Document:

exv10w1

Exhibit 10.1

EXECUTION VERSION

AMENDED AND RESTATED ELECTRIC SERVICE AGREEMENT

BETWEEN

THE CITY OF COFFEYVILLE, KANSAS

AND

COFFEYVILLE RESOURCES NITROGEN FERTILIZERS, LLC

DATED AS OF AUGUST 1, 2010

 

 

TABLE OF CONTENTS

	 	 	 

	ARTICLE I.

	 	DEFINITIONS
	 
	 	 
	ARTICLE II.

	 	ELECTRIC SERVICE CUSTOMER INFORMATION
	 
	 	 
	ARTICLE III.

	 	PAYMENT SECURITY
	 
	 	 
	ARTICLE IV.

	 	ELECTRIC TRANSMISSION
	 
	 	 
	ARTICLE V.

	 	ELECTRIC POWER AND ENERGY
	 
	 	 
	ARTICLE VI.

	 	RATES AND CHARGES
	 
	 	 
	ARTICLE VII.

	 	BILLINGS AND PAYMENTS: TERMINATION OF SERVICE
	 
	 	 
	ARTICLE VIII.

	 	SERVICE CHARACTERISTICS
	 
	 	 
	ARTICLE IX

	 	ELECTRIC STANDARDS FOR THE FACILITY
	 
	 	 
	ARTICLE X.

	 	METERING
	 
	 	 
	ARTICLE XI.

	 	FORCE MAJEURE
	 
	 	 
	ARTICLE XII.

	 	RIGHTS-OF-WAY AND ACCESS
	 
	 	 
	ARTICLE XIII.

	 	DELIVERY POINTS
	 
	 	 
	ARTICLE XIV.

	 	TERM
	 
	 	 
	ARTICLE XV.

	 	ASSIGNMENT
	 
	 	 
	ARTICLE XVI.

	 	LIABILITY: LEGAL REMEDIES
	 
	 	 
	ARTICLE XVII.

	 	AMENDMENT(S) AND RESERVATION OF POWERS
	 
	 	 
	ARTICLE XVIII.

	 	MOTORS—STARTING PROCEDURES AND ALLOWABLE CURRENTS
	 
	 	 
	ARTICLE XIX.

	 	MISCELLANEOUS

 

 

ELECTRIC SERVICE AGREEMENT

     This AMENDED AND RESTATED AGREEMENT FOR ELECTRIC SERVICE (The “Agreement” or the “Terms and
Conditions of Service”) is made and entered into as of the first day of August, 2010, by and
between the City of Coffeyville, Kansas (“City”), a municipal corporation organized and existing
under the laws of the State of Kansas, and Coffeyville Resources Nitrogen Fertilizers, LLC
(together with its successors and permitted assigns, “Coffeyville Resources”), a Delaware Limited
Liability Company.

W I T N E S S E TH:

     WHEREAS, the City purchases wholesale power and energy, and transmission capacity; and owns
and operates its own generation, transmission, and distribution facilities to furnish retail
electric service to the geographic area identified as the City’s Certified Electric Service
Territory pursuant to K.S.A. 66-1,170, et seq.; and

     WHEREAS, Coffeyville Resources owns a nitrogen fertilizer facility (together with the
associated Linde Air Separation Unit and any other related facilities, as further defined in
Section 1.13 hereof, the “Facility”) in the City’s Certified Electric Service
Territory1, which is a retail customer of the City’s municipal electric utility; and

     WHEREAS, Coffeyville Resources and the City entered into that certain Agreement for
Electric Service dated January 13, 2004 (“2004 Agreement”) pursuant to which Coffeyville Resources
purchases municipal electric service from the City; and

     WHEREAS, the City and Coffeyville Resources have agreed to amend and restate the 2004
Agreement as set forth herein and that the Agreement and these Terms and Conditions of Service
supersede and cancel all previous terms and conditions of service pertaining to the supplying and
taking of the City’s electric service by the Facility as of the Effective Date (as “Effective Date”
is defined in Section 1.10 herein); and

     WHEREAS, the City and Coffeyville Resources have agreed that these Terms and
Conditions of Service shall govern the supplying by the City and taking by the Facility of the
City’s municipal electric service for the Facility within the City’s Certified Electric Service
Territory1 as of the Effective Date;

     NOW, THEREFORE, the City and Coffeyville Resources agree as follows:

 

			
	1	 	As modified by the Kansas Corporation
Commission on June 26, 2000, to include that portion of the Facility which
originally was situated beyond the City’s Certified Electric Service Territory
at the time the City entered into that certain Electric Service Agreement with
Farmland Industries, Inc.

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ARTICLE I. DEFINITIONS

     The following terms included in this Agreement shall be defined as follows:

	1.1	 	“AEP” shall mean the American Electric Power Company, Inc., a New York corporation, and the
facilities of any electric company division, affiliate, and/or subsidiary of AEP and any
purchaser, successor, or transferee of AEP or any of AEP’s division, affiliates and/or
subsidiaries. AEP and PSO transferred functional control of their transmission facilities
that they own in the state of Oklahoma to SPP, which put the transmission service over AEP’s
and PSO’s transmission facilities under the SPP tariff.
	 
	1.2	 	“Applicable Losses” shall be as defined in Section 1.02 of the Power and Energy Supply
Contract.
	 
	1.3	 	“City” shall have the meaning given in the introductory paragraph.
	 
	1.4	 	“City Certified Electric Service Territory” shall mean the geographic area in which the City
has the responsibility and exclusive right to supply retail electric service pursuant to
K.S.A. 66-1,170, et seq.
	 
	1.5	 	“Coffeyville Resources” shall mean Coffeyville Resources Nitrogen Fertilizers, LLC, a limited
liability company organized and existing under the laws of the State of Delaware, together
with its successors and assigns.
	 
	1.6	 	Reserved.
	 
	1.7	 	Reserved.
	 
	1.8	 	Reserved.
	 
	1.9	 	“Distribution Facilities” shall mean any electric line used to furnish retail electric
service, including any line from a Substation to an electric consuming facility, but such term
does not include any transmission facilities (including the Transmission Facilities as defined
in this Agreement). There are no Distribution Facilities used to furnish retail electric
service to the Facility Delivery Point(s) pursuant to this Agreement.
	 
	1.10	 	“Effective Date” shall mean August 1, 2010.
	 
	1.11	 	Reserved.
	 
	1.12	 	Reserved.

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	1.13.	 	“Facility” shall mean any piece of land or real estate or any building, structure, or
improvement or portion thereof that make up the Coffeyville Resources nitrogen fertilizer
facility, the associated Linde Air Separation Unit, and any other related facilities or
enhancements within the City Certified Electric Service Territory and within the area
highlighted on the attached Exhibit 10 that receives or may receive power through the Facility
Delivery Point(s) as defined in 1.14.
	 
	1.14	 	“Facility Delivery Point(s)” shall mean the 13.8 kV metering location(s) in 138/13.8 kV
Substation B, as depicted on Exhibit 3, attached hereto.
	 
	1.15	 	“Force Majeure” shall mean “acts of God,” including but not limited to, flood, tornado,
earthquake, storm, lightning or fire. Force Majeure shall also include labor strikes, slow
downs, or walkouts, war, riot, civil disturbance, sabotage, or restraint by a court or public
authority, which by the exercise of due diligence and foresight could not reasonably have been
avoided. Force Majeure shall also include the temporary interruption or reduction in electric
service, which, in the reasonable opinion of the City, is necessary to prevent severe system
overload, or for the purpose of necessary maintenance, repairs, replacements, or installation
of equipment. Except in the case of emergency, the City will give Coffeyville Resources as
much prior notice as is reasonably possible of such temporary interruptions or reductions and
will perform any necessary, replacements, repairs, or installation of equipment in accordance
with a mutually agreeable schedule so as to cause the least inconvenience to the City and
Coffeyville Resources. Force Majeure shall not excuse any failure to pay money when due.
	 
	1.16	 	“Good Utility Practice” shall mean any of the practices, methods and acts engaged in or
approved by a significant portion of the electric utility industry during the relevant time
period, or any of the practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Good Utility Practice is not intended to be
limited to the optimum practice, method, or act to the exclusion of all others, but rather to
be acceptable practices, methods, or acts generally accepted in the region.
	 
	1.17	 	“Meter” shall mean any device or devices used to measure or register electric power and
energy.
	 
	1.18	 	“Operation & Maintenance Charges” shall mean the actual City cost of operating, maintaining,
repairing, replacing and insuring the Transmission Facilities serving the Facility plus the
overhead mark-up, all as set forth in the Rate Schedule, but shall not include such costs
included in a revenue requirement recovered by the City under the SPP Open Access Tariff.

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	1.19	 	“Payment Security Instrument” shall mean the instrument furnished pursuant to Article III
hereof.
	 
	1.20	 	“Power and Energy Supply Contract” shall mean the Power Purchase and Sale Agreement by and
between Grand River Dam Authority and the City of Coffeyville Kansas Effective as of August 1,
2007 (attached hereto as Exhibit 2), or any subsequent power and energy supply contracts
executed by the City to serve the Facility.
	 
	1.21	 	“Power Factor” shall mean the ratio of real power (kW) to apparent power (kVA) for any given
load and time. Generally, it is expressed as a percentage ratio.
	 
	1.22	 	“Power Factor Adjustment” shall mean an adjustment in the billing under the Rate Schedule if
the Facility’s Power Factor varies from the specified range of percentages set forth herein.
	 
	1.23	 	“PSO” shall mean the Public Service Company of Oklahoma.
	 
	1.24	 	“PSO Interconnection Agreement” shall mean the Interconnection Agreement between the City and
Public Service Company of Oklahoma (PSO), attached hereto as Exhibit 4.
	 
	1.25	 	“Rate Schedule” shall mean the schedule, attached hereto as Exhibit A, setting forth the
amount to be paid by Coffeyville Resources to the City for electric service.
	 
	1.26	 	“SPP” shall mean the Southwest Power Pool.
	 
	1.27	 	“SPP Charges” shall mean the charges imposed by the SPP under its Open Access Tariff and the
SPP Network Integration Transmission Service Agreement for the provision of transmission
service, ancillary services or other services by the SPP for the City’s electric loads,
including Coffeyville Resources, as apportioned to Coffeyville Resources in accordance Item 2
of the Rate Schedule, but shall not include any penalties for failure to comply with any SPP
or North American Electric Reliability Corporation (“NERC”) reliability standard.
	 
