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Exhibit 10.10
AGREEMENT BETWEEN
LOUISIANA GENERATING, LLC
AND
TRITON COAL COMPANY
FOR THE SALE AND PURCHASE OF COAL
Execution Copy
August 1, 1997
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AGREEMENT BETWEEN LOUISIANA GENERATING, LLC
AND TRITON COAL COMPANY
FOR THE SALE AND PURCHASE OF COAL
TABLE OF CONTENTS
PAGE
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July 31, 1997 i
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1.01 MUTUAL OBLIGATIONS.................................................................................... 2
1.02 DEFINITIONS........................................................................................... 2
2.01 SELLER'S RESERVES AND PREPARATION FOR SELLING COAL.................................................... 7
2.02 SUBSTITUTION.......................................................................................... 8
3.01 EFFECTIVENESS; TERM OF AGREEMENT...................................................................... 9
3.02 EXTRAORDINARY MARKET OPPORTUNITIES.................................................................... 11
3.03 SELLER'S RIGHT TO MATCH PRICE......................................................................... 12
4.01 PRICE PER TON OF COAL................................................................................. 18
4.02 ADJUSTMENTS - GENERAL................................................................................. 19
4.03 ADJUSTMENT FOR CHANGES IN GOVERNMENTAL IMPOSITIONS.................................................... 19
4.04 CALORIFIC VALUE ADJUSTMENT............................................................................ 24
4.05 EMISSIONS ALLOWANCE ADJUSTMENT........................................................................ 24
4.06 EXCESS SO2 ALLOWANCE DUE SELLER....................................................................... 256
4.07 SO2 ALLOWANCE DUE PURCHASER........................................................................... 267
5.01 BILLING AND PAYMENT................................................................................... 27
5.02 THIRD PARTY ANNUAL AUDIT.............................................................................. 29
6.01 SHIPMENT.............................................................................................. 30
6.02 RAIL SHIPMENTS........................................................................................ 30
6.03 FREIGHT CHARGES, TITLE, AND RISK OF LOSS.............................................................. 32
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6.04 LOADING COSTS CHARGEABLE TO SELLER.................................................................... 32
6.05 EXCESS FREIGHT COSTS CHARGEABLE TO SELLER............................................................. 33
6.06 PAYMENT OF EXCESS COSTS............................................................................... 33
7.01 SHIPPING NOTICE....................................................................................... 33
8.01 QUANTITY REQUIREMENTS................................................................................. 35
9.01 WEIGHING.............................................................................................. 36
10.01 COAL SPECIFICATIONS.................................................................................. 38
11.01 SAMPLING............................................................................................. 39
11.02 ANALYSIS............................................................................................. 41
12.01 REJECTION OF COAL FOR COAL QUALITY DEFICIENCIES...................................................... 43
12.02 SUSPENSION OF SHIPMENTS FOR COAL QUALITY DEFICIENCIES................................................ 44
13.01 AUTOMATIC TERMINATION................................................................................ 47
14.01 TERMINATION FOR UNREMEDIED DEFAULT................................................................... 47
15.01 FORCE MAJEURE........................................................................................ 48
16.01 CHANGES IN ENVIRONMENTAL RELATED REQUIREMENTS........................................................ 51
17.01 WARRANTIES........................................................................................... 55
17.02 DISCLAIMER OF WARRANTIES............................................................................. 56
18.01 INDEPENDENT CONTRACTOR............................................................................... 56
19.01 BINDING EFFECT....................................................................................... 56
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20.01 ASSIGNMENTS.......................................................................................... 56
21.01 RIGHT OF INSPECTION: ACCOUNTING..................................................................... 57
22.01 RIGHT OF INSPECTION: COAL PROPERTY................................................................... 58
22.02 RIGHT OF INSPECTION: PURCHASER's LAB................................................................ 59
23.01 WAIVER............................................................................................... 59
24.01 LIMITATION OF DAMAGES................................................................................ 59
25.01 DISPUTED MATTERS..................................................................................... 60
25.02 ARBITRATION.......................................................................................... 61
25.03 EXCEPTIONS........................................................................................... 64
26.01 NOTICES.............................................................................................. 65
27.01 REMEDIES CUMULATIVE.................................................................................. 66
28.01 AGENT FOR PURCHASER.................................................................................. 66
29.01 CAPTIONS............................................................................................. 67
30.01 APPLICABLE LAW....................................................................................... 67
31.01 COMPLIANCE WITH LAWS AND REGULATIONS................................................................. 67
32.01 ENTIRE AGREEMENT..................................................................................... 67
33.01 CONFIDENTIAL AND PROPRIETARY INFORMATION............................................................. 68
34.01 BIG CAJUN II, UNIT 3................................................................................. 69
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Execution Copy
AGREEMENT BETWEEN LOUISIANA GENERATING, LLC
AND TRITON COAL COMPANY
FOR THE SALE AND PURCHASE OF COAL
This Agreement is made and entered this 1st day of August, 1997 by and
between Louisiana Generating, LLC, a limited liability company organized and
existing under the laws of the State of Delaware, hereinafter referred to as
"PURCHASER", and Triton Coal Company, a corporation organized and existing under
the laws of the State of Delaware, hereinafter referred to as "SELLER."
WITNESSETH:
WHEREAS, SELLER owns or otherwise controls or has entered into
contracts for the mining of the Coal Property (as hereinafter defined) from
which SELLER desires to sell coal to PURCHASER.
WHEREAS, PURCHASER intends to acquire Cajun Electric Power Cooperative,
Inc.'s ("Cajun's") Big Cajun No. II steam-electric generating plant and coal
unloading dock, located at approximately Mile 263 AHP near New Roads, Louisiana
(the "Power Plant") pursuant to the Asset Purchase Agreement (as hereinafter
defined) incorporated in the Trustee's Plan of Reorganization (as hereinafter
defined) proposed in Cajun's Chapter 11 Case Number 94-11474 pending before the
United States Bankruptcy Court for the Middle District of Louisiana (the
"Chapter 11 Proceeding"); and
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WHEREAS, PURCHASER will require large quantities of coal for the
operation of the Power Plant.
NOW, THEREFORE, in consideration of the premises and covenants herein,
PURCHASER and SELLER agree as follows:
1.01 MUTUAL OBLIGATIONS. SELLER agrees to sell coal to PURCHASER,
and PURCHASER agrees to buy coal from SELLER, on the terms and conditions, in
the quantities, and of the quality set forth herein.
1.02 DEFINITIONS. The following definitions shall apply in this
Agreement:
a. "AAR" shall have the meaning set forth in Section 9.01.
b. "ACMS" shall mean the American Commercial Marine Service
Company.
c. "ASSET PURCHASE AGREEMENT" shall mean the Second Amended and
Restated Asset Purchase and Reorganization Agreement dated as
of December 6, 1996 among PURCHASER, the Trustee and, as to
certain specific sections of the Agreement only, NRG Energy,
Inc., Zeigler Coal Holding Company, and Southern Energy, Inc.,
as the same may be amended from time to time.
d. "ASTM" shall have the meaning set forth in Section 7.01.
e. "BN" shall mean the Burlington Northern Santa Fe Railway
Company.
f. "BASE PRICE" shall have the meaning set forth in Section 4.01.
g. "BILLING PRICE" is the Base Price as adjusted pursuant to
Section 4.02.
h. "CAJUN" shall have the meaning set forth in the Recitals.
i. "CALORIFIC VALUE ADJUSTMENT" shall have the meaning set forth
in Section 4.04.
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j. "CARRIER"or "CARRIERS" shall mean collectively BN and ACMS or
other Carriers under any replacement Transportation Agreement.
k. "CHANGED GOVERNMENTAL IMPOSITIONS" shall have the meaning set
forth in Section 4.03.
l. "CHAPTER 11 PROCEEDING" shall have the meaning set forth in
the Recitals.
m. "COAL CARS" shall mean PURCHASER supplied open-top railcars
equipped with rotary couplers, having a capacity of not less
than 204,000 pounds, suitable for use in service between the
relevant Origin and the Terminal, and suitable for use in
service in the coal unloading equipment maintained by ACMS or
any successor Carrier.
n. "COAL PROPERTY" shall mean the real property, mineral
interests, preparation plant facilities and loading
facilities, with improvements thereto, referred to as the
Buckskin Mine and the North Rochelle Mine, both located in
Campbell County, Wyoming and the other approved coal
properties described in Appendix A.
o. "CONTRACT YEAR" shall mean each twelve (12) month period
during the term of this Agreement following the Effective
Date.
p. "DELIVERED COST" shall mean, for purposes of calculating the
Calorific Value Adjustment under Section 4.04, the sum of the
Base Price plus the Transportation Rate to the Power Plant
unloading facility, including the rail, transshipment and
barge rates.
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q. "DESIGNATED LOADING POINT" shall mean that point on Origin
mines' trackage at which any further train movement is at the
direction of the mine operator.
r. "DISPUTED MATTER" shall have the meaning set forth in Section
25.01.
s. "EFFECTIVE DATE" shall have the meaning set forth in Section
3.01.
t. "EMISSIONS ADJUSTMENT" shall have the meaning set forth in
Section 4.05.
u. "ENVIRONMENTAL RELATED REQUIREMENT" shall have the meaning set
forth in Section 16.01.
v. "ESTIMATED DELIVERY REQUIREMENTS" shall have the meaning set
forth in Section 8.01.
w. "EXCLUDED PORTION" shall have the meaning set forth in Section
3.03.
x. "EXTENDED TERM" shall have the meaning set forth in Section
3.01.
y. "EXTRANEOUS MATERIAL" shall have the meaning set forth in
Section 10.01.
z. "EXTRAORDINARY SALES NOTICE" shall have the meaning set forth
in Section 3.02.
aa. "FORCE MAJEURE" shall have the meaning set forth in Section
15.01.
bb. "GOVERNMENTAL IMPOSITIONS" shall have the meaning set forth in
Section 4.03.
cc. "GOVERNMENTAL IMPOSITIONS NOTICE" shall have the meaning set
forth in Section 4.03.
dd. "GSU" shall mean Gulf States Utilities or any successor in
interest.
ee. "HEARING" shall have the meaning set forth in Section
25.01(b).
ff. "INDEPENDENT ARBITRATOR" shall have the meaning set forth in
Section 25.02(b).
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gg. "INITIAL TERM" shall mean the period of time beginning on the
Effective Date and ending five (5) Contract Years from the
Effective Date.
hh. "INTERNAL MEDIATION NOTICE" shall have the meaning set forth
in Section 25.01(a).
ii. "NEW AGREEMENTS" shall have the meaning set forth in Section
3.03.
jj. "ORIGIN" shall mean each of the existing Powder River Basin
mines served by BN (or any successor Carrier) in Campbell and
Converse Counties, Wyoming that is now operating, those mines
listed in Appendix A, and those mines that become operational
during the Initial Term of this Agreement and are approved by
the prior written consent of PURCHASER, not to be unreasonably
withheld.
kk. "ORIGIN LOADING FACILITIES" shall mean the equipment necessary
to load Unit Train Shipments of coal at an Origin, in
accordance with PURCHASER's Transportation Agreement,
including but not limited to rail trackage, coal silos and/or
hoppers, conveyor belts, preparation plants and storage
facilities at or for such Origin.
ll. "OUTSIDE MEDIATION NOTICE" shall have the meaning set forth in
Section 25.01(a).
mm. "PAYMENT PERIOD" shall have the meaning set forth in Section
5.01.
nn. "PERIODIC COAL PAYMENT" shall have the meaning set forth in
Section 5.01.
oo. "POWER PLANT" shall have the meaning set forth in the
Recitals.
pp. "PURCHASER" shall have the meaning set forth in the preamble.
