COAL TRANSPORTATION AGREEMENT
THIS AGREEMENT is made and entered into this 25th day of August, 1995, by
and between Northern Coal Transportation Company, an Oregon corporation with
an office in Gillette, Wyoming ("Northern"), and American Crystal Sugar
Company, a Minnesota cooperative with offices at 101 North Third Street,
Moorhead, Minnesota 56560 ("Shipper").
RECITALS
1. Concurrent with this Coal Transportation Agreement ("Agreement"),
Kennecott Energy Company, for and on behalf of Spring Creek Coal Company, has
executed a Coal Supply Agreement with Shipper (the "Coal Supply Agreement")
for the sale and purchase of coal from the Spring Creek Mine (the "Mine") to
Shipper. The coal is to be used in Shipper's sugar factories in East Grand
Forks, Moorhead and Crookston, Minnesota, in Drayton and Hillsboro, North
Dakota, and possibly in Progold LLC's Wahpeton, North Dakota, sugar factory.
In this Agreement, these sugar factories shall be referred to collectively as
the "Sugar Factories" or individually as a "Sugar Factory." Capitalized terms
not otherwise defined in this Agreement will have the meaning set forth in
the Coal Supply Agreement.
2. The Coal Supply Agreement contemplates the establishment of a
transportation system that can take delivery at the Point of Delivery (as that
term is defined in Section 5.01 of the Coal Supply Agreement) of estimated
requirements of coal in approximately equal weekly and monthly amounts and
transport those amounts to the Sugar Factories.
3. Shipper has appointed United Sugars Corporation, a Minnesota company
with offices at 1700 Eleventh Street, Moorhead, Minnesota ("USC") to act as its
agent in procuring and facilitating the transportation of coal to the Sugar
Factories. USC has the authority and is acting on behalf of Shipper in
relation to the transportation of coal under the Coal Supply Agreement. USC
will be acting on behalf of Shipper under this Agreement.
4. Northern desires to enter into a contract with Shipper to arrange for
the transportation of coal called for by the Coal Supply Agreement and to
perform all of the obligations of Shipper with respect to the transportation of
coal required by the Coal Supply Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties set forth below, the parties to this Agreement agree as follows:
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SECTION 1. TERM; CAMPAIGN SEASONS.
1.01 TERM. The term of this Agreement shall commence on July
1,1995 ("the Effective Date"), and shall continue to July 31, 2005.
1.02 CAMPAIGN SEASONS. Shipments under the Coal Supply
Agreement have been divided into periods of approximately ten months
commencing on or about August 15 and continuing until about May 31 of the
following calendar year, with the last such period running from about August
15, 2004, to about May 31, 2005. These ten-month periods of coal deliveries
shall be referred to in this Agreement as "Campaign Seasons." The Campaign
Season for ProGold LLC is contemplated to be year-round.
SECTION 2. SHIPMENTS.
2.01 DESCRIPTION OF TRANSPORTATION SYSTEM. Northern agrees to
transport from the Spring Creek Mine to the Sugar Factories the estimated annual
requirements under the Coal Supply Agreement in approximately equal weekly and
monthly amounts. The coal is to be delivered to Shipper FOB Point of Delivery.
The Coal Supply Agreement anticipates that deliveries in the first months of a
Campaign Season will be larger to allow Shipper sufficient time to build
stockpiles at each Sugar Factory. Northern will design the system to allow
Shipper Substantial flexibility to increase or decrease the amount of coal
delivered
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to a Sugar Factory by each unit train (when broken into segments), subject to
the tonnage minimum stated in Section 2.09 of this Agreement. However, Shipper
may not stop a unit train from cycling except in the event of a force majeure as
provided in Section 5 of this Agreement, since such interruptions greatly
increase the difficulty of transportation management. Northern reserves the
right to tender trains of not more than 80 cars in total or 115,000 tons of
coal in total per calendar month consisting of the total cars to Shipper
and/or Minn-Dak Farmers Cooperative (""Minn-Dak") for the destination Sugar
Factories and Minn-Dak's Sugar Factory so that following telephonic notice to
Shipper of such limitation aforesaid Northern shall not be required to tender
trains totaling 80 cars or 115,000 tons per calendar month under this
Agreement to both Minn-Dak and Shipper, until such time as Northern gives
telephonic notice to Shipper that the limitation no longer applies. There
will be a stop at Fargo, North Dakota, for removal of cars to be delivered to
Moorhead and Wahpeton, North Dakota. Shipper may not require Northern to
continue more than 75 cars to Grand Forks, North Dakota. At origin, Northern
may place all cars for delivery via Fargo, North Dakota, at the head of the
train. A detailed description of the transportation system, as set forth
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Northern's agreement with the Burlington Northern Railroad (the "Carrier"), is
set forth in Exhibit A.
