# Contract

June 30th, 2005
Requirement Specification (per Shipment) ------------- -------------- Maximum Moisture [_ _ _ _]% Maximum Ash [_ _ _ _]% Maximum Sulfur [_ _ _ _]% Minimum Volatile Matter [_ _ _ _]% Minimum Ash Fusion Temperature Softening (H=W Reducing Atmosphere) [_ _ _ _]degrees F Minimum Grindability (Hardgrove Grindability Index ("HGI")) [_ _ _ _] HGI Minimum Calorific Value [_ _ _ _] Btu/lb.
(b) Based on the foregoing, the following calculations would be made: Step 1: Calculate (to six decimal places) the [_ _ _ _] of all Shipments received during the Contract Year: [_ _ _ _] [_ _ _ _] [_ _ _ _] - --------- x ---------- x --------- = [_ _ _ _] [_ _ _ _] [_ _ _ _] [_ _ _ _]
[_ _ _ _] [_ _ _ _] = [_ _ _ _] Step 2: Calculate (to six decimal places) the [_ _ _ ] of all Shipments received during the Contract Year: [_ _ _ _] = [_ _ _ _] Thus, the actual [_ _ _ _] Step 3: Calculate the total amount of [_ _ _ _] received during the Contract Year: [_ _ _ _] [_ _ _ _] [_ _ _ _] [_ _ _ _] x --------- x --------- x --------- = [_ _ _ _] [_ _ _ _] [_ _ _ _] [_ _ _ _]
Step 4: Calculate the amount of [_ _ _ _] resulting from the excess determined in Step 2 and then round to the nearest whole unit: [_ _ _ _] [_ _ _ _] [_ _ _ _] x --------- x --------- = [_ _ _ _] [_ _ _ _] [_ _ _ _]
Item of Analysis Tolerance - ---------------- --------- Moisture [_ _ _ _] Moisture Ash [_ _ _ _] Dry Ash Volatile Matter [_ _ _ _] Dry Volatile Matter Sulfur = 2.0% [_ _ _ _] Dry Sulfur AFT (H=W Reducing) [_ _ _ _] Grindability [_ _ _ _]
10. PRICE, BILLING AND PAYMENT The price per ton stated in the Purchase Order is fixed and is not subject to adjustment except as provided herein or except as otherwise provided in the Purchase Order. The price per ton paid by Purchaser for coal delivered under the Agreement includes all sums to be borne by Seller for all federal, state, and local taxes of every nature (but not including sales and use taxes to be paid by Purchaser) which are assessed or may be assessed as a result of the production, shipment, or sale of coal pursuant to the Agreement. Seller's acceptance of the amounts paid by Purchaser for coal delivered under the Agreement shall constitute full and final settlement of any and all claims by Seller for costs or expenses (including, without limitation, taxes, fees, governmental impositions, assessments, premiums, and penalties) incurred or paid by Seller, either while the Agreement is in effect or at any time in the future, with respect to the production, shipment, or sale of coal pursuant to the Agreement. Seller agrees to defend, indemnify, and hold Purchaser harmless from and against any claim or liability for any such taxes, fees, governmental impositions, assessments, premiums, or penalties. Seller shall report to Purchaser all shipments of coal at the delivery point specified in the Purchase Order. Initially, Purchaser shall pay, normally within thirty days after shipment, at [_ _ _ _] of the price per ton stated in the Purchase Order if Purchaser has received the coal, the required shipping documentation, and the samples, if required, of coal collected by Seller. Seller shall not submit invoices for payment. Purchaser shall pay any balance due, based upon the determination of quality adjustments, as soon as practical after such determinations are made for coal shipped during each month. In the event the total amount payable resulting from these determinations is less than the amount previously paid by Purchaser, the overpayment shall be deducted from subsequent payments to Seller; or if no subsequent payments become due, Seller shall reimburse Purchaser promptly upon receipt of such overpayment. Purchaser shall have the C-9 * CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. BRACKETS AND UNDERSCORES DENOTE SUCH OMISSIONS. right to deduct or set-off against payments due Seller hereunder any sum of money due to Purchaser from Seller, whether or not such sums are related to the Agreement. 11. PRICE ADJUSTMENTS FOR QUALITY A. Calorific Value Adjustment Bituminous Coal The Calorific Value Adjusted Price for coal received from Seller and accepted by Purchaser for each shipment shall be calculated as follows: The [_ _ _ _] shall be divided by the [_ _ _ _] specified in the Purchase Order. If the resulting quotient is equal to or greater than [_ _ _ _], the quotient shall be multiplied by [_ _ _ _] per ton stated in the Purchase Order. If the resulting quotient is less [_ _ _ _] price and transportation charge paid by Purchaser. The resulting product, less the price per ton stated in the Purchase Order, shall constitute the Calorific Value Adjustment ("CVA"). EXAMPLE: [_ _ _ _] f.o.b. mine @ [_ _ _ _] Btu/lb. and [_ _ _ _] for freight Shipment A = [_ _ _ _]. Shipment B = [_ _ _ _] Btu/lb. [_ _ _ _] [_ _ _ _] - ------ ------ [_ _ _ _] [_ _ _ _] [_ _ _ _] [_ _ _ _] therefore: therefore: [_ _ _ _] = [_ _ _ _] [_ _ _ _] = [_ _ _ _] = [_ _ _ _] = [_ _ _ _]