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qq. "PURCHASER APPOINTEE" shall have the meaning set forth in
Section 25.02(b).
rr. "PURCHASER'S DESIGNATED LABORATORY" shall have the meaning set
forth in Section 11.02.
ss. "REFEREE LABORATORY" shall have the meaning set forth in
Section 11.02.
tt. "SECTION 3.03 NOTICE" shall have the meaning set forth in
Section 3.03.
uu. "SELLER" shall have the meaning set forth in the preamble.
vv. "SELLER APPOINTEE" shall have the meaning set forth in Section
25.02(b).
ww. "SELLER PORTION" shall have the meaning set forth in Section
3.03.
xx. A "SHIPMENT" shall begin when SELLER has loaded coal in
sufficient quantities into a Unit Train provided by PURCHASER
and shall end when the coal is unloaded at the Power Plant or
other designated facility as provided herein.
yy. "SURVIVING PROVISIONS" shall have the meaning set forth in
Section 3.01.
zz. "TENDER" shall mean (a) with respect to a Shipment of coal by
rail, to make available for loading into Coal Cars; (b) with
respect to Coal Cars, to release Coal Cars into the control of
BN (or any successor Carrier); and (c) with respect to a
Shipment of coal by barge, to make available for unloading and
loading into barges at the Terminal.
aaa. "TERMINAL" shall mean ACMS' Hall Street Terminal in St. Louis,
Missouri or such other terminal as may be specified in a
successor Transportation Agreement.
bbb. "TON" or "TON" shall mean two thousand pounds avoirdupois
weight.
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ccc. "TRANSPORTATION AGREEMENT" shall mean the Transportation
Agreement among PURCHASER, BN and ACMS or any replacement or
successor Transportation Agreement.
ddd. "TRIGGER DATE" shall have the meaning set forth in Section
4.01.
eee. "TRANSPORTATION OF COAL" shall mean movement of Coal from
Origin to destination including rail transportation from
Origin to the Terminal, receiving, interim storage, loading to
barge at the Terminal and barge transportation from the
Terminal to destination.
fff. "TRANSPORTATION RATE" shall mean those rates set forth in the
Transportation Agreement.
ggg. "TRUSTEE" shall mean Ralph R. Mabey, as Chapter 11 Trustee of
Cajun.
hhh. "TRUSTEE'S PLAN OF REORGANIZATION" shall mean the Trustee's
Plan of Reorganization as may be amended from time to time for
Cajun, pending in the Chapter 11 Proceeding.
iii. "UNIT TRAIN" shall mean an assembly of Coal Cars transporting
coal from one Origin to the Terminal on one bill of lading.
2.01 SELLER'S RESERVES AND PREPARATION FOR SELLING COAL. SELLER
represents and warrants that SELLER owns or controls the Buckskin and North
Rochelle mines and that such mines contain economically recoverable coal under
current laws and regulations of a quality and in quantities which shall be
sufficient to satisfy the requirements of
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this Agreement and that all coal delivered hereunder shall be mined from the
Coal Property or such other Origins as may be approved by PURCHASER pursuant to
Section 2.02.
SELLER hereby agrees to commit sufficient reserves of coal at the
Buckskin and North Rochelle mines meeting the quality specifications of Section
10.01 so as to fulfill the quantity specifications herein. SELLER agrees and
warrants that SELLER shall not use or sell coal meeting the quality
specifications hereof from such mines in a way that shall reduce the
economically recoverable balance of coal from such mines to an amount less than
the amount required to be supplied hereunder.
SELLER shall defend the title of PURCHASER with respect to all coal
sold hereunder and, with respect to such title, shall indemnify PURCHASER from
and against all claims, demands, actions, suits and judgments.
2.02 SUBSTITUTION. All coal delivered hereunder shall be shipped from
the Coal Property or, at SELLER's sole option, after giving notice to PURCHASER,
any Origin, provided SELLER obtains the prior written consent of PURCHASER with
respect to such Origin, which consent shall not be unreasonably withheld and,
provided further, that the coal shipped from any Origin other than the Coal
Property satisfies the quality specifications of Section 10.01 hereof and, on
the basis of a test burn, performs satisfactorily to PURCHASER in the Power
Plant.
In the event that SELLER requests that PURCHASER conduct a test burn of
coal from a proposed substitute Origin, such test shall be promptly scheduled
and performed consistent with PURCHASER's then current operating plans. SELLER
shall promptly reimburse PURCHASER for all costs incurred by PURCHASER which are
paid to third parties for conducting such test,
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provided that PURCHASER shall pay the normal Transportation Rates (excluding any
costs of segregating such coal or other extraordinary costs, which shall be paid
by SELLER) associated with the transportation of such coal. PURCHASER shall not
be required to perform more than two test burns in any Contract Year. PURCHASER
shall solely determine the results of test burns in accordance with its standard
operating procedures. PURCHASER shall promptly notify SELLER of its approval of
such proposed Origin if use of such coal does not adversely affect PURCHASER's
operations, provided, however, that PURCHASER shall retain the right to withdraw
its approval of any Origin, including the Coal Property, if the use of coal from
such Origin has, in PURCHASER's sole discretion reasonably exercised, a material
adverse effect on PURCHASER's operations when compared to its historical
operations.
3.01 EFFECTIVENESS; TERM OF AGREEMENT. This Agreement shall only become
effective if the closing occurs under the Asset Purchase Agreement. SELLER shall
provide the full coal requirements for the Power Plant for a period of five (5)
Contract Years (the "Initial Term") commencing on the Closing Date of the Asset
Purchase Agreement (the "Effective Date") of this Agreement. This Agreement
shall continue in full force and effect during the Initial Term unless earlier
terminated according to the provisions of this Agreement. PURCHASER shall have
the right to purchase up to {***} tons of coal from other sources during the
{***} Contract Year of the Initial Term hereof for purposes of test burns (the
"Test Burn Amount"). In such event, SELLER has the right to provide make-up coal
to PURCHASER, up to the Test Burn Amount so purchased, during the {***} Contract
Year at the {***} Contract Year price, provided that the Test Burn Amount shall
be deducted from Seller's Portion during such
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sixth Contract Year for purposes of Section 3.03. SELLER agrees to give written
notice to PURCHASER on or before the expiration of the {***} Contract Year if
SELLER intends to provide such make-up coal, in which case SELLER will provide
such coal within the first two (2) calendar months of such {***} Contract Year.
This Agreement shall terminate upon the expiration of the Initial Term,
provided, however, that the following provisions (the "Surviving Provisions")
shall survive for an additional period of {***} Contract Years following the
expiration of the Initial Term (the "Extended Term"): (i) Section 2.01 with
respect to SELLER's reserves; (ii) Section 2.02 with respect to the substitution
of coal from Origins other than the Coal Property; (iii) Section 3.03 with
respect to PURCHASER's right to purchase the Excluded Portion (as hereinafter
defined) from other sources and SELLER's matching rights; (iv) Section 19.01,
Binding Effect; (v) Section 20.01, Assignments; (vi) Section 21.01 with respect
to the parties' accounting inspection rights; (vii) Section 23.01, Waiver;
(viii) Sections 25.01, 25.02 and 25.03 with respect to Disputed Matters; (ix)
Section 26.01, Notices; (x) Section 29.01, Captions; (xi) Section 30.01,
Applicable Law; (xii) Section 32.01, Entire Agreement; (xiii) Section 33.01 with
respect to confidentiality; (xiv) Section 34.01 as it applies to Section 3.03;
(xv) the Preambles, Recitals, such definitions in Section 1.02 and such of the
Appendices as are used or referenced in the Surviving Provisions specified
above; and (xvi) this Section 3.01. At the end of the Initial Term, the
Surviving Provisions may, at the option of the parties: (i) continue in effect
as the only surviving provisions of this Agreement; (ii) be incorporated in a
New Agreement (as defined in Section 3.03); or (iii)
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be incorporated in a separate agreement limited to the Surviving Provisions and
such other provisions as the parties may agree.
3.02 EXTRAORDINARY MARKET OPPORTUNITIES. In the event PURCHASER has an
identifiable new opportunity to make extraordinary off-system power sales, with
respect to which, in order to provide a reasonable margin to PURCHASER,
PURCHASER requires a lower coal price, PURCHASER shall promptly notify SELLER in
writing (an "Extraordinary Sales Notice") of the required price and volume of
coal associated with such opportunity. Such extraordinary market opportunity
shall be for a minimum of either {***}. PURCHASER shall not use this provision
to increase its margin on a sale it otherwise would have made, but only to make
a sale it otherwise would not make.
As soon as possible, but in any event within three (3) days of
receiving an Extraordinary Sales Notice, SELLER shall notify PURCHASER in
writing as to whether or not it elects to supply the required price and volume
of coal associated with such opportunity. Any such coal provided by SELLER shall
comply with the quality and other requirements of this Agreement. If SELLER
fails to respond within such three (3) day period or if SELLER elects not to
meet such price, or to provide the required volume, then PURCHASER may purchase
the coal required to secure such extraordinary off-system power sales from any
supplier who is willing to supply coal at the required price and volume.
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SELLER shall have the right to designate an independent third party to
audit, at SELLER's expense, the quantity and price terms of such sales, provided
that such third party auditor (i) shall be required to keep such terms and the
identity of the third party supplier confidential pursuant to the terms of a
confidentiality agreement to be entered into among such auditor, SELLER and
PURCHASER, which confidentiality agreement shall be reasonably acceptable to
PURCHASER; and (ii) shall only be permitted to advise SELLER as to whether or
not such third party sales are being made in accordance with the quantity and
price terms described in the relevant Extraordinary Sales Notice. PURCHASER and
SELLER agree to work together to identify such market opportunities.
3.03 SELLER'S RIGHT TO MATCH PRICE. During the Extended Term, PURCHASER
shall have the right to purchase up to {***} tons of coal per year, plus or
minus one Unit Train, (the "Excluded Portion") from other sources, provided
that PURCHASER agrees to notify SELLER in writing prior to soliciting or
negotiating such offers or such other arrangements.
Subject to PURCHASER's right to obtain the Excluded Portion from other
sources and to the other terms of this Section 3.03, SELLER shall have the right
to supply coal to meet the remaining coal requirements of the Power Plant
(including the requirements of GSU at Unit No. 3 and any new facilities which
PURCHASER may construct at the Power Plant) (the "SELLER's Portion"), during the
Extended Term. PURCHASER may solicit third party offers for SELLER's Portion.
PURCHASER shall evaluate and determine the delivered cost per million BTU's,
term, coal quality and other terms and conditions applicable to such third party
offers (which it may
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obtain by solicitation and/or through direct negotiations with other fuel
suppliers submitting bona fide offers. In making such evaluations, PURCHASER
shall consider coal handling costs, transportation, transloading, heat content,
sulfur and other generally accepted industry fuel procurement practices.
The following procedure shall be used to determine whether an offer
from a fuel supplier for SELLER's Portion shall be deemed to be "bona fide" for
purposes of this Section 3.03. If such supplier produces coal (i) in the Powder
River Basin or (ii) in the United States west of the Mississippi River and, in
the case of (ii) only, has (A) the ability to load out unit trains (consisting
of a minimum of {***} coal cars) and (B) uncommitted reserve life equal to at
least {***} times the volume that PURCHASER would offer to purchase from such
third party supplier (the "Qualifying Characteristics") (which facts shall be
verified by the independent auditor described below, provided that such
verification shall be limited to obtaining written confirmation from such
proposed supplier of the facts outlined above), the bona fides of such third
party supplier shall be determined in the sole opinion of PURCHASER. If such
third party supplier does not meet the Qualifying Characteristics outlined in
sub-paragraphs (i) or (ii) above because such supplier does not produce coal in
the Powder River Basin or in the United States west of the Mississippi River
(and does not meet the additional sub-qualifications outlined above for
suppliers who produce coal west of the Mississippi River), then PURCHASER shall
provide the independent auditor with such information as is required to enable
such auditor to determine whether the offer of such third party supplier is bona
fide. In making such determination, the inquiry of the auditor shall be
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limited to determining whether it is commercially reasonable to assume that the
third party supplier has the ability to perform its obligations under the
proposed offer.