	1.28	 	“SPP Network Integration Transmission Service Agreement” shall mean the agreement between the
City and SPP attached hereto as Exhibit 1 as the same may be amended from time to time
pursuant to SPP’s right to file unilateral changes to the SPP Network Integration Transmission
Service Agreement under Section 205 of the Federal Power Act (“FPA”) and the FERC’s right to
require changes under Section 206 of the FPA.

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	1.29	 	“SPP Open Access Tariff” shall mean the tariff approved by the Federal Energy Regulatory
Commission pursuant to which SPP provides transmission service, including SPP Network
Integration Transmission Service.
	 
	1.30	 	“Substation B” shall mean the 138/13.8 kV Substation as depicted on Exhibit 9, attached
hereto.
	 
	1.31	 	“SWEPCO” shall mean Southwestern Electric Power Company.
	 
	1.32	 	“Transmission Capacity” shall mean the transmission transfer capability available to the City
pursuant to the SPP Network Integration Transmission Service Agreement for the delivery of the
City’s entitlements (which would include electric power and energy up to the then current
electric demand of the Facility) under the Power and Energy Supply Contract.
	 
	1.33	 	“Transmission Facilities” shall mean the City owned transmission facilities, inclusive of but
not limited to, the two 138 kV transmission lines from the City/PSO Interconnection Point to
and including Substation B used for the bulk transfer of energy from the City/PSO
interconnection point to the Facility Delivery Point(s), but such term does not include any
Distribution Facilities. For purposes of Section 4 of the Rate Schedule, Transmission
Facilities shall include any future Direct Assignment Facilities.
	 
	1.33A	 	“Direct Assignment Facilities” shall mean facilities or portions of facilities that are
constructed by the City for the sole use or benefit of Coffeyville Resources, the cost and
design of which is agreed to by Coffeyville Resources, in its sole discretion, and which the
City has no obligation to construct in the absence of Coffeyville Resources’ agreement to the
design and cost thereof and cost recovery arrangements therefor. Any cost recovery agreements
between the City and Coffeyville Resources for Direct Assignment Facilities shall be
incorporated into this Agreement under Section 6 of the Rate Schedule.
	 
	1.34	 	“Transmission Wheeling Charge” shall mean the wheeling charge to Coffeyville Resources for
energy transferred across the transmission system and/or through the SPP Network Integration
Transmission Service Agreement, as set forth in the Rate Schedule.

ARTICLE II. ELECTRIC SERVICE CUSTOMER INFORMATION

	2.1	 	Coffeyville Resources shall provide customer information to the City Finance Department for
service to the Facility through the Facility Delivery Points. This information shall include
the name of the individuals who will be responsible for processing the account payment and
local operations, with their mailing addresses, fax and phone numbers.

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ARTICLE III. PAYMENT SECURITY

	3.1	 	Coffeyville Resources shall furnish the City with a Payment Security Instrument, which shall
be (a) an irrevocable Letter of Credit from a bank or financial institution acceptable to the
City, (b) a Payment Security Bond from an insurance company acceptable to the City, (c) such
other equivalent instrument or instruments from an entity or entities acceptable to the City,
or (d) an interest-bearing, cash collateralized trust account with a financial institution in
trust of the City, in each case in the amount of three million dollars ($3,000,000), to cover
Coffeyville Resources’ obligations with respect to payment of the minimum Transmission
Wheeling Charges and of monthly electric use billings. In the event Coffeyville Resources
expands the Facility, and such expansion increases the average monthly electric charges by
more than $125,000 per month measured at one hundred twenty (120) day intervals following the
expansion, Coffeyville Resources shall increase the amount of the Payment Security Instrument
by two (2) times the amount of the average increase.
	 
	3.2	 	In the event Coffeyville Resources breaches its requirement to make any of the payments or
portions thereof as they become due for payment for the charges outlined in Section 3.1 above,
and such breach has not been cured or corrected by Coffeyville Resources within ten (10) days
after its receipt of written notice by the City to Coffeyville Resources of such breach, all
of the remaining aggregate of payments shall immediately become due and payable. If said
payment is not made by Coffeyville Resources within ten (10) days after its receipt of written
notice by the City to Coffeyville Resources as set forth above, then the City will make demand
for all of the remaining aggregate of payments against the issuer of the Payment Security
Instrument.
	 
	3.3	 	The Payment Security Instrument identified above is attached hereto as Exhibit 5. As of the
date of this Agreement, the form of the Payment Security Instrument is in the full amount of
$3,000,000 and is acceptable in form to the City for its term thereof.
	 
	3.4	 	If the Payment Security Instrument furnished pursuant to this Article III expires or is
terminated prior to the expiration of the term of this Agreement, then Coffeyville Resources
shall furnish a substitute Payment Security Instrument acceptable to the City no later than
forty-five (45) days prior to the expiration or termination date of the Payment Security
Instrument, or pay the aggregate unpaid balance of the amounts secured and owing. If the full
amount owing is not paid in full by Coffeyville Resources or an acceptable substitute Payment
Security Instrument is not furnished within thirty-five (35) days prior to the expiration or
termination date of the Payment Security Instrument, then the City will make demand for
payment due and owing against the issuer of the Payment Security Instrument.

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ARTICLE IV. ELECTRIC TRANSMISSION

	4.1	 	The City and the SPP have entered into the SPP Network Integration
Transmission Service Agreement. Pursuant to the SPP Network Integration Transmission
Service Agreement, the City will have available for the delivery of the City’s entitlements
(which would include electric power and energy up to the then current electric demand of
the Facility) under the Power and Energy Supply Contract. Subject to the right of SPP to
curtail transmission service under and in accordance with its SPP Open Access Transmission
Tariff and to the right of the SPP unilaterally to file amendments pursuant to Section 205
of the Federal Power Act, each day during the term of this Agreement, the City will have an
amount of transmission transfer capability designated as Maximum Net Dependable Capacity
(“MNDC”) specified in Appendix 1 to the Network Integration Transmission Service Agreement.
The current amount of the MNDC is 139 megawatts as of the Effective Date. The City will
not curtail the delivery of electric power and energy required to the Facility in amounts
up to 90 megawatts, except (i) as the SPP may require or provide pursuant to its Open
Access Transmission Tariff, or (ii) due to Force Majeure.
	 
	 	 	During the Term of the Agreement, the City will use all reasonable efforts to maintain the
SPP Network Integration Transmission Service Agreement in full force and effect, with an
MDNC thereunder in an amount of no less than 139 MDNC. If, for any reason, the SPP Network
Integration Transmission Service Agreement is unavailable during the Term of this
Agreement, the City will use its best efforts to replace such agreement with a reasonably
similar agreement.

	4.2	 	If the Facility does not use the full amount of Transmission Capacity available for its use,
the City may use such capacity to serve any retail customer within the City Certified Electric
Service Territory without compensation to Coffeyville Resources. However, for any new
commercial or industrial customer that individually has a peak demand of 2 megawatts or more,
commencing operations subsequent to the date of execution of this Agreement, the City shall
provide during the term of this Agreement, a $0.001 (1 mill) rebate to Coffeyville Resources
for each kilowatt-hour of energy paid for by such customer that was wheeled across the
Transmission Facilities to serve such customer. This rebate is limited to a maximum of
$2,500,000 over the life of the Agreement. Notwithstanding anything to the contrary herein,
the provisions of this Section 4.2 shall cease to be effective as of the commencement of the
Extension Term.
	 
	4.3	 	Reserved.
	 
	4.4	 	Any net revenue generated by the City from the transmission of energy across the Transmission
Facilities by another power provider to serve retail customers outside of the City Certified
Electric Service Territory shall be shared equally with Coffeyville Resources.
Notwithstanding anything to the contrary herein, the

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	 	 	provisions of this Section 4.4 shall cease to be effective as of the commencement of the
Extension Term.

	4.5	 	On or before July 1 of each year throughout the Term of this Agreement, Coffeyville Resources
shall provide the City a written forecast of its estimated electrical demand during each
calendar year during the ensuing ten year period.
	 
	4.6	 	Coffeyville Resources may not resell any of the Transmission Capacity made available to the
Facility under this Agreement on the City’s Transmission Facilities or through the SPP Network
Integration Transmission Service Agreement.
	 
	4.7	 	Coffeyville Resources may not use any of the Transmission Capacity made available to the
Facility under this Agreement on the City’s Transmission Facilities or through the SPP Network
Integration Transmission Service Agreement for any electric load or service except the
Facility, without the written consent of the City as approved by the City’s Governing Body,
which consent shall not be unreasonably withheld, and subject to the limitations set forth in
the SPP Network Integration Transmission Service Agreement and the PSO Interconnection
Agreement. In the future, if it becomes legally permissible for Coffeyville Resources to
obtain power and energy for its Coffeyville Refinery through the Transmission Capacity made
available to the Facility on the City’s Transmission Facilities or through the SPP Network
Integration Transmission Service Agreement, subject to City approval, which approval shall not
be unreasonably withheld, and the limitations set forth in the SPP Network Integration
Transmission Service Agreement and the PSO Interconnection Agreement, Coffeyville Resources
shall be allowed to do so under Items 2 and 3 of the Rate Schedule and by payment of any
additional cost incurred by the City, inclusive of but not limited to capital investments for
additional Transmission and Distribution Facilities if necessary.
	 
	4.8	 	The City shall not amend any Facility related provisions of the SPP Network Integration
Transmission Service Agreement that are within the sole control of the City without written
concurrence from Coffeyville Resources.

 ARTICLE V. ELECTRIC POWER AND ENERGY

	5.1	 	Reserved.
	 
	5.2	 	No later than six (6) months prior to the termination or expiration of any existing Power and
Energy Supply Contract, Coffeyville Resources will deliver to the City a written forecast of
its estimated monthly power and energy requirements for the Facility for the ten (10) year
period beginning with the expiration date of the existing Power and Energy Supply Contract.

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	5.3	 	For periods subsequent to the Effective Date, Coffeyville Resources understands and agrees
that the cost and any other obligations associated with any Power and Energy Supply Contract
for additional power and energy or any subsequent Power and Energy Supply Contract shall be
billed to and paid for by Coffeyville Resources under the Rate Schedule.
	 
	5.4	 	The City’s obligation is limited to the extent that such power and energy are available
through a firm Power and Energy Supply Contract(s), which, as provided above, the City shall
use its best efforts in good faith to secure following Coffeyville Resources’ delivery of the
forecast of estimated power and energy requirements.
	 