2.02 RESPONSIBILITIES CONCERNING DELIVERY - Northern shall
deliver coal to the Sugar Factories. Northern will deliver coal in railcars
directly to sidings on Shipper's property at the Sugar Factories. Northern will,
on Shipper's behalf, fully pursue all claims against third parties for loss of
the coal in any given railcar from the time that the railcar is completely
loaded at the Spring Creek Mine until the railcar is on property at a Sugar
Factory.
2.03 COORDINATION. Northern shall be responsible for arranging
all transportation and for coordinating with Spring Creek Coal Company the
arrival of railroad trains for loading at the Point of Delivery (as defined in
Section 5.01 of the Coal Supply Agreement). Northern shall use reasonable
efforts to schedule arrivals of trains at the Point of Delivery such that coal
can be delivered in approximately equal monthly amounts during any Campaign
Season; provided that deliveries in the first months of a Campaign Season will
be larger to allow Shipper to build stockpiles at each of the Sugar Factories.
Weekly shipments will be in substantially equal quantities consistent with the
monthly delivery quantity.
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2.04 NOTICE OF CHANGES IN TRAIN SEGMENTS. If Shipper desires to
alter the size of train segments to be transported to any Sugar Factory during a
Campaign Season, Shipper may notify Northern by mail or by telephone, telegraph
or other electronic means. Any electronic notice shall be confirmed in writing
within ten (10) days. Requested changes in the size of train segments to be
transported to any Sugar Factory will be implemented for the first train loaded
more than 24 hours after notice is received; provided that Northern shall not be
obligated to provide unit trains of more than 80 cars or fewer than 55 cars,
which trains are comprised -of Shipper and Minn-Dak cars. Subject to system
limitations, a train segment that has left the Mine may be reconsigned to a
different Sugar Factory. Shipper shall monitor and control its coal stockpiles
so that requested increases or decreases in the size of train segments delivered
to the Sugar Factories will not result in a unit train with more than 80 cars or
fewer than 55 cars which may be combined with Minn-Dak shipments. USC will act
on Shipper's behalf in coordinating unit train composition with Minn-Dak and
Northern.
2.05 RIGHT TO TRANSPORT EXCESS COAL. To maintain the efficient
operation of its transportation system, Northern may transport from the Spring
Creek Mine to the Sugar Factories
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up to 12 percent more than Shipper's estimated or amended coal requirements in
any month, as contemplated by Section 3.03 of the Coal Supply Agreement.
Shipper agrees to accept and pay for the transportation of such coal, provided
that Shipper shall not be required to pay transportation for more coal than it
has requested during any Campaign Season, subject to the minimum tonnage stated
in Section 2.09 of this Agreement.
2.06 EXTENDED CAMPAIGN SEASON. Under Section 3.02 (b) of the
Coal Supply Agreement, Shipper may extend any Campaign Season by three months
before August 15 or after May 31 of such Campaign Season upon six weeks written
notice to Spring Creek Coal Company. If Shipper chooses to extend any Campaign
Season, it shall also be required to give Northern six weeks written notice and
Shipper shall pay Northern for any increased transportation costs as specified
in Section 2.08 of this Agreement.