PURCHASER shall use its commercially reasonable efforts to provide
SELLER with as much advance notice of the terms of such third party offers for
SELLER's Portion as is consistent with PURCHASER's need to minimize its
delivered cost of coal but in no event later than ninety (90) days prior to the
end of the Initial Term (or, if (i) SELLER and PURCHASER have entered into a New
Agreement for the supply of coal or (ii) PURCHASER and a third party supplier
have entered into a contract for the sale of coal, no later than ninety (90)
days prior to the expiration of such New Agreement or coal supply contract, as
relevant). PURCHASER shall provide written notice to SELLER of such offers to
supply the SELLER's Portion (a "Section 3.03 Notice") including all pertinent
terms and conditions (which may include non-economic terms); which notice shall
describe the f.o.b. mine price to SELLER which would result in the same
evaluated delivered price to PURCHASER.
SELLER shall have the right to verify, through an independent auditor,
the terms and conditions of any such offer, provided that (i) PURCHASER consents
to such independent auditor, which consent shall not be unreasonably withheld
and (ii) such auditor enters into a confidentiality agreement with SELLER and
PURCHASER that is reasonably acceptable to PURCHASER and that shall provide that
such auditor shall not reveal the identity of the proposed third party
suppliers. The cost of such verification shall be borne by SELLER. The purpose
of such verification shall be limited to assessing the accuracy of the described
terms and
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conditions and to the matters relating to the bona fides of the third party
suppliers described above.
SELLER shall have the right, but not the obligation, within {***}
working days of receiving a Section 3.03 Notice to provide written notice to
PURCHASER of SELLER's intent to match the price at the same evaluated delivered
cost per million BTU's and to match such other terms and conditions as are
described in such Section 3.03 Notice. Notwithstanding the source of coal
reflected in any Section 3.03 Notice given hereunder, SELLER shall have the
right to match such terms and conditions with shipments originating either at
the Coal Property or some other approved Origin or from a source (and with
similar fuel characteristics) in the same geographic region as the source of
fuel reflected in such Section 3.03 Notice, provided that such non-Origin
sources from other geographic regions shall be subject to approval by PURCHASER
as though they were proposed to be new Origins in accordance with Section 2.02.
In no event shall the independent audit process described above extend
beyond such {***} day period, provided that, if, within such {***} day period
the independent auditor reports that PURCHASER's Section 3.03 Notice does not
accurately describe the third party terms and conditions, PURCHASER shall
correct its Section 3.03 Notice and SELLER's {***} working day period to provide
notice of its intent to match shall be extended for an additional period of five
(5) working days from SELLER's receipt of a corrected Section 3.03 Notice.
If SELLER elects to match such offer, SELLER and PURCHASER shall
cooperate in preparing and executing one or more new agreements (the "New
Agreements") to replace this Agreement (except that the parties may elect to
handle the Surviving Provisions pursuant to
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Section 3.01), which New Agreements shall include: (i) the terms and conditions
described in the Section 3.03 Notice and (ii) such other terms and conditions as
SELLER and PURCHASER may agree; provided that if the parties fail to execute
such New Agreement on or before the date that is forty-five (45) days prior to
the end of the Initial Term (or if a New Agreement previously has been executed,
on or before the date that is forty-five (45) days prior to the end of the term
of such New Agreement) then PURCHASER shall be free to contract with the third
party suppliers on the terms described below.
In the event that SELLER elects to match such offer, SELLER, at its
sole option, may also elect to negotiate the transportation of such coal from
other sources to the Power Plant, provided that PURCHASER has not made prior
contractual commitments to transport such coal; provided that nothing contained
herein shall prohibit PURCHASER from contemporaneously negotiating a coal
transportation agreement with a third party carrier. If SELLER negotiates a
Transportation Agreement that is reasonably acceptable to PURCHASER and
PURCHASER has not made prior contractual commitments to transport such coal,
then PURCHASER shall execute such Transportation Agreement.
In the event PURCHASER has not made prior contractual commitments to
transport such coal and SELLER undertakes to negotiate such Transportation
Agreement, SELLER agrees that it will be acting only as agent for, and
representative of, PURCHASER for that limited purpose. SELLER's agency is
limited to negotiating a coal Transportation Agreement with Carriers and is for
the period beginning when SELLER gives notice to PURCHASER of SELLER's intent to
match such third party notice, as provided herein, and ending with SELLER having
completed its
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negotiations within a reasonably short period of time. SELLER is not permitted
to represent itself as agent of PURCHASER for any other purpose and may act as
PURCHASER's agent only during the period of time established hereinabove.
If PURCHASER has made a prior contractual commitment to transport such
coal, SELLER may not act as PURCHASER's agent in negotiating a Transportation
Agreement, but SELLER shall be free to contact the Carrier with whom PURCHASER
has made such Transportation Agreement or any other Carrier for the purpose of
determining whether SELLER can obtain a transportation rate from such Carrier
that would enable SELLER to match the third party offer outlined in PURCHASER's
Section 3.03 Notice, provided that nothing contained in this Agreement shall
change the requirement that PURCHASER must be the signatory to any
Transportation Agreement entered into to transport the coal to be purchased and
sold hereunder.
Nothing in this Section 3.03 shall restrict PURCHASER in the
development of its own fuel procurement strategy, the choice of type of fuel or
the quality thereof, the choice of third party fuel suppliers, etc., which it
shall elect to purchase after the Initial Term of this Agreement. The only
limitations on PURCHASER during the Extended Term shall be that all offers
relating to SELLER's Portion which SELLER has the election to match hereunder
must be from bona fide suppliers (established as described above), and must
have a minimum term of {***}.
In the event that SELLER does not elect to match all of the alternative
terms and conditions offered by another supplier within the {***} day period
described above (as the same may be extended to correct a Section 3.03 Notice),
or SELLER and PURCHASER fail to execute a New Agreement within the time period
described above, SELLER shall forego its right to match
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that portion of PURCHASER's coal requirements provided that within {***} days of
such event, PURCHASER executes an agreement with {***} from an alternate
supplier to purchase such coal under the same terms as were described in the
Section 3.03 Notice from PURCHASER to SELLER, provided that such third party
agreement may differ from the terms described in the Section 3.03 Notice if such
differences would not reasonably be deemed to be material to a decision by
SELLER as to whether it desires to match such third party offer. Upon expiration
of such coal supply agreement for SELLER's Portion, PURCHASER shall, once again
during the Extended Term, grant SELLER the right to match any new offer. This
matching right shall also again apply during the Extended Term upon the
expiration of any New Agreement entered into between SELLER and PURCHASER as a
result of SELLER electing to match the terms and conditions offered by a third
party supplier.
4.01 PRICE PER TON OF COAL. The prices per ton f.o.b. railcar at the
Coal Property or other approved Origins applicable to Shipments hereunder (the
"Base Price") shall be as follows in the specified calendar years:
($/Ton)
-------
1997 {***}
1998 {***}
1999 {***}
2000 {***}
2001 {***}
2002 {***}
2003 {***}
It is understood that the prices specified above include all costs of
Governmental Impositions, as of the earlier of January 1, 1998 or the Effective
Date (the "Trigger Date"), as
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allocated between PURCHASER and SELLER pursuant to Section 4.03, relating to the
ownership or acquisition of the mineral, mining, processing, marketing or
quality control work necessary to meet the quantity and quality specifications
hereof.
4.02 ADJUSTMENTS - GENERAL. The Base Prices set forth in Section 4.01
shall be adjusted from time to time as provided in Section 4.03 hereof (as so
adjusted, the "Billing Price"). Any adjustments to SELLER's account pursuant to
Section 4.03 shall be included in the Base Price for the purposes of the
Calorific Value Adjustment under Section 4.04.
4.03 ADJUSTMENT FOR CHANGES IN GOVERNMENTAL IMPOSITIONS. The term
"Governmental Impositions," as used in this Agreement, means taxes, fees or
other costs, including royalties or severance taxes imposed on SELLER by any
government or governmental agency or as a result of costs arising from any
governmental law or regulation directly affecting the ownership, production,
severance, loading, transportation, preparation or sale of coal and reclamation
of the source of coal shipped hereunder including all costs of compliance with
the Federal Surface Mining Control and Reclamation Act of 1977 applicable to the
Coal Property or other Origins, including (but not limited to) costs associated
with all environmental protection performance standards under Sections 515 and
516 of such Act, with inspection and monitoring by state and/or federal
regulatory authorities, with the obtaining of permits and with any performance
bond which may be required under such Act. As an example, the term Governmental
Impositions shall include ad valorem taxes and federal royalties levied by a
political subdivision and severance taxes on coal; however, the term
Governmental Impositions shall not include federal or state income taxes, ad
valorem taxes on land, personal property, or
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improvements thereto which are not levied directly upon the ownership,
production, severance, loading, preparation, transportation, or sale of coal
hereunder, unmined mineral taxes, special fund assessments related to worker's
compensation insurance, orders or decrees revoking SELLER's self-insurance
privileges and sales or use taxes (even if imposed on materials and supplies
used in the production of coal hereunder.)
The Base Prices specified in Section 4.01 include all costs of
compliance by SELLER as of the Trigger Date with all Governmental Impositions in
force as of such date. No adjustment to the Base Price shall be made under this
Section 4.03 for costs occasioned by any Governmental Impositions in force on
the Trigger Date or expressly included in the prices specified in Section 4.01,
regardless of whether SELLER's costs as of the Trigger Date reflect the full
costs of compliance with such Governmental Impositions. To the extent not
prohibited by or inconsistent with other provisions of this Section 4.03,
adjustments to the Base Price shall be made for changes in costs which directly
affect coal actually mined or coal procured for delivery to PURCHASER hereunder
and which result from SELLER's compliance with the following: (a) amendments to
Governmental Impositions which are enacted or promulgated after the Trigger
Date, (b) final judgments, orders or decrees issued by any court of law or
equity or administrative or regulatory body after the Trigger Date, which
reflect new and different interpretations of Governmental Impositions or (c)
Governmental Impositions enacted after the Trigger Date (collectively; the
"Changed Governmental Impositions"). However, no adjustment to the Base Price
shall be made for changes in costs which result from any civil or criminal money
fine or penalty imposed as the result of failure to comply with any Governmental
Impositions unless
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PURCHASER shall have specifically authorized the incurring of such fine or
penalty; or any change in the millage rate or valuation of property for purposes
of assessing any existing ad valorem tax. As of the Trigger Date certain of the
Governmental Impositions applicable to this Agreement are set forth in Appendix
B and relate to coal sold hereunder and are calculated in the manner indicated.
In the event and whenever after the Trigger Date any of the events
described in sub-parts (a), (b) or (c) above of the proceeding paragraph occurs,
SELLER shall give PURCHASER prompt written notice thereof (a "Governmental
Impositions Notice") as provided in Section 26.01. For purposes of this Section
4.03, if the Changed Governmental Imposition is stated in cents per ton, the
Governmental Impositions Notice shall contain sufficient documentation and data
to permit PURCHASER to verify SELLER's computations of the effect of such
Governmental Impositions on SELLER's costs. In the event the Changed
Governmental Imposition is not stated in cents per ton, SELLER shall furnish a
preliminary Governmental Impositions Notice to PURCHASER notifying PURCHASER
that such changed Governmental Imposition has occurred, which preliminary notice
shall be followed by a final Governmental Impositions Notice within the time
periods specified below.