	5.5	 	In the event power and energy cease to be available under the Power and Energy Supply
Contract, the City shall use its best effort in good faith to obtain power and energy at the
lowest price available delivered to the delivery point(s) on the GRDA, SWEPCO or PSO systems
of SPP, consistent with the City’s best judgment as to the reliability of the supplier, and
upon such other terms and conditions as the City may reasonably require. Coffeyville Resources
may reject any power and energy supply contract subsequent to such contract in effect on and
as of the Effective Date hereunder, as proposed by the City. However, if Coffeyville Resources
rejects a power and energy supply contract as proposed by the City, the City is relieved of
any and all obligations and responsibilities to provide power and energy to the Facility until
such time that the City and Coffeyville Resources can obtain a power and energy supply
contract agreeable to both parties. Further, if Coffeyville Resources rejects a power and
energy supply contract as proposed by the City, such action does not relieve Coffeyville
Resources from its obligation and responsibility to pay any and all expenses or payments due
or to become due in the future pursuant to this Agreement.
	 
	5.6	 	The City shall not amend any Facility related provisions of the Power and Energy Supply
Contract that are within the sole control of the City without written concurrence from
Coffeyville Resources.

ARTICLE VI. RATES AND CHARGES

	6.1	 	Coffeyville Resources agrees to pay the City monthly during the term of this Agreement for
electric service provided hereunder, in accordance with the Rate Schedule. A sample invoice
calculated pursuant to this Agreement is attached hereto as Schedule A.

ARTICLE VII. BILLINGS AND PAYMENTS: TERMINATION OF SERVICE

	7.1	 	The City’s electric meters shall normally be read at approximately monthly intervals and
bills for electric service shall normally be submitted to Coffeyville

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	 	 	Resources on monthly intervals. Whenever it is not possible with reasonable diligence to
read a meter for a billing period, the City may submit an estimated bill based upon
previous usage and other available information, with the amount of such bill to be
subsequently adjusted as necessary when the next actual reading is obtained.

	7.2	 	The City will electronically mail and/or fax on the billing date a bill for electric service
to the Facility at the electronic address and/or facsimile number of the Facility, or at such
other address and facsimile number designated by Coffeyville Resources pursuant to Article II
herein. Failure to receive a bill in no way exempts Coffeyville Resources from liability for
payment for electric service. Each bill will separately set out the SPP Charges due for the
month.
	 
	7.3	 	Charges for electric service shall be due and payable monthly within 15 days after the
billing date, and each monthly bill shall have stamped thereon the due date. In the event a
monthly bill is not paid in full by the due date indicated thereon, an order shall be issued
(subject to Section 7.7 hereof) causing the electric service to the Facility to be
disconnected, for such nonpayment. Coffeyville Resources shall pay its electric bill via wire
transfer to a wire transfer address as designated in writing by the City.
	 
	7.4	 	Coffeyville Resources shall pay a flat ten (10%) percent of the balance due as a late charge
on any delinquent payment.
	 
	7.5	 	If electric service has been disconnected due to a breach of this Agreement by Coffeyville
Resources, re-connection shall occur only upon total payment of the amount past due, any
applicable late charge and payment of a reconnection service charge in the amount of Ten
Thousand Dollars ($10,000).
	 
	7.6	 	In the event Coffeyville Resources should offer payment for any monthly electric bill, or
portion thereof, by means of a check or order which has not been honored on account of
insufficient funds of the maker to pay same, or because the check or order was drawn on a
closed account or on a non-existent account, or otherwise dishonored (unless wrongfully
dishonored), a check service charge in the amount of Ten Thousand Dollars ($10,000) shall be
charged and collected as a service charge for proper handling and administration. Provided, in
the event two (2) such dishonored checks or orders are made to the City for electric service
within any last preceding twelve (12) month period, payment of each monthly electric bill by
Coffeyville Resources shall be made and acceptable only by certified or cashier’s check or
wire transfer.
	 
	7.7	 	The City may discontinue electric service to the Facility for any of the reasons set forth
below, after written notice stating the reason or reasons for such discontinuance has been
given to Coffeyville Resources by delivery in accordance with Section 19.12 and by delivery to
the address of the Facility or to such other

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	 	 	billing address requested by Coffeyville Resources as shown on the City’s records, and the
reason or reasons for such proposed discontinuance have not been cured or corrected by
Coffeyville Resources within 10 days after receipt of such notice:

	 	a)	 	Non-payment of a bill for electric service;
	 
	 	b)	 	Refusal by Coffeyville Resources or its representatives to provide the City
reasonable access to its equipment located at the Facility;
	 
	 	c)	 	Violation by Coffeyville Resources of any applicable federal, state, city, or
regulatory agency laws, rules or regulations covering electrical service or services
to the Facility;
	 
	 	d)	 	Potential adverse effect of the Facility’s equipment and/or appurtenances on
service to other customers;
	 
	 	e)	 	Violation of or non-compliance with any provision of this Agreement for
service;
	 
	 	f)	 	Failure of Coffeyville Resources to maintain current Payment Security
Instruments as required pursuant to these Terms and Conditions of Service, except to
the extent payment obligations have been satisfied by realizing through payment from
the surety of a Payment Security Instrument or otherwise;
	 
	 	g)	 	Failure of Coffeyville Resources to increase the amount of the Payment
Security Interest as provided in Article 3; or
	 
	 	h)	 	Failure of Coffeyville Resources to either pay the aggregate unpaid balance
of the amounts secured and owing or furnish a substitute Payment Security Instrument
as provided in Section 3.4.

	7.8	 	The City may discontinue electric service without advance notice to Coffeyville Resources for
any of the reasons set forth below:

	 	a)	 	Existence of a dangerous or defective condition related to the wiring or
equipment at the Facility;
	 
	 	b)	 	When a defective condition of wiring or equipment at the Facility results, or
is likely to result, in danger to life or property or interference with proper service
to others;
	 
	 	c)	 	Fraudulent use of electricity; or
	 
	 	d)	 	Tampering with the City’s regulating and measuring equipment or other
property.

	7.9	 	Coffeyville Resources shall be responsible for all damage to, misuse of, or loss of the
City’s property located at the Facility, unless caused by an act of God or the negligence of
the City and its agents, Coffeyville Resources shall not authorize anyone to change, remove,
or tamper with the City’s property.
	 
	7.10	 	No regulating or measuring equipment, or other property or equipment owned by the City,
wherever situated, whether located at the Facility or elsewhere, shall be

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	 	 	tampered with or
interfered with for the purpose of adjustment, fraudulent
adjustment or otherwise. In the event the City’s electrical equipment has been tampered
with, the City will follow the same procedures as for fraudulent use of electricity as
outlined in these Terms and Conditions of Service.

	7.11	 	For the purpose of these Terms and Conditions of Service, the term “Fraudulent Use of
Electricity” shall include any unauthorized use of the City’s electric service and facilities
by Coffeyville Resources.
	 
	7.12	 	In the event fraudulent use of electricity or evidence of attempted fraudulent use of
electricity is discovered, or where the City’s regulating or measuring equipment or other
property has been tampered with, electric service may be discontinued by the City without
advance notice to the Facility. Electric service to the Facility will not be resumed until
Coffeyville Resources shall have paid all bills including:

	 	a)	 	The charge for the estimated amount of electricity fraudulently consumed;
	 
	 	b)	 	The cost of replacement or repair of any damaged City equipment; and
	 
	 	c)	 	A re-connection charge of Ten Thousand Dollars ($10,000).

ARTICLE VIII. SERVICE CHARACTERISTICS

	8.1	 	Service hereunder shall be at alternating current, 3-phase, 4-wire, 60 Hertz, 13.8Y/7.97 kV,
75 MVA with an allowable variation of 10% above or below nominal voltages.
	 
	8.2	 	The City will use its best efforts in good faith to supply continuous electric service at the
Facility Delivery Points; provided, however that the foregoing shall not be deemed or
construed to be a guarantee of continuity of service. It shall be the responsibility of
Coffeyville Resources to install and maintain protective devices, which will protect the
Facility’s equipment or process during abnormal service conditions or the failure of part or
all of the electric service. The provisions of the latest edition of the National Electrical
Code and the National Electric Safety Code shall be considered as the minimum acceptable
standard for the protection and safeguarding of persons, wiring and/or equipment of the
Facility. In no event will the City be liable for any damages to Coffeyville Resources if the
Facility equipment or process is not protected or safeguarded in conformity with such minimum
code requirements, nor shall the City be liable for any service interruption, irregularities,
or any other causes or abnormalities not caused by the sole negligence of the City.
	 
	8.3	 	In order to make necessary repairs to or replacements in the City’s facilities for supplying
electric service, the City reserves the right in accordance with Good Utility Practice,
without incurring any liability therefor, to suspend service without notice to Coffeyville
Resources for such periods as may be reasonably

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		 	necessary. When conditions permit an attempt
will be made to notify Coffeyville
Resources of such an outage. Insofar as is practicable, any interruption shall be made at a
time, which will cause least reasonable inconvenience to the Facility.
	 
	8.4	 	The City also reserves the right to discontinue service to the Facility without advance
notice, when a defective condition of wiring or equipment at the Facility results, or is
likely to result, in danger to life or property or interference with proper service to others.
Electric service to the Facility will not be resumed until the defective condition has been
remedied to the satisfaction of the City. If such defective condition is the result of
tampering with City equipment, the provisions related to the fraudulent use of electricity
shall also apply.
	 
	8.5	 	The City will endeavor at all times to maintain and operate its electrical system with
minimal interruption and voltage fluctuations consistent with economically realistic
operations and with Good Utility Practice.
	 
	8.6	 	Whenever high or low voltage problems are suspected the City will check the voltage. If
necessary, corrective adjustment to the voltage will be made without delay.
	 
	8.7	 	Electric service shall be provided to the Facility by two 13.8Y/7.97 kV, 75 MVA services.
	 
	8.8	 	Coffeyville Resources hereby authorizes agents of the City to enter the Facility at all times
for any purpose incidental to the supplying of electric service, including, but not limited
to, inspecting the Facility’s equipment and connections; repairing, replacing or removing City
property; or tree trimming and tree removal. Refusal on the part of Coffeyville Resources to
provide reasonable access for the above purposes shall be deemed to be sufficient cause for
discontinuance of service.
	 