2.07 UNLOADING. Shipper agrees to provide facilities at the
Sugar Factories to permit delivery by Northern of segments of a train. Said
facilities shall be designed and constructed for carload unloading. Northern
will place the loaded cars on a siding on Shipper's property. The Shipper will
complete unloading operation at its own expense. The Shipper shall exercise
reasonable care and caution when unloading.-Cl
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railcars at their facilities and will insure that railcar doors are closed with
latches in the locked position, with cargo hoppers free and clear of any foreign
debris. The Shipper shall pay for the actual costs incurred by Northern in
respect of any failure of Shipper to exercise such reasonable care and caution,
including any origin demurrage incurred by Northern as a result thereof.
Plant-personnel are responsible to notify USC, who will in turn notify
Northern, of any problems or deficiencies found concerning the railcars.
When a train reaches a Sugar Factory, the coal shall be unloaded from each
railcar within five (5) full days of the date of the arrival of such railcar
to ensure that at least 55 empty railcars- are available at all times to make
up unit trains. In the event that railcars are not unloaded within the time
specified above, Northern reserves the right to charge a mutually acceptable
demurrage rate on each such railcar.
2.08 CHANGES IN TRANSPORTATION SYSTEM. Shipper acknowledges that
changes in the transportation system including, but not limited to, (i)
reconsignment, of train segments from one Sugar Factory to another; (ii) any
break in the unit train cycle due to failure to unload railcars or other reasons
caused by Shipper; (iii) any extension of the Campaign Season as provided in
Section 2.06 of this Agreement, and (iv) Carriers Line Abandonment as set forth
in Section 7.01 may result in changes
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in Northern's railcar and other costs as set forth in Exhibit' A. Unless excused
by Section 5, Shipper agrees to pay all such changes in transportation costs
caused by or attributable to Shipper or USC. Northern WILL be responsible for
changes in transportation costs caused by or attributable to Northern. Northern
will be responsible for changes in transportation costs caused by or
attributable to Northern.
2.09 FREIGHT COSTS DUE TO QUANTITY VARIATIONS.
*CONFIDENTIAL TREATMENT REQUESTED*
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*CONFIDENTIAL TREATMENT REQUESTED*
2.10 FROZEN COAL. Shipper assumes the risk that coal may freeze in transit
between the Spring Creek Mine or any source of Substitute Coal and the Sugar
Factories. No price
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adjustment or delay in unloading shall be allowed for frozen coal.
2.10 SOLE REPRESENTATIVE. For the purpose of proper and
efficient communications, it is expressly understood between Northern and the
Shipper that Northern is the sole representative of Shipper, USC and the Sugar
Companies for all services stated or contemplated in this Agreement and that all
communication, verbal or written, relating in any way to the rates, terms,
conditions, and performance of this Agreement be accomplished solely between
Northern, Northern Mine's Representative and Carrier. The only exception to the
above will involve day-to-day communications between USC or the Sugar Companies
it represents and the Carrier pertaining to or relating to railcar switching
from and to the Sugar Factories or such switching of destination related
operations.
SECTION 3. TRANSPORTATION COSTS; ADJUSTMENTS; BILING AND PAYMENT
*CONFIDENTIAL TREATMENT REQUESTED*
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*CONFIDENTIAL TREATMENT REQUESTED*
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*CONFIDENTIAL TREATMENT REQUESTED*
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*CONFIDENTIAL TREATMENT REQUESTED*
14
*CONFIDENTIAL TREATMENT REQUESTED*
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*CONFIDENTIAL TREATMENT REQUESTED*
SECTION 4. LIABILITY AND INDEMNIFICATION.
4.01 LIABILITY FOR PROPERTY DAMAGE AND PERSONAL INJURY. Each
party shall assume and be responsible for any liability for loss and damage to
property and for personal injury, including death, to any person caused by the
negligence of that party and arising out of or connected with performance of
this Agreement.
4.02 JOINT LIABILITY. If liability is due to the joint and
concurring negligence of the parties, it shall be shared by them proportionately
on the basis of the negligence of each party involved.