Subject to the following provisions of this Section 4.03, after
PURCHASER delivers a Governmental Impositions Notice to SELLER, PURCHASER and
SELLER shall jointly estimate and agree on the cost of such Governmental
Impositions applicable to the coal sold hereunder and shall make an adjustment
to the Base Prices specified in Section 4.01 accordingly. Changes in the
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cost of Governmental Impositions shall be shared {***} to the PURCHASER's
account and {***} to the SELLER's account.
Where such Changed Governmental Imposition is stated in cents per ton,
the adjustment to the Base Prices specified in Section 4.01 shall be made on
such basis using the information contained in the Governmental Impositions
Notice. Where such Changed Governmental Imposition is not stated in cents per
ton, SELLER shall, within sixty (60) days after delivering the preliminary
Governmental Impositions Notice to PURCHASER referenced above, prepare and
submit to PURCHASER a final Governmental Impositions Notice in a format
reasonably acceptable to PURCHASER detailing SELLER's determination of the
actual cost impact of such Changed Governmental Imposition applicable to the
coal delivered to PURCHASER hereunder. Such final notice shall also include a
proposed cents per ton allocation of such actual cost impact based upon the
quantity delivery commitment of SELLER and a method of adjusting for the
continuing cost impact of such Changed Governmental Imposition. SELLER's final
Governmental Impositions Notice submitted in accordance with this Section 4.03
shall be subject to PURCHASER's approval, which approval shall not be
unreasonably withheld. In the event PURCHASER's approval and any adjustment to
be made cannot be established within one hundred twenty (120) days after
submittal by SELLER of its final Governmental Impositions Notice, the matter
shall be submitted to outside mediation in accordance with Section 25.01(b).
PURCHASER shall determine, after consulting in good faith with SELLER
during such one hundred twenty (120) day period, the amount of an interim
adjustment, if any, to partially compensate SELLER for the immediate impact of
any such Changed Governmental Impositions.
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PURCHASER's determination of the amount of any such interim adjustment will be
made after consideration of the detailed statements and supporting information
submitted by SELLER and will not, in PURCHASER's opinion, exceed the expected
amount of the final adjustment. If the final adjustment approved by PURCHASER
differs from any interim adjustment, a retroactive settlement shall be made.
After the approval by PURCHASER of said final adjustment, the required changes
to the Base Price hereunder and other affected provisions of this Agreement
shall be made.
After such final adjustment has been made, then during the period
beginning up to twelve (12) months prior to the delivery of the Governmental
Impositions Notice (or final Governmental Impositions Notice in the case of a
Changed Governmental Imposition that is not stated in cents per ton) and during
which such Changed Governmental Imposition was in effect, an adjustment to the
Base Price specified in Section 4.01 (as such Base Price may have been adjusted
pursuant to Section 4.02) shall be made for the cost of such Changed
Governmental Imposition, applicable to the coal sold to PURCHASER hereunder,
provided that in no event shall an adjustment to the Base Price be made for any
period prior to the Trigger Date. The twelve (12) month limitation imposed in
the prior sentence shall not apply to Governmental Impositions identified in
governmental audits of severance tax or royalty rates or payments. PURCHASER
also shall have the right, but not the obligation, to give SELLER notice as
provided in Section 26.01, of any such Changed Governmental Impositions; and an
adjustment to the Base Price specified in Section 4.01 shall then be made as
described in this Section 4.03.
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4.04 CALORIFIC VALUE ADJUSTMENT. The parties shall make a monthly
adjustment to amounts paid by PURCHASER to SELLER hereunder in accordance with
Section 5.01 upon the basis of the governing actual "as-received" calorific
value of the coal as contained in the samples taken in accordance with Sections
11.01 and 11.02 and analyzed in accordance with Appendix G attached hereto and
as compared to {***} btu/lb. This monthly adjustment (the "Calorific Value
Adjustment") shall be made as set forth in Appendix C.
4.05 EMISSIONS ALLOWANCE ADJUSTMENT. The Base Prices specified in
Section 4.01 above are based on the following assumed prices for emission
allowances during the Initial Term hereof:
Assumed SO[2]
Calendar Year Allowance Price(P[C])
------------- ----------------
2000 {***}
2001 {***}
2002 {***}
2003 {***}
Beginning on January 1, 2000 and continuing during the remainder of the
Initial Term, PURCHASER shall determine the actual price of sulfur dioxide
emission allowances during the immediately preceding month (P[A]), which price
shall equal the "Market Price Indices," rounded to the nearest 1/10th of a cent
per ton, for sulfur dioxide emission allowances that are published or provided
by Cantor-Fitzgerald Environmental Brokerage Services. The Market Price Index
for the current month is published in the prior month (i.e., the January 2000
Market Price Index is published in December 1999). If this information is no
longer published, then PURCHASER and SELLER agree to negotiate in good faith on
the use of a reasonably adequate substitute.
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Upon determination of the actual price of sulfur dioxide emission
allowances as specified above, PURCHASER shall compute an emissions allowance
adjustment (the "Emissions Adjustment") as follows:
Emissions Adjustment = ([P[A] -P[C]]/P[C] ) x A[S]; rounded to the
nearest one-tenth of one cent per ton
Where
P[A] = Actual Monthly Market Price Index of sulfur dioxide
emission allowances
P[C] = Assumed sulfur dioxide emission allowance price for such
calendar year
A[S] = {***} per ton in 2000
{***} per ton in 2001
{***} per ton in 2002
{***} per ton in 2003
If P[A] is greater than P[C] during any such month, the Emissions
Adjustment shall be multiplied by the number of tons of coal shipped hereunder
during such month and SELLER shall promptly remit such amount in cash to
PURCHASER in accordance with Section 5.01 (Billing and Payment).
If P[A] is less than P[C] during any such month, the absolute value of
the Emissions Adjustment shall be multiplied by the number of tons of coal
shipped hereunder during such month and PURCHASER shall promptly remit such
amount in cash to SELLER in accordance with Section 5.01 (Billing and Payment).
4.06 EXCESS SO[2] ALLOWANCE DUE SELLER. Beginning with calendar year
2000, if the actual SO[2] emissions of the Power Plant are less than {***} tons
of SO[2] during any calendar year during the Initial Term, PURCHASER shall
provide SELLER with allowances, as
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calculated herein, by January 20th of the following calendar year rounded to the
next closest allowance. The allowances due SELLER shall be calculated as
follows:
If the actual Annual Plant Burn for such calendar year is less than
{***} MMBtu and actual Power Plant emissions for such calendar year are less
than {***} tons of SO[2] (both as determined by PURCHASER) then:
[{***} - APE - [{***}-APB] x {***}] x {***}= ADS
If the actual Annual Plant Burn in such calendar year is greater than
{***} MMBtu and the actual Power Plant SO[2] emissions for such calendar year
are less than {***} tons of SO[2] then:
[{***} - APE] x {***}=ADS.
Where
Power Plant SO[2] Allowances in Tons available = {***}
Actual Plant Burn in MMBtu = APB
Actual Plant Emissions in Tons of SO[2] = APE
Allowances Due Seller = ADS
A sample calculation of the SO[2] allowance due SELLER is set forth in
Appendix E. If (i) {***} is not the correct number of SO[2] emissions allowances
established for the Power Plant as of the applicable date or if GSU's interest
in the Power Plant is not included in calculating the SO[2] allowances (see
Section 34.01 herein), or (ii) the final Contract Year of the Initial Term is
less than a full calendar year, then Sections 4.06 and 4.07 will be equitably
adjusted by the parties.
4.07 SO[2] ALLOWANCE DUE PURCHASER.
Beginning with calendar year 2000, if actual SO[2] emissions of the
Power Plant are greater than {***} tons of SO[2] during any calendar year of the
Initial Term, SELLER will provide
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PURCHASER by January 20th of the following calendar year, with the number of
allowances in excess of {***} required to enable PURCHASER to be in compliance
with the applicable regulatory requirements for SO[2] allowances for the
previous calendar year.
If SELLER fails to provide PURCHASER with such allowances by January
20th, PURCHASER shall be permitted to purchase the allowances required for
PURCHASER to be in compliance and SELLER shall be liable for the cost thereof,
which shall be payable to PURCHASER immediately upon presentation of a statement
of such costs by PURCHASER.
In the event PURCHASER elects to (i) purchase coal from third parties
pursuant to Section 3.02 or 8.01, or (ii) divert any of SELLER's coal from the
Power Plant to other plants pursuant to Section 6.01, and as a result of such
elections, the SO[2] emissions at the Power Plant are different from what such
emissions would have been in the absence of such election(s), the amount of
SO[2] allowances due SELLER or PURCHASER under Sections 4.06 and 4.07 shall be
adjusted accordingly.
5.01 BILLING AND PAYMENT. An invoice shall be prepared by SELLER and a
copy sent to PURCHASER within {***} days after the end of each Payment Period
(as defined below) for all coal shipped to PURCHASER during the Payment Period.
The payment periods ("Payment Periods") during the Initial Term of this
Agreement shall be as follows:
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PAYMENT PERIODS
{***} - 7th of the month
{***} - 14th of the month
{***} - 21st of the month
{***} - last day of the month
Each invoice will indicate (i) the tons of coal shipped by SELLER
during the Payment Period, as determined by SELLER's loaded weights established
in accordance with Section 9.01, (ii) the then current Billing Price established
pursuant to Sections 4.01, 4.02, and 4.03 hereof and (iii) the amount then due
from PURCHASER (the "Periodic Coal Payment") determined by multiplying the tons
of coal shipped during the Payment Period by the Billing Price. Within fifteen
(15) days after the end of each Payment Period PURCHASER shall remit to SELLER
or its designee one-hundred percent (100%) of the Periodic Coal Payment.
Within fifteen (15) days after the end of each calendar month during
the Initial Term, PURCHASER shall calculate the total amount due SELLER for coal
shipped during the prior month, plus or minus any adjustments pursuant to the
Calorific Value Adjustment specified in Section 4.04 and Appendix C and the
Emissions Adjustment specified in Section 4.05. This total amount less all
Periodic Coal Payments previously made for coal shipped during the Payment
Periods of such prior month shall be forwarded by PURCHASER to SELLER within
five (5) working days for any balance due from PURCHASER. Any such amount which
is due from SELLER to PURCHASER as a result of an overpayment shall be credited
toward PURCHASER's payment due for the next Shipment.
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Invoices shall be sent to:
Fuel Accounting Manager
Louisiana Generating
Baton Rouge, LA
Payment shall be sent via wire transfer to the following account:
Triton Coal Company
c/o Bank of America
Account No. 78-20151
ABA No. 071000039
5.02 THIRD PARTY ANNUAL AUDIT. PURCHASER has executed a Transportation
Agreement for the transportation of coal hereunder during the Initial Term of
this Agreement. Transportation Rates and certain other information in the
Transportation Agreement must be held confidential pursuant to the terms of such
Agreement. In order to verify the accuracy of Calorific Value Adjustments
calculated pursuant to Section 4.04, SELLER may designate an independent third
party to annually audit PURCHASER's computations of such adjustments; provided
that (i) PURCHASER consents to such independent auditor, which consent shall not
be unreasonably withheld; (ii) such auditor enters into a confidentiality
agreement with SELLER and PURCHASER that is reasonably acceptable to PURCHASER
and that shall provide that such auditor shall be bound by the confidentiality
provisions of the Transportation Agreement; and (iii) the scope of such audit
shall be limited to verifying the accuracy of Calorific Value Adjustments
calculated pursuant to Section 4.04. The cost of such verification shall be
borne by SELLER.