	8.9	 	Any and all equipment, apparatus and devices placed or installed, or caused to be placed or
installed by the City on or in the Facility’s premises shall be and remain the property of the
City, regardless of the mode or manner of annexation or attachment to real property. Upon the
termination of this Agreement, the City shall, within a reasonable time, remove such
equipment, apparatus, or devices.
	 
	8.10	 	City liability is limited as provided in Article XVI hereof.

ARTICLE IX. ELECTRIC STANDARDS FOR THE FACILITY

	9.1	 	All of the Facility’s electrical wiring and apparatus connected or to be connected to the
City’s Electric Service shall be at Coffeyville Resources’ expense and shall be installed and
maintained by Coffeyville Resources in accordance with the National Electrical Code and the
National Electrical Safety Code. In the event of a conflict between the National Codes and an
applicable municipal code, the latter

-14-

 

	 	 	shall govern. The City reserves the right to refuse to
connect to any wiring or
apparatus which does not meet these Code requirements and the City may, without advance
notice, discontinue service to the Facility when a defective condition of wiring or
equipment is discovered at the Facility.

	9.2	 	Facility electric power wiring, equipment and apparatus shall not produce harmonic currents
and voltages which exceed the limitations set forth in IEEE Standard 519-1992 or the latest
revision thereof, Recommended Practices and Requirements for Harmonic Control in Electrical
Power Systems.
	 
	9.3	 	If it is determined by the City that remedial action is required to correct an adverse
condition produced by the Facility through use of any equipment causing such adverse
condition, the City reserves the right, at Coffeyville Resources’ expense, to install any
suitable or special equipment on City facilities, or the City may at its option, require
Coffeyville Resources to install such equipment reasonably necessary to limit such adverse
condition.

ARTICLE X. METERING

	10.1	 	All meters shall be furnished, installed and maintained by the City and remain its property.
All meter bases, enclosures and other associated equipment shall be furnished and maintained
by the City and remain its property. No metering equipment shall be by-passed for any reason,
without prior approval of the City.
	 
	10.2	 	The City will test the accuracy of the Facility’s meter(s) within twenty (20) days after a
written request has been received from Coffeyville Resources. If the meter(s) tested is found
to be more than one percent (1%) incorrect, the City will not charge for such test. If the
meter(s) is found to be within the accuracy limits of plus or minus one percent (1%), the City
will charge Coffeyville Resources its cost to cover the costs to perform such test, plus a ten
percent (10%) overhead mark-up.
	 
	10.3	 	If the results of a meter(s) test shows the average error to be more than one percent (1%)
fast or more than one percent (1%) slow, the City will adjust the bill as follows:

	 	a)	 	Fast Meters: The City shall refund Coffeyville Resources the overcharge based
on the corrected meter reading for a period equal to one-half of the time elapsed
since the last previous meter test, but not to exceed six months, or such shorter time
period set forth in the applicable Power and Energy Supply Contract or the SPP Network
Integration Transmission Service Agreement.
	 
	 	b)	 	Slow Meters: The City shall charge Coffeyville Resources for the electricity
consumed but not included in bills previously rendered, based

-15-

 

	 		 	on the corrected meter
reading for a period equal to one-half of the time
elapsed since the last previous meter test, but not to exceed six months, or such
shorter time period set forth in the applicable Power and Energy Supply Contract or
the SPP Network Integration Transmission Service Agreement

	10.4	 	If a meter is found not to register or to have been registering intermittently for any
period, the City may charge an estimated amount of electricity used, which shall be calculated
from interchange meter readings, or by averaging the amounts registered over corresponding
periods in previous years, or in the absence of such information, over similar periods of
known accurate measurement preceding or subsequent thereto.
	 
	10.5	 	If a meter is found to have an incorrect register, connection, multiplier, or constant the
error shall be corrected. Where the error is adverse to Coffeyville Resources, the City will
refund the excess charged for the amount of electricity incorrectly metered for the period of
time not to exceed 6 months the meter was used for billing Coffeyville Resources, or such
shorter time period set forth in the applicable Power and Energy Supply Contract or the SPP
Network Integration Transmission Service Agreement. Where the error is adverse to the City,
the City will charge Coffeyville Resources the undercharge for the amount of electricity
incorrectly metered for the period of time not to exceed 6 months the meter was used for
billing Coffeyville Resources, or such shorter time period set forth in the applicable Power
and Energy Supply Contract or the SPP Network Integration Transmission Service Agreement.

ARTICLE XI. FORCE MAJEURE

	11.1	 	Neither Coffeyville Resources nor the City shall be considered to be in default in respect to
any obligation hereunder (other than obligations to pay costs and expenses due) pursuant to
this Agreement, if either the City or Coffeyville Resources is prevented from fulfilling such
obligation under this Agreement by reason of Force Majeure.
	 
	11.2	 	If either party is prevented from performing or hindered in performing any of its obligations
by reason of Force Majeure, then it will make performance as soon as is reasonably feasible
thereafter.
	 
	11.3	 	Force Majeure shall not relieve Coffeyville Resources of its obligations to pay those amounts
identified as Items 1A, 2, 3 and 4 of the Rate Schedule, or to pay any costs of energy
consumed prior to the Force Majeure event; provided, however, that to the extent the City has
been relieved of the City’s obligation(s) under the SPP Network Integration Transmission
Service Agreement or the Power and Energy Supply Contract as a result of Force Majeure
thereunder,

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	 	 	Coffeyville Resources shall be relieved of the corresponding obligation(s) identified as Items
1A and 2 of the Rate Schedule.

ARTICLE XII. RIGHTS-OF-WAY AND ACCESS

	12.1	 	When requested by the City, Coffeyville Resources shall provide to the City, at no cost to
the City, necessary rights-of-way, easements, warranty deeds, or licenses on or across
Coffeyville Resources owned real estate, at reasonable locations thereon, for the proper
location upon such Coffeyville Resources real estate of City owned electric facilities,
including Transmission Facilities that are reasonably utilized by the City for the delivery of
power and energy at the Facility Delivery Point(s).
	 
	12.2	 	Authorized employees of the City shall have reasonable access to Facility premises at all
reasonable times to inspect, repair, replace, or remove City facilities.

ARTICLE XIII. DELIVERY POINTS

	13.1	 	The Facility Delivery Point(s) are set out on Exhibit 3, attached hereto.
	 
	13.2	 	Where a service connection cannot be made or maintained with adequate clearances without
being interfered with by trees or other obstructions on the Facility’s Premises, it will be
the responsibility of Coffeyville Resources to provide whatever corrective measures are
required.

ARTICLE XIV. TERM

	14.1	 	This Agreement shall become effective on the execution of the same, and shall continue from
that date of execution until July 1, 2019; provided, however, that at Coffeyville Resources’
sole option and upon one hundred and eighty (180) days prior written notice provided by
Coffeyville Resources to the City, this Agreement shall be extended from July 1, 2019 through
June 30, 2024 (such five year extension period shall be referred to herein as the “Extension
Term”); and provided, further, that the rates and charges applicable to such extension period
shall be as set forth in the Rate Schedule.

ARTICLE XV. ASSIGNMENT

	15.1	 	Except as otherwise provided herein; the rights and privileges of Coffeyville Resources under
this Agreement are not assignable without the written consent of the City; such consent not to
be unreasonably withheld.
	 
	15.2	 	The sale, subleasing or assignment by Coffeyville Resources of any interest in the Facility
or this Agreement shall not relieve Coffeyville Resources or any

-17-

 

	 	 	successors or assigns from
the performance of the covenants and conditions contained herein, without the written consent
of the City as approved by the City’s Governing Body. Such consent shall not be unreasonably
withheld.

	15.3	 	Prior to any sale, subleasing or assignment by Coffeyville Resources of any interest in the
Facility or this Agreement, Coffeyville Resources and/or the transferee entity shall provide
evidence reasonably satisfactory to the City that, at a minimum, the following conditions have
been satisfied: (a) the transferee entity shall be knowledgeable in operations similar to the
Facility, (b) the transferee entity shall be formed and existing as a legal entity under the
laws of one of the states of the United States of America, and shall be qualified to do
business in the State of Kansas, (c) the transferee entity shall expressly assume and agree to
perform all of the obligations of Coffeyville Resources under this Agreement and any other
agreement of Coffeyville Resources and the City relating to the Facility, and (d) that the
Payment Security Instruments shall apply to the obligations of the transferee entity under
this agreement. Copies of all transfer, sale, subleasing and assignment documents shall be
delivered to the City.
	 
	15.4	 	If a sale, sublease or assignment is made following approval by the City as provided in this
Article, the provisions of this Article shall continue in full force and effect and no further
such sale, sublease or assignment shall be made except in compliance with the provisions of
this Article.
	 
	15.5	 	Nothing contained herein shall prevent either the City or Coffeyville Resources from
pledging, mortgaging, or assigning its rights under this Agreement as security for any
indebtedness, and both the City and Coffeyville Resources may assign to the pledge or
mortgagee (or to a trustee for the holder of such indebtedness), any money due or to become
due and owing under this Agreement.

ARTICLE XVI. LIABILITY: LEGAL REMEDIES

	16.1	 	Prior to delivery to Coffeyville Resources through the City’s Meter(s) at the Facility
Delivery Point(s), Coffeyville Resources shall not be liable for any damages of any type
whatsoever related to the power and energy sold/purchased under this Agreement, unless such
damages are the result of the negligence or willful misconduct of Coffeyville Resources.
	 
	 	 	Subsequent to the delivery through the meter(s) of the City at the Facility Delivery
Points, Coffeyville Resources shall be deemed to be in exclusive control of, and liable for
any damages of any type whatsoever related to the power and energy sold/purchased under
thus Agreement, unless such damages are the result of the negligence or willful misconduct
of the City.
	 
	16.2	 	If there is a breach of this Agreement by either the City or Coffeyville Resources, the
non-breaching party shall have available to it all remedies available for breach

-18-

 

	 	 	of contract
under the laws of the State of Kansas. However, neither the City nor Coffeyville Resources
shall claim, nor shall the City or Coffeyville Resources be
permitted to recover punitive damages from the other, as a result of the breach of this
Agreement by either the City or Coffeyville Resources.

	16.3	 	In arriving at the determination of whether negligence was involved, accidents, acts of God,
and other failures beyond the City’s control, including but not limited to, Force Majeure
events, shall not be considered negligence. Further, negligence may be determined against the
City only if the City had prior actual notice of a system deficiency, and failed to initiate
corrective measures within a reasonable time after receipt of such actual notice.
	 
