Document:

exv10w22

Exhibit 10.22

Tennessee Valley Authority

Coal Supply & Origination

1101 Market Street, MR 2A

Chattanooga, Tennessee 37402-2801

CONTRACT SUPPLEMENT

	 	 	 	 	 	 	 	 	 

	TO:

	 	Armstrong Coal Company, Inc.
	 	Supplement No.
	 	15	 
	 

	 	7701 Forsyth Boulevard - 10th Floor
	 	Date
	 	December 28, 2011

	 

	 	St. Louis, Missouri 63105
	 	Group-Contract No.
	 	612-40668	 
	 

	 	 	 	Plant
	 	Various

Attention: Mr. Martin Wilson

This confirms the discussion between Bill McNally, TVA, and Adam Anderson, Armstrong Coal Company,
Inc., “(Armstrong) to amend Contract 612-40668 (the “Contract”) as set forth below.

1. The
effective date of this Supplement is December 28, 2011 (the
“Effective Date”).

2. As of the Effective Date, TVA is exercising its right under the Contract’s Subsection 2.1.2
to decrease the scheduled quarterly deliveries by twenty percent (20%) of the quarterly
schedule and this Supplement No. 15 memorializes the sixty (60) days’ written notice
(“Nominated Quantity”) required to do so. For the sake of clarity, TVA’s Nominated Quantity for
March 1, 2012, through December 31, 2012, will be reduced by 100,000 tons per quarter or a
total reduction of 300,000 tons in Calendar Year 2012.

	 	 	 	 	 
	Year	 	Existing Commitment	 	New Commitment Under this Supplement
	2012

	 	2,000,000 tons
	 	1,700,000 tons

All other terms and conditions of the contract remain unchanged.

	 	 	 	 	 	 

	 

	 	Tennessee Valley Authority	 	 
	 
	 	 	 	 	 
	 

	 	By /s/ Connie S. Gazaway	 	 
	 

	 	 	 

	 	 
	 

	 	 

Connie S. Gazaway
	 	 
	 

	 	Asset Management Specialist	 	 
	 
	 	 	 	 	 
	 
	 	/s/ Ray W. Popoynak	 	 
	 

	 	 

Ray W. Popoynak
	 	 
	 

	 	Manager, Coal Acquisition	 	 

TVA RESTRICTED INFORMATIONexv10w23

Exhibit 10.23

Tennessee Valley Authority

Coal Supply & Origination

1101 Market Street, MR 2A

Chattanooga, Tennessee 37402-2801

CONTRACT SUPPLEMENT

	 	 	 	 	 	 	 	 	 

	TO:

	 	Armstrong Coal Company, Inc.
	 	Supplement No.
	 	16	 
	 

	 	7701 Forsyth Boulevard - 10th Floor
	 	Date
	 	February 21, 2012

	 

	 	St. Louis, Missouri 63105
	 	Group-Contract No.
	 	612-40668	 
	 

	 	 	 	Plant
	 	Various

Attention: Mr. Martin Wilson

TVA and
Armstrong Coal Company, Inc., “(Armstrong) agree to amend Contract No. 635-40685 and
Contract No. 612-40668 as set forth below.

	1.	 	Contract No. 635-40685. Supplement No. 5 dated December 28, 2011, to this
Contract is hereby rescinded. For the sake of clarity, rescinding Supplement No. 5
increases TVA’s Base Tonnage for 2012 from 900,000 tons to 1,000,000 tons.
	 
	2.	 	Contract No. 612-40668. TVA’s Base Contract Tonnage for 2012, as specified in
Supplement No. 15, dated December 28, 2011, and is hereby reduced from 1,700,000
tons to 1,000,000 tons.
	 
	3.	 	Contract No. 612-40668 and Contract No. 635-40685. TVA and Armstrong hereby
agree that all tonnage required to be delivered under Contract Nos.
612-40668 and
635-40685 through December 31, 2011, is complete and that no tonnage shortfalls
exist with respect to either party.
	 
	4.	 	Contract No. 612-40668. TVA and Armstrong hereby agree that for Calendar Year 2012
only the moisture specification set forth in the agreement shall remain at a 12% reject
level; provided, however, the Parties shall cooperate in good faith on excursions that
may occur on a periodic basis as follows: if (i) Armstrong delivers four consecutive trains
to TVA that exceed the 12% moisture reject specification set forth in the Contract, the
fourth train may be rejected; (ii) if Armstrong delivers two consecutive trains to TVA that
exceed 12.5% moisture, the second train may be rejected; and/or (iii) any shipments on
the Contract exceeding 12.6% moisture may be rejected. In the event that any of the
aforementioned items are triggered, and prior to the submission of any rejection
notification by TVA to Armstrong, the Parties shall discuss in good faith an alternative
resolution to avoid any potential rejection.

Paragraphs
1, 2, 3, and 4 of this Supplement to Contract No. 612-40668 and
Contract No. 635-40685
constitute the entire agreement between the parties and supersede any prior communications,
understandings, or agreements with respect to the subject matter hereof (collectively “Prior
Negotiations”). For the sake of clarity, any Prior Negotiations regarding test Burns, scheduling or
rescheduling of reopeners, initiation of new contracts, and tonnage commitments for Calendar Year
2013 are not part of this Supplement and have not been agreed to by the parties.

TVA RESTRICTED INFORMATION

Page 1 of 2

 

All other
terms and conditions of Contract No. 612-40668 and 635-40685 remain unchanged.

Please complete the acceptance on both copies and return one copy to this office. You should retain
the other original copy for your files.

In the event Contractor fails to execute this Supplement in the acceptance space provided below or
fails to return such executed Supplement to TVA, shipment of coal to TVA following the date of
Contractor’s receipt of this Supplement shall be deemed to constitute acceptance by Contractor of
all the terms and conditions of this Supplement, unless within five (5) business days of the date
of receipt of this Supplement, Contractor notifies TVA, both orally and in writing that this
Supplement is not accepted.

Except as otherwise provided in the immediately preceding sentence, the acceptance date of this
Supplement shall be the date on which both parties have signed a copy hereof.

	 	 	 	 	 	 	 	 

	Accepted
	 	Armstrong Coal Co.	 	Tennessee Valley Authority	 	 
	 

	 	 

          (Company)
	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	By
	 	/s/ Martin D. Wilson	 	By /s/ Connie S. Gazaway	 	 
	 

	 	 

	 	 	 

	 	 
	 

	 	 

	 	 

Connie S. Gazaway
	 	 
	 

	 	 	 	Asset Management Specialist	 	 
	 
	 	 	 	 	 	 	 
	Title
	 	President	 	March 9, 2012	 	 
	

	 	 

	 	 

Date 
	 	 
	 
	 	 	 	 	 	 	 
	Date
	 	 	 	/s/ R. W. Poponyak	 	 
	 

	 	 

	 	 

R. W. Poponyak
	 	 
	 

	 	 	 	Manager, Coal Acquisition	 	 

TVA RESTRICTED INFORMATION

Page 2 of 2exv10w24

Exhibit 10.24

CONTRACT

FOR

PURCHASE AND SALE OF COAL

BETWEEN

ARMSTRONG COAL COMPANY, INC.

AND

TENNESSEE VALLEY AUTHORITY

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	SECTION

	 	DESCRIPTION
	 	 	PAGE #	 
	1.

	 	Contract Term
	 	 	4	 
	2.

	 	Quantity
	 	 	5	 
	3.

	 	Scheduling
	 	 	7	 
	4.

	 	Variations, Delays, and Interruptions in Deliveries
	 	 	7	 
	5.

	 	Source
	 	 	11	 
	6.

	 	Price
	 	 	12	 
	7.

	 	Sampling and Analysis
	 	 	12	 
	8.

	 	Adjustment for Quality
	 	 	18	 
	9.

	 	Quality and Specifications
	 	 	20	 
	10.

	 	Contract Price Adjustments and Cost Requirements
	 	 	21	 
	11.

	 	Remedies
	 	 	23	 
	12.

	 	Notices
	 	 	25	 
	13.

	 	Shipping Notices
	 	 	25	 
	14.

	 	Transportation
	 	 	26	 
	15.

	 	Payments, Invoices
	 	 	27	 
	16.

	 	Weights
	 	 	28	 
	17.

	 	Contract Administrator/Contracting Officer
	 	 	29	 
	18.

	 	Disputes
	 	 	30	 
	19.

	 	Clean Air Act and Other Environmental Requirements
	 	 	30	 
	20.

	 	Unilateral Termination Right
	 	 	30	 
	21.

	 	Credit Evaluation and Performance Assurance
	 	 	30	 
	22.

	 	Verification of Data, Inspection or Records and Mine
Sources
	 	 	32	 
	23.

	 	Coal Mining Reclamation and Conservation Requirements
	 	 	32	 
	24.

	 	Relationship of Parties - Producer’s Statement
	 	 	34	 
	25.

	 	Non-Assignability; Subcontracts; Designation and
Termination of Agent
	 	 	34	 
	26.

	 	Waivers
	 	 	34	 
	27.

	 	Officials Not to Benefit
	 	 	34	 
	28.

	 	Small Business Policy
	 	 	35	 
	29.

	 	Liquidated Damages for Subcontracting Plans
	 	 	35	 
	30.

	 	Affirmative Action and Equal Opportunity
	 	 	35	 
	31.

	 	Safety and Health
	 	 	36	 
	32.

	 	Environmentally Acceptable Facilities; Clean Air and
Water
	 	 	36	 
	33.

	 	Certification for Contracts, Grants, Loans, and
Cooperative Agreement
	 	 	36	 
	34.

	 	Contract Components
	 	 	37	 
	35.

	 	Exhibit I: Sample Calculations
	 	 	38	 
	36.

	 	Appendix A: Coal Producers Statement and Specific
Location Map
	 	 	39	 

2

 

Contract                                         

CONTRACT FOR PURCHASE AND SALE OF COAL

THIS
AGREEMENT, is made and entered into this 10th day of September, 2008 by and
between TENNESSEE VALLEY AUTHORITY, a corporation organized and existing under an Act of Congress
(hereinafter called “TVA”), and Armstrong Coal Company, Inc., a Delaware corporation with its
principal place of business located at 7701 Forsyth Boulevard,
10th Floor, St. Louis, Missouri
63105 (hereinafter called “Contractor”).

W I T N E S S E T H:

In consideration of the mutual covenants hereinafter stated, the parties hereto agree as follows:

DEFINITIONS.

“Contract Year” shall mean the nine-month period commencing April 1. 2009, and ending December 31,
2009, and thereafter, each calendar year commencing January 1st and ending December
31st for the Contract Term set forth below.

“Delivery Commencement Date” shall be that date set forth in Section 1 hereof for commencement of
deliveries. Such date may be changed only by a written supplement to this contract,
signed by both parties, that expressly refers to the term “Delivery Commencement Date;” provided,
however, both parties agree that the Delivery Commencement Date shall be postponed for any delay
in the start-up of the Parkway Mine caused by either Contractor’s inability to receive required
mining permits, or Contractor’s inability to begin production due to delays in the delivery of
equipment or machinery. In the event of such delay, the Delivery Commencement Date shall be
established as the first day of the earliest ensuing month full production can begin at the
Parkway Mine, and the first “Contract Year” shall, notwithstanding any other provision of this
contract to the contrary, be the nine month period commencing with the Delivery Commencement Date,
as modified, and thereafter each subsequent twelve-month period for the Contract Term set-forth
below, as modified, shall also be a Contract Year. (For example, if full production did not begin
until June 1, 2009 the first Contract year shall be deemed to be the 9-month period beginning June
1. 2009 and ending February 28, 2010; Contract Year #2
shall be March 1, 2010 - February 28, 2011;
Contract Year #3 would be March 1, 2011 — February 28, 2012, etc.) The actual date of commencement
of deliveries shall not affect the Delivery Commencement Date.

Notwithstanding any and all provisions to the contrary herein, it shall be a condition precedent
to the parties’ obligations, duties and rights hereunder, as well as to the enforceability of this
Agreement, that Seller shall have obtained all permits utilized or necessary in connection with
the mining and production of coal from the Parkway Mine, in a form no longer subject to appeal,
challenge or collateral attack, whether in administrative, judicial or other forum, by any party,
by no later than January 1, 2010. Should such condition precedent not be met by the aforementioned
date, this Agreement shall be deemed null and void and unenforceable ab initio, and neither party
shall have any liability to the other related to or arising from this Agreement. Buyer
acknowledge and agrees that Seller shall use its best efforts to seek the aforementioned
permits, and take and all steps related thereto, that Seller deems advisable in its sole and
absolute discretion.

“Contract Administrator” shall be that TVA representative designated to administer the contract on
behalf of TVA.

3

 

“Destination” shall have the following meaning: For coal purchased F.O.B. destination at such
facility or facilities, each such facility shall be a “Destination.” The initial Destination is as
follows: TVA’s Paradise Fossil Plant.

“Receiving Plant” shall mean TVA’s Paradise Fossil
Plant.

	1.0	 	CONTRACT TERM

	 	 	 	The Delivery Commencement Date shall be April 1, 2009, unless postponed on account of any
delay in the start-up of the Parkway Mine as described above, and deliveries shall
continue for four and three-quarter (43/4) years from said Delivery Commencement Date
unless terminated earlier by agreement or as otherwise provided herein. Provided, however,
this contract may be reopened by either party (9) months prior to the 33th
month anniversary of the Delivery Commencement Date for the purpose of renegotiating price
only, and not for the purpose of renegotiating any other terms and conditions.

	 	 	 	Prior to April 1, 2011, either party may notify the other in writing that it wishes to
reopen for negotiation the Base Price for the 4th “Contract Year” (i.e. the
price applicable to calendar year 2012 unless such 4th “Contract Year” has been postponed
on account of delays in the start-up of the Parkway Mine—see “Definitions” above of
“Contract Year”). If the parties have not agreed on a new Base Price prior to July 1,
2011, the Contract shall terminate on December 31. 2011 (or at the expiration of the
third Contract Year, if such Contract Year ends later due to start-up delays at the
Parkway Mine), provided however, in the event the parties cannot reach a mutual agreement
as to a new Base Price, and written notice is given prior to July 15, 2011, TVA shall have
the unilateral right to extend the Contract for one year beyond the expiration date of the
third Contract Year for the purchase and sale of 1.000,000 tons of coal at a price that is
Five dollars ($5.00) above the then-current Base Price, or Contractor shall have the
unilateral right to extend the Contract for one year beyond the expiration date of the
third Contract year for the purchase and sale of 1,000,000 tons of coal at a price that is
Five dollars ($5.00) below the then-current Base Price.