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6.01 SHIPMENT. It is anticipated that coal sold hereunder shall be
shipped by rail from the Designated Loading Point ultimately to be delivered to
the Power Plant. PURCHASER's designation of plants to receive the coal may
include any plants on or off the Louisiana Generating system in the event
PURCHASER experiences operating problems or transportation problems. In
addition, PURCHASER, may elect to have up to {***} tons per year of the coal
sold by SELLER hereunder delivered to plants other than the Power Plant as
designated by PURCHASER; provided, however, that no such coal shall be delivered
to plants belonging to any of the three partners who comprise PURCHASER or any
of their respective affiliates or subsidiaries. PURCHASER shall nominate the
tons of coal to be shipped to other plants subject to SELLER's consent which
shall not be unreasonably withheld. In addition, PURCHASER, at its sole option,
may elect to have all or any part of the coal sold hereunder delivered to plants
other than the Power Plant as designated by PURCHASER; provided, however, that
all of the energy produced from such coal is received by PURCHASER. Any cost
increases which may result from the transportation of coal from the Origin to
destinations other than the Power Plant pursuant to this Section 6.01 shall be
for PURCHASER's account.
6.02 RAIL SHIPMENTS. PURCHASER shall provide whatever rail
transportation service is required for the loading of the coal to be provided by
SELLER under this Agreement. SELLER shall provide at its expense Origin Loading
Facilities sufficient for efficient and dependable loading of at least one
hundred and twenty (120) Coal Car Unit Trains at the Coal Property and other
Origins as mutually agreed to by PURCHASER and SELLER. SELLER agrees to provide
Origin Loading Facilities capable of loading Unit Trains at an effective rate of
a
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minimum of {***} tons in {***} hours. SELLER shall load the Coal Cars in a
timely manner that coincides with the loading times specified in the applicable
Transportation Agreement. SELLER shall be prepared to operate the Origin Loading
Facilities twenty-four (24) hours per day, seven days per week, if needed, in
compliance with the Transportation Agreement applicable to deliveries under this
Agreement to which SELLER agrees to be bound and, further, agrees to conduct its
operation in compliance herewith and therewith. (A summary of the
non-confidential terms of the applicable Transportation Agreement provisions is
attached hereto as Appendix F).
PURCHASER shall not make changes to the loading or operating provisions
of the existing Transportation Agreement without the prior written consent of
SELLER, which consent shall not be unreasonably withheld. Upon execution of an
applicable tariff or rail contract that supplements or replaces the existing
Transportation Agreement, Appendix F may be supplemented by attaching relevant
portions of said tariff or rail contract hereto as a new Appendix F. SELLER
represents and warrants that no agreement of SELLER providing for the joint use
of surface facilities shall interfere with or impair SELLER's obligations as set
forth in this Agreement.
Shipping schedules shall be coordinated by PURCHASER's and SELLER's
transportation coordinators in accordance with the quantities of coal to be
delivered under this Agreement.
6.03 FREIGHT CHARGES, TITLE, AND RISK OF LOSS. Subject to the
reimbursement provided by Sections 6.04 and 6.05, PURCHASER shall pay all
freight and other charges imposed by Carriers with respect to the loading,
transportation, transshipment and
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unloading at destination of the coal provided under this Agreement. PURCHASER
shall bear all risks associated with ownership of the coal including, but not
limited to, the risk of loss of each Shipment after the Shipment has been
properly loaded into Coal Cars at the Designated Loading Point in accordance
with the terms hereof and title shall pass to PURCHASER at the Designated
Loading Point once such loading has been completed; provided, however, if
PURCHASER suffers an economic disadvantage as a result thereof, SELLER and
PURCHASER agree to negotiate in good faith a basis for resolving PURCHASER's
disadvantages.
6.04 LOADING COSTS CHARGEABLE TO SELLER. If SELLER fails to satisfy the
loading requirements of the applicable Transportation Agreement and such failure
is not excused pursuant to the force majeure provisions of the applicable
Transportation Agreement, to which provisions SELLER agrees to be bound, SELLER
shall pay any resulting Coal Car detention penalties or demurrage and shall pay
any penalties or charges for any Coal Cars loaded in excess of capacity which is
required by such Transportation Agreement.
6.05 EXCESS FREIGHT COSTS CHARGEABLE TO SELLER. If SELLER fails to
Tender sufficient coal to satisfy the quantity requirements in accordance with
Section 8.01 of this Agreement, and thereby fails to satisfy the Tonnage
requirements of the applicable Transportation Agreement and such failure is not
excused pursuant to the force majeure provisions (including environmental force
majeure provisions and availability of rail equipment) of the applicable
Transportation Agreement to which provisions SELLER agrees to be bound, SELLER
shall pay any resulting freight or other charges which are incurred by PURCHASER
under such Transportation Agreement over the amount of such charges otherwise
payable.
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SELLER shall also pay the per Ton Transportation Rate required to be paid by
PURCHASER under the applicable Transportation Agreement for all Tons not loaded
to the minimum capacity per Coal Car as specified in the Transportation
Agreement to the extent such costs are incurred by PURCHASER.
6.06 PAYMENT OF EXCESS COSTS. Any payments required by Sections 6.04
and 6.05 above and Section 7.01 below shall be paid by SELLER within fourteen
(14) working days after SELLER's receipt of a written statement from PURCHASER
itemizing such charges. At PURCHASER's election, such charges may be credited
against amounts owed by PURCHASER to SELLER hereunder.
7.01 SHIPPING NOTICE. Promptly after loading each Shipment (and in any
event no later than the end of the next working day), SELLER shall
electronically transfer to PURCHASER, in a format prepared by PURCHASER a notice
of Shipment which shall include SELLER's name; train number; car numbers;
Tonnage shipped; date of Shipment; and other such information as required by
PURCHASER from time to time.
NOTICES OF SHIPMENT SHALL BE SENT TO:
Plant Manager, Big Cajun II
Louisiana Generating
and
Production Support Analyst
Fuel Department
Louisiana Generating
and
Manager
American Commercial Marine Service Company
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Hall Street Terminal
St. Louis, Missouri
SELLER shall determine the short proximate analysis (moisture, ash,
sulfur, sodium and Btu) of the coal contained in each Unit Train in accordance
with American Society for Testing Materials ("ASTM") methods and procedures (see
Appendix G, Coal Preparation and Analysis Laboratory Procedures) and shall
electronically transfer such analysis to PURCHASER at the addresses specified
above in a format provided by PURCHASER within twenty-four (24) hours of such
Unit Train departing from the Origin. Should SELLER fail to provide such
analysis of any Shipment as specified herein, PURCHASER may elect to delay
unloading of the Shipment until such analysis is provided; and SELLER shall be
liable for any demurrage and other costs occasioned by such delay.
8.01 QUANTITY REQUIREMENTS. Subject to Power Plant burn and inventory
requirements and to the terms of Section 3.02, PURCHASER shall purchase from
SELLER under the terms of this Agreement PURCHASER's estimated quarterly
delivery requirements (the "Estimated Delivery Requirements") of coal required
at the Power Plant per calendar quarter during the Initial Term of this
Agreement. SELLER shall give PURCHASER preliminary written notice of Shipment
Origins and expected coal quality specifications no later than sixty (60) days
prior to the beginning of the Contract Year and final written notice of Shipment
Origins and expected coal quality specifications no later than thirty (30) days
prior to the beginning of such Contract Year, provided that SELLER shall have
the right to modify the Shipment Origins (subject to Section 2.02) and expected
coal quality specifications (subject to Section 10.01) by giving PURCHASER
written notice no later than thirty (30) days prior to the beginning of the
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calendar quarter or, in the event of a Force Majeure, as much notice as is
commercially reasonable under the circumstances. PURCHASER shall give SELLER
preliminary written notice of its Estimated Delivery Requirements no later than
ninety (90) days prior to the beginning of the Contract Year and final written
notice of Estimated Delivery Requirements no later than forty-five (45) days
prior to the beginning of the Contract Year. PURCHASER shall have the right to
increase the quarterly Tons shipped by up to twenty percent (20%) above the
relevant Estimated Delivery Requirement specified in any final written notice by
giving SELLER written notice no later than thirty (30) days prior to the
beginning of the calendar quarter or, in the event of a Force Majeure, as much
notice as is commercially reasonable under the circumstances; provided, however,
that SELLER shall not be obligated to ship more than {***} Tons of coal to
PURCHASER in any calendar month. In the event that PURCHASER elects to purchase
a volume of coal in excess of {***} Tons of coal in any calendar month, SELLER
shall have the right but not the obligation to supply such coal in accordance
with the terms hereof provided that if it elects to supply such coal, SELLER
must notify PURCHASER in writing within ten (10) days of receipt of PURCHASER's
notice described above. If SELLER fails to notify PURCHASER within such ten (10)
day period or if SELLER elects not to supply such excess coal, PURCHASER may
purchase it elsewhere.
9.01 WEIGHING. The governing weight of coal sold and delivered
hereunder shall be determined from SELLER's scale systems located at the
Designated Loading Point. Said scale systems and methods of weighing shall be
acceptable to PURCHASER and the Carrier, and shall be certified in accordance
with the Association of American Railroads ("AAR") "Scale
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41
Handbook". The regulations contained in the AAR "Scale Handbook" are based on
National Institute of Standards and Technology Handbook 44, "Specifications,
Tolerances, and other Technical Requirements for Weighing and Measuring
Devices." All scales used to determine the governing weight of coal shall be
tested and certified by the BN (or any successor Carrier) and the Wyoming
Department of Agriculture on a semi-annual basis. If SELLER fails to establish
weights in accordance with this Section 9.01 for ten (10) or fewer Coal Cars in
any Unit Train, the weight of each of those Coal Cars shall be deemed to equal
the average weight of the other Coal Cars comprising such Unit Train. If SELLER
fails to establish weights in accordance with this Section 9.01 for eleven (11)
or more Coal Cars in any Unit Train, the weight of each of the Coal Cars
comprising such Unit Train shall be deemed to equal the average per Coal Car
weight of the five (5) prior Unit Trains shipped by SELLER to PURCHASER.
SELLER will determine and report a weight for each Shipment of coal
hereunder. Subject to the provisions of the following two paragraphs, the
aggregate weights determined by SELLER in accordance with the terms of this
Agreement during any Payment Period shall be accepted as the quantity of coal
sold and purchased during such period for which invoices are to be rendered and
payments are to be made in accordance with Section 5.01.
PURCHASER shall have the right to have a representative present at any
and all times to observe determination of weights. If PURCHASER should at any
time question the accuracy of the weights thus determined, PURCHASER shall so
advise SELLER and SELLER shall permit the BN (or any successor Carrier) or the
Wyoming Department of Agriculture, as appropriate, to test SELLER's scale
systems or methods on a mutually agreeable schedule and at Seller's expense.
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If such tests show the scale systems devices to be in error, or if the scale
systems otherwise are determined to be in error, SELLER will, at its expense,
take appropriate steps to immediately adjust such scale systems to an accurate
condition. If such tests show the scale systems devices to be accurate,
PURCHASER shall pay the cost of such tests.
If SELLER's scale systems or weighing methods are determined to be in
error, an appropriate adjustment shall be made to the affected weights and
related invoices and payments and shall be applied to the next Shipment. Such
adjustments shall be made retroactively to a date that is midway between the
date on which the scale systems or weighing methods were last certified and the
date on which the weighing methods and scale systems were determined to be in
error.