	16.4	 	Neither party shall be liable to the other for any special, indirect, consequential or
punitive damages, including but not limited to loss of power, loss of product or loss of
revenues, however caused.
	 
	16.5	 	Notwithstanding anything herein to the contrary, it is expressly agreed between the parties
that the City has not waived any rights it may be entitled to under the Kansas Tort Claims
Act, K.S.A. 75-6101 et seq., as amended, and any agreements made by the City found to be
inconsistent with the provisions of such Act are hereby declared to be null and void.

ARTICLE XVII. AMENDMENT(S) AND RESERVATION OF POWERS

	17.1	 	This Agreement may only be amended by a written amendment executed in writing by both the
City and Coffeyville Resources.
	 
	17.2	 	The City reserves to itself all of its governmental and proprietary powers not specifically
limited by the provisions of this Agreement.

ARTICLE XVIII. MOTORS—STARTING PROCEDURES AND ALLOWABLE CURRENTS

	18.1	 	Starting of any motor in the Facility shall not create an electric utility system voltage
drop that will affect other electric utility customers and/or equipment.
	 
	18.2	 	Starting of the 37,000 HP synchronous motor will, for some 138 kV transmission
configurations, require use of two 138 kV, 21.6 MVAR capacitor banks during the motor start
mode. One or both 21.6 MVAR capacitor banks will normally be in-service for transmission VAR
control. Use of the banks for motor starting will necessitate certain switching be
accomplished to release the banks for motor starting, followed by additional switching for
normal system operation.

-19-

 

	18.3	 	Coffeyville Resources and the City shall follow a defined procedure for:

	 	a)	 	Preparation for motor start.
	 
	 	b)	 	Procedure for motor start.
	 
	 	c)	 	Switching following motor start.

	18.4	 	The above procedure is set forth on Exhibit 6, as part of this Agreement.
	 
	18.5	 	The system effort required to start the motor may cause abnormally low voltages and
abnormally high voltages; therefore, the City may be required to notify power users of the
impending voltage variations. Coffeyville Resources shall give the City reasonable advance
notice of any plans to start the motor. The failure of Coffeyville Resources to follow the
complete starting procedure as set forth on Exhibit 6 shall cause Coffeyville Resources to be
responsible for all resulting applicable damages.
	 
	18.6	 	Interference Producing Equipment (Harmonics): The Facility electric power distribution system
on the load side of the 13.8 kV meters M3 and M4 may have nonlinear connected loads which
could cause the flow of harmonic currents. These harmonic currents could cause interference
with communication and other types of equipment and when coupled with reactive power
compensation, could cause high levels of harmonic voltage and current distortion.
	 
	18.7	 	Coffeyville Resources agrees to provide control of any non-linear connected loads through the
use of (1) Shunt filters, (2) Phase multiplication, or (3) Harmonic compensation or injection
so that harmonic currents and voltages produced do not exceed those defined in IEEE Standard
519-1992 or the latest revision thereof, “Recommended Practices and Requirements for Harmonic
Control in Electrical Power Systems.”

ARTICLE XIX. MISCELLANEOUS

	19.1	 	This Agreement is executed by a duly authorized representative of the City who is fully
authorized to execute this Agreement on behalf of the City, as evidenced by the City
Resolution adopted by the Governing Body of the City and attached hereto as Exhibit 7.
	 
	19.2	 	This Agreement is executed by a duly authorized representative of Coffeyville Resources, who
is fully authorized to execute this Agreement on behalf of Coffeyville Resources, as evidenced
by the Secretary’s Certificate of Coffeyville Resources attached hereto as Exhibit 8.

-20-

 

	19.3	 	Coffeyville Resources agrees to maintain the Facility in good condition, repair and working
order; Coffeyville Resources agrees to pay, as the same respectively become due, all taxes,
assessments and other governmental charges at any time lawfully levied or assessed upon or
against the Facility or any part thereof; and
Coffeyville Resources agrees to annually provide written documentation to the City that it
has obtained and is maintaining all-risk casualty insurance on the Facility in an amount
not less than the actual market value of the Facility, subject to reasonable deductibles or
self-insured retentions.
	 
	19.4	 	This Agreement is the entire and final expression of the Agreement and it may not be
contradicted by evidence of any prior or contemporaneous written or oral agreements or
negotiations of the parties.
	 
	19.5	 	This Agreement shall be construed and enforced in accordance with the laws of the State of
Kansas, in Kansas Courts.
	 
	19.6	 	The covenants terms and conditions of this Agreement shall extend to and be binding upon the
successors, assigns, trustees, and/or receivers of the respective parties thereto.
	 
	19.7	 	The section headings hereof are for the convenience of referenced only and shall not be
treated as a part of this Agreement or as affecting the true meaning of the provisions herein.
	 
	19.8	 	This Agreement may be executed simultaneously in multiple counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and the same
instrument.
	 
	19.9	 	This Agreement has been prepared from negotiations from all parties and no party shall be
charged with having prepared this document in the event an ambiguity exists.
	 
	19.10	 	Should any paragraph be declared unconstitutional or unenforceable, the validity of the
remaining provisions shall be given full force and effect.
	 
	19.11	 	Any waiver by the parties hereto of any breach of any parties’ obligations under this
Agreement shall not be deemed a continuing waiver and shall not prevent the parties hereto
from exercising any remedy they may have for any succeeding breach of the same or other
obligation.

-21-

 

	19.12	 	All notices and communications required to be in writing pursuant to this Agreement shall be
effective only if delivered personally, or sent by facsimile or certified mail, or by
overnight delivery service to the following (or to such other address or facsimile number as
designated in writing by one party to the other):

Coffeyville Resources Nitrogen Fertilizers, LLC

ATTN: Plant Manager

P.O. Box 5000

Coffeyville, KS 67337

(620) 252-4357 (fax)

with a copy to:

Coffeyville Resources Nitrogen Fertilizers, LLC

10 East Cambridge Circle Drive, Suite 250

Kansas City, Kansas 66103

Fax: (913) 982-5651

Attention: General Counsel

City of Coffeyville, Kansas

ATTN: City Manager

P.O. Box 1629/102 W. Seventh

Coffeyville, KS 67337

(620) 252-6175 (fax)

(SIGNATURES ARE ON THE NEXT PAGE)

-22-

 

     IN WITNESS WHEREOF, the City and Coffeyville Resources have executed this Agreement as of the
day and year first written above.

	 	 	 	 	 
	 	CITY OF COFFEYVILLE, KANSAS

 	 
	 	By:  	/s/ Alec Hendryx
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Mayor 	 
	 
	 	COFFEYVILLE RESOURCES NITROGEN

FERTILIZERS, LLC

 	 
	 	By:  	/s/ John J. Lipinski
 	 
	 	 	Chief Executive Officer 	 
	 	 	 	 
	 

-23-

 

EXECUTION VERSION

EXHIBIT A RATE SCHEDULE

This rate schedule is based on exclusive use of the City’s municipal electric utility service and,
no electric service from any other source may be used by Coffeyville Resources at the Facility.

	1.	 	Demand, Energy and Power Cost Adjustment Charges

	 	A.	 	The monthly Demand Charge shall be equal to the demand rate set forth in the
Power and Energy Supply Contract with the Grand River Dam Authority, attached hereto as
Exhibit 2, applicable during the relevant billing period, multiplied by Coffeyville
Resources’ thirty-minute interval demand at the time of the City’s highest
thirty-minute interval demand during the monthly billing period, adjusted for
Applicable Losses as set forth in the Power and Energy Supply Contract, or the demand
rate set forth in any subsequent power and energy supply contracts executed by the
City.
	 
	 	B.	 	The monthly Energy Charge shall be equal to the energy rate set forth in the
Power and Energy Supply Contract with the Grand River Dam Authority, attached hereto as
Exhibit 2, applicable during the relevant billing period, multiplied by the total
amount of energy (expressed in kilowatt-hours) delivered to Coffeyville Resources
during the monthly billing period, adjusted for Applicable Losses as set forth in the
Power and Energy Supply Contract, or the energy rate set forth in any subsequent power
and energy supply contracts executed by the City.
	 
	 	C.	 	The monthly Power Cost Adjustment Charge shall be equal to the power cost
adjustment rate set forth in the Power and Energy Supply Contract with the Grand River
Dam Authority, attached hereto as Exhibit 2, applicable during the relevant billing
period, multiplied by the total amount of energy (expressed in kilowatt-hours)
delivered to Coffeyville Resources during the monthly billing period, adjusted for
Applicable Losses as set forth in the Power and Energy Supply Contract, or the power
cost adjustment rate set forth in any subsequent power and energy supply contracts
executed by the City.

	2.	 	SPP Charges

	 	A.	 	Monthly Transmission Charge payments in the sum determined in accordance with
the Formula set forth below:

     Coffeyville Resources shall pay a proportionate share of all transmission and ancillary
service and charges for other services incurred by the City under the SPP Open Access Tariff in
connection with the delivery of purchased power to the City’s electric system, determined as
follows:

MTC = [CuPTD / CiPTD] x TTC, where

 

 

	 	 	 	 	 

	 

	 	MTC =
	 	Monthly Transmission Charge, which is Coffeyville Resources’ proportionate
share of the transmission and ancillary charges incurred by the City in connection with
the delivery of purchased power to the City’s electric system during the billing
period, as set forth in the SPP’s support for its monthly invoices to the City, which
support shall be made available by the City to Coffeyville Resources concurrently with
the delivery of the City’s monthly bill to Coffeyville Resources.
	 
	 	 	 	 
	 

	 	CuPTD=
	 	Customer’s Peak Transmission Demand shall be Coffeyville Resources’ highest measured
demand (corrected for losses, as required), at the time of the system peak used by the
SPP to allocate transmission charges for Network Integration Transmission Service for
the billing period.
	 
	 	 	 	 
	 

	 	CiPTD=
	 	City’s Peak Transmission Demand, which shall be the City’s highest measured demand
(corrected for losses, as required), including the demand of Coffeyville Resources
served under this rate, at the time of the system peak used by the SPP to allocate
transmission charges for Network Integration Transmission Service for the billing
period.
	 
	 	 	 	 
	 

	 	TTC=
	 	Total Transmission Costs, which includes all transmission, wheeling and
ancillary charges incurred by the City associated with the delivery of purchased power
to the City’s electric system during the billing period.