	 	 	 	If no notice is given by either party prior to April 1, 2011 of their intent to reopen the
4th Contract Year price for renegotiation, the then-current Base Price shall continue for
such 4th Contract Year pursuant to Section 6.0 below.

	 	 	 	In the event delays in start-up of the Parkway Mine have caused a postponement of the
starting date of the 4th Contract Year (See “Definitions” above of “Contract
Year”) such that the starting date of such 4th Contract Year differs from the starting
date of Calendar Year, 2012, the parties agree to adjust the notice periods of this
Section 1.0 accordingly, by Contract supplement, to conform to the postponement of the
starting date of the 4th Contract Year.

	 	 	 	If this reopener provision is exercised and a new Base Price is established for the
4th Contract Year, the Base Price effective for the 5th Contract Year
shall be such new 4th Year Base Price increased by 3.0%.

4

 

	2.0	 	QUANTITY

	2.1.1	 	Subject to TVA’s right to reduce or increase quantities to be delivered, as hereinafter
provided, the quantity of coal to be sold and purchased hereunder during each Contract Year
shall be as follows:

	 	 	 	 	 	 	 
	 	 	 	 	Base Tonnage
	*Contract Year #1
	 	2009	 	 	750,000	 
	Contract Year #2
	 	2010	 	 	1,000,000	 
	Contract Year #3
	 	2011 	 	 	1,000,000	 
	Contract Year #4
	 	2012	 	 	1 ,000,000	 
	Contract Year #5
	 	2013	 	 	1 ,000,000	 

	 		
	*	 	Note: If the Delivery Commencement Date is delayed (See “Definitions” above of
“Contract Year”). tonnages set forth above shall continue to apply to the applicable
Contract Year, as adjusted to account for such delays.

	 	 	 	Note: Except as otherwise provided below, all annual tonnages will be delivered in
fifty-two (52) equal weekly deliveries or as directed by the Contract Administrator

	 	 	 	TVA may, from time to time, with the consent of Contractor, decrease the scheduled
quarterly deliveries by up to twenty percent (20%) of the quarterly schedule by giving at
least sixty (60) days written notice (“Nominated Quantity”).

	 	 	 	If the “Nominated Quantity” is decreased pursuant to the above in any quarter, Contractor
at its option, on written notice provided within 90 days of the end of the quarter
scheduled for such decrease, may notify TVA of its intent to reschedule deliveries for the
amount of such decrease with delivery rescheduled by mutual agreement at the then-current
Base Price applicable to the time such delivery is rescheduled. The Base Price for any
“make-up” tonnage rescheduled, at TVA’s request, after the expiration of the Contract Term
shall be the Base Price of the final Contract Year escalated by 3%.

	2.1.2	 	TVA shall not be required to accept any quantity of coal shipped during a week that is in
excess of the Nominated Quantity or scheduled quantity, but if TVA accepts such excess quantity of
coal, TVA shall, upon 15-day written notice to Contractor, require that such excess amount be
deducted from the quantities to be shipped during the following or subsequent months/week(s) in the
Contract Year nor shall Contractor be obligated to deliver such make-up tonnage.
	 
	 	 	If at the expiration of the term of the contract less than the maximum tonnage has been
scheduled for delivery, the parties may by agreement extend the term of this contract for
a period sufficient to permit the delivery of make-up tonnage. Neither party shall be
obligated to agree to such an extension with respect to such make-up tonnage.
	 
	2.1.3	 	This contract is not and shall not be construed as a contract for all of TVA’s coal
requirements for any plant. TVA reserves the right to purchase coal from other suppliers in any amount
during the term of this contract.
	 
	 
	2.2	 	Notwithstanding the provisions of Subsection 2.1.1, above, if generation of electricity at a
Receiving Plant is curtailed or interrupted for a period of one week or more as a result of
the operating requirements of TVA’s integrated electric generating system, including
considerations of economic dispatch of TVA’s generating units. TVA may. from time to time,
suspend or reduce Contractor’s deliveries under this contract by a percentage equal to the
percentage reduction in electric output of the Receiving Plant resulting from such
curtailment or interruption. If there is more than one Receiving Plant for this contract at
the time of such curtailment or interruption, the

5

 

	 	 	suspension or reduction in deliveries shall apply only to such coal as, but for the
curtailment or interruption, would have been received at the Receiving Plant experiencing a
curtailment or interruption. Such suspension or reduction in deliveries may continue as
long as generation at such Receiving Plant is curtailed or interrupted; provided, however,
if TVA continues any such reduction or suspension for more than one hundred eighty (180)
consecutive days, and the average weekly reduction or suspension during said one hundred
eighty (180) day period was more than fifty percent (50%) of the average weekly quantity
scheduled under this contract for delivery during such period, Contractor may notify TVA in
writing, after such one hundred eighty (180) day period, of Contractor’s intent to
terminate this contract ninety (90) days from the date of TVA’s receipt of such written
notice, and this contract shall, upon the passing of such ninety-day (90-day) period,
terminate without further cost or obligation to either party, unless TVA shall have
directed the cancellation of the suspension or reduction within
forty-five (-45) days of
TVA’s receipt of Contractor’s notice of termination.
	 
	2.3	 	If the coal purchased hereunder is shipped to a blending / trans-loading facility for
incorporation into a Blended Product(s) that is constituted from (i) coal purchased hereunder and/or coal
of like quality to that purchased hereunder (such coal together with coal purchased hereunder
“Contract Quality  Coal”) and (ii) other coal or coals of dissimilar quality (when blended with
Contract Quality Coal, the “Blended Product(s)”), which Blended Product(s) is transported to more
than one TVA Receiving Plant (“Multiple Receiving Plants”), then the provisions of Subsection
2.2 shall be applied as follows: In the event one or more of the Multiple Receiving Plants
experiences a curtailment or interruption in generation as described above, TVA shall determine the
total reduction in weekly usage of Contract Quality Coal associated
with the curtailment(s)
or interruption(s) (“Contract Quality Coal Reduction’’), and TVA may adjust downward weekly
deliveries hereunder on the basis of the ratio of the Contract Quality Coal Reduction to
the average total quantity of Contract Quality Coal TVA has been receiving weekly for use in the
Blended Product(s) based on receipts during the prior 30-day period. All provisions of Subsection
2.2 not inconsistent with this paragraph shall apply in the case of Blended Product(s) and Multiple
Receiving Plants.
	 
	2.4	 	Except where Contractor has terminated this contract as provided in Subsection 2.2.,
suspensions or reductions under Subsection 2.2 or Subsection 2.3 shall not affect the enforceability of
this contract and, on termination of the suspension or reduction, shipments shall resume
pursuant to the terms and conditions of this contract. Contractor, at its option, on written notice
provided within 90 days of the resumption of deliveries herein, may notify TVA of its intent to
reschedule deliveries suspended or reduced pursuant to Subsection 2.2 or Subsection 2.3 (also the
“make-up
tonnage”) with delivery rescheduled by mutual agreement at the then-current Base
Price
applicable to the time such delivery is rescheduled. The Base Price for any “make-up”
tonnage
rescheduled, at TVA’s request, after the expiration of the Contract Term shall be the Base
Price of
the final Contract Year escalated by 3.0%.
	 
	 
	2.5	 	Except in the case of any failure to deliver that is excused under Subsection 4,2., TVA may
exercise the remedies afforded it under Section 11, Remedies, or as otherwise
provided by law, in the event Contractor fails to deliver coal as provided in this Section 2,
Quantity or Section 3. Scheduling; provided, however, in lieu of other remedies and
notwithstanding any other provision of this agreement to the contrary, TVA may elect to
reschedule for delivery any such unexcused deficiencies provided TVA provides written notice
to Contractor of its intent to do so within 90 days of the date such deficiency occurred and
such deficiency is rescheduled for delivery within twelve (12) months of such notice, or
later as may be mutually agreed. Such rescheduled coal shall be delivered in accordance with
the provisions of this contract and at the price in effect at the time during which such
deficiencies occurred.

6

 

	3.0	 	SCHEDULING

	3.1	 	TVA shall provide Contractor with any changes to the quantities of coal to be delivered to
TVA
consistent with the requirements of Section 2, Quantity. TVA maintains the right to
coordinate all
deliveries under this contract and others for the purposes of establishing a uniform
delivery
schedule for placement at Destination; provided however, such delivery schedule shall be
mutually agreed upon by Contractor, which agreement shall not be unreasonably withheld or
delayed.

	3.2	 	Contractor shall be responsible for making timely arrangements for the
scheduling of transportation equipment necessary to comply with the delivery schedule established by TVA.
	 
	3.3	 	Scheduled deliveries shall be by truck.
	 
	4.0	 	VARIATIONS, DELAYS AND INTERRUPTIONS IN DELIVERIES
	 
	4.1	 	Time of shipment is of major importance to TVA. Contractor shall immediately notify TVA’s
Contract Administrator of any expected deviation from the shipment schedule established in
accordance with Section 2, Quantity, and Section 3,
Scheduling, of this contract and of
the cause and extent of the deviation, except in the case of variations in quantity from
schedule of up to Five percent (5%).

	4.2	 	Subject to the conditions hereinafter stated, neither party shall be liable to the other for
failure to deliver or accept delivery of coal as provided for in this contract if such failure
was due to supervening causes beyond its control and not due to its own negligence, and which
cannot reasonably be overcome by the exercise of due diligence. Such causes shall include by
way of illustration, but not limitation: acts of God or of the public enemy; insurrection;
riots; strikes; nuclear disaster; partial or total outages of coal-fired units; floods;
accidents; major breakdown of equipment or facilities (including, but not limited to,
emergency outages of equipment or facilities to make repairs to avoid breakdowns thereof or
damage thereto), such equipment and facilities to include, but not limited to, power
generation, unloading, stock-out and preparation plant equipment; fires; industry-wide carrier
delays or shortages of carriers’ equipment; embargoes; orders or acts of civil or military
authority; or industry-wide shortages of materials and supplies. Nor shall TVA be obligated to
accept delivery of coal hereunder to the extent that such causes wholly or partially prevent
the unloading, stockpiling, preparing, or burning of coal at a Destination or Receiving Plant
that is receiving coal at the time the cause occurs, in which case TVA shall have no
obligation to consign deliveries to another destination or plant; provided, however, that if
there is more than one Destination or Receiving Plant for this
contract at the time such cause
occurs, TVA shall be excused from taking delivery of only such coal as would have been
received at the Destination or Receiving Plant experiencing such cause. Nor shall the refusal
of either party to settle a strike on terms other than it considers satisfactory preclude the
strike from being considered an excusable cause. In the event of force majeure by Contractor,
TVA shall have the right, but not the obligation, to require Contractor to make up any tonnage
not delivered in accordance with this section. In the event of force majeure by TVA,
Contractor shall have the right, but not the obligation, to require TVA to make up any tonnage
not delivered in accordance with this section. Any make-up tonnage under this provision shall
be rescheduled by mutual agreement between the parties. Written notice of a party’s intent to
exercise its right to require the other party to make-up any tonnage not delivered in
accordance with this section, in order to be effective, must be provided within 90 days of the
resumption of deliveries. The Base Price for make-up tonnage rescheduled herein shall be the
then-current Base Price at the time such deliveries are rescheduled. The Base Price for any
tonnage rescheduled under this provision, at TVA’s request, after the expiration of the
Contract Term shall be the Base Price of the final Contract Year, escalated by 3 percent.

7

 

	4.3	 	Contractor’s delays due to delays of its subcontractors will not be excusable under this Section 4
unless the delay of the subcontractor was also due to causes beyond the control and without the
negligence of the Contractor or subcontractor, such as the causes listed above. Once Contractor
has obtained all federal, state, and other regulatory agency coal mining permits in a form not
subject to appeal or challenge, certificates, and licenses and mining equipment necessary to begin
mining at the Parkway Mine, the failure by Contractor to obtain and maintain such permits,
certificates, and licenses and mining equipment shall not excuse Contractor from any obligation
under this contract. The provisions of Subsection shall not excuse a party unless such party failing
to deliver or take coal shall give written notice to the other of such failure and furnish full
information as to the cause and probable extent thereof within ten (10) calendar days after the
failure first occurs. In the case of the Contractor, said ten-day (10-day) period shall begin with the
day following that on which tonnage first becomes deficient under the established delivery
schedule. In the case of TVA. this period shall begin on the day following that on which TVA
first fails to take coal duly and properly delivered. Failure to give such notice and furnish such
information within the time specified shall be deemed a waiver of all rights under this Section 4
with respect to such coal or such tonnage scheduled for delivery prior to the date such notice and
information are actually furnished.
	 
	4.4	 	In the event of partial failure to deliver, take, or unload
coal which is excusable under this Section 4, the parties shall prorate deliveries or receipts of coal in substantially the same proportion based
upon contractual commitments, (e.g. a fifty percent (50%) reduction in receiving or production
capacity would result in a fifty percent (50%) reduction in scheduled deliveries for each supplier
or consumer). However, the parties shall not be obligated to prorate a reduction in receipts or
deliveries under coal supply contracts not affected by the failure because they have different
modes of delivery or have substantially different quality requirements, or because their scheduled
delivery dates are not affected by the failure. During the periods TVA may experience such
failures to take or unload coal; Contractor shall be permitted to sell such coal normally intended
for TVA. In the case of the period during which Contractor may experience such failures to
deliver coal, TVA may purchase replacement coal. The disabling effects of such failures to
deliver, take, or unload coal shall be corrected by the party experiencing such failure as soon as
and to the extent reasonably practicable.
	 