10.01 COAL SPECIFICATIONS. The coal sold by SELLER and purchased by
PURCHASER hereunder shall be uniformly blended; and such blend shall be
consistent from Coal Car to Coal Car; shall be two and one-half inches and under
in size (2-1/2" x 0") as defined in the then-current ASTM Designation D-4749
Standard Test Method for "Performing Sieve Analysis and Designating Coal Size";
shall not contain greater than {***} particles less than one-quarter (1/4) inch
in size (if, in PURCHASER's sole reasonable judgment, coal handling problems
occur at the destination, and SELLER is reasonably able to correct such problems
at the Origin, SELLER agrees to take reasonable corrective action acceptable to
PURCHASER); shall have no intermediate sizes added or removed; shall not contain
coal greater than three (3) inches in any dimension and shall be substantially
free of bone, slate, shale, rock, dirt, clay, fireclay, pond fines, washer
fines, washer refuse, plastic, rubber, iron, roots, wood, water, debris, refuse
or other
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waste materials identified as coming from the Origin or a washer or coal
preparation facility (collectively "Extraneous Material"). Any Shipment that is
not substantially free of such Extraneous Material will be rejected. SELLER
shall only deliver run-of-mine coal product (or fully washed product) to
PURCHASER; provided, however, SELLER may add minimal amounts of coal fines from
the ENCOAL facility at the Buckskin Mine to Shipments hereunder. SELLER shall
promptly reimburse PURCHASER for all damage to PURCHASER's equipment directly
caused by any Extraneous Material loaded with the coal by SELLER, as well as for
damages to PURCHASER's equipment caused by shipping coal failing to meet the
specifications contained in this Section 10.01.
Coal sold by SELLER and purchased by PURCHASER hereunder shall conform
to the following analysis on an "as received" basis:
Expected Annual
Weighted Avg. Suspension Limits Rejection Limits
Specifications (Per Shipment) (Per Shipment)
-------------- -------------- --------------
Max. Moisture (total), % {***} {***} {***}
Max. Ash, % {***} {***} {***}
Max. Sulfur Dioxide {***} {***} {***}
lbs./MMBtu
Min. Volatile Matter, % {***} {***} {***}
Min. Ash Fusion Temp.,(degree)F {***} {***} {***}
Softening (H=W)
Reducing Atmosphere
Min. Calorific Value, Btu/lb. {***} {***} {***}
for the Buckskin Mine
Min. Calorific Value, Btu/lb. {***} {***} {***}
for all Origins other than
the Buckskin Mine
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The Expected Annual Weighted Average Specifications shown in the above
table establish the minimum requirements for coal from all Origins other than
the Buckskin Mine.
11.01 SAMPLING. SELLER shall provide at its expense at the Designated
Loading Point a mechanical sampling system of the "cutting the full coal stream"
type or other system acceptable to PURCHASER. The design and operation of the
sampling system shall be in accordance with ASTM D-2234, "Standard Test Methods
for Collection of a Gross Sample of Coal" and D-2013, "Standard Method of
Preparing Coal Samples for Analysis." The mechanical sampling system shall be
enclosed to minimize moisture loss and shall be designed for two stage of sample
crushing to the No. 8 sieve size. SELLER shall submit design drawings and
specifications for any new sampling system to PURCHASER for approval prior to
installation. PURCHASER will not unreasonably withhold such approval. PURCHASER
and SELLER shall use their best efforts to agree on a modification of procedures
and equipment to incorporate improved methods developed in the future by the
ASTM.
SELLER shall collect representative samples using the mechanical
sampling system as described above at the Designated Loading Point of each
Shipment of coal sold hereunder. SELLER shall divide the final sample of No. 8
sieve size coal from the mechanical sampling system, at the Designated Loading
Point, into at least four 1000 gram laboratory sample splits in accordance with
ASTM Standard D-2013, "Standard Method of Preparing Coal Samples for Analysis,"
using an enclosed riffle to minimize moisture loss. SELLER shall send two
laboratory samples to PURCHASER's Designated Laboratory (as defined in Section
11.02), and shall retain
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two laboratory samples, one of which will be retained by SELLER for sixty (60)
days from date of shipment as a reserve sample and the second of which will be
analyzed by SELLER to meet its obligations under this Agreement.
PURCHASER or PURCHASER's designated representative may observe any
sampling or sample preparation performed by SELLER or SELLER's designated
representative. In the event that SELLER's sampling system ceases to operate,
SELLER shall immediately notify PURCHASER or PURCHASER's representative to
determine a course of action to be taken. A weighted average analysis of the
results for coal contained in the last ten (10) Unit Trains sampled may be used
by mutual agreement between PURCHASER and SELLER for any Unit Train for which
the samples required above are not collected. SELLER shall provide PURCHASER
with documentation of test results of a dynamic bias test of the sampling system
on a semi-annual basis, and shall conduct a stop belt test prior to January 1,
1998 and during the third Contract Year of the Initial Term of this Agreement
unless the sampling system is significantly modified between the tests in year
one and year four, in which case an additional stop belt test shall be performed
at the completion of such modification.
11.02 ANALYSIS.
PURCHASER's designated laboratory ("PURCHASER's Designated Laboratory")
may be its laboratory, SELLER's laboratory as provided below, or a qualified
independent coal testing laboratory which, in each case, shall analyze the
laboratory samples sent by SELLER in accordance with Appendix G. In the event
PURCHASER elects to employ such an independent
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laboratory, SELLER shall not be liable for any costs incurred by PURCHASER
except as herein provided.
Prior to the Effective Date, PURCHASER shall inspect the laboratory
located in SELLER's Buckskin Property and operated by a third party. At any time
during the Initial Term hereof, PURCHASER shall have the right to inspect the
Buckskin laboratory or such other laboratory as SELLER may designate as SELLER's
laboratory. PURCHASER may propose to SELLER changes it deems necessary in the
laboratory or analytical procedures. If SELLER makes the recommended changes to
the laboratory and/or analytical procedures, PURCHASER will designate SELLER's
laboratory as PURCHASER's Designated Laboratory. If PURCHASER can show the
analytical procedures used by SELLER's laboratory fail to meet appropriate ASTM
standards, including those described in Appendix G, or if SELLER changes the
third party operator of SELLER's laboratory without obtaining PURCHASER's prior
written consent, PURCHASER reserves the right to revoke the designation of
SELLER's laboratory as PURCHASER's Designated Laboratory and to designate
another laboratory as PURCHASER's Designated Laboratory. If PURCHASER so
designates SELLER's laboratory as PURCHASER's Designated Laboratory, all costs
will be for SELLER's account.
Upon request of PURCHASER, the two laboratory samples sent to
PURCHASER's Designated Laboratory shall be promptly analyzed in accordance with
Appendix G and, except as provided in this Section 11.02, the results of such
analysis shall govern under this Agreement. PURCHASER will cause the results of
its Designated Laboratory's analysis to be provided to SELLER within twenty-four
(24) hours of receipt of SELLER's samples.
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Except as hereinafter provided in this Section 11.02, the analysis of
PURCHASER's Designated Laboratory shall govern for all purposes under this
Agreement. If a dispute arises between PURCHASER and SELLER over the results of
the analyses performed by PURCHASER's Designated Laboratory, the reserve sample
shall be sent to a qualified independent laboratory (selected jointly by
PURCHASER and SELLER) (the "Referee Laboratory") which shall conduct a referee
analysis in accordance with Appendix G. The cost of any such analysis shall be
borne equally by PURCHASER and SELLER. The results of the Referee Laboratory's
analysis will be determinate.
With respect to a dispute pertaining to the calorific value of the
coal, the analysis of PURCHASER's Designated Laboratory will be deemed to have
been confirmed and no further adjustment in billing calculations will be made if
the dry basis Btu content of the analysis of the Referee Laboratory differs from
the analysis of PURCHASER's Designated Laboratory by no more than 100 Btu per
pound. With respect to disputes involving other items of the analysis, the
analysis of PURCHASER's Designated Laboratory will be deemed to have been
confirmed and no other adjustment in billing calculations will be made if the
difference between the analysis of the Referee Laboratory and the analysis of
PURCHASER's Designated Laboratory is within the tolerances for reproduceability
specified in the applicable ASTM Standards.
In the event that a difference in any item of the analysis of
PURCHASER's Designated Laboratory and that of the Referee Laboratory exceeds
tolerances specified in the applicable ASTM Standards specified in Appendix G,
the analysis of the Referee Laboratory will govern and appropriate adjustments
in billing calculations will be made during the next Payment Period.
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12.01 REJECTION OF COAL FOR COAL QUALITY DEFICIENCIES. In addition to
and not as a limitation upon other rights of PURCHASER hereunder, PURCHASER
shall have the right to refuse and reject any Shipment of coal under any one or
more of the following circumstances: (a) the Shipment fails by analysis
(including short proximate analysis as provided for in Section 7.01) to comply
with any one or more of the Rejection Limits set forth in Section 10.01; (b) the
Shipment contains coal that was or is being mined or produced from a seam or
source other than the Coal Property described in Appendix A without securing the
prior written approval of PURCHASER as provided in Section 2.02; (c) the
Shipment fails in any manner to comply with any of the coal size specifications
contained in Section 10.01 hereof or (d) when loaded at Origin, the Shipment is
not substantially free of Extraneous Material. PURCHASER shall give prompt
notice to SELLER of any such rejection of Shipments. Risk of loss shall shift
from PURCHASER to SELLER upon delivery of such notice. After receipt of such
notification, SELLER shall not resume Shipments from the particular Origin of
the rejected Shipment until coal quality has been corrected or the Origin
changed to PURCHASER's satisfaction.
In the event that PURCHASER notifies SELLER that a Shipment has been
rejected, SELLER may, at SELLER's expense, remove such Shipment from PURCHASER's
facilities or from transportation equipment and shall reimburse PURCHASER for
all transportation costs incurred by PURCHASER in connection with such Shipment.
PURCHASER may deduct all such costs and expenses from any sum owed by PURCHASER
to SELLER. If SELLER elects not to remove any such Shipment by giving prompt
notice and PURCHASER is willing to purchase such
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coal, the price applicable to such Shipment shall equal the applicable Billing
Price pursuant to Sections 4.01; 4.02 and 4.03 less {***} per ton. SELLER and
PURCHASER shall work together in good faith to expeditiously resolve any
problems associated with rejection of a Shipment hereunder.
12.02 SUSPENSION OF SHIPMENTS FOR COAL QUALITY DEFICIENCIES. Subject to
SELLER's substitution rights contained in Section 2.02, PURCHASER shall, in
addition to the rights set forth above in Section 12.01, have the right to
suspend Shipments from a particular Origin immediately, by giving notice to
SELLER, under any one or more of the following circumstances: (a) any Shipment
from such Origin fails by analysis (including short proximate analyses as
provided for in Section 7.01) to comply with any one or more of the per Shipment
suspension limit specifications set forth in Section 10.01; (b) any Shipment
contains coal that was or is being mined or produced from a seam or source other
than the Coal Property described in Exhibit A without securing the prior written
approval of PURCHASER as provided in Section 2.02; or (c) when loaded at the
Origin, any Shipment is not substantially free of Extraneous Material. Shipments
in transit at the time of notification of suspension shall be accepted.
The suspension of Shipments from any one Origin shall not affect
SELLER's right to source Shipments hereunder from other Origins consistent with
the terms of this Agreement. In addition, PURCHASER shall have the right to
purchase coal from other sources during such period of suspension if total
deliveries to PURCHASER are reduced. Four (4) or more suspensions in any 120 day
period shall be deemed to be a material breach of this Agreement, for
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which PURCHASER shall have the unilateral right, exercised in its sole
discretion, to terminate this Agreement by giving notice of the termination to
SELLER as provided in Section 13.01.