	3.	 	Transmission Wheeling Charge
	 
	 	 	The per kilowatt-hour charge listed below for each kilowatt-hour of energy transferred on
the City’s Transmission Facilities or through the SPP Network Integration Transmission
Service Agreement for the Facility pursuant to this Agreement.

	 	 	 	 	 
	 	 	Per Kilowatt-hour	 
	Time Period	 	Charge	 
	 
	[Effective Date] through June 30, 20191
	 	$	0.003	 
	July 1, 2019 through June 30, 20232
	 	$	0.0035	 
	July 1, 2023 through June 30, 20243
	 	$	0.00375	 
	 

 

			
	1	 	Coffeyville Resources shall pay
for a minimum of two hundred thousand dollars ($200,000.00) of Transmission
Wheeling Charges annually, whether or not the Facility uses any power and
energy. If the actual Transmission Wheeling Charge for any calendar year is
less than said $200,000.00 minimum, then Coffeyville Resources’ electric
utility bill will be adjusted for any difference between said $200,000.00
minimum Transmission Wheeling Charge and the actual Transmission Wheeling
Charge for that year. If a power and energy supply contract is not available,
the Minimum Transmission Wheeling Charge shall be tolled until a new power and
energy supply contract is obtained.
	 
	2	 	Transmission Wheeling Charge for
this period shall only be effective if Coffeyville Resources elects to extend
the Term of this Agreement pursuant to Article XIV.
	 
	3	 	Transmission Wheeling Charge for
this period shall only be effective if Coffeyville Resources elects to extend
the Term of this Agreement pursuant to Article XIV.

 

 

	4.	 	Operation & Maintenance Charges
	 
	 	 	Coffeyville Resources shall reimburse the City its actual costs of operating, maintaining,
repairing, replacing, and insuring the Transmission Facilities, plus a ten percent (10%)
overhead markup, unless and to the extent that such costs are included in a revenue
requirement recovered by the City under the SPP Open Access Tariff in which case there will
be no such reimbursement.
	 
	5.	 	Power Factor Adjustment
	 
	 	 	A Power Factor meeting the contractual requirements of the Transmission and Power Supply
Providers must be maintained at the two metering locations (Meters M1 and M2) where the
City’s 138 kV transmission lines connect to Substation B.
	 
	 	 	The Power Factor of Facility will be measured through the meters (Meters M3 and M4) located
at the Facility Delivery Point(s). The Power Factor of the City’s transmission facilities
connected to Substation B will be measured through meters (Meters M5 and M6) located on the
high-voltage side of the 138/69 kV step-down transformers. The combined Power Factor of the
City and the Facility electric loads will be augmented through the use of two 21.6 MVAR, 138
kV capacitor banks to assist in Power Factor correction. Coffeyville Resources may elect to
use the Facility’s 37,000 H.P. synchronous motor to fine-tune the Power Factor requirements.
	 
	 	 	The data obtained from meters M3 through M6 will be used to determine the MVAR requirements
of the Facility and the City. To the extent not otherwise recovered under SPP Charges, the
costs of any necessary reactive supply and voltage control ancillary services supplied by
the SPP will be billed to Coffeyville Resources and the City accordingly. All additional
costs incurred by the City to adjust the Facility’s Power Factor deficiencies will be billed
through part 5 of this Rate Schedule.
	 
	6.	 	Direct Assignment Facilities
	 
	 	 	Any agreements for the recovery of costs associated with Direct Assignment Facilities shall
be negotiated by the Parties in advance of the design, planning and construction of each
Direct Assignment Facility proposed under the Agreement. Any such agreements shall be in
writing and executed by both Parties.Exhibit 10.1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT LETTER

This AMENDED AND RESTATED EMPLOYMENT LETTER, dated as of August 19, 2010 (the “Employment
Letter”), is between A.C. Moore Arts & Crafts, Inc., a Pennsylvania corporation (“Company”), and
Joseph A. Jeffries (“Executive”) and amends and restates in entirety the Amended and Restated
Employment Letter between Company and Executive dated August 10, 2009.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound hereby, the parties agree as follows:

1. Employment; Change of Control.

(a) The Company is pleased to continue Executive’s employment with the Company as set forth in
this Employment Letter.

(b) The Board of Directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined in Appendix I) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the Executive’s full
attention and dedication to the Company currently and in the event of any threatened or pending
Change of Control, and to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations. Therefore, in order
to accomplish these objectives if a Change of Control occurs, paragraphs 2 through 12 of this
Employment Letter (except paragraph 10 which shall continue) shall be superseded by Appendix I.

2. Effectiveness. This Employment Letter shall be effective as of the date hereof.

3. Position. Executive’s title is Chief Executive Officer. Executive will report
directly to the Board.

4. Base Salary. Executive’s annual base salary is $475,000, payable in regular
installments in accordance with the Company’s general payroll practices. Executive’s performance
and salary will be reviewed annually on a schedule consistent with the Company’s practice for
officers (such schedule currently contemplated to be May of each year).

5. [INTENTIONALLY OMITTED.]

6. Annual Incentive Plan. During each fiscal year in which Executive continues to be
employed by the Company, he will be entitled to participate in the Company’s annual incentive bonus
plan (the “ Annual Incentive Plan ”) as administered and determined by the Compensation Committee
of the Board. If the Board or the Compensation Committee modifies such Annual Incentive Plan in
subsequent years, Executive shall continue to participate at a level
no lower than the highest level established for any Executive Vice President of the Company as
administered and determined by the Compensation Committee of the Board.

 

 

 

7. Long-Term Incentive Compensation. Executive will be eligible to participate in the
Company’s long-term incentive plan as administered and determined by the Compensation Committee of
the Board. Upon execution of this Employment Letter, the Company is granting to Executive 150,000
stock-settled Stock Appreciation Rights which vest in full after three years from the date of grant
pursuant to the form of Stock Appreciation Rights Agreement issued under the Company’s 2007 Stock
Incentive Plan, as amended.

8. Benefits . Executive will be entitled to receive benefits generally provided to
officers of the Company consistent with the Company’s practices, including without limitation, the
following:

	 	•	 	Medical, dental and prescription benefits.
	 
	 	•	 	Life insurance equal to 1.5 times his annual base salary, with a maximum amount of $450,000;
optional voluntary life insurance.
	 
	 	•	 	Long-term disability benefits; New Jersey short-term disability benefits.
	 
	 	•	 	Participation in the Company’s 401(k) plan.
	 
	 	•	 	Vacation (three (3) weeks annually).
	 
	 	•	 	Cell phone/blackberry.
	 
	 	•	 	Reimbursement for business expenses/use of a corporate credit card.

9. [INTENTIONALLY OMITTED.]

10. Covenants.

(a) In consideration of the compensation to be paid to Executive as set forth in this
Employment Letter, the sufficiency of which Executive hereby acknowledges, Executive agrees that
for a period of eighteen (18) months after termination of his employment (the “ Non-Compete Period
”), Executive will not directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner engage in any business competing with the
businesses of the Company or its subsidiaries (such businesses being the retail sale of arts and
crafts and related products), as such businesses exist or are in process on the date of the
termination of his employment, within a fifty (50) mile radius of any geographic location in which
the Company or its subsidiaries engage in such businesses or actively plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly traded and which competes
with the businesses of Company and its subsidiaries, so long as Executive has no direct or indirect
active participation in the business of such corporation.

 

2

 

(b) During the Non-Compete Period, Executive shall not directly or indirectly through another
person or entity (i) induce or attempt to induce any employee of the Company or any subsidiary to
leave the employ of the Company or such subsidiary, or in any way interfere with the relationship
between the Company or any subsidiary and any employee thereof, (ii) hire an employee of the
Company or any subsidiary, or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any subsidiary to cease doing
business with the Company or such subsidiary, or in any way interfere with the relationship between
any such customer, supplier, licensee, licensor, franchisee, or business relation and the Company
or any subsidiary (including, without limitation, making any negative statements or communications
about the Company or its subsidiaries).

(c) The provisions of this paragraph 10 will be enforced to the fullest extent permitted by
the law in the state in which Executive resides or is employed at the time of the enforcement of
the provision. If, at the time of enforcement of this paragraph 10, a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area and that the court shall
be allowed to revise the restrictions contained herein to cover the maximum period, scope and area
permitted by law. Executive agrees that the restrictions contained in this paragraph 10 are
reasonable. In the event of the breach or a threatened breach by Executive of any of the provisions
of this paragraph 10, the Company, in addition and supplementary to other rights and remedies
existing in its favor, may apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof (without posting a bond or other security). In addition, in the
event of an alleged breach or violation by Executive of this paragraph 10, the Non-Compete Period
shall be tolled until such breach or violation has been duly cured.

11. Severance and Benefits Prior to a Change of Control. If Executive’s employment is
terminated at any time by the Company without cause (as defined below) prior to a Change of Control, Executive will receive (i) the sum of (a) severance payments in the amount of eighteen (18)
months’ salary continuation at his then current rate, less any required withholdings or authorized
deductions, in equal consecutive monthly installments from the termination date, plus (b) an amount
equal to the sum of the actual annual incentive bonus paid to Executive in each of the two fiscal
years prior to the termination date multiplied by .75, less any required withholdings or authorized
deductions, in eighteen (18) equal consecutive monthly installments from the termination date (the
amounts in subparagraphs 11(i)(a) and 11(i)(b) collectively, “Severance”) plus (ii) health
insurance benefits pursuant to the Company’s programs as in effect from time to time, to the extent
Executive participated immediately prior to the date of such termination for eighteen (18)
consecutive months from the termination date. Severance shall be paid at the same time the
Executive’s salary would have been paid based on the Company’s normal payroll practices had the
Executive continued employment through the severance term. Notwithstanding the foregoing and in
conformity with paragraph 16 below, if the Severance is subject to the Specified Employee Rule (as
defined in paragraph 16 below), then no monthly payment of Severance shall be made to the Executive
before the date which is six (6) months after the date of his separation from service as and to the
extent required under Code Section 409A (as defined in
paragraph 16 below) and the aggregate of the first six months payments shall be made on that
date with the remaining twelve payments to be made in twelve consecutive equal monthly
installments.