	4.5	 	If the coal purchased hereunder is shipped to a blending trans-loading facility for incorporation
into a Blended Product(s) (as defined in Subsection 2.3 hereof), which Blended Product(s) is
transported to more than one TVA Receiving Plant (“Multiple Receiving Plants”), then the
provisions of Subsection 4.2 shall be applied as follows: In the event one or more of the Multiple
Receiving Plants experiences a failure to take, unload or burn a Blended Product due to causes
identified in Subsection 4.2, TVA shall determine the total Contract Quality Coal Reduction, (as
defined in Subsection 2.3 hereof), and TVA may adjust downward weekly deliveries hereunder on
the basis of the ratio of the Contract Quality Coal Reduction to the average total quantity of
Contract Quality Coal TVA has been receiving weekly for the Blended Product(s) based on
receipts during the prior 30-day period. All provisions of Subsection 4.2 not inconsistent with this
Subsection 4.5 shall apply in the case of Blended Product(s) and Multiple Receiving Plants. This
Subsection 4.5 shall not apply to excused failures to take coal due to events that affect
transportation, receipt, unloading, or handling of coal prior to blending.

	4.6	 	TVA. by providing at least thirty (30) days’ prior written notice to Contractor, shall have the right
to refuse any shipments otherwise scheduled for delivery to a Destination or Receiving
Plant
during maintenance periods or scheduled or unscheduled outages, unless caused, in whole or
in
part, by TVA’s negligence, at such Destination or Receiving Plant. Either party shall have
the
right, but not the obligation, to make up any tonnage not delivered in accordance with this
Section.

8

 

	 	 	 	Written notice of a party’s intent to exercise its right to require the other party to
make up such deliveries, in order to be effective, must be provided within 90 days of the
commencement of such maintenance or outage period and such deliveries are rescheduled for
delivery as may be mutually agreed. The Base Price for make-up tonnage rescheduled herein
shall be the then-current Base Price at the time such deliveries are rescheduled. The Base
Price for any “make-up” tonnage rescheduled, at TVA’s request, after the expiration of the
Contract Term shall be the Base Price of the final Contract Year escalated by 3.0%.

	4.7	 	Any written notice and information provided by Contractor to TVA under this Section 4 shall
be submitted to TVA in writing and accompanied by and attached to a Certificate of Force
Majeure Information (“Certificate”), using the format set forth below, and executed by an
authorized representative of Contractor.

9

 

CERTIFICATE OF FORCE MAJEURE INFORMATION

TVA CONTRACT NO. (INSERT CONTRACT NUMBER) (THE “CONTRACT”)

1. [insert name], hereby certify that:

(a) I have prepared and submitted the attached Notice of Force Majeure in good faith and
based upon facts and circumstances known personally to me;

(b) to the best of my knowledge and belief, the information contained in the attached Notice
is, as of the date of this Certificate, accurate, complete, not misleading, and can be verified by
supporting information currently in my possession or in the possession of other employees or
officers of [insert company name] (“Contractor”) and nothing has been omitted from the
attached Notice the inclusion of which is necessary for the information contained in the attached Notice to
be accurate, complete, and not misleading;

(c) to the best of my knowledge and belief, the failure to deliver coal as provided in the
Contract is due to supervening causes beyond the control of Contractor, is not due to Contractor’s
own negligence, and cannot be reasonably overcome by the exercise of due diligence by
Contractor, and

(d) I am duly authorized to execute and submit this Certificate and attached Notice.

For the purposes of this certification, the term “Force Majeure” refers to the conditions and
causes set forth in Subsection 4.2 of the Contract, and the term “Notice” refers to the written
notice described in Subsection 4.3 of the Contract.

	 	 	 

	 

                              Name

	 	 
	 
	 	 
	 

                              Title

	 	 
	 
	 	 
	 

                              Company

	 	 
	 
	 	 
	 

                              Date of Execution

	 	 

10

 

	5.0	 	SOURCE

	5.1	 	The source of coal delivered under this contract is of major importance to TVA. The
provisions of this contract pertaining to coal quality and quantity requirements, price
adjustments, federal and state legislation, and other matters are directly related to the
source of coal. As used in this Section 5, “Source Area” shall mean the total coal reserve
areas outlined in the Specific Location Map(s) identified in Appendix A; provided, that,
within the Source Area, only the area(s) (for surfaced-mined coal) or mine opening(s) (for
underground-mined coal) covered by the following mining permit(s) and proposed mine permit
areas identified herein is an “Authorized Source” of coal for delivery under this contract:
[see appendix A]. The mine area(s) and/or opening(s) located within the Source Area shown on
the Specific Location Map(s), but not covered by the mining permit(s) listed above, may
become an Authorized Source under the following procedures as mining progresses and the
appropriate permit(s) and license(s) are obtained. Contractor shall notify TVA in writing at
least sixty (60) days in advance of its intention to deliver coal from any additional area(s)
or mine opening(s) that is in the Source Area but which is not then authorized. TVA shall
authorize such areas if the proposed source is owned or controlled by contractor or its
affiliates and if, in TVA’s reasonable judgment, the proposed source is capable of meeting
the requirements of this contract. TVA reserves the right to require Contractor to furnish
any information and/or any guarantees TVA deems necessary bearing on the ability of any
source or proposed source to meet the requirements of this contract and to make that
information and / or any guarantees a part of this contract.

	5.2	 	Contractor shall immediately notify TVA in writing of any material events affecting the size
or location of the Authorized Source(s). All Authorized Sources under this contract shall be in
compliance with the Federal Mine Safety and Health Act of 1977, as amended, all state and
federal reclamation laws, including the Surface Mining Control and Reclamation Act of 1977, as
amended, and regulations issued under such laws. If Contractor fails to comply with this
requirement, whether or not coal from such Authorized Source is then being delivered hereunder,
TVA may exercise its rights under Section 11, Remedies.

	5.3	 	Contractor expressly assumes the risk that the “Source Area” and Authorized Source(s) as
scheduled by Contractor (subject to approval by TVA as set forth herein) will permit the
production of coal in such quantities and of such quality as will meet the requirements of this
contract. Coal shall not be delivered from any other source(s), or shipped from any other
origin(s), or mined by any other producer(s) unless authorized by TVA in writing prior to delivery.
	 
	5.4	 	Regardless of the cause of or reason for a request by Contractor to approve a new Authorized
Source outside the Source Area, TVA shall be under no obligation to approve the tendered
source
as an Authorized Source, and TVA may withhold its approval on any basis or bases that TVA
may
deem appropriate, including purely economic considerations.
	 
	 	 	Notwithstanding the above, it is understood by the parties that Contractor is a new mining
entity, and that its ability to ship the quantities set forth in Section 2.1 1 above will
require additional mines and permits from the “Source Area’’ and the approval of these
additional mines as “Authorized Sources” by TVA.
	 
	 	 	In the event TVA withholds approval of such additional mines or seams based on “purely
economic considerations,” the quantities set forth in Section 2.1.1 above shall be adjusted
accordingly by the parties.

11

 

	6.0	 	PRICE

	 	 	TVA shall pay Contractor the following prices for the Contract Years specified below (the
“Base Price”) (All prices are on a truck-delivered basis to the Paradise Fossil Plant):

	 	 	 	 	 	 	 	 	 

	* Contract Year
	 	1	 	2009	 	$55.00 f.o.b. PAF
	Contract Year
	 	2	 	2010	 	$56.51 f.o.b. PAF
	Contract Year
	 	3	 	2011	 	$58.07 f.o.b. PAF
	Contract Year
	 	4	 	2012	 	$59.66 f.o.b. PAF
	Contract Year
	 	5	 	2013	 	$61.30 f.o.b. PAF

	 	 	 
	*	 	It the Delivery Commencement Date is postponed for any delay in the start-up of
the Parkway Mine caused by either Contractor’s inability to receive required mining
permits or Contractor’s inability to begin production due to delays in the delivery of
equipment or machinery, prices set forth above shall apply to the applicable Contract
Year, as adjusted to account for such delays (See Definitions” above of ''Contract Year”).

	7.0	 	SAMPLING AND ANALYSIS

	 	7.01	 	Upon the commencement of deliveries under this Contract, the following applies:

	 	 	 	(Check one box only)

	 	 	 	 	 	 	 

	 

	 	þ

	 	TVA Sampling/TVA Analysis
	 	Section
7.1
	 
	 	 	 	 	 	 
	 

	 	o

	 	Contractor Sampling/Contractor Analysis
	 	Section
7.2
	 
	 	 	 	 	 	 
	 

	 	o

o

	 	Contractor Sampling/TVA Analysis
	 	Section
7.3

	 	7.02	 	Regardless of which method of sampling and analysis is selected for initial
deliveries, TVA, may elect from time to time, with 30 days’ advance written notice,
to switch to a different method of sampling and/or analysis, in which event the
appropriate alternative clause of this Section 7 shall govern.
	 
	 	7.03	 	Contractor shall provide to TVA on a quarterly basis the following analysis
and testing as specified by TVA. Sample composite size of not less than 10,000 tons
(unless otherwise approved by TVA):

	 	 	 	 	 	 	 

	 

	 	Size Consist
	 	Mineral Ash
	 	Ash Fusions
	 

	 	HGI
	 	Trace Elements	 	 

	7.1	 	TVA Sampling/TVA Analysis

	7.1.1	 	The sampling location shall be the Receiving Plant unless TVA notifies Contractor in writing
that samples will be taken at other locations, including blending
facilities. Contractor may
be present at the taking of samples, but TVA shall have no obligation to notify Contractor to
be present. TVA may engage the services of a third party to take its samples hereunder, rather
than using its own employees. Except as provided below, in order for TVA sampling and analysis
to govern, the following criteria shall apply:

	 	7.1.1.1	 	Sixty five percent (65%) of the shipments shall have been sampled and analyzed in
accordance with the methods described in the latest published edition of the Annual
Book of ASTM Standards. Samples must have been collected utilizing mechanical systems

12

 

	 	 	 	meeting ASTM D 2234 Type 1, Condition B, Collection of a Gross Sample of Coal,
which have been shown to be free of statistically significant bias. Systems will be
subject to a critical inspection according to ASTM D4702 annually. Analysis
procedures used should be as follows:

	 	 	 
	Parameter	 	Method
	Residual Moisture

	 	ASTM D 5142
	Air Dry Moisture

	 	ASTM D 3302 (Note)
	Ash

	 	ASTM D 5142
	Sulfur

	 	ASTM D 4239
	Btu

	 	ASTM D 5865
	 
	 
	Note: Or General Industry Standards
	 	 

	 	7.1.1.2	 	The lot size for each sample shall be by barge load for barge coal, by
trainload for rail coal, and by daily truck deliveries for truck coal.

	 	7.1.1.3	 	The sampling system shall be located in an area such that the sample collected to
represent the shipment is collected only from coal that is from said shipment.

	7.1.2	 	Analysis data (total moisture, ash, sulfur, and Btu) shall be promptly made available to
Contractor through access to a computer system or, at TVA’s option, may be provided by other means.
Moisture, ash, and sulfur values shall be reported to the nearest hundredth (.01) of a percent. Heat
content shall be reported to the nearest whole Btu/lb. SO2 content shall be calculated and reported
to the nearest hundredth (.01) of a pound.

	7.1.3	 	All samples collected by TVA, or others at its direction, shall be properly air dried and prepared
according to ASTM D2013 & D3302 or General Industry Standards to produce a 60-mesh sample
for analysis. The 60-mesh sample shall be divided into at least two parts and put in
suitable
airtight containers, the first container in each case to be used by TVA, or its
designated
commercial laboratory, to determine the quality of coal sold hereunder for all contract
purposes,
except as specifically provided below. The second container in each case shall be held
available
to TVA for a period of sixty (60) days from actual sampling date of the coal, properly
sealed and
labeled, to be analyzed if a dispute arises between TVA and Contractor. If Contractor
wishes to
dispute a sample or analysis, it shall notify TVA in writing within such sixty-day (60-day)
period.
If Contractor fails to provide such notice of dispute within such sixty-day (60-day)
period,
Contractor shall be deemed to have waived any claim or defense based on errors or omissions
in
the sampling or analysis operations as to the affected samples.
	 
	7.1.4	 	Upon receipt of a notice of a dispute over the results or method of such sampling or
analysis, TVA
shall review and inspect the sampling and analysis equipment and procedures and the second
sample part will be analyzed by a third-party commercial laboratory to check for
reproducibility.
The third-party laboratory will follow the same ASTM analysis procedures
outlined in
Subsection 7.1.1, and the reproducibility limits in those same standards will be used to
judge
reproducibility. If the review of the sampling and/or analysis indicates the original
sampling or
analysis was improperly performed or the results of the second analysis are not within ASTM
reproducibility limits, the original analysis report shall be declared erroneous, and the
results of
the second analysis will be conclusive for both parties in regard to the analysis of the
sample in
question. Otherwise, the original analysis report shall remain in full force and effect.
	 
	7.1.5	 	Contractor shall also sample and analyze, or obtain services of a third party to sample and
analyze,
all shipments of coal to TVA under this contract. These analyses shall specify, at a
minimum, the
total moisture content, the ash content (as-received), the heat content Btu/lb
(as-received), the
sulfur content (as-received) and SO2 (as-received) and must be electronically transmitted
to the

13

 

	 	 	 	Contract Administrator and other parties designated by the Contract Administrator in a
format acceptable to TVA. These analyses are required in order to provide information on the
contents of coal received by TVA within 24 hours (including week ends and holidays) or prior
to unloading, whichever is earliest. TVA reserves the right not to unload coal at the
Destination until after the appropriate analysis is received. Contractor shall be responsible
for any demurrage charges incurred by TVA as the result of Contractor’s failure to transmit
the analyses when and as required. TVA may reject coal based on these analyses; however,
nothing in this Subsection 7.1.5 shall affect in any way TVA’s rights to appropriate
contractual actions and adjustments for quality based on samples collected and analyzed in
accordance with this Section 7.

	7.1.6	 	In the event TVA does not sample at least sixty-five percent
(65%) of the tonnage received in a calendar quarter, the Contractor’s samples shall be used
for the quality adjustment(s) for such quarter under Section 8, Adjustments for Quality,
provided all Contractor samples for such quarter meet all criteria below:

	 	7.1.6.1	 	Ninety-five percent (95%) of shipments shall have been sampled and analyzed in
accordance with the methods described in the latest published edition of the Annual
Book of ASTM Standards, volume 05.05. Samples must have been collected utilizing
mechanical systems meeting ASTM D 2234 Type 1, Condition B, Collection of a Gross
Sample of Coal, which have been shown to be free of bias within the past year. The
bias testing procedure and precision used must be approved by TVA. Systems will be
subject to a critical inspection according to ASTM D4702 prior to approval. Analysis
procedures used should be as follows:

	 	 	 
	Parameter	 	Method
	Residual Moisture

	 	ASTM D 5142
	Air Dry Moisture

	 	ASTM D 3302
	Ash

	 	ASTM D 5142
	Sulfur

	 	ASTM D 4239
	Btu

	 	ASTM D 5865

	 	7.1.6.2	 	Sample analysis (total moisture, ash, sulfur, and Btu) and other data
required by TVA to match data with shipment shall be provided to TVA in a format
approved by TVA.