In the event that PURCHASER suspends Shipments from a particular
Origin, SELLER may resume Shipments from such Origin provided that SELLER (i)
provides a written explanation of the cause of the quality variations and
specifies remedial actions reasonably acceptable to PURCHASER which SELLER will
undertake to ensure compliance with the coal quality specifications of Section
10.01 and (ii) after resumption of Shipments, the weighted average calorific
content of the first twenty (20) Shipments of coal from such Origin must equal
or exceed {***} Btu/lb., the sulfur dioxide content of each of these twenty (20)
Shipments must be {***} pounds per MMBtu or less, the minimum volatile matter
must be {***} or higher and the minimum ash fusion temperature must be {***} or
higher. The twenty (20) Shipments shall be scheduled and sampled by such method
as shall be reasonably acceptable to PURCHASER. All special handling costs,
including (but not limited to) stockpile segregation, transportation routing,
etc., associated with the test Shipments shall be borne by SELLER.
If the analysis by PURCHASER shows the resumed Shipment(s) to be in
compliance with the coal quality specifications specified above, deliveries
shall be permitted to resume from this Origin. PURCHASER shall have the sole
right to determine if SELLER shall be allowed to make up any Tonnage not
delivered during the period Shipments were suspended. Any make-up Tonnage
scheduled will be mutually agreed to on a reasonable basis. The price to be paid
for any such make-up Tonnage is the price that would have been in effect at the
time the coal was originally scheduled to be delivered under the terms of this
Agreement.
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In the event of suspension of any Shipment(s) followed by termination
of this Agreement, SELLER shall reimburse PURCHASER for any and all
transportation costs associated with suspended Shipment(s) and/or termination
which may be incurred by PURCHASER. PURCHASER's rights of suspension and
termination are in addition to any other remedies provided by this Agreement or
at law or in equity for SELLER's failure to deliver coal in compliance with this
Agreement.
13.01 AUTOMATIC TERMINATION. In addition to the automatic termination
rights set forth in Sections 12.01, 12.02, 15.01, 16.01 and 20.01, PURCHASER in
each of (a), (b), or (c) below and SELLER in (c) below shall have the right to
cancel the remaining Shipments to be delivered and to terminate this Agreement
with no liability therefor except with respect to coal delivered prior to such
termination by giving written notice to the other party, as provided in Section
26.01, under any one or more of the following circumstances: (a) any Shipment
contains coal that was or is being mined or produced from a seam or source other
than the Coal Property described in Appendix A without the prior written
approval of PURCHASER as provided in Section 2.02; (b) the occurrence of four
(4) or more suspensions in any 120 day period, as provided in Section 12.02 or
(c) in the event that the other party engages in any fraudulent or illegal
conduct in connection with its performance under this Agreement.
14.01 TERMINATION FOR UNREMEDIED DEFAULT. If either party fails to
comply with any or all of its material obligations as set forth in this
Agreement, the party not in default shall have the right to terminate this
Agreement at any time by giving notice as provided in Section 26.01 of its
intention to do so to the other party, which notice shall specify the default.
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At the expiration of sixty (60) days after the date of such notice,
unless the party in default shall have cured such default to the satisfaction of
the non-defaulting party, the party not in default shall have the right, at its
sole election, to terminate this Agreement immediately with no liability
therefor except with respect to coal delivered prior to such termination;
provided, however, that the failure of the parties to agree on a price
adjustment shall not constitute grounds for termination of this Agreement under
this Section 14.01.
In addition to and not as a limitation upon other rights of PURCHASER
or SELLER hereunder, either party may elect, at its sole option, to forego its
right to terminate this Agreement upon the other party's default under this
Agreement, as provided in Section 13.01 or this Section 14.01, and may require,
in lieu of termination, the other party to perform its obligations according to
the terms and conditions of this Agreement.
15.01 FORCE MAJEURE. "SELLER's Force Majeure" as used herein shall mean
a cause reasonably beyond the control of SELLER which, wholly or in substantial
part, directly or indirectly prevents SELLER from the mining, transporting,
crushing, loading, or delivery of coal at the Coal Property or another Origin
approved in accordance with Section 2.02. "PURCHASER's Force Majeure" as used
herein shall mean a cause reasonably beyond the control of PURCHASER which,
wholly or in substantial part, directly or indirectly prevents or restricts the
delivery, unloading, storing or burning of coal or the production of electricity
by PURCHASER at the Power Plant. Examples (without limitation) of Force Majeure
are the following: acts of God; acts of the public enemy; insurrections; riots;
strikes; labor disputes; work stoppages; fires; explosions; floods; electric
power failures; breakdowns of or damage to
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generating or preparation plants or mining equipment which materially impacts
the mining process; interruptions to or contingencies of transportation,
including but not limited to Force Majeure as defined in the Transportation
Agreement; embargoes; and orders or acts of civil or military authority
(including, without limitation, a city or county ordinance, an act of a state
legislature or an act of the United States Congress); provided, however, for the
purposes of this Agreement, Force Majeure shall not include, and neither party
hereto shall be excused from performance because of the development or existence
of economic conditions which may adversely affect the anticipated profitability
of such party's activities hereunder, acts or omissions of such party which
constitute mismanagement or fraud on the part of such party, or reduced
productivity of labor employed by such party in its activity hereunder.
If a PURCHASER's Force Majeure occurs and PURCHASER gives SELLER notice
of such Force Majeure as provided in Section 26.01, the obligations and
liabilities of PURCHASER and the corresponding obligations of SELLER shall be
suspended to the extent made necessary by and during the continuance of such
Force Majeure; provided, however, that PURCHASER shall use its commercially
reasonable efforts to eliminate the disabling effects of such Force Majeure as
soon as and to the extent possible (except PURCHASER may settle any of its own
labor disputes, strikes, or terminate any of its own lockouts in its sole
discretion).
If a SELLER's Force Majeure occurs and SELLER gives PURCHASER notice of
such Force Majeure as provided in Section 26.01, the obligations and liabilities
of SELLER and the corresponding obligations of PURCHASER shall be suspended to
the extent made necessary by and during the continuance of such Force Majeure;
provided, however, that SELLER shall use its
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commercially reasonable efforts to eliminate the disabling effects of such Force
Majeure as soon as and to the extent possible (except that SELLER may settle any
of its own labor disputes, strikes, or terminate any of its own lockouts in its
sole discretion).
In the event of a transportation or transloading or SELLER's Force
Majeure, PURCHASER may purchase substitute coal from a third party or parties if
Power Plant inventories are projected to fall below {***} days projected burn.
In the event a Force Majeure causes a partial reduction in the total quantity of
coal SELLER can deliver from all PURCHASER approved Origins, SELLER's available
supply of coal from such Origins shall be apportioned in a reasonable manner
among all of its customers having contracts for the purchase of coal from such
Origins at the time of the occurrence of the Force Majeure event.
It is agreed that in the event that any valid act, law, ordinance, rule
or regulation of a municipality, county, state or the United States government,
or final judicial decision, judgment or order, is adopted or passed after the
Effective Date of this Agreement, which either (a) directly prohibits the mining
contemplated hereunder or (b) directly or indirectly imposes significant burdens
or restrictions upon the burning or use of coal by PURCHASER to the extent that
PURCHASER is unable or would not be allowed to utilize the coal to be shipped
hereunder feasibly and economically at the Power Plant or would be allowed to
utilize such coal only after the installation or substantial renovation of plant
equipment, then the existence and implementation of such act, law, ordinance,
rule, regulation, decision, judgment or order shall constitute an event of
permanent Force Majeure whereupon this Agreement may be terminated by the party
so affected upon notice to the other party. Neither party shall have any further
right or
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obligation hereunder effective upon such termination except with respect to coal
delivered prior to such termination.
Notwithstanding the provisions of this Section 15.01, a party not
claiming Force Majeure may terminate this Agreement upon notice to the other
party and without liability to the other party whenever all of the following
circumstances exist: (a) a condition of Force Majeure occurs which causes the
mutual obligations to be suspended as provided above with respect to the total
quantity of coal to be supplied; (b) such condition (alone or extended by other
conditions of Force Majeure) continues so that the mutual obligations remain
suspended for a period of six (6) consecutive months; and (c) at the end of said
six (6) consecutive months or at any time thereafter, the party not claiming
Force Majeure, in the exercise of its reasonable judgment, concludes that there
is little likelihood of ending the condition(s) in the immediate future. The
party not claiming Force Majeure may exercise such right of termination by
giving ninety (90) days' notice, as provided in Section 26.01, of its intention
to terminate to the other party. Neither party shall have any further right or
obligation hereunder effective upon such termination except with respect to coal
delivered prior to such termination.
16.01 CHANGES IN ENVIRONMENTAL RELATED REQUIREMENTS. The term
"Environmental Related Requirement," as used in this Agreement, means the
following: (a) any prohibition, restriction, or limitation related to the
quality of coal which PURCHASER may burn, including any constituent
specification, at its electric generating plants, or to the type or amount of
emissions from any or all such plants; (b) any rule or requirement affecting the
permissible means for complying with any such prohibition, restriction or
limitation; or (c) any
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imposition of a cost, fee, tax or other economic burden on PURCHASER relating to
(i) the production of electricity (generally or by means of coal-fired steam
electric generation), (ii) the quantity of coal purchased and/or burned by
PURCHASER, (iii) any constituent specification of coal purchased by PURCHASER,
or (iv) the type or amount of emissions from PURCHASER's electric generating
plants. A change in Environmental Related Requirements shall be deemed to have
occurred in any one or more of the following circumstances: (a) there is any
increase or decrease in existing Environmental Related Requirements; (b)
PURCHASER, in the exercise of its sole judgment, decides to change its strategy
for compliance with any such existing Environmental Related Requirements; or (c)
a new Environmental Related Requirement is imposed on PURCHASER as a result of
any federal or state statute, local ordinance, administrative regulation or
ruling, court order, or any revision in any interpretation or implementation
thereof. In the event that it is recognized that a change in Environmental
Related Requirements upon PURCHASER may occur even though stated as a
restriction or limitation on, or requirement of, PURCHASER and its affiliates or
some other group of utilities, so long as (i) such restriction or limitation
appears to be likely and imminently applicable to PURCHASER, then SELLER and
PURCHASER agree to negotiate in good faith to develop a mutually reasonable plan
of mitigation. It is further recognized that any change in Environmental Related
Requirements may affect PURCHASER in a general way and may not be directed at
specific plants, fuels, fuel supplies or other operating conditions. In this
event PURCHASER shall, in its sole discretion, determine its strategy for
compliance, and whether PURCHASER's use of the
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coal to be supplied hereunder has been adversely impacted. The provisions of
this Section 16.01 are intended to provide rights in addition to the rights
provided in Section 15.01.
The price, specifications, quantity and destination of coal purchased
hereunder are predicated on Environmental Related Requirements in effect as of
the Trigger Date. In the event and whenever after such date, there is a change
in Environmental Related Requirements, PURCHASER shall determine whether such
change has had or may have an adverse impact on its use of the coal purchased
hereunder. It is agreed that any change in Environmental Related Requirements
which has one or more of the following effects shall be deemed to have an
adverse impact on PURCHASER's use of the coal purchased hereunder, even though
the statute, regulation, ruling or ordinance may allow PURCHASER a choice of
options for complying with such changed Environmental Related Requirements
(which choice may include the payment of a fee or tax in lieu of the
installation of equipment, or utilization of coal of different constituent
specifications, or the reduction in the overall use of coal by PURCHASER): (a)
the change imposes a fee, tax, or other economic burden on PURCHASER relating to
the constituent specifications of coal purchased by it or on the type or amount
of emissions from PURCHASER's electric generating plants; (b) the change
directly or indirectly prevents or restricts PURCHASER from utilizing the coal
purchased hereunder in one or more of its electric generating plants; (c) the
change requires PURCHASER to install equipment (such as flue gas desulfurization
equipment or particulate removal equipment) at one or more of its electric
generating plants in order to comply with such change; or (d) the change
requires or permits PURCHASER to utilize coal of a quality (including, but not
limited to, sulfur) different from that specified in Section 10.01.