 

3

 

Cause shall mean the a determination in good faith by the Company of either (i) failure of the
Executive to perform substantially the Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the Executive by the Chairman of the
Board or another member of the Board which specifically identifies the manner in which the Chairman
of the Board or the Board believes that the Executive has not substantially performed the
Executive’s duties; provided however, that Executive shall have one opportunity to cure the failure
so identified for sixty days from the written demand, or (ii) the engaging by the Executive in
illegal conduct or gross misconduct, in either case, in violation of the Company’s Code of Ethical
Business Conduct, as amended, restated or supplemented. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall have been delivered
to the Executive a written notice from the Chairman of the Board or another member of the Board
finding that, in the good faith opinion of the Chairman of the Board or the Board, the Executive is
guilty of the conduct described in phrases (i) or (ii) of this paragraph setting forth the meaning
of Cause, and specifying the particulars thereof in detail.

No payment of any sum pursuant to this paragraph 11 will be made unless (i) Executive shall have
executed and delivered to the Company a release of any and all claims against the Company and its
subsidiaries (and their respective present and former officers, directors, employees and agents),
all in form and substance as provided by counsel to the Company (the “Release”), (ii) any waiting
period or revocation period provided by law for the effectiveness of the Release shall have expired
without Executive having revoked the Release and (iii) the Resignation (as defined in paragraph 17
below) shall have become effective. Upon any termination of employment Executive agrees not to
make any negative comments or disparaging remarks, concerning or relating to his employment with
Company or his service as a director on the Board, in writing, orally, or electronically, that
would injure the business or reputation of the Company and its subsidiaries (and their respective
present and former affiliates, officers, directors, employees and agents).

12. At Will. Executive may terminate his employment with the Company at any time and
for any reason whatsoever. Likewise, the Company may terminate his employment at any time and for
any reason whatsoever, with or without cause or advance notice. This at-will employment
relationship cannot be changed except in writing signed by the Chairman of the Board.

13. No Confidences. During his employment, Executive shall not improperly use,
communicate, disclose, provide commentary regarding or make available any proprietary information
or trade secrets of any former employer or any other person or entity to whom or to which Executive
has any duty of confidentiality. Further, Executive warrants that Executive shall not bring onto
the Company’s premises or transfer to the Company’s electronic media any

 

4

 

documents or information that is not generally known to the public, belonging to any former
employer or other person or entity to whom or to which Executive owes a duty of confidentiality
unless Executive has written consent from the former employer or other person or entity. Executive
acknowledges that Executive is agreeing to all of the terms of this Employment Letter voluntarily
and without any coercion or restraint.

14. Other Agreements. Consistent with the Company’s practices, Executive will enter
into agreements relating to confidentiality and arbitration, along with equity agreements from time
to time, with the Company as a condition of his employment. This Employment Letter replaces and
supersedes any and all prior discussions, offers, communications or agreements of any sort
whatsoever previously provided to Executive by the Company; except that any agreements with respect
to equity grants to Executive and the Award letter agreement dated March 29, 2010 between the
Company and Executive shall continue in full force and effect, the terms of which shall control
over the terms of this Employment Letter in the case of a conflict between this Employment Letter
and the Award letter or any such equity grant agreement; provided further however; that if Appendix
I has become effective and there is a conflict between the terms of any such equity grant agreement
and Section 7 of Appendix I, then Section 7 of Appendix I shall control.

15. Counterparts. This Employment Letter may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together constitute one and the
same letter.

16. Code Section 409A. Unless otherwise expressly provided, any payment of
compensation by Company to the Executive, whether pursuant to this Employment Letter or otherwise,
shall be made within two and one-half months (2-1/2 months) after the end of the later of the
calendar year or the Company’s fiscal year in which the Executive’s right to such payment vests
(i.e., is not subject to a substantial risk of forfeiture for purposes of Section 409A of the
Internal Revenue Code of 1986, as amended (“Code Section 409A”)).

All payments of “nonqualified deferred compensation” (within the meaning of Code Section 409A)
are intended to comply with the requirements of Code Section 409A, and shall be interpreted in
accordance therewith. Neither party individually or in combination may accelerate, offset or assign
any such deferred payment, except in compliance with Code Section 409A, and no amount shall be paid
prior to the earliest date on which it is permitted to be paid under Code Section 409A. In the
event that an amount becomes payable to the Executive after termination of employment, the Company
shall determine whether such payment is subject to the requirements of Code Section 409A (a)
(2)(A)(i) and Code Section 409A (a)(2)(B)(i) (hereinafter referred to as the “Specified Employee
Rule”). The Company shall make such determination and provide written notice thereof to the
Executive prior to the earlier of the date that any such amounts would be paid to the Executive
without regard to Code Section 409A or within thirty (30) days after his termination of employment.
Upon the request of the Executive, the Company agrees to promptly provide to him such information
that the Executive may reasonably request with regard to its determination. In the event that the
Company determines that an amount payable to the Executive after his termination of employment is
subject to the Specified Employee Rule, then no distribution of such amount shall be made to the
Executive on account of his separation from service before the date which is six (6) months after
the date of his separation from service (or if earlier, the date of death of the Executive) as and to the extent required under Code Section
409A. The aggregate amount that would have been payable to the Executive but for the restrictions
imposed by the prior sentence shall be paid to the Executive as soon as permitted by Code Section
409A, without the imposition of excise taxes.

 

5

 

All expense reimbursement or in-kind benefits provided under this Agreement or, unless
otherwise specified, under any Company program or policy subject to Code Section 409A shall comply
with the following rules: (i) the amount of expenses eligible for reimbursement or in-kind benefits
provided during one calendar year may not affect the benefits provided during any other year; (ii)
reimbursements shall be paid no later than the end of the calendar year following the year in which
the Executive incurs such expenses, and the Executive shall take all actions necessary to claim all
such reimbursements on a timely basis to permit the Company to make all such reimbursement payments
prior to the end of said period, and (iii) the right to reimbursement or in-kind benefits shall not
be subject to liquidation or exchange for another benefit.

17. Member of Board; Resignation. Within 30 days after the execution of this
Employment Letter, the Board will elect Executive as a member of the Board to fill a vacant
position on the Board. Concurrently with such election Executive shall execute and deliver a
resignation letter (“Resignation”) which provides that Executive resigns his position as a member
of the Board effective immediately upon any termination of his employment with the Company. The
Resignation shall be retained with the records of the Company.

18. Notices.

Any notice provided for hereof shall be in writing and shall be (i) personally delivered, (ii)
delivered overnight by a nationally recognized overnight delivery carrier or (iii) mailed by
certified first class mail, return receipt requested, to the recipient at the address below
indicated:

Notices to Executive:

Joseph A. Jeffries

At his most recent address as reflected in the employment records of the Company.

Notices to the Company:

130 A. C. Moore Drive

Berlin, NJ 08009

Attention: Chairman of the Board

 

6

 

or such other address or to the attention of such other person as the recipient party shall
have specified by prior written notice to the sending party. Any notice hereof shall be deemed to
have been given on the day personally delivered, one day after deposit with the overnight delivery
carrier or three days after being mailed.

IN WITNESS WHEREOF, the parties hereto have caused this Employment Letter to be duly executed
and delivered as of the date first written above.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Joseph A. Jeffries
 	 
	 	Joseph A. Jeffries 	 
	 	 	 
	 
	 	A.C. MOORE ARTS & CRAFTS, INC.

 	 
	 	By:  	/s/ Michael J. Joyce
 	 
	 	 	Michael J. Joyce, 	 
	 	 	Chairman of the Board 	 

 

7

 

	 	 	 	 	 

APPENDIX I

CHANGE OF CONTROL PROVISIONS

To Employment Letter of Joseph A. Jeffries (“Executive”)

If a Change of Control (as defined in this Appendix I) of the Company occurs, paragraphs 2
through 12 of the Employment Letter (except paragraph 10 which shall continue) shall be superseded
by this Appendix I.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Effective Date.

For the purpose of this Appendix I, the “Effective Date” shall mean the date on which a Change
of Control (as defined in Section 2 of this Appendix I) occurs. Anything in the Employment Letter
to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment
with the Company is terminated prior to the date on which the Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control, then for all
purposes of the Employment Letter and this Appendix I, the “Effective Date” shall mean the date
immediately prior to the date of such termination of employment.

2. Change of Control. For the purpose of this Appendix I and the Employment Letter, a
“Change of Control” shall mean:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 50% of either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

8

 

(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination, or the combined voting power of
the then-outstanding voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

3. Employment Term. The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms
and conditions of the Employment Letter and this Appendix I, for the period commencing on the
Effective Date and ending on the eighteenth month anniversary of such date (the “Employment
Term”). Such period may be extended in writing by the mutual agreement of the Company and Executive
at any time prior to such anniversary.

4. Terms of Employment.

(a) Position and Duties.

(i) During the Employment Term, (A) the Executive’s position, authority, duties and
responsibilities shall be at least commensurate in all material respects with the most significant
of those held, exercised and assigned to him at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s services shall be performed at the location
where the Executive was employed immediately preceding the Effective Date or any office or location
less than 35 miles from such location.

 

9

 

(ii) During the Employment Term, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote Executive’s best efforts and Executive’s
full business time and attention to the business and affairs of the Company and its subsidiaries.
During the Employment Term it shall not be a violation of this Appendix I or the Employment Letter
for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage
personal investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee of the Company in accordance with
this Appendix I and the Employment Letter. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.

(b) Compensation.

(i) Base Salary. During the Employment Term, the Executive shall receive an annual base
salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date occurs. During the
Employment Term, the Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive under the
Employment Letter and this Appendix I. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in the Employment Letter and this Appendix I
shall refer to Annual Base Salary as so increased. As used in this Appendix I, the term “affiliated
companies” shall include any company controlled by, controlling or under common control with the
Company.

(ii) Annual Bonus; Long-term incentive plan; Benefits. In addition to Annual Base Salary, the
Executive will continue to be eligible to participate in the Company’s annual incentive bonus plan,
for each fiscal year ending during the Employment Term, and be eligible to receive an annual bonus
(the “Annual Bonus”) pursuant to such annual incentive plan consistent with the Company’s
practices. Executive will continue to be eligible to participate in the Company’s long-term
incentive plan and to be entitled to receive benefits generally provided to officers of the Company
consistent with the Company’s practices.