14

 

	 	7.1.6.3	 	The lot size for each sample shall be by barge load for barge coal, by
trainload for rail coal, and by daily truck deliveries for truck coal.
	 
	 	7.1.6.4	 	Analysis for each sample shall have been received by TVA by electronic data
interchange within seven (7) days of collection of said sample.
	 
	 	7.1.6.5	 	The sampling system shall be located in an area acceptable to TVA such that the
sample collected for shipment is collected only from coal that is loaded for said
shipment.

	7.1.7	 	In the event TVA’s sampling and analysis in any calendar quarter does not comply with the
requirements of this Section 7.0 with respect to sampling and analysis by TVA and in the
event Contractor’s sampling and analysis in the same calendar quarter does not comply with
the requirements of this Section 7.0 with respect to sampling and analysis by Contractor,
then an average of Contractor’s and TVA’s samples and analysis shall be used for said
quarterly adjustment(s) for the tons represented by such samples. Contractor’s samples shall
be used for the remaining tons for said quarterly adjustments(s) provided such samples meet
all of the above criteria. In the event there are some tons not sampled by TVA and not
sampled by Contractor in accordance with the above criteria, the quality adjustments for
those tons will be based on a prorated calculation of the analysis of the TVA-sampled tons
and the Contractor-sampled tons in such quarter that do meet the above criteria.

	7.2	 	Contractor Sampling/Contractor Analysis
(Applicable if checked above or elected by TVA pursuant to this Section 7)

	 	7.2.1	 	Contractor or third party collected samples shall be used for the quality
adjustments) for each quarter under Section 8, Adjustments for Quality, provided all
samples for such quarter meet all criteria below:

	 	7.2.1.1	 	One hundred percent (100%) of shipments shall have been sampled and
analyzed in accordance with the methods described in the latest published
edition of the Annual Book of ASTM Standards. Samples must have been
collected utilizing mechanical systems meeting ASTM D 2234 Type I,
Condition B, Collection of a Gross Sample of Coal, which have been shown to
be free of statistically significant bias within the past year. The bias testing
procedure and precision used must be approved by TVA. Systems will be
subject to a critical inspection according to ASTM D4702 prior to approval.

	 	7.2.1.2	 	TVA shall have the right to approve any laboratory that performs analyses
hereunder, and the laboratory will be subject to inspection and/or audit
prior to approval. Analysis procedures used should be as follows unless
otherwise approved in writing by TVA:

	 	 	 	 	 
	Parameter	 	Method
	Residual Moisture
	 	ASTM D 5142
	Air Dry Moisture
	 	ASTM D 3302
	Ash
	 	ASTM D 5142
	Sulfur
	 	ASTM D 4239
	Btu
	 	ASTM D 5865

15

 

	 	7.2.1.3	 	Sample analysis (total moisture, ash, sulfur, and Btu) and other data
required by TVA to match data with shipment shall be provided to TVA in a format
approved by TVA.
	 
	 	7.2.1.4	 	The lot size for each sample shall be by bargeload for barge coal, by trainload
for rail coal, and by daily truck deliveries for truck coal.
	 
	 	7.2.1.5	 	Analysis for each sample shall have been received by TVA by electronic data
interchange within seven (7) days of collection of said sample.
	 
	 	7.2.1.6	 	The sampling system shall be located in an area acceptable to TVA such that the
sample collected for shipment is collected only from coal that is loaded for said
shipment.

	 	7.2.2	 	If TVA samples any of the tonnage received in a calendar quarter, and if Contractor’s
samples for that same tonnage during the quarter do not meet all of the above criteria,
TVA’s samples shall be used for said quarterly adjustment(s) for the tons represented by
such samples. TVA may engage the services of a third party to collect its samples
hereunder, rather than using its own employees. Contractor’s samples shall be used for
the remaining tons for said quarterly adjustment(s), provided such samples meet all of the
above criteria. In the event there are some tons not sampled by TVA and not sampled by
Contractor in accordance with the above criteria, the quality adjustment for those tons
will be based on a prorated calculation of the analyses of the TVA-sampled tons and
Contractor-sampled tons in such quarter that do meet the above criteria.
	 
	 	7.2.3	 	In the event Contractor’s mechanical sampling system is not operating due to mechanical,
electrical, or operational failure. Contractor shall immediately notify TVA and accept
TVA’s (or TVA’s agent’s) samples at the Destination or Receiving Plant.
	 
	 	7.2.4	 	Contractor agrees to ensure that all sampling equipment is properly maintained and
adjusted so that each sample taken is proportionate and representative of the coal
delivered. TVA or its designated representative may observe any sampling or sample
preparation performed by Contractor. Contractor shall furnish the results of bias tests on
the sampling system, and the results must be acceptable to TVA. The sample system
shall be bias tested (batch interval of all system components), and shown to be free of
statistically significant bias, at least every twelve (12) months.
	 
	 	7.2.5	 	Contractor shall prepare the samples obtained as directed by TVA and shall divide such
samples into at least three parts and place in suitable airtight containers. Contractor
will
analyze the first part and electronically transmit the results to the Contract
Administrator
and all other parties designated by the Contract Administrator (TVA location or
otherwise) within 24 hours (including weekends and holidays) or prior to unloading at
Destination, whichever is earliest. Except as provided below, Contractor’s analysis
results obtained on this first part will be utilized by TVA to determine whether or not the
coal covered by the sample will be unloaded at the Destination. TVA reserves the right
not to unload coal until after the appropriate analysis is received. Contractor shall be
responsible for any demurrage charges incurred by TVA as a result of Contractor’s
failure to transmit the analyses when and as required. TVA may reject coal based on
these analyses. Within twenty-four (24) hours of coal loading, Contractor shall have the
second part identified by such sample number analyzed by either Contractor’s approved
laboratory or an approved third-party laboratory. The analysis results obtained from the
second part shall supersede the first part sample results and will be utilized for all
contract purposes, including determining the price adjustment required to compensate for

16

 

	 	 	 	the difference between the quality of the coal actually shipped and the
contract Typical Analysis. The third part (“referee sample”) will be retained by
Contractor, for a minimum of sixty (60) days, to be analyzed by an independent
laboratory (to be agreed upon by TVA and Contractor) in the event of a
disagreement between the parties regarding the results obtained on either of the
other two parts. The results of the referee analysis will be conclusive for both
parties in regard to the analysis of the sample in question. The cost of any such
referee analysis shall be borne by the party that requested it.

	7.3	 	Contractor Sampling/TVA Analysis
(Applicable if checked above or elected by TVA pursuant to this Section 7)

	 	7.3.1	 	Contractor or third party collected samples shall be used for the quality
adjustment(s) for each quarter under Section 8, Adjustments for Quality, provided all
samples for such quarter meet all criteria below:

	 	7.3.1.1	 	Ninety-five percent (95%) of shipments shall have been sampled and
analyzed in accordance with the methods described in the latest published
edition of the Annual Book of ASTM Standards. Samples must have been
collected utilizing mechanical systems meeting ASTM D 2234 Type 1, Condition
B, Collection of a Gross Sample of Coal, which have been shown to be free of
statistically significant bias within the past year. The bias testing
procedure and precision used must be approved by TVA. Systems will be subject
to a critical inspection according to ASTM D4702 prior to approval. Analysis
procedures used should be as follows unless otherwise approved in writing by
TVA:

	 	 	 	 	 
	Parameter	 	Method
	Residual Moisture
	 	ASTM D 5142
	Air Dry Moisture
	 	ASTM D 3302 (Note)
	Ash
	 	ASTM D 5142
	Sulfur
	 	ASTM D 4239
	Btu
	 	ASTM D 5865
	 
	 
	(Note) — or General Industry Standards.
	 	 	 	 

	 	7.3.1.2	 	Sample analysis (total moisture, ash, sulfur, Btu and SO2) and other
data required by TVA to match data with shipment shall be provided to TVA in a
format approved by TVA.
	 
	 	7.3.1.3	 	The lot size for each sample shall be by barge load for barge coal, by trainload
for rail coal, and by daily truck deliveries for truck coal.
	 
	 	7.3.1.4	 	Analysis for each sample shall have been received by TVA by electronic data
interchange within three (3) days of collection of said sample.
	 
	 	7.3.1.5	 	The sampling system shall be located in an area acceptable to TVA such that
the sample collected for shipment is collected only from coal that is loaded
for said shipment.

	 	7.3.2	 	If TVA samples any of the tonnage received in a calendar quarter, and if
Contractor’s samples for that same tonnage during the quarter do not meet all of the
above criteria, TVA’s samples shall be used for said quarterly adjustment(s) for the
tons represented by such samples. TVA may engage the services of a third party to
collect its samples hereunder, rather than using its own employees. Contractor’s
samples shall be used for

17

 

	 	 	 	the remaining tons for said quarterly adjustment(s), provided such samples meet
all of the above criteria. In the event there are some tons not sampled by TVA
and not sampled by Contractor in accordance with the above criteria, the quality
adjustment for those tons will be based on a prorated calculation of the analyses
of the TVA-sampled tons and Contractor-sampled tons in such quarter that do meet
the above criteria.

	 	7.3.3	 	In the event Contractor’s mechanical sampling system is not operating due to
mechanical, electrical, or operational failure, Contractor shall immediately notify TVA and accept
TVA’s (or TVA’s agent’s) samples at the Destination or Receiving Plant.
	 
	 	7.3.4	 	Contractor agrees to ensure that all sampling equipment is properly maintained and
adjusted so that each sample taken is proportionate and representative of the coal
delivered. TVA or its designated representative may observe any sampling or sample
preparation performed by Contractor. Contractor shall furnish the results of bias tests on
the sampling system, and the results must be acceptable to TVA. The sample system
shall be bias tested (batch interval of all system components), and shown to be free of
statistically significant bias, at least every twelve (12) months.
	 
	 	7.3.5	 	Contractor shall prepare the samples obtained as directed by TVA and shall divide such
samples into at least three parts and place in suitable airtight containers.
Contractor will analyze the first part and electronically transmit the results to the Contract
Administrator and all other parties designated by the Contract Administrator (TVA location or
otherwise) within 24 hours (including weekends and holidays) or prior to unloading
at Destination, whichever is earliest. Except as provided below, Contractor’s
analysis results obtained on this first part will be utilized by TVA to determine whether or
not the coal covered by the sample will be unloaded at the Destination. TVA reserves the
right not to unload coal until after the appropriate analysis is received. Contractor
shall be responsible for any demurrage charges incurred by TVA as a result of Contractor’s
failure to transmit the analyses when and as required. TVA may reject coal based
on these analyses. Within twenty-four (24) hours of coal loading, Contractor shall
send the second part identified by such sample number directly to TVA’s Central laboratory by
expedited delivery for analysis. The analysis results obtained from the second part
shall supersede the first part sample results and will be utilized for all contract
purposes, including determining the price adjustment required to compensate for the difference
between the quality of the coal actually shipped and the contract Typical Analysis.
The third part (“referee sample”) will be retained by Contractor, for a minimum of sixty
(60) days, to be analyzed by an independent laboratory (to be agreed upon by TVA and
Contractor) in the event of a disagreement between the parties regarding the results
obtained on either of the other two parts. The results of the referee analysis will
be conclusive for both parties in regard to the analysis of the sample in question. The
cost of any such referee analysis shall be borne by the party that requested it.

	8.0	 	ADJUSTMENT FOR QUALITY

	8.1	 	As used in this Section 8, a “Quarterly Average Value” shall mean the weighted average value
of the appropriate quality component determined from all samples of coal collected and analyzed in
accordance with Section 7 during a calendar quarter, based on the tonnage represented by the
samples collected and corresponding analysis.
	 
	8.2	 	BTU Adjustment — For the coal accepted in each calendar quarter, an adjustment, calculated to
the nearest cent per ton and using the then current Base Price, shall be applied to the
contract price to account for variations in the Quarterly Average Value for as-received Btu/lb. compared
to the

18

 

	 	 	Typical Analysis for as-received Btu. This adjustment shall in no way be affected by
contract price adjustments under Section 10.2 “Law
Changes”. (See Exhibit I for example of
calculations.)

	8.3	 	Ash Adjustment - For the coal accepted in each calendar quarter, an adjustment, calculated to
the nearest tenth of a cent per ton at a rate of either (1) $0.15 per ton (decrease) for each percentage
point the Quarterly Average Value of ash (on an as received basis) exceeds the Typical Analysis
for ash, or (2) $0.15 per ton (increase) for each percentage point the Quarterly Average Value for
ash (on an as-received basis) is less than the Typical Analysis for ash, shall be applied to the
contract price. The calculation shall be prorated to cover any
fractional percentage. (See Exhibit I
for example of calculations.)
	 
	8.4	 	Moisture Adjustment - For the coal accepted in each calendar quarter, an adjustment, calculated
to the nearest tenth of a cent per ton at a rate of either (1) $0.06 per ton (decrease) for each
percentage point the Quarterly Average Value of moisture exceeds the Typical Analysis for
Moisture, or (2) $0.06 per ton (increase) for each percentage point the Quarterly Average Value
for Moisture is less than the Typical Analysis for Moisture, shall be applied to the contract price.
The calculation shall be prorated to cover any fractional percentage. (See Exhibit I for example of
calculations.)
	 