4.03 LIMITATION ON LIABILITY. IN NO EVENT SHALL EITHER PARTY
HAVE LIABILITY TO THE OTHER PARTY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES EXCEPT
AS EXPRESSLY STATED IN THIS AGREEMENT.
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SECTION 5. FORCE MAJEURE.
(a) If either party is unable to meet any of its obligations under
this Agreement as a result of flood, earthquake, storm, or other act of God,
fire, derailment, accident, strike, lockout, boycotts, picketing, shortages of
or inability to obtain electric power, raw materials, railcars or machinery,
mechanical breakdown in facilities, war, insurrection, riot, catastrophic sugar
beet or corn crop failure (as applicable), railroad line abandonment, act of
government or governmental agency, or due to any cause beyond the reasonable
control of either party, including the inability of a Sugar Factory, the Mine
and/or the Carrier to meet its obligations for reasons whether similar or
dissimilar to the foregoing and whether foreseeable or unforeseeable" such event
will be deemed an event of force majeure. In addition, it shall be deemed an
event of force majeure in the event Shipper is unable to burn Northern's coal
due to ash-fouling, sulfur dioxide emissions, or other legally enforceable
environmental restrictions, or either party permanently closes or experiences
partial failure or nonoperation of any of its facilities lasting a minimum of
seven (7) days as a result of reasons beyond the control of such party. In the
event of force majeure, the obligations of the parties, other than payment for
Transportation Costs incurred, shall be
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suspended for the duration of the event of force majeure, provided that
reasonable notice is given. No suspension or reduction for reason of force
majeure shall invalidate the remainder of this Agreement; but on removal of the
cause, shipments shall resume at the specified rate; deficiencies in shipments
so caused shall not be made up except by mutual consent. If an event of force
majeure prevents the performance of either party for a period of one year or
more despite that party's efforts to eliminate the force majeure event and to
mitigate its impact, then the party not claiming an event of force majeure may
terminate this Agreement by providing at least thirty (30) days written notice
of termination to the other party. The provisions of this Section shall not
excuse either party from performing unless that party gives a reasonable notice
to the other party of the occurrence of an, event of force
majeure.
(b) For the purposes of any partial or total event of Force Majeure under
this Agreement, it will be presumed that, except for the event, total loading of
coal onto trains at the mine and total deliveries to Shipper by Northern at the
Sugar Factories would have been 3650 Tons per Campaign Season day, under the
500,000 Ton Minimum Volume Requirement, for each continuous hour period. Lie
Minimum Tonnaqe Requirement of 416,66-1 tons
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(subject to reduction as provided herein) will be proportionately reduced per
Campaign Season day for each Force Majeure day claimed as follows:
Minimum Tonnage Requirement
DESTINED WHEN TO: 500,000 TONS
----------------- ------------
Redco, ND 575 Tons
Wilds, MN 560 Tons
Drayton, 4TD 575 Tons
Bingham, MN 540 Tons
East Grand Forks, MN 750 Tons
Wahpeton, ND 650 Tons
(c) For the purposes of this Section 5, the Shipper destination Sugar
Factories are those located at the destination named in Exhibit C.
SECTION 6. DISPUTES.
In the event any dispute arises between the parties concerning any issue of
law or fact arising out of this Agreement, it shall be settled by arbitration
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award may be entered in any court having
jurisdiction over the matter.
The parties to the arbitration shall be entitled to such discovery as would
be available to them under the Federal Rules of Civil Procedure, and the
arbitrators will have all the authority of a court under such Rules incidental
to such discovery, Including but not limited to orders to produce documents or
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other materials and orders to appear and submit to deposition and to impose
appropriate sanctions, including but not limited to awarding sanctions against a
party for failure to comply with any order.
The arbitration panel shall consist of three arbitrators, one appointed by
Northern, one by Shipper and the third by the arbitrators appointed by Northern
and Shipper. If the partyappointed arbitrators cannot agree within 15 days
after their appointment on appointment of a third person, then the third person
shall be appointed by the American Arbitration Associa- tion.