5. Termination of Employment.

(a) Death or Disability. The Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Term. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Term (pursuant to the definition of
Disability set forth below), it may give to the Executive written notice in accordance with this
Appendix I and the Employment Letter of its intention to terminate the Executive’s employment. In
such event, the Executive’s employment

 

10

 

with the Company shall terminate effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of the Executive’s duties. For
purposes of this Appendix I and the Employment Letter, “Disability” shall mean the absence of the
Executive from the Executive’s duties with the Company on a full-time basis for 90 consecutive days
as a result of incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable to the Executive or
the Executive’s legal representative.

(b) Cause. The Company may terminate the Executive’s employment during the Employment Term
for Cause. For purposes of this Appendix I “Cause” shall mean:

(i) the failure of the Executive to perform substantially the Executive’s duties with the
Company or one of its affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance is delivered to the
Executive by the Chairman or another member of the Board which specifically identifies the manner
in which the Chairman or the Board believes that the Executive has not substantially performed the
Executive’s duties; provided however, that Executive shall have one opportunity to cure the failure
so identified for sixty days from the written demand, or

(ii) the engaging by the Executive in illegal conduct or gross misconduct, in either case, in
violation of the Company’s Code of Ethical Business Conduct.

Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board or upon the instructions of the Chairman of the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall have been delivered
to the Executive a written notice from the Chairman of the Board or another member of the Board
finding that, in the good faith opinion of the Chairman of the Board or the Board, the Executive is
guilty of the conduct described in subsection 5(b)(i) or (ii) above, and specifying the particulars
thereof in detail.

(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good
Reason. For purposes of this Appendix I and the Employment Letter, “Good Reason” shall mean:

(i) the assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position, authority, duties or responsibilities as contemplated by Section 4(a) of this
Appendix I, or any other action by the Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;

(ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this
Appendix I, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;

 

11

 

(iii) the Company’s requiring the Executive to be based at any office or location other than
as provided in Section 4(a)(i)(B) of this Appendix I; or

(iv) any failure by the Company to require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Appendix I and the Employment
Letter in the same manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.

(d) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is
terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of
the notice of termination, (ii) if the Executive’s employment is terminated by the Company other
than for Cause or Disability, the date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case may be.

6. Obligations of the Company upon Termination.

(a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Term,
the Company shall terminate the Executive’s employment other than for Cause, death or Disability or
the Executive shall terminate Executive’s employment for Good Reason:

(i) the Company shall pay to the Executive in a single lump sum payment in cash within 30 days
after the Date of Termination the aggregate of the following amounts (provided however; that in
conformity with Section 9 below, if the single lump sum is subject to the Specified Employee Rule
((as defined in Section 9 below)), then the single lump sum shall be paid to the Executive on the
date which is six (6) months after the date of his separation from service as and to the extent
required under Code Section 409A ((as defined in Section 9 below))) :

(A) the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, plus (2) the product of (I) the target Annual Bonus paid or payable as
if target were achieved for the current fiscal year of the Date of Termination and (II) a fraction,
the numerator of which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 (“Pro Rata Bonus”), plus (3) any compensation
previously deferred by the Executive and not theretofore previously paid shall be paid in
accordance with the terms of the plan pursuant to which deferral was made plus (4) an amount equal
to the sum of the actual annual incentive bonus paid to Executive in each of the two fiscal years
prior to the Date of Termination multiplied by .75 and (5) the amount equal to the Executive’s
Annual Base Salary multiplied by 1.5.

 

12

 

(ii) The Company shall provide all benefits as are, from time to time, maintained for officers
of the Company, including without limitation, medical and other insurance plans to the Executive through the eighteenth month anniversary of the Date of the
Termination of Executive’s employment pursuant to or, if not pursuant to, which are substantially
equal to the Company’s insurance programs in effect and to the extent Executive participated
immediately prior to the date of such termination, provided that if the Consolidated Omnibus
Reconciliation Act of 1985 (“COBRA”) applies to the provision of health insurance benefits for any
part of the period of benefit continuation provided for by this paragraph, Executive will make all
necessary elections and such benefits will run concurrently with and satisfy the continuation
coverage requirements of this subsection for the period to which COBRA applies.

No payment of any sum nor the receipt of any benefit shall be due to Executive under this
Section 6(a) unless and until (i) Executive shall have executed and delivered to the Company a
release of any and all claims against the Company and its subsidiaries (and their respective
present and former officers, directors, employees and agents — collectively the “Released
Parties”) and a covenant not to sue the Released Parties, all in form and substance as provided by
counsel to the Company (the “Release”), (ii) any waiting period or revocation period provided by
law for the effectiveness of such Release shall have expired without Executive’s having revoked
such Release and (iii) if the Executive is a member of the Board, the Resignation (as defined in
paragraph 17 of the Employment Letter) shall have become effective. In the event Executive shall
decline or fail for any reason to execute and deliver such Release, the Executive shall be entitled
to receive only those amounts provided pursuant to Section 6(d) provided for an Executive whose
employment is terminated by the Company for Cause or by Executive without Good Reason.

(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Term, this Appendix I and the Employment Letter shall terminate without
further obligations to the Executive’s legal representatives under this Appendix I and the
Employment Letter, except that Executive, or Executive’s estate if applicable, shall be entitled to
receive the sum of (i) Executive’s Annual Base Salary through the Date of Termination, (ii)
Executive’s Pro Rata Bonus (as defined in Section 6(a)(i)(A)(2)) and (iii) the timely payment or
provision of any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies. The amounts set forth in Section 6(b)(i) and (ii) shall be
paid to the Executive’s estate, as applicable, in a lump sum in cash within 30 days of the Date of
Termination.

(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s
Disability during the Employment Term, this Appendix I and the Employment Letter shall terminate
without further obligations to the Executive, except that Executive shall be entitled to receive
the sum of (i) Executive’s Annual Base Salary through the Disability Effective Date and (ii)
Executive’s Pro Rata Bonus (as defined in Section 6(a)(i)(A)(2)) and (iii) the timely payment or
provision of other benefits required to be paid or provided to Executive or which Executive is
eligible to receive under any plan, program, practices or policies relating to disability of the
Company and its affiliated Companies. The amounts set forth in Section 6(c)(i) and (ii) shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

 

13

 

(d) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for
Cause or Executive voluntarily terminates employment without Good Reason during the Employment
Term, this Appendix I and the Employment Letter shall terminate without further obligations to the
Executive other than for the Executive’s Annual Base Salary through the Date of Termination and
timely payment or provision of any other applicable benefits, in each case to the extent
theretofore unpaid.

7. Options, SARs and Restricted Stock. All options to purchase and stock appreciation
rights in common stock in the Company and the grants of common stock in the Company with vesting
restrictions held by Executive on the date of a Change of Control shall immediately be deemed
vested and the options and stock appreciation rights shall immediately become exercisable on the
date of the Change in Control and Executive shall have until the end of the applicable original
term of each such option and stock appreciation right to exercise such option and stock
appreciation right; provided, however, that if Executive’s employment with the Company is
terminated for any reason (other than Cause) after the Change in Control, Executive shall have
until the earlier of (1) the end of the applicable original term of each such option and stock
appreciation right and (2) 18 months after the Date of Termination to exercise each such option and
stock appreciation right post-termination. In the event that Executive’s employment with the
Company is terminated for Cause, all options, stock appreciation rights and unvested restricted
stock held by Executive shall terminate immediately.

8. Nonexclusivity of Rights. Nothing in this Appendix I or the Employment Letter
shall prevent or limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies and amounts which are
vested benefits or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the date of termination of employment shall be payable in accordance
with such plan, policy, practice or program or contract or agreement except as explicitly modified
by this Appendix I and the Employment Letter.

9. Code Section 409A. Unless otherwise expressly provided, any payment of
compensation by Company to the Executive, whether pursuant to this Appendix I and the Employment
Letter or otherwise, shall be made within two and one-half months (21⁄2  months)
after the end of the later of the calendar year or the Company’s fiscal year in which the
Executive’s right to such payment vests (i.e., is not subject to a substantial risk of forfeiture
for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section
409A”)).

All payments of “nonqualified deferred compensation” (within the meaning of Code Section 409A)
are intended to comply with the requirements of Code Section 409A, and shall be interpreted in
accordance therewith. Neither party individually or in combination may accelerate, offset or assign
any such deferred payment, except in compliance with Code Section 409A, and no amount shall be paid
prior to the earliest date on which it is permitted to be paid under Code Section 409A. In the
event that an amount becomes payable to the Executive upon termination of employment, the Company
shall determine whether such payment is subject to the requirements of Code Section 409A (a)
(2)(A)(i) and Code Section 409A (a)(2)(B)(i) (hereinafter referred to as the “Specified Employee
Rule”). The Company shall make such determination and provide

 

14

 

written notice thereof to the Executive prior to the earlier of the date that any such amounts
would be paid to the Executive without regard to Code Section 409A or within thirty (30) days after
his termination of employment. Upon the request of the Executive, the Company agrees to promptly
provide to him such information that the Executive may reasonably request with regard to its
determination. In the event that the Company determines that an amount payable to the Executive
after his termination of employment is subject to the Specified Employee Rule, then no distribution
of such amount shall be made to the Executive on account of his separation from service before the
date which is six (6) months after the date of his separation from service (or if earlier, the date
of death of the Executive) as and to the extent required under Code Section 409A. The aggregate
amount that would have been payable to the Executive but for the restrictions imposed by Code
Section 409A shall be paid to the Executive as soon as permitted by Code Section 409A without the
imposition of excise taxes.

All expense reimbursement or in-kind benefits provided under this Appendix I and the
Employment Letter or, unless otherwise specified, under any Company program or policy subject to
Code Section 409A shall comply with the following rules: (i) the amount of expenses eligible for
reimbursement or in-kind benefits provided during one calendar year may not affect the benefits
provided during any other year; (ii) reimbursements shall be paid no later than the end of the
calendar year following the year in which the Executive incurs such expenses, and the Executive
shall take all actions necessary to claim all such reimbursements on a timely basis to permit the
Company to make all such reimbursement payments prior to the end of said period, and (iii) the
right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for
another benefit.

10. Code Section 280G. If it shall be determined that any payment or distribution by
the Company to or for the benefit of the Employee under this Agreement or any other arrangements
between the parties would be subject to the deduction limitations and excise tax imposed by
Sections 280G and 4999 of the Internal Revenue Code, (including any applicable interest and
penalties, the “Excise Tax”), then the parties agree that the Company shall reduce the aggregate
amount of all such payments or distributions or other arrangements as may be necessary to avoid the
application of any Excise Tax.

 

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