	8.5	 	Sulfur Dioxide Adjustment - For coal accepted in each calendar quarter, an adjustment,
calculated to the nearest tenth of a cent per ton at a rate of either (1) $0.25 per ton (decrease) for
each tenth (1/10) of a pound per million BTUs the Quarterly Average Value of sulfur dioxide
exceeds the Typical Analysis for sulfur dioxide, or (2) $0.25 per ton (increase) for each tenth
(1/10) of a pound per million BTUs the Quarterly Average Value for sulfur dioxide is less than the
Typical Analysis of sulfur dioxide, shall be applied to the contract price. The calculation shall be
prorated to cover any fractional amount tenth (1/10) of a pound. This adjustment shall in no way
be affected by contract price adjustments under Section 10, Contract Price Adjustments and Cost
Reimbursements hereof. (See Exhibit I for example of calculation).
	 
	8.6	 	As soon as practicable after the end of each calendar quarter, TVA shall submit to Contractor a
report showing the Quarterly Average Values and any per-ton adjustments determined under
this Section 8 of the contract. The number of tons of coal received by TVA during the
calendar quarter shall be multiplied by said adjustments, and any resulting amount shall be paid
promptly (or credited to the extent of any offsetting debit) to the party to whom it is due. The
assessment of adjustments in accordance with the foregoing does not in any way impair TVA’s rights under
the contract or at law with respect to any failure by Contractor to meet the Typical Analysis
that gives rise to such adjustments.

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	9.0	 	QUALITY AND SPECIFICATIONS

	9.1	 	All coal delivered under this contract shall conform to the following Typical Analysis on a
quarterly average as determined by sampling and analyses performed in accordance with Section
7, Sampling and Analysis:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	REJECTION/SUSPENSION	 	 	 	 	 	 	 	 	 	 
	 	 	TYPICAL ANALYSIS1	 	 	SPECIFICATIONS3	 	 	 	 	 	 	 	 	 	 
	Lbs. of S02 per million
Btu2
	 	 	5.0	 	 	lbs.	 	Not more than	 	 	5.0 	(P)	 	lbs.	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Moisture
	 	 	11.0	 	 	 	%	 	 	Not more than	 	 	12.0	 	 	 	%	 	 
	Sulfur (a/r max)
	 	 	2.90	 	 	 	%	 	 	Not more than	 	 	3.0	 	 	 	%	 	 
	Ash (as received)
	 	 	10.0	 	 	 	%	 	 	Not more than	 	 	12.0	 	 	 	%	 	 
	Btu/lb. (a/r)
	 	 	11,400	 	 	 	 	 	 	Not less than	 	 	11,000	 	 	 	 	 	 
	Ash fusion temperature
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reducing atmosphere
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Initial
	 	 	1980	 	 	 	°F	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Softening
	 	 	2075	 	 	 	°F	 	 	 	 	 	 	 	 	 	 	 	°F	 	 
	Hemispherical
	 	 	2135	 	 	 	°F	 	 	 	 	 	 	 	 	 	 	 	°F	 	 
	Fluid
	 	 	 	 	 	 	°F	 	 	 	 	 	 	 	 	 	 	 	°F	 	 
	Volatile Matter (dry basis)
	 	 	 	 	 	 	%	 	 	 	 	 	 	 	 	 	 	 	%	 	 
	Grindability (Hardgrove Index)
	 	 	54	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Chlorine (dry basis)
	 	 	.02	 	 	 	%	 	 	 	 	 	 	 	 	 	 	 	%	 	 

	 	 	 
	NOTES:
	 
	1	 	The Typical Analysis shall be used for the quality adjustments under Section 8.
	 
	2	 	Sulfur Dioxide calculated at 97.5 percent.
	 
	3	 	Failure to comply with any of these specifications shall be a basis for rejections and suspensions or termination pursuant to Subsections 9.3. and 9.4.
	 
	4	 	Paradise (P)

	9.2	 	The coal as-received shall have a top size not greater than two (2) inches and not less than
one and one-fourth (1-1/4) inches, with at least forty -five percent (45%) of the product larger
than one-fourth (1/4) inch, and with at least eighty-five percent (85%) of the product larger than
28 mesh. Such sizes shall be determined by using screens with square openings. Coal shall not
exhibit a temperature in excess of 120° F, and it shall be substantially free from mining impurities
and scrap such as drill bits, pieces of scrap metal or plate, plastic, rubber, rope, cloth, wire,
cable, bone, slate, earth, rock, pyrite, wood, or water, that can be kept out or removed with the
exercise of reasonable care during mining, preparation and loading. Belt magnets shall be employed
by Contractor for metal removal when conveyor belt load outs are employed. Coal shall be
loaded in a manner that will ensure reasonably uniform consistency as to size and quality and shall
not contain slurry pond material (washer tailings), gob pile material (mine refuse),
petroleum-coke, oxidized coal, or blends of such materials, or create excessive amounts of dust during the
unloading and transferring to storage.
	 
	9.3	 	If any coal delivered fails to meet any of the Rejection/Suspension Specifications in
Subsection on the basis of laboratory analysis or the requirements of Subsection 9.2. on the basis of
visual inspection or laboratory analysis, TVA may reject the coal at the source, loading
point, Destination, or Receiving Plant; provided, however, TVA must reject such coal within
seventy-two (72) hours of receipt of the aforementioned analysis or such right to reject is waived.
TVA’s acceptance of any amount of coal which does not meet these requirements shall not
constitute a waiver of any right which TVA may have under this contract or as provided by law on account
of

20

 

	 	 	the delivery of such coal. In the event TVA rejects any coal in accordance with this
section, TVA will immediately notify Contractor of the rejection and of the cause of
rejection. In the case of coal rejected after loading, unless the cause for rejection is
corrected, Contractor shall promptly remove the coal from the carrier’s equipment, from the
transloading or blending facility, or from TVA premises, as the case may be, at
Contractor’s expense. In addition to excess costs as provided in Section 11, Remedies,
Contractor shall reimburse TVA for any additional transportation costs, demurrage,
equipment repair or replacement costs, or handling expenses incurred by TVA in connection
with any such rejection. TVA shall not be under any obligation or liability to assist
Contractor in any corrective actions required to remedy the cause for rejection. If TVA
fails to reject a shipment of non-conforming coal which it had the right to reject for
failure to meet any or all of the Rejection/Suspension Specifications set forth in
Subsection 9.1 or because such shipment contained extraneous materials, then such
non-conforming coal shall be deemed accepted by TVA.
	 
	9.4	 	If any coal delivered fails to meet any of the Rejection/Suspension Specifications stated in
Subsection 9.1. or the requirements of Subsection 9.2., TVA shall have the right to refuse
to accept further deliveries from any or all mine sources under the contract until
Contractor provides assurance satisfactory to TVA that Contractor will comply with the
Rejection/Suspension Specifications and the Subsection 9.2. requirements. Such assurance
must be given in writing within seven (7) days after the beginning of such suspension. If
Contractor fails to provide such satisfactory assurance within the time specified or
provides such assurance but does not correct the deficiencies that resulted in the
Contractor’s failure to comply with any of the Rejection/Suspension Specifications or the
requirements of Subsection 9.2. within seven (7) days after giving such assurance, TVA may
then terminate Contractor’s right to make further deliveries under this contract. However,
if TVA has suspended Contractor’s right to make further deliveries under the above
provision two (2) times during any twelve-month period, TVA shall have the immediate
right, at its option, upon the third such violation occurring within any twelve (12) month
period following the second such violation, to terminate Contractor’s right to make
further deliveries under this contract. Contractor shall be responsible for all costs or
damages incurred by TVA resulting from Contractor’s failure to comply with the contract
requirements. Damages or excess reprocurement costs may be determined in accordance with
Section 11, Remedies.

	10.0	 	CONTRACT PRICE ADJUSTMENTS AND COST REIMBURSEMENTS

	10.1	 	Contract Price Adjustments.

Effective the first day of the second Contract Year and the first day of each Contract
Year thereafter, the Base Price (or then current Base Price, as adjusted annually pursuant
to this Section 10.1 only) shall be adjusted as set forth in
Section 6.0 Price above.

	10.2	 	Contract Cost Reimbursements,

	10.2.1	 	Law Change Assessment Costs. In the event of the issuance, enactment, promulgation or
amendment, after April 3, 2008, of a federal or state statute, regulation, ordinance,
rule or other mandate, or of a final judgment, order, or decree of a judicial or regulatory
body or agency:

(i) relating specifically to coal mine safety, rescue, or emergency response (for
example, and by way of illustration only, the Mine Improvement and New Emergency
Response Act of 2006), or

(ii) which assesses on a per-ton basis a tax, fee or other charge on coal (for
example, and by way of illustration only, the Federal Black Lung Excise Tax and
severance tax on coal delivered hereunder),

21

 

but excluding all sales taxes, income taxes, franchise or privilege taxes, employment
taxes, ad valorem taxes (on real and personal property), other similar taxes, and royalties
(“Law Change”), Contractor shall be entitled to a reimbursement of the actual additional
costs incurred as a result of such Law Change. Contractor shall notify TVA of such Law
Change and supply from its records information satisfactory to TVA showing the direct
effect, if any, of the Law Change upon the cost per ton of furnishing coal under this
contract for which it seeks reimbursement.

If Contractor seeks reimbursement under Subsection 10.2.1 (ii), the reimbursement shall,
subject to Subsection 10.2.2, be equal to the additional per-ton assessment referenced
therein which results from a Law Change. If Contractor seeks reimbursement under subsection
10.2.1 (i), the per ton reimbursement shall, subject to Subsection 10.2.2, be equal to the
total cost calculated on a per-ton basis attributable to such a Law Change. provided
however, the cost attributed to such Law Change shall be uniformly allocated over all coal
tonnage produced by Contractor from the source affected by such Law Change (a “Law Change
Cost Reimbursement”).

If a Law Change increases Contractor’s cost of providing coal to TVA, a Law Change Cost
Reimbursement shall be paid by TVA to the extent, and only to the extent, of the increased
cost that is attributable to such Law Change effective on the later of (a) the date TVA
receives Contractor’s notice of the Law Change or (b) the date Contractor’s cost of
providing coal is increased by the Law Change. If a Law Change decreases Contractor’s cost
of providing coal to TVA, a Law Change Cost Reimbursement shall be paid to TVA to the
extent, and only to the extent, of the decreased cost that is attributable to such Law
Change effective on the date such Law Change could be utilized to reduce Contractor’s costs
whether or not Contractor actually reduces such costs on such date.

This Subsection 10.2.1 does not apply to any (i) promulgation, issuance, implementation,
revision or amendment of rules and regulations except to the extent, and only to the
extent, such promulgation, issuance, implementation, revision, or amendment results from a
Law Change, or (ii) implementation of statutes or rules or regulations that are enacted,
issued or promulgated after April 3, 2008. Any reimbursement under this Subsection 10.2.1
shall not include any portion of Contractor’s general and administrative expenses, or other
corporate and overhead expense, and shall be subject to Subsection 10.2.2.

Notwithstanding any other provision of this agreement to the contrary, in the event of any
price reopener or price renegotiation by the parties with respect to coal sold under this
agreement, TVA and Contractor agree that the date that both parties have executed a written
supplement with respect to such new renegotiated per-ton price for coal, and not April 3,
2008, shall be used as the operative date with respect to establishing any Law Change; it
being understood that any such new renegotiated per-ton price will be deemed to fully
incorporate the cost of any and all Law Changes occurring on or before the date such new
written supplement was executed by both parties.

	10.2.2	 	If: (i) an individual or combination of Law Change Cost Reimbursement(s) requested by
Contractor with respect to April 3, 2008 through the end of the first Contract Year exceeds
one dollar and seventy cents ($1.70) on a per ton basis; or (ii) an individual or combination
of Law Change Cost Reimbursement(s) requested by Contractor in any single Contract Year
thereafter exceeds one dollar and twenty cents ($1.20) on a per ton basis, then TVA may, at
its sole discretion and without further obligation or liability to either party hereunder or
at law, terminate the contract upon sixty (60) days written notice given after such a
reimbursement is requested by Contractor, However, in lieu of termination, Contractor may
elect to absorb the cost in excess of the aforementioned limits, in which case the contract
shall remain in full force and effect.

22

 

	 	 	Contractor’s election must be set forth in writing within thirty (30) days of TVA’s notice
of termination. Such election by Contractor shall be irrevocable and binding for the
reimbursement sought to the extent it exceeds the aforementioned limits and shall be
effective as of the effective date of the Law Change. TVA may invoke the provisions of
this Subsection 10.2,2 each and every time the cost of a Law Change exceeds the per-ton
cost limits set forth above.
	 
	10.2.3	 	Subject to Section 10.3, Contractor shall submit to TVA quarterly invoices for all
reimbursements sought under Subsection 10.2.1(ii), and all payments, including tentative
payments subject to review, for reimbursement(s) sought under Subsection 10.2. 1(ii) shall be
made by TVA to Contractor within thirty (30) days of receipt of an invoice from Contractor
for the same. Subject to Section 10.3, Contractor shall submit to TVA invoices for all
reimbursements sought under Subsection 10.2.1(i), and all payments, including tentative
payments subject to review, for reimbursement(s) sought under Subsection 10.2.1(i) shall be
made by TVA to Contractor within twelve (12) months of receipt of an invoice from Contractor
for the same.
	 
	10.3	 	The increase, decrease or reimbursement under each subsection of this Section 10 shall be
calculated separately to the nearest one-tenth (1/10) cent per ton. Any changes (including a
recalculation of a previously granted tentative price adjustment or reimbursement) considered
applicable by Contractor shall be reported to TVA by Contractor with appropriate data necessary
to verify the change. Contractor must furnish such supporting evidence as may be requested by
TVA. A request for a price adjustment or reimbursement considered applicable by Contractor
must be submitted to TVA with appropriate documentation within one hundred eighty (180) days
of the date Contractor incurs a resulting cost change. Failure to do so shall constitute a waiver of
Contractor’s right to any upward adjustment or reimbursement. Any overpayment made under
these provisions may be deducted from any amounts otherwise due Contractor.
	 
	10.4	 	Contractor agrees that, in the event TVA reimburses Contractor under this Section 10 for a cost
incurred by Contractor and it is later determined that Contractor is entitled to recover
such cost from a third party, at TVA’s request Contractor shall use its best efforts to recover such
cost and upon such recovery shall reimburse TVA for amounts previously paid by TVA based on said
cost. Reasonable costs incurred by Contractor in pursuing such recovery at TVA’s request shall be
reimbursed by TVA; provided that where Contractor and/or other purchasers from Contractor
also receive a benefit from pursuing such recovery, the cost thereof shall be equitably prorated.
	 
	11.0	 	REMEDIES
	 
	11.1	 	This Subsection 11.1 does not apply to a situation where another contract provision
provides a different procedure, such as Subsection 9.4. If TVA in good faith believes that
Contractor has failed to comply with any term or condition of this contract, the Contract Administrator
shall give Contractor oral notice, to be followed by written confirmation, of any such violation.

	 	11.1.1	 	If Contractor fails to correct a curable material contract violation within seven
(7) days of first notice, TVA shall have the right to suspend Contractor’s right to
make further deliveries until Contractor provides adequate assurance to TVA that
Contractor will comply with all provisions of this contract, such assurance to be
given in writing within seven (7) days after such suspension. If Contractor fails to
provide such adequate assurance within the time specified or timely provides such
satisfactory assurance but Contractor does not correct the curable material contract
violation(s) within seven (7) days after giving such assurance, TVA shall have the
right, but not the obligation, to terminate Contractor’s right to make further
deliveries under this contract.

23

 

	 	11.1.2	 	In the case of a contract violation by Contractor or Contractor’s
Subcontractor that (i) is not curable (including, but not limited to, violations of
Section 5, Source, of this contract or Section 27
Officials Not to Benefit), or (ii)
is a violation of any Federal or state law or regulation or county or municipal
enactment, ordinance or code, including but not limited to laws and regulations
described in Subsection 14.6, upon providing notice as described above, TVA shall have
the immediate right, but not the obligation, to terminate, or suspend for up to thirty
(30) days, Contractor’s right to make further deliveries under this contract. If TVA
suspends Contractor’s right to make further deliveries, then, upon expiration of such
suspension, TVA shall either direct Contractor to continue performance of this
contract or terminate Contractor’s right to make further deliveries.

	11.2	 	Contractor shall be responsible for all costs or damages incurred by TVA resulting from
Contractor’s failure to comply with the contract requirements, unless otherwise excused. TVA
may, at its option, purchase in the open market or by contract or otherwise procure coal at a
commercially reasonable price to replace all or any part of (i) that which was rejected by TVA
or which the Contractor has failed to deliver, or (ii) that as to which its right to deliver
was terminated or suspended. Except as provided in Section 4, Variations, Delays, and
Interruptions in Deliveries, Contractor shall be liable to TVA for the excess cost occasioned
by such purchase(s) and any other loss or damage caused by Contractor’s breach of the
contract, including, but without limitation to, liability incurred by TVA with respect to the
transportation or other handling of the coal. In the alternative, TVA may, at its election,
determine the loss or damage sustained as a result of Contractor’s breach of contract by any
other commercially reasonable methods or as provided by law. In addition to all other means
of recovery, TVA may deduct any such excess costs and damages from any amount otherwise due
Contractor under this contract or otherwise.

	11.3	 	TVA may, at its election, determine its excess costs resulting from any deficiency,
rejection, suspension, or termination, unless otherwise excused, in the following manner: (1)
such part of the highest-delivered-cost coal (of comparable quality under one or more
contracts) which TVA purchases at the next awarding of term or spot contracts for delivery to
any fossil plant in the TVA system as would be required to replace coal which was scheduled
for delivery under this contract after the date the Contractor’s right to make deliveries
under this contract was terminated shall be deemed to have been purchased as Replacement Coal
for Contractor’s account; and (2) for unexcused deficiencies occurring before termination or
contract expiration, such part of the highest-delivered-cost coal (of comparable quality under
one or more contracts) which TVA receives under term or spot contracts in the week following
each such deficiency, for delivery to any plant in the TVA system, as equals the quantity of
Contractor’s deficiency shall be deemed to have been purchased as Replacement Coal for
Contractor’s account. Contractor shall be liable to TVA for the difference between the
delivered cost of such Replacement Coal and the delivered cost of coal under this contract
(not including quality adjustments under this contract). The delivered cost shall include
transportation and handling costs, as well as coal price, and shall take into account any
differences between the quality of Replacement Coal and the quality
specifications of this contract.

	11.4	 	If TVA suspends or terminates Contractor’s right to make further deliveries hereunder or
under any other provision of this contract and such suspension or termination is finally
determined in accordance with Section 18,  Disputes, to have been improper, then Contractor
May, without limitation and to the extent commercially practicable, resell the coal or the
undelivered balance thereof, and may recover the difference between the resale price (or zero
if the coal cannot be resold) and the contract price, together with any incidental damages,
including lost profits, but less expenses saved as a result of the same.

	11.5	 	In addition to the specific remedies provided for herein, in the event of a breach, the
parties shall have all rights and remedies provided by law or equity.

24

 

12.0 NOTICES

	 	 	Unless otherwise provided for in the contract, any contractual notice required to be given
to either party shall be given by registered, certified, or first-class mail, electronic
facsimile, or e-mail, to the intended party at the following address or at such changed
address as may from time to time be designated in a notice similarly delivered or mailed.
Except as expressly provided herein, any notice shall be deemed to have been given when
sent. Communications by electronic facsimile or e-mail shall be confirmed by depositing,
within twenty-four (24) hours after sending the electronic facsimile or e-mail, a copy of
the same in the post office for transmission by registered, certified, or first-class mail
in an envelope properly addressed as follows:

In the case of Contractor to:

Martin Wilson, President

Armstrong Coal Company, Inc.

7701 Forsyth Boulevard – l0th Floor

St. Louis, MO 63105

314-721-8211 (FAX)

martinw@a-wllc.com

With copy to:

Tate Rich, President

Delta Coals, LLC

95 White Bridge Road, #404

Nashville, TN 37205

(615) 352-5668 (FAX)

trichdelta@comcast.net

Mason L. Miller 

Miller
 +
Wells, PLLC 

300 Lexington,
KY 40507 

(859) 281-0079 (FAX)

mmiller@millerwells.com

In the case of TVA to:

Eddie
Spicer

Tennessee Valley Authority

1101 Market Street, MR 2A-C

Chattanooga, TN 37402

(423) 751-3837 Fax

erspicer@tva.gov

	 	 	Either party may, by written notice to the other, change the representative or the
address to which such notices and communications are to be sent.

	13.0	 	SHIPPING NOTICES

	13.1	 	For all coal shipped under this contract, Contractor shall forward to the Contract
Administrator and all other parties (TVA location or otherwise) as designated by the Contract
Administrator a shipping notification as to coal shipped. This shipping notice must include
the Purchase Order number, line item number, release number, traffic control numbers,
railcar/barge/truck numbers,

25

 

origin, name of mine, size of coal, shipping date, and such other relevant information as
TVA may from time to time require. TVA shall have the right to require Contractor to
transmit all of the above-referenced information via electronic data transfer direct to
TVA’s computer system. Contractor is responsible for ensuring that its computer system is
compatible with TVA’s computer system.

	13.2	 	Contractor must take whatever steps are necessary to ensure that shipping notices are
received by the Contract Administrator and all other parties as designated by the Contract
Administrator prior to arrival of the coal at the Destination or within 24 hours of loading,
including weekends and holidays, whichever is earliest. The Destination may not unload coal
until a correct shipping notice is received, and Contractor will be responsible to carrier or
TVA for any demurrage charges resulting from delays due to late or improper notification.

	13.3	 	In addition, on Monday of each week. Contractor must email a cumulative shipping notice to
the Contract Administrator. This shipping notice will include such items as Contract number,
traffic control number, shipping date, conveyance ID, tonnage, quality and explanation for all
variances from schedule. The format for this report will be provided by the Contract
Administrator.

	14.0	 	TRANSPORTATION

	14.1	 	TVA reserves the right to specify reasonable limitations on the type and size of
transportation equipment, the method of transportation (including trainload lots and barge
load lots where lots are necessary to provide the lowest transportation rate possible), and
the exact routing to be used, whether or not transportation to the Destination is the
responsibility of TVA. TVA may reject any shipment made in disregard of such specifications.
If the contract provides for a price or prices that include transportation in whole or in part
to the Destination (f.o.b. destination contract), title to the coal and risk of loss and
damage shall remain with Contractor until delivery in acceptable condition by the carrier at
Destination.

	14.2	 	For all coal to be delivered hereunder, it shall be Contractor’s responsibility to load the
coal and furnish loading devices which shall be suitable and fit for the purpose contemplated
in this contract. Contractor shall be governed by carrier’s instructions regarding the
height and distribution of the load, weight of cargo, and other instructions which carrier
deems necessary for safe transportation. Contractor shall allow carrier’s inspection of
loaded equipment to assure compliance with carrier’s loading instructions.

	14.3	 	For all coal shipped, it shall be Contractor’s responsibility to visually inspect the
transportation equipment prior to each loading and ascertain that the equipment is empty and
suitable for loading. Any equipment found mechanically unsound for loading or contaminated
with material shall not be loaded. Contractor shall not load any railcars with open doors.
When loading barges, Contractor shall leave the four corners of the barges open to allow
easier removal of coal and accumulated water. Contractor shall be responsible for all costs
incurred by TVA, including the cost of any coal lost in transit, resulting from
Contractor’s failure to comply with these requirements.

	14.4	 	For all coal purchased for delivery by rail, whether f.o.b. origin or f.o.b. Destination,
Contractor shall be responsible for loading each car to the appropriate capacity as required
by the rail carrier. In addition, each trainload shipment tendered under this contract shall
be loaded to the minimum
trainload weight as required by the rail carrier. Contractor’s account will be charged
with any charges assessed to TVA because of Contractor’s failure to observe any minimum
weight loading requirements. The gross weight of each car shall not exceed the maximum
allowed by the carrier. If cars are found to be loaded in excess of such maximum, it shall
be Contractor’s responsibility to

26

 

correct the load at Contractor’s expense, including but not limited to, Contractor’s
payment to the carrier of switching charges, as well as any demurrage charges which may
accrue while the car or cars await correction in load.

	14.5	 	Contractor shall be responsible for any demurrage that accrues at any loading point as a
result of Contractor or its subcontractors not being prepared to load the coal as scheduled.
The carrier shall invoice Contractor and Contractor shall pay said carrier for all origin
demurrage charges which accrue at the loading point(s). Contractor agrees to comply with the
terms and conditions of TVA’s applicable transportation agreement(s) with respect to loading.

	14.6	 	The explicit obligation of this contract is that it will be performed in accordance with all
applicable Federal, state, county and municipal laws, regulations codes and ordinances,
including, but not limited to, those applicable to transportation of coal. Transportation of
coal by Contractor or by any third party transporting coal on Contractor’s behalf to rail or
barge loading facilities, or any other transportation by truck, shall comply with applicable
highway laws and regulations governing the weight of vehicles and all other highway laws
promoting public safety, health and welfare, including all laws governing the operation of
vehicles on any road or highway. To ensure compliance with this provision and to promote
safety and compliance with laws governing vehicle operation, TVA may, as provided in
Subsection 11.1.2, terminate or suspend further deliveries under this contract on account of
violation of any motor vehicle laws or actions that, in TVA’s judgment, constitute unlawful or
unsafe motor vehicle operations occurring in connection with any delivery of coal by truck. If
any Contractor fails to comply with laws or regulations governing the weight of vehicles, TVA
shall have the same rights provided under Section 9, Quality
and Specifications, for failure to meet the requirements thereof, including but not limited to the right to reject coal
delivered in overweight trucks. To ensure compliance with this provision and to help protect
the roads and highways from overweight trucks, TVA may require that Contractor furnish a copy
of the “certified” truck weight ticket. Regardless of the actual weight of any truck coal
received, the maximum gross weight that can be recorded for a single truck will be limited to
the applicable maximum weight enforced by law. Any weight exceeding that maximum weight may be
deducted from the total weight of coal used for payment purposes.

	14.7	 	All coal shipped hereunder shall be delivered by Contractor by truck to the Paradise Fossil
Plant only.

	15.0	 	PAYMENTS, INVOICES

	15.1	 	Payments under this contract are subject to the provisions of the Prompt Payment Act (31
U.S.C. Sections 3901-3907). Payments as are provided for in the contract or by law will be
made by Electronic Fund Transfer (EFT). EFTs will be made not more than thirty (30) calendar
days after the later of (1) receipt of a proper invoice(s) by TVA at:

Accounts Payable Department

P.O. Box 15500

Knoxville, Tennessee 37901-5500

Fax Number: (865) 632-6609 or (865) 632-4019

Email accountspayable@tva.gov

or (2) receipt and unloading of the coal at the Destination. In preparing invoices,
Contractor shall multiply the number of tons delivered by the Base Price applicable at the
F.O.B. point of delivery plus or minus any adjustments that have been made effective under
contract provisions. Payments shall be made in United States funds and timely sent to
Contractor via EFT transfer to the following account:

27

 

	 	 	 	 	 

	Bank Name:

	 	US Bank N.A.

	ABA Number:

	 	081000210

	Bank Account Name:

	 	Armstrong Energy, Inc.

	Bank Account Number:

	 	152306681361
  

	15.2	 	For purposes of this provision only, “proper invoice” shall mean a numbered and dated
invoice containing the complete name of Contractor, agent’s name (if any), Purchase Order
number. Release number, Destination, total amount due, correct weights (as defined below),
traffic control number, shipping date, name of mine at which the coal was produced, together
with any documentation required to be submitted therewith by any other provision of the
contract.

	15.3	 	For freeze conditioning invoices, or invoices for anything other than the tons delivered at
the current price, the invoices should be mailed, faxed or emailed to the Contract
Administrator, using the notification information in Section 12.

	16.0	 	WEIGHTS

	16.1	 	Coal will be weighed or measured by TVA, Contractor, or independent laboratory technician
(using scales or other appropriate method approved by TVA) at the location where samples are
collected for payment purposes. Except as specifically provided below, Contractor-provided
weights will be used for contract purposes where this contract provides that Contractor
samples are used for payment purposes, and TVA’s weights will be used for contract purposes
when this contract provides that TVA’s samples are used for payment purposes. When
Contractor-provided weights are used, said weights will be reported to TVA by electronic
facsimile or as designated by the Contract Administrator for each shipment of coal hereunder.
TVA shall have the right to have a representative present, at TVA’s sole risk and expense, at
any and all times during TVA loadings to observe determination of weights. Contractor shall
notify TVA immediately upon the occurrence of inaccurate weighing or absence of actual
weighing. Contractor shall confirm such notification in writing to TVA within seven (7)
working days of the date of each such occurrence. Such confirmation shall identify each
affected coal shipment by Purchase Order number, line item number, shipping point, traffic
control number, shipping date, and car/barge/truck number(s). Contractor’s account shall be
adjusted for any coal inaccurately weighed, or not weighed, such adjustment to be made at
whatever time such occurrence(s) becomes known to TVA.