SECTION 7. GENERAL PROVISIONS.
7.01 LINE ABANDONMENT. The terms of this Agreement in no WAY
obligate carrier or Northern to continue ownership, maintenance (including
Weight standards), or operation of any rail lines. Northern will not be
liable for any consequential damages or increased transportation costs that
may be incurred by Shipper as the result of carrier's discontinuation of
ownership, maintenance (including Weight standards), or operation of any rail
lines. If Shipper fails to meet its Minimum Tonnage Requirements due to
lawful cessation of service or abandonment of any ral lines during the term
of this Agreement, as the sole remedy of: Shipper, the rates on all coal
whhich moved in accor-
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dance with this Agreement during the then current Campaign Season shall be
determined as if the Minimum Tonnage Requirement had been met.
7.02 WAIVER. Failure of either party at any time to require
performance of any provision of this Agreement shall not limit that party's
right to enforce the provisions, nor shall any waiver of any breach of any
provision be a waiver of any succeeding breach of the provision itself or of
any other provision.
7.03 HEADINGS. The headings in this Agreement are included only
for convenience and shall not control or affect the meaning or construction of
this Agreement.
7.04 ENTIRE AGREEMENT. This Agreement is the entire agreement
between the parties. There are no other provisions, representations,
warranties or understandings, express or implied. No modification, variation
or amendment of this Agreement shall be of any force or effect unless it is
in writing and signed by all the parties.
7.05 BINDING AFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties, their respective successors and assigns.
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7.06 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Minnesota.
7.07 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original.
7.08 NOTICES. Notices under this Agreement shall be in writing
and shall be effective when actually delivered. If mailed, a notice shall be
deemed effective five (5) days after mailing as registered or certified mail,
postage prepaid, directed to the other party as set out below. If via
telefacsimile, a notice shall be deemed effective upon receipt of the successful
telefax transmission report, directed to the other party as set out below.
NORTHERN NORTHERN COAL TRANSPORTATION COMPANY
Attn: Contract Administration
505 South Gillette Avenue
Gillette, Wyoming 82716
or
Caller Box 3009
Gillette, Wyoming 82717-3009
Fax No. (307)687-6009
SHIPPER AMERICAN CRYSTAL SUGAR COMPANY
Attn: Vice President, Operations
101 North Third Street
Moorhead, Minnesota 56560
Fax No. (218)236-4494
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The addresses and fax numbers of any party may be changed by giving notice in
writing at any time to the other party.
7.08 CONFIDENTIALLITY. Any nonpublic information, oral or
written, including the contents of this Agreement and any related agreement,
disclosed by a party to the other shall be considered confidential information,
and such information shall not be disclosed to any third party, other than to
Northern's parent corporation, USC, ProGold, or the employees, accountants,
attorneys, and lenders of such parties, and will be kept secret and confidential
during the term of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
Effective Date set forth above.
NORTHERN COAL TRANSPORTATION COMPANY
By /s/ ILLEGIBLE
--------------------------------------
Title V.P. Marketing & Sales
-----------------------------------
AMERICAN CRYSTAL SUGAR COMPANY
By /s/ Marcus F. Richardson
--------------------------------------
Title CO.O.
-----------------------------------
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EXHIBIT A
DESCRIPTION OF TRANSPORTATION
(AS EXCERPTED FROM THE AGREEMENT BETWEEN THE BURLINGTON
NORTHERN RAILROAD AND NORTHERN COAL TRANSPORTATION COMPNAY)
*CONFIDENTIAL TREATMENT REQUESTED*
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*CONFIDENTIAL TREATMENT REQUESTED*
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EXHIBIT B
LIQUIDATED DAMAGES
*CONFIDENTIAL TREATMENT REQUESTED*
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EXHIBIT C
*CONFIDENTIAL TREATMENT REQUESTED*
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EXHIBIT D
ADJUSTMENT OF RATES AND CHARGES
*CONFIDENTIAL TREATMENT REQUESTED*
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*CONFIDENTIAL TREATMENT REQUESTED*
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