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If PURCHASER determines that a change in Environmental Related
Requirements has had or may have an adverse impact on its use of the coal
purchased hereunder, PURCHASER shall so notify SELLER as provided in Section
26.01. Upon receipt of such notice, SELLER shall have the right, at its option,
to propose within thirty (30) days after receipt of such notice, any steps
available to SELLER in its mining and processing of the coal, in the supply of
substitute coal, in the change in the price of the coal, or other measure which
would result in as low a delivered cost of coal at the Power Plant or to other
power plants pursuant to Section 6.01 as PURCHASER could achieve by purchasing
reasonably available substitute coal, taking into consideration any fees, taxes,
costs, or other economic burdens imposed on the use of coal by PURCHASER. In the
event PURCHASER, in its sole judgment, determines that SELLER cannot achieve
this result, then PURCHASER may terminate this Agreement upon ninety (90) days'
notice thereof as provided in Section 26.01. PURCHASER shall have the right to
give such notice either before or after the effect of a change in Environmental
Related Requirements. Neither party shall have any further right or obligation
hereunder effective upon such termination except with respect to coal delivered
prior to such termination.
The parties hereto acknowledge that this Agreement is based on the
assumption that the coal to be delivered hereunder will enable PURCHASER to
comply with the provisions of the Clean Air Act Amendments of 1990, judicial and
administrative interpretations thereof, and regulations to be promulgated
thereunder as such interpretations and resolutions exist as of the Effective
Date of this Agreement. If, at any time during the Initial Term of this
Agreement, PURCHASER determines, in its sole judgment, that any operational or
environmental compliance
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problem at the Power Plant has resulted from the components or characteristics
of SELLER's coal or the products of its combustion, including, but not limited
to, nitrogen oxide emissions, or any other constituent or property of the coal
not otherwise specified herein, SELLER and PURCHASER shall immediately enter
into discussions in a good faith effort to resolve the problem. If such
discussions fail to resolve such problem in a manner which, in PURCHASER's sole
judgment, is reasonable and would not impose an unreasonable additional expense
to PURCHASER, then PURCHASER shall have the right to terminate this Agreement by
giving SELLER notice of PURCHASER's intention to do so as provided in Section
26.01. Neither party shall have any further right or obligation hereunder
effective upon such termination except with respect to coal delivered prior to
such termination. No expense contemplated by this Section 16.01 shall be deemed
reasonable if it would result in a delivered price of coal hereunder in excess
of the delivered price of competitive fuels or sources then available to
PURCHASER. If, during the Initial Term of this Agreement, PURCHASER is required
to meet certain NOx levels, then PURCHASER and SELLER agree to review NOx levels
and identify appropriate mechanisms for establishing a value for NOx emissions
by calculating any difference between SELLER's coal and the baseline coal used
to establish initial compliance, i.e., Kennecott's Antelope Mine.
17.01 WARRANTIES. In addition to the warranties provided elsewhere in
this Agreement, SELLER warrants that (i) no outside sales to others will
diminish the production of coal to be supplied under this Agreement; (ii) only
coal mined and produced from the Coal Property will be shipped to PURCHASER and
(iii) no substitute coal will be shipped by SELLER
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to PURCHASER without the prior approval of PURCHASER except as provided
in Section 2.02 and Appendix A.
17.02 DISCLAIMER OF WARRANTIES. WITH THE EXCEPTION OF THOSE WARRANTIES
EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER MAKES NO OTHER WARRANTIES
WHATSOEVER, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Notwithstanding the
foregoing, SELLER and PURCHASER agree that, to the extent the coal provided
hereunder creates operational problems for PURCHASER, the parties shall
negotiate in good faith to seek a prompt and mutually satisfactory resolution of
such problems.
18.01 INDEPENDENT CONTRACTOR. This Agreement is a contract for the sale
and purchase of coal. The parties recognize and agree that neither party is an
agent or employee of the other party nor any affiliate of the other party and
that each party is independent of any managerial or other control or direction
by the other party and is free to perform, by such means and in such manner as
such party may choose, all work in pursuance of commitments hereunder.
19.01 BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the parties and their successors and assigns, as permitted under
Section 20.01.
20.01 ASSIGNMENTS. Neither party may assign its rights under this
Agreement without the non-assigning party's prior written approval. However,
notwithstanding the above, PURCHASER may assign its rights, duties, obligations
and interests in and to this Agreement to a subsidiary, affiliate or sister
entity; provided, however, PURCHASER shall not be thereby
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relieved of its responsibilities or obligations hereunder. Furthermore,
notwithstanding the above, SELLER may assign its rights, duties, obligations and
interests in and to this Agreement to a parent, subsidiary, affiliate or sister
entity; provided, however, that SELLER shall not be thereby relieved of its
responsibilities or obligations hereunder. This Agreement shall likewise apply
to any successor or assignee of either PURCHASER or SELLER.
Should the majority of stock or other ownership interests in either
SELLER or PURCHASER be conveyed to an unaffiliated entity, and if the party
whose stock or other ownership interests are being conveyed will not agree to
guaranty the performance of its transferee hereunder, the party not conveying
its interest shall have the option to immediately terminate this Agreement,
should it determine, in its reasonable judgment, that the change in such
ownership materially and adversely affects the other party's ability to perform
under this Agreement, provided, however, that the parties agree that a transfer
of stock or ownership interests between or among one or more of the existing
owners of PURCHASER or its or their affiliates shall not be included in any
determination as to whether there has been a transfer of a majority of the stock
or ownership interests of PURCHASER.
21.01 RIGHT OF INSPECTION: ACCOUNTING. SELLER and PURCHASER shall
preserve in an orderly manner the records supporting all charges and adjustments
to the Billing Price and all other payments, adjustments and obligations
hereunder and shall make such records available to the other party's
accountants, auditors or other authorized representatives, who shall, after
giving adequate notice, be afforded access to and be permitted to examine such
records at all reasonable times during normal business hours. In the event, upon
audit, it is
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determined that adjustments in price were not properly made or were allowed to
go into effect but were not properly calculated, adjustments shall be made
promptly in billings hereunder for current coal deliveries to reflect the proper
amounts of such adjustments; or if no billings are then due, payments reflecting
the difference between the proper amounts determined by audit and the amounts
paid shall be made. It is expressly understood and agreed that the provisions of
this Section 21.01 shall survive the termination or expiration of this
Agreement.
22.01 RIGHT OF INSPECTION: COAL PROPERTY. PURCHASER or its designated
agent shall have the right at all times, at its sole risk and expense, to enter
upon the Coal Property and/or other appropriate locations or Origins (including
PURCHASER's Designated Laboratory), where such entry is announced, for any of
the following purposes: (a) to inspect and examine the method, equipment and
manner of mining, producing, storing, washing, blending, crushing, loading,
unloading, transporting, sampling, weighing, analyzing, and other handling of
coal to be sold and delivered under this Agreement; (b) to take samples of coal
for PURCHASER's analyses (in taking such samples PURCHASER agrees not to
materially impact SELLER's operations); or (c) in connection with any
accounting, audit, or examination of SELLER's records. PURCHASER's
representative shall check in with the appropriate personnel at the entrance to
SELLER's facility or other location or Origin prior to entering onto such
property. SELLER's representative will accompany PURCHASER's representative at
the convenience of PURCHASER's representative and PURCHASER's representative
will undergo reasonable safety training as required by SELLER but no more often
than once each calendar year. PURCHASER's representative will also abide by
SELLER's company rules and procedures.
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No inspection by PURCHASER shall be deemed to be a waiver of any of
PURCHASER's rights or relieve SELLER of any obligation under this Agreement.
22.02 RIGHT OF INSPECTION: PURCHASER'S LAB. SELLER or its designated
agent shall have the right at all times, at its sole risk and expense, to enter
PURCHASER's Designated Laboratory where such entry is announced to inspect and
examine the method, equipment and manner of conducting analysis of coal to be
sold and delivered under this Agreement. SELLER's representative shall check in
with the appropriate personnel at PURCHASER's facility prior to entering onto
PURCHASER's property. SELLER's representative will abide by PURCHASER's company
rules and procedures. No inspection by SELLER shall be deemed to be a waiver of
any of SELLER's rights or relieve PURCHASER of any obligation under this
Agreement.
23.01 WAIVER. The failure of either party to insist on strict
performance of any provision of this Agreement, or to take advantage of any
right hereunder, shall not be construed as a waiver of such provision or right.
Time is of the essence of this Agreement.
24.01 LIMITATION OF DAMAGES. Neither PURCHASER nor SELLER shall be
liable hereunder to the other for consequential, special, exemplary or indirect
damages.
25.01 DISPUTED MATTERS. If any dispute, disagreement, claim or
controversy exists between SELLER and PURCHASER arising out of or relating to
this Agreement (in each case, a "Disputed Matter") and such Disputed Matter is
not resolved pursuant to a dispute resolution mechanism specifically provided
for elsewhere in this Agreement, it shall be submitted to the following
mediation process:
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(a) Internal Mediation. Upon notice from either party to the other
("Internal Mediation Notice"), the Disputed Matter shall first be
referred jointly to two designees, one of each of SELLER and of
PURCHASER. If PURCHASER's and SELLER's designees do not agree upon a
decision within twenty-one (21) days after the delivery of an Internal
Mediation Notice, either party may give the other notice (an "Outside
Mediation Notice") that the Disputed Matter shall be referred to
outside mediation in accordance with subsection (b).
(b) Outside Mediation. If either party delivers an Outside Mediation Notice
to the other, the parties shall participate in a non-binding resolution
procedure whereby each Party presents its case at a hearing (the
"Hearing") before a panel consisting of three (3) individuals: (i) a
senior executive or representative of SELLER, (ii) a senior executive
or representative of PURCHASER, and (iii) a neutral adviser appointed
by the first two executives or representatives. If such executives or
representatives fail to agree upon such neutral adviser within seven
(7) days after the date of the Outside Mediation Notice, either party
may direct the American Arbitration Association to select such neutral
adviser. The Hearing shall occur promptly after the appointment of the
neutral adviser but no later than thirty (30) days after the date of
the Outside Mediation Notice or such reasonable time thereafter (not to
exceed fourteen (14) days) as may be necessary to accommodate the
schedule of the neutral adviser. Each party may be represented at the
Hearing by lawyers. If the outside mediation proceedings do not result
in a resolution of
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the Disputed Matter, the outside mediation proceeding shall be without
prejudice to the legal position of any affected party. The parties
shall each bear their respective costs incurred in connection with this
procedure, except that the fees and expenses of the neutral adviser and
the costs of the facility for the Hearing shall be allocated fifty
percent (50%) to SELLER and fifty percent (50%) to PURCHASER.
(c) Failure to Resolve Dispute. If the Disputed Matter is not resolved
pursuant to subsection (a) or within sixty (60) days after the date of
the Outside Mediation Notice, either Party may submit such Disputed
Matter to binding arbitration in accordance with Section 25.02.
25.02 ARBITRATION. Upon written notice from one party to the other
party in accordance with Section 25.01(c), the Disputed Matter shall be
submitted to binding arbitration in accordance with this Section 25.02. Each
such arbitration shall proceed in accordance with the then current rules of the
American Arbitration Association insofar as such rules are not inconsistent with
the provisions expressly set forth in this Agreement, and, unless the parties