms and
conditions of Negotiated Contract LGE00019, (“Coal Synfuel Supply Agreement”)
with ECO Coal Pelletization No. 12, LLC (“ECO”) for the purchase of coal
synfuel which shall be processed from coal which is produced or supplied to ECO
from Hopkins County Coal, LLC.

 

B.             For each ton of coal synfuel Buyer purchases
from ECO during the term of the Coal Synfuel Supply Agreement, Buyer and Seller
hereby agree to reduce by like amount the quantity of coal to be purchased
under the Amended and Restated Coal Supply Agreement as is more particularly
set forth herein below.

 

1.0
AMENDMENTS

 

The Amended and Restated
Agreement heretofore entered into by the parties, dated effective April 1,
1998, as amended by Amendment No. 1 dated January 1, 2000 and identified by the
Contract Number set forth above, (hereinafter referred to as “Agreement”) is
hereby amended as follows:

 

2.0 QUANTITY

 

2.1                                 Section 3.2 Coal Synfuel Quantity,  is added and reads as follows:

 

“During the Term, any
quantity of coal synfuel purchased by Buyer from ECO under the Coal Synfuel
Supply Agreement shall reduce the Quantity of coal to be supplied under this
Agreement, by an equal amount of tonnage.”

 

 

3.0
INDEPENDENT RELATIONSHIP OF AGREEMENT TO COAL SYNFUEL SUPPLY AGREEMENT.

 

3.1                                 Section 21 Independent Relationship of Agreement to Coal Synfuel Supply  Agreement,
is added and read as follows:

 

“Except for the tonnage
reduction provision set forth under Section 3.2 herein above, all obligations
between Buyer and Seller set forth in this Agreement shall continue through its
Term. If Buyer reduces and/or suspends its purchases of coal synfuel under the
Coal Synfuel Supply Agreement and/or either Buyer or ECO terminates the Coal
Synfuel Supply Agreement for any reason, this Agreement shall remain in full
force and effect and Buyer and Seller shall be obligated to continue their
performance as required herein through the Term of this Agreement. In no event
shall nonperformance or breach by Buyer or ECO under provisions of the Coal
Synfuel Supply Agreement be a basis for Buyer or Seller to claim nonperformance
or breach or grant a right of offset, counter claim or cancellation of this
Agreement, and this Agreement shall continue in full force and effect with the
remaining obligations for the purchase of quantities of coal to be the Quantity
set forth in Section 3.0 during any contract year reduced by the amount of coal
synfuel delivered by ECO to Buyer during such contract year.”

 

IN WITNESS
WHEREOF, the parties
hereto have executed this Amendment No. 2 on the day and year below written,
but effective as of the day and year first set forth above.

 

	
  HOPKINS COUNTY COAL, LLC.

  	
  LOUISVILLE
  GAS AND ELECTRIC

  COMPANY

  
	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  	
  DATE:

  	
   

  	
   

  
	
   

  	
   

  
	
  WEBSTER
  COUNTY COAL, LLC

  	
   

  
	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  DATE: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:

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