28

 

	16.2	 	All scales and weighing devices used by Contractor to determine the governing weight
of coal shall be certified by the appropriate regulatory authority or a railroad and shall
be material tested annually by an independent third party at the Contractor’s expense and
the results of such tests provided to TVA within thirty (30) days of receipt of such test
results of Contractor. Such scales and weighing devices shall comply with the National
Institute of Standards and Technology Handbook 44 and shall be installed, maintained, and
operated according to manufacturers’ recommendations.

	16.3	 	If Contractor-provided weights are to be used, and Contractor fails to provide proper
weights, TVA weights will be the means by which the weight of coal sold, delivered, and
purchased hereunder shall be determined. Contractor shall reimburse TVA for any cost or
expense charged to or incurred by TVA as a result of the absence of proper weights from
Contractor, and TVA may elect to have TVA’s sampling and analysis govern for quality
adjustment purposes as to any coal not properly weighed by Contractor. While TVA may not
undertake to weigh all coal received, it may at its option check weigh any coal received. In
the event invoiced weights exceed TVA weights by more than one and one-half percent (1.5%), a
full material test will be run by both parties with each party responsible for its own cost.
The weights that are determined most accurate shall govern.

	16.4	 	Scale tests shall be performed more often than annually if reasonably requested by TVA. TVA
shall be responsible for the cost of additional (more than annual) requested tests unless the
results thereof show that the scale failed to conform to certification standards, in which
event the Contractor shall be responsible for such costs.

	16.5	 	If Contractor’s or TVA’s weighing devices or methods are determined by said independent
third party to be in error over 0.5%, an appropriate adjustment shall be made to the affected
weights and related invoices and payments reflecting the full extent of the error. Such
adjustments shall be made retroactively to a date midway between the date on which the
weighing devices were last tested and calibrated and the date on which the inaccuracy in
weighing methods or devices was first questioned and prospectively until the date on which the
weighing methods and devices are corrected.

	16.6	 	If scales at the applicable mine determine the weight for less than all of the railcars in a
single trainload lot, then the average railcar weight for the last three trainload lots to
TVA, for trains that contained railcars all of the same capacity as the unweighed cars, shall
be determined by dividing the trainload lots’ weight by the number of railcars in the
trainload lots. The average railcar weight shall be multiplied by the number of railcars in
the unweighed or partially unweighed trainload lot to determine the trainload lot weight.

	17.0	 	CONTRACT ADMINISTRATOR/CONTRACTING OFFICER

The Manager of Coal Acquisition and Supply has designated the Contract Administrator who
administers this contract for TVA to act on behalf of TVA for all purposes in the
administration of this contract, such designation to continue until revoked or modified by
the Manager of Coal Acquisition and Supply. The Contract Administrator shall serve as TVA’s
“Contracting Officer” with respect to matters arising under terms of this contract that
provide for action by the Contracting Officer.

29

 

18.0 DISPUTES

The Parties agree that any lawsuit between them that asserts a claim or claims arising out
of or related to this contract (whether sounding in contract, tort, or otherwise) shall be
filed and litigated to conclusion only in the United States District Court for the Eastern
District of Tennessee at Knoxville, and each Party hereby consents to the jurisdiction and
venue of that court for all such lawsuits. The Parties further agree that in any such
litigation (1) each will stipulate to have a United States Magistrate Judge conduct any and
all proceedings in the litigation in accordance with 28 U.S.C. § 636(c) and Fed. R. Civ. P.
73, and (2) each will waive any right it may have to a trial by jury.

	19.0	 	CLEAN AIR ACT AND OTHER ENVIRONMENTAL REQUIREMENTS

In the event of enactment, implementation, amendment, or enforcement of the Clean Air Act,
as amended, or any other applicable federal, state, or local air pollution control or
environmental law, rule, or requirement which causes the continued use of the coal
purchased under this contract to be inconsistent with (i) TVA’s air pollution control
strategies, as they may be modified for meeting such air pollution control or
environmental requirements, or (ii) an administrative or judicial order, TVA may cancel
this contract with no further obligation or liability hereunder or at law by giving
Contractor ninety (90) days’ advance notice of such cancellation. In the case of
inconsistency with TVA’s air pollution control strategies, the parties will attempt to
renegotiate the contract during such notice period to provide for delivery of coal that
will be of a quality consistent with TVA’s new air pollution control strategies. In the
event the parties do not reach agreement on such a renegotiated contract within the 90-day
notice period, the cancellation notice given by TVA shall remain in effect and the
contract shall terminate at the end of such period. In no event will TVA be obligated to
divert deliveries from any affected Receiving Plant(s) to any alternate fossil plant or
other destination.

	20.0	 	UNILATERAL TERMINATION RIGHT - This Section left intentionally blank.

	21.0	 	CREDIT EVALUATION AND PERFORMANCE ASSURANCE

	21.1	 	Performance Assurance. Contractor has previously furnished performance assurance for the
protection of TVA in the form of a cash deposit in the amount of One Million Dollars
($1,000,000.00).

This deposit is for the security of TVA regarding the performance of all obligations of
the Contractor under this contract and all other contracts with TVA, and TVA may, subject
to the provisions of Section 21, reasonably require the Contractor to adjust the amount of
this deposit upward or downward. The deposit will earn interest at TVA’s short-term
interest rate.

Contractor acknowledges and agrees that any failure to establish, maintain, or adjust said
deposit
shall constitute a default under this contract, subject to all applicable cure provisions.

30

 

	21.2	 	Material or Adverse Change in Financial Condition. Contractor shall inform TVA,
in writing, within ten (10) business days of any Material or Adverse Change in its
financial condition. For the purposes of this contract, a Material or Adverse Change may
include, but is not limited to, any of the following:

	 	1)	 	A bankruptcy filing,
	 
	 	2)	 	Insolvency,
	 
	 	3)	 	A report of a quarterly or annual loss or a decline in earnings of twenty
percent (20%) or more compared to the prior period,
	 
	 	4)	 	A negative restatement of prior financial statements or a failure or refusal
to provide quarterly or annual financial statements to TVA as required under
Subsection 21.3 below,
	 
	 	5)	 	Default under other financing agreements with third-parties in excess of Ten
Million Dollars ($10,000,000.00),
	 
	 	6)	 	Appointment of a receiver, trustee or examiner, or
	 
	 	7)	 	Entry of a judgment against Contractor in an amount that is greater than five
percent (5%) of the Contractor’s net worth.

If there is a Material or Adverse Change in Contractor’s financial condition. TVA may
require Contractor to provide additional reasonable Performance Assurance, as outlined
herein, within ten (10) business days of Contractor’s receipt of a written request from
TVA for such additional Performance Assurance, in an amount determined by TVA in a
commercially reasonable manner and in a form and from a financial institution or other
guarantor reasonably acceptable to TVA. Such additional Performance Assurance may include,
but is not limited to, increasing the amount of the deposit provided to TVA under
Subsection 21.1 above, or other performance assurance as described in Subsection 21.4. If
the Contractor fails to deliver such additional Performance Assurance to TVA with ten (10)
business days of receipt of TVA’s written request for such additional Performance
Assurance, then the Contractor may be deemed by TVA to be in default under the terms of
this contract, subject to all applicable cure provisions.

	21.3	 	Ongoing Credit Evaluation & Monitoring. TVA will monitor Contractor’s creditworthiness on an
ongoing basis for changes in financial condition. Contractor shall comply with the following
provisions:

	 	1)	 	Financial Statements:

	 	a)	 	Within one hundred and twenty (120) calendar days following
the end of each fiscal year, Contractor shall deliver a copy of Contractor’s
annual report containing audited consolidated financial statements for such
fiscal year that include balance sheets, income statements, statements of cash
flows and notes to the financial statements.
	 
	 	b)	 	Within sixty (60) calendar days following the end of each of
the first three fiscal quarters of each fiscal year, Contractor shall deliver
a copy of Contractor’s quarterly report containing unaudited consolidated
interim financial statements for such fiscal quarter.
	 
	 	c)	 	In all cases Contractor’s financial statements shall be
prepared in accordance with generally accepted accounting principles used in
the United States.
	 
	 	d)	 	In the event any annual report or quarterly report cannot be
delivered on a timely basis due to a delay in preparation or certification,
such delay shall be excused to the extent, and only to the extent, Contractor
is diligently pursuing the preparation, certification, and delivery of such
report and has informed TVA in writing as to the
cause or causes of such delay and the anticipated duration of such delay

	 	2)	 	Within ten (10) business days of any change in majority ownership of
Contractor, Contractor shall report such change and the details thereof to TVA.
	 
	 	3)	 	Within ten (10) business days of the occurrence thereof Contractor shall
disclose to TVA any material litigation with a demand in excess of Ten Million Dollars
($10,000,000.00).

31

 

TVA shall periodically
review Contractor’s financial information to determine if, an
increase or decrease in the current level of Performance Assurance is required on behalf of
Contractor. If the financial condition of the Contractor has changed to a point whereby TVA determines that further or additional Performance Assurance is not required. TVA will
release the security provided in Subsection 21.1; otherwise, the current Performance
Assurance obligation will continue.

	21.4	 	Types of Acceptable Performance Assurance. The types of acceptable Performance Assurance
that TVA may require include but are not limited to:

	 	1.	 	Cash Deposit,
	 
	 	2.	 	An irrevocable standby letter of credit (including an increase or
extension of an existing letter of credit) in a form and from a financial
institution reasonably acceptable to TVA, or
	 
	 	3.	 	Various combinations of the foregoing or other credit or
performance assurance reasonably acceptable to TVA.

	21.5	 	Remedies with Respect to Performance Assurance. In addition to any other remedies available
under this contract or at law, TVA, upon or any time after the occurrence or deemed
occurrence of a default by Contractor (and provided such default is continuing), may exercise
any and all of its rights with respect to all Performance Assurance, including but not
limited to drawing on any outstanding letter of credit issued for TVA’s benefit and
liquidating all Performance Assurance then held by or for the benefit of TVA free from any
claim or right of any nature whatsoever of Contractor, including, but not limited to, the
cash deposit of One Million Dollars ($1,000,000) previously furnished by Contractor by the
protection of TVA. TVA shall apply the proceeds from such Performance Assurance to reduce
Contractor’s obligations under this and all other contracts with TVA, and Contractor shall
remain liable for any amounts owing to TVA after the application of such proceeds.

	22.0	 	VERIFICATION OF DATA, INSPECTION OF RECORDS AND MINE SOURCES

	 	 	TVA, its employees, agents, or representatives, shall have the right, at its sole expense,
after prior notice and at a reasonable time to inspect Contractor’s or, if applicable, its
producer’s records and mines and related facilities to verify the accuracy of the data
supplied by Contractor to support its request for price adjustments or to establish
Contractor’s actual cost change under section 10, Contract Price Adjustments and Cost
Reimbursements, and for purposes of determining Contractor’s compliance with the
provisions of this contract. Information obtained by TVA, its employees, agents, or
representatives, in examining Contractor’s or its producer’s records or inspecting
Contractor’s or its producer’s mines shall not be disclosed to third parties without the
Contractor’s consent, unless disclosure is ordered by a court of competent jurisdiction,
is made for purposes of any litigation or proceeding (judicial, administrative, or
investigatory) involving this contract, or is otherwise required by law.

	23.0	 	COAL MINING RECLAMATION AND CONSERVATION REQUIREMENTS

The following TVA reclamation and conservation requirements are applicable to all
contracts for the purchase of coal:

	23.1	 	TVA Policy On Areas From Which Coal Will Be Procured: Coal Mining - Land and Water Resource
Protection. TVA accepts no coal mined from locations in or near areas officially designated by
state or federal agencies, or identified by TVA, as wild or scenic river areas, wild,
wilderness, natural, scenic, public recreation areas or under study pursuant to legislative
authority for any such official designation, except where special circumstances exist. No coal
will be

32

 

accepted from locations in or near areas designated under legislative authority as
potential sites for the above uses unless, after coordination with the appropriate
agencies, TVA determines that the coal can be mined without substantially adversely
affecting the area’s potential for such use. In such cases and also in cases involving
offerings of coal from mines in or near other visually important areas such as major
highways or population centers, special provisions designed to protect aesthetic values may
be incorporated in the purchase contracts. No coal will be accepted from areas in which, in
TVA’s judgment, mining would adversely affect a public water supply and such adverse effect
cannot be avoided by proper reclamation.

	23.2	 	Contractor agrees that all sources of coal delivered shall be in full compliance with all
state and federal reclamation laws, including the Surface Mining Control and Reclamation Act
of 1977 and all regulations issued thereunder. A violation of any such law or regulation
shall constitute a breach of contract, entitling TVA to exercise its remedies as provided for
in this contract or by law. TVA will not accept coal mined from any source, stockpile, or
otherwise during any period when the source is subject to a cessation order issued by the
Office of Surface Mining and Reclamation (OSM) or any state reclamation enforcement agency for
violation of reclamation requirements.

	23.3	 	TVA also reserves the right to either terminate this contract or suspend deliveries under the
contract from any source whatsoever when any Authorized Source is subject to a cessation
order.

	23.4	 	Coal which is not delivered due to such cessation order or suspension shall not be considered
excusable, and TVA may purchase replacement coal for the Contractor’s account. If, upon
appeal by the Contractor under OSM’s or the appropriate state’s regulations, a cessation order
is held to have been improperly issued, the Contractor shall not be liable for the cost of
replacement coal, and any coal not delivered due to the order or suspension may, at
Contractor’s option, be canceled or rescheduled upon delivery terms reasonably acceptable to
TVA. This constitutes Contractor’s exclusive remedy against TVA in the event of a wrongful
issuance of a cessation order by OSM or a state agency.