GUARANTEE MONTHLY MONTHLY AVERAGE AS SULFUR RECEIVED EXAMPLE SPECIFICATION % SULFUR ADJUSTMENT CALCULATION - ------- ------------- ---------- ---------------------- A [_ _ _ _] [_ _ _ _] [_ _ _ _] per ton reduction B [_ _ _ _] [_ _ _ _] [_ _ _ _] per ton reduction
Plants Daniel, Miller and Scherer are New Source Performance Standards plants that mandate a [_ _ _ _] pounds sulfur per million Btu's. Purchaser shall reject any shipment to these plants, which exceeds [_ _ _ _] sulfur/million Btu's. Seller shall be C-11 * CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. BRACKETS AND UNDERSCORES DENOTE SUCH OMISSIONS. liable for all costs incurred as a result of exceeding the [_ _ _ _] pounds sulfur per million Btu's maximum. For shipments intended for Plants Daniel, Miller and Scherer, Purchaser may deduct [_ _ _ _] from the f.o.b. mine price in liquidation of administration costs for shipments exceeding [_ _ _ _] pounds of sulfur per million Btu; provided, however, Seller shall remain responsible for incidental damages arising out of Purchaser's acceptance of shipments exceeding [_ _ _ _] pounds of sulfur per million Btu. Such amount is a reasonable pre-loss estimate of Purchaser's damages, which are difficult to measure; and this provision is not intended as a penalty. Such adjustments in the price of coal shall be made if such shipments are accepted by Purchaser, provided, however, Purchaser shall be under no obligation to accept such shipments. In addition, some plants in the system, including but not limited to, Plants Arkwright and Mitchell, shall require a minimum sulfur specification, which shall be stated in the Purchase Order. Analysis performed on any size sample lot which indicates an "as received" sulfur content less than the minimum sulfur specification stated in the Purchase Order shall result in a downward price adjustment of [_ _ _ _] sulfur, or portion thereof, below such specification. E. Ash Fusion Temperature Adjustment Bituminous Coal Analysis performed on any size sample which indicates an ash fusion temperature (H=W) within [_ _ _ _] degrees of the ash fusion specification stated in the Purchase Order shall not result in any price adjustment for ash fusion temperature. Analysis of any shipment or portion of a shipment which falls more than [_ _ _ _] degrees below the ash fusion temperature specification stated in the Purchase Order shall result in a downward price adjustment based on a ratio [_ _ _ _] degree below such specification. EXAMPLE A: Ash fusion temperature is within [_ _ _ _] degree deadband. Ash fusion temperature specification: [_ _ _ _] degrees Ash fusion temperature of shipment: [_ _ _ _] degrees Ash fusion temperature adjustment: [_ _ _ _]
EXAMPLE B: Ash fusion temperature is outside [_ _ _ _]-degree deadband. Ash fusion temperature specification: [_ _ _ _] degrees Ash fusion temperature of shipment: [_ _ _ _] degrees Ash fusion temperature adjustment: [_ _ _ _] per ton reduction
Sub-Bituminous Coal Analysis performed on any size sample which indicates an ash fusion temperature (H=W) within [_ _ _ _] degrees of the ash fusion temperature specification stated in the Purchase Order shall not result in any price adjustment for ash fusion temperature. Analysis of any shipment or portion of a shipment which falls more than [_ _ _ _] degrees below the ash fusion temperature specification stated in the Purchase Order shall result in a downward price adjustment based on a ratio of [_ _ _ _] per degree below such specification. EXAMPLE A: Ash fusion temperature is within [_ _ _ _] -degree deadband. C-12 * CONFIDENTIAL MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. BRACKETS AND UNDERSCORES DENOTE SUCH OMISSIONS. Ash fusion temperature specification: [_ _ _ _] degrees Ash fusion temperature of shipment: [_ _ _ _] degrees Ash fusion temperature adjustment: [_ _ _ _]
EXAMPLE B: Ash fusion temperature is outside [_ _ _ _] degree deadband. Ash fusion temperature specification: [_ _ _ _] degrees Ash fusion temperature of shipment: [_ _ _ _] degrees Ash fusion temperature adjustment: [_ _ _ _] per ton reduction