	23.5	 	TVA reserves the right to require and Contractor agrees to perform over and above the
requirements specified by law any special or additional reclamation work which TVA deems
necessary to ensure that the mining operation complies with TVA’s overall policy for
protection and enhancement of the environment. Any such special or additional reclamation
work shall be subject to the approval of the U.S. Office of Surface Mining, or a related
agency having jurisdiction over the matter. TVA agrees to compensate Contractor for the
performance of such work in an amount to be mutually agreed upon before the commencement of
work. No work performed by Contractor shall be deemed special or additional reclamation work
for the purposes hereof unless it is so designated in writing by the Contract Administrator.

	23.6	 	TVA, its agents, and assigns shall have the right to enter upon any of the land affected by
Contractor’s mining operation, at any time and without the necessity of giving notice, for any
purpose related to enforcing these reclamation and conservation requirements or to observe
mining or reclamation completed or in progress.

	23.7	 	TVA will not accept coal from sources mined under the 16-2/3 percent exemption allowed under
P.L. 95-87, unless it can be documented that the source will be mined and reclaimed to the
performance standards established under P.L. 95-87, and furthermore, that the
operation has the concurrence of the coal mining and regulatory (primacy) authority
established by this law in the state from which the coal is to be mined.

33

 

	24.0	 	RELATIONSHIP OF PARTIES — PRODUCER’S STATEMENT

	24.1	 	Regardless of whether the Contractor is the producer of the
coal to be furnished or is the
sales agent of one or more producer, the Contractor binds and obligates itself for the full
and faithful performance of the contract in its entirety.

	24.2	 	If the Contractor is not the producer of the coal to be delivered hereunder, Contractor
represents that it has contracted directly with the producer(s) who has (have) executed the
Coal Producer’s Statement(s) for the delivery of the coal to TVA.

	25.0	 	NONASSIGNABILITY; SUBCONTRACTS; DESIGNATION AND
TERMINATION OF AGENT

	25.1.1	 	Neither this contract nor any interest herein or any payments hereunder shall be assigned
without the prior written consent of TVA, which consent TVA may withhold in its sole
discretion. In the event TVA shall give such consent, the same shall not be construed as a
waiver of this provision with regard to any subsequent assignment.

	25.1.2	 	Notwithstanding the foregoing, any party may, without the need for consent from the other
party (and without relieving itself from liability hereunder), transfer, sell, pledge,
encumber or assign this contract or the accounts, revenues or proceeds hereof or thereof in
connection with any bank financing or security arrangements, provided, however, that no such
assignment shall in any way relieve the assignor from liability for full performance under
this contract. Any such assignee shall assume and agree to be bound by the terms and
conditions of this contract. Any consent to an assignment under this provision shall not be
construed as a waiver of this provision with regard to any subsequent assignment.

	25.2	 	No designation of any agent by the Contractor to submit invoices, receive payments, or
take any other action in connection with the performance or administration of this contract
shall be effective or recognized by TVA until the Contractor has given written notice of such
designation and TVA has given Contractor specific written notice of its approval thereof.

	25.3	 	If Contractor notifies TVA in writing of the termination of any agent that Contractor
may have previously designated to administer this contract on its behalf, TVA may thereafter
rely on such notice of termination in all dealings with Contractor or a successor agent.

	26.0	 	WAIVERS

No waiver of any breach of this contract shall be held to be a waiver of any other breach.
Unless a remedy is expressly designated as exclusive, all remedies afforded under the
contract shall be in addition to every other remedy provided herein or by law.

	27.0	 	OFFICIALS NOT TO BENEFIT

No member of or delegate to Congress or Resident Commissioner, or any officers, employee,
special Government employee, or agent of TVA shall be admitted to any share or part of
this contract or to any benefit that may arise therefrom unless it be made with a
corporation for its general benefit; nor shall the Contractor offer or give, directly or
indirectly, to any officer, employee, special Government employee, or agent of TVA any
gift, gratuity, favor, entertainment,

34

 

	 	 	loan, or any other thing of monetary value, except as
provided in 5 C.F.R. part 2635.
Breach of this provision shall constitute a material breach of this contract and TVA shall
have the right to exercise all remedies provided in this contract, or
at law.

	28.0	 	SMALL BUSINESS POLICY
	 
	 	 	The requirements of 15 U.S.C § 637(d) are incorporated by reference.
	 
	29.0	 	LIQUIDATED DAMAGES FOR SUBCONTRACTING PLANS
	 
	29.1	 	Failure to make a good-faith effort to comply with the subcontracting plan, as used in this
clause, means a willful or intentional failure to perform in accordance with the requirements
of the subcontracting plan approved under 15 U.S.C. 637(d) or willful or intentional action to
frustrate the plan.
	 
	29.2	 	Performance shall be measured by applying the percentage goals to the total actual
subcontracting dollars or, if a commercial plan is involved, to the pro rata share of actual
subcontracting dollars attributable to Government contracts covered by the commercial plan.
If, at contract completion, or in the case of a commercial plan, at the close of the fiscal
year for which the plan is applicable, the Contractor has failed to meet its subcontracting
goals and the Contracting Officer decides in accordance with Subsection 29.3 that the
Contractor failed to make a good-faith effort to comply with its subcontracting plan, the
Contractor shall pay TVA liquidated damages in an amount equal to the actual dollar amount by
which the Contractor failed to achieve each subcontract goal.
	 
	29.3	 	Before the Contracting Officer makes a final decision that the Contractor has failed to make
such good-faith effort, the Contracting Officer shall give the Contractor written notice
specifying the failure and permitting the Contractor to demonstrate what good-faith efforts
have been made. Failure to respond to the notice may be taken as an admission that no valid
explanation exists. If, after consideration of all the pertinent data, the Contracting Officer
finds that the Contractor failed to make a good-faith effort to comply with the subcontracting
plan, the Contracting Officer shall issue a final decision to that effect and require that the
Contractor pay the government liquidated damages as provided in Subsection 29.2.
	 
	29.4	 	With respect to commercial plans. i.e., company-wide or division-wide subcontracting plans,
the Contracting Officer of the agency that originally approved the plan will exercise the
functions of the Contracting Officer under this clause on behalf of all agencies that awarded
contracts covered by that commercial plan.
	 
	29.5	 	The Contractor shall have the right of appeal, under the section in this contract titled
DISPUTES, from any final decision of the Contracting Officer.
	 
	29.6	 	Liquidated damages shall be in addition to any other remedies that TVA may have.
	 
	30.0	 	AFFIRMATIVE ACTION AND EQUAL OPPORTUNITY
	 
	 	 	To the extent applicable, this contract incorporates by reference the “Equal Opportunity”
for Special Disabled Veterans and Veterans of the Vietnam Era clause, 41 C.F.R. §
60-250.5; the “Equal Opportunity for Workers with Disabilities” clause, 41 C.F.R. §
60-741.5; and the “Equal Opportunity” clause, 41 C.F.R.
§ 60-1.4.

35

 

	31.0	 	SAFETY AND HEALTH
	 
	 	 	All sources supplying coal purchased under this contract shall be in full compliance
with the Federal Mine Safety and Health Act of 1977 and regulations issued thereunder.
Failure to comply shall constitute a breach of contract, permitting TVA to exercise its
remedies under this contract or as provided by law.
	 
	32.0	 	ENVIRONMENTALLY ACCEPTABLE FACILITIES; CLEAN AIR AND WATER
	 
	 	 	Contractor hereby stipulates and agrees as follows:

(1) Contractor certifies that performance of this contract will not involve the use of any
facility or facilities which have given rise to a conviction under Section 113(c) of the
Clean Air Act (42 U.S.C. 7413(c)) or Section 309(c) of the Federal Water Pollution Control
Act (33 U.S. C. 1319(c).

(2) Contractor will comply with all the
requirements of Section 114 of the Clean Air Act
and Section 308 of the Federal Water Pollution Control Act relating to inspection,
monitoring, entry, reports, and information, as well as all other requirements specified in
Section 114 and Section 308 of the Clean Air Act and the Federal Water Pollution Control
Act, respectively, and all regulations and guidelines issued thereunder in its performance
of this contract.

(3) Contractor will notify TVA of any conviction under Section 113(c) of the Clean Air Act
or Section 309(c) of the Federal Water Pollution Control Act involving a facility to be
utilized for this contract.

	33.0	 	CERTIFICATION FOR CONTRACTS, GRANTS, LOANS AND
COOPERATIVE AGREEMENTS

	 	 	Contractor’s representative, by signing this contract, certifies, to the best of his
or her knowledge and belief, that:

(1) No Federal appropriated funds have been paid or will be paid by or on behalf of
Contractor to any person for influencing or attempting to influence an officer or employee
of any agency, a member of Congress, an officer or employee of Congress, or an employee of
a member of Congress in connection with the awarding of this contract or the extension,
continuation, renewal, amendment, or modification of this contract.

(2) If any funds other than Federal appropriated funds have been paid or will be paid to
any person for influencing or attempting to influence an officer or employee of any agency,
a member of congress, an officer or employee of Congress, or an employee of a member of
Congress in connection with this Agreement, Contractor shall complete and submit Standard
Form-LLL, “Disclosure of Lobbying Activities,” in accordance with its instructions.

	 	 	This certification is a material representation of fact upon which reliance was placed
when this contract was made or entered into. Submission of this certification is a
prerequisite for making or entering into this contract imposed by 31
U.S.C. 1352. Any
person who makes an expenditure prohibited under paragraph (1) of this clause or who fails
to file or amend the disclosure form required to be filed or amended by paragraph (2) of
this clause shall be subject to civil penalties as provided for by 31 U.S.C. 1352.

36

 

	34.0	 	CONTRACT COMPONENTS

	 	 	Appendix A (Coal Producer’s Statement(s) and Specific Location Map(s)); Exhibit I (Example
Calculation of Price Adjustment for Quality Variations); and the Subcontracting Plan are
attached hereto and made a part hereof.

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed as of the
aforesaid date by their duly authorized representatives.

	 	 	 	 	 	 	 	 	 

	WITNESS:	 	 	 	CONTRACTOR
Armstrong Coal Co.	 	 
	
	 	 	 	 	 	 	 	 
	/s/ Elizabeth J. Byrne 

	 	 
	 	By:	 	/s/ Martin D. Wilson	 	 
	 

	 	 	 	 	 	 

Signature
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	President	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	WITNESS:	 	 	 	TENNESSEE VALLEY AUTHORITY	 	 
	

	 	 	 	 	 	 	 	 
	/s/  

	 	 
	 	By:	 	/s/ James M. Bach Sr.	 	 
	 

	 	 	 	 	 	 

Signature
	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	Fuel Buyer	 	 
	 

	 	 	 	 	 	 

	 	 

37

 

EXHIBIT I

EXAMPLE CALCULATION OF PRICE ADJUSTMENT

FOR QUALITY VARIATIONS

Assume:

	 	 	 	 	 	 	 	 	 
	 	 	Typical Analysis	 	 	Qtrly. Avg. Value	 
	Btu/lb. (as-received)
	 	 	12,000	 	 	 	12,125	 
	Ash (as-received)
	 	 	7.00	%	 	 	9.00	%
	Total Moisture
	 	 	12.00	%	 	 	12.25	%
	SO2 in
Ibs./mmBtu at 97.5%
	 	 	1.70	 	 	 	1.62	 

Total Tons Received equals 100,000

Price equals $20.00

Ash Adjustment Increase/Decrease is $0. 15 per percentage point

Moisture adjustment increase/decrease is $0.06 per tenth of a
percent 
SO2 adjustment increase/decrease is $0.25 per tenth of a Ib.

	 	 	 	 	 	 	 

	Btu example for Section 8.2.	 	 
	 
	 
	Btu Adjustment

	 	=
	 	(Quarterly
Average Value - Typical Analysis) X Price
	 	 
	 

	 	 	 	Typical Analysis	 	 

	 	 	 	 	 	 	 

	Btu Adjustment

	 	=
	 	(12,125 - 12,000) X $20.00	 	 
	 

	 	 	 	12,000	 	 
	 
	 	 	 	 	 	 
	Btu Adjustment

	 	=
	 	$0.21 per ton

Ash example for Section 8.3.

Ash Adjustment decrease = (Quarterly Average Value - Typical Analysis) X Adjustment

Ash
Adjustment decrease = (9.00 - 7.00) X $0.15

Ash Adjustment decrease = $0.30 per ton

Moisture
example for Section 8.4.

Moisture
Adjustment decrease = (Quarterly Average Value - Typical Analysis) X Adjustment

Moisture Adjustment decrease = ((12.25 - 12.00)) X $0.06

Moisture Adjustment decrease = $0.015 per ton.

SO2 example for Section 8.5 (scrubbed plants).

SO2 Adjustment increase = (Typical Analysis - Quarterly Average Value) X Adjustment

SO2
Adjustment increase = (1.70 - 1.62) X 10) X $0.25

SO2 Adjustment increase = $0.20 per ton.

Sulfur
Dioxide example for Section 8.5 non-scrubbed plants)

Cantor Fitzgerald Market Price Index

	 	 	 	 	 

	Month A Index Value
	 	$	181.00	 
	Month B Index Value
	 	$	163.00	 
	Month C Index Value
	 	$	192.00	 
	 
	Average Index Value
	 	$	178.67	 

(Typical
Analysis
SO2 -
Quarterly Average Value SO2) X (Quarterly Average Value BTU) X (quarterly
tonnage) X (average index value) / 1,000,000 = adjustment

(0.80 – 0.95)
X (13,000) X (250,000) X (179.00) / 1,000,000 = -$87,101.625

38

 

Appendix A

Authorized Source List:

	 	1.	 	Parkway Underground  —  West Kentucky #9 —  Permit #889-5014
	 
	 	2.	 	Sunnyside Surface —  West Kentucky #11 & #12 — Permit Proposed
	 
	 	3.	 	Nelson Creek B Surface — West Kentucky #11 & #12 — Permit Proposed
	 
	 	4.	 	Paradise Underground — West Kentucky #9 — Permit Proposed
	 
	 	5.	 	Jacob’s Creek Surface  — West Kentucky #9 — Permit Proposed
	 
	 	6.	 	Game Preserve Surface — West Kentucky #9 — Permit Proposed
	 
	 	7.	 	Hillside — West Kentucky #9  —  Permit Proposed

39

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00203-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00203-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00203-of-00352.parquet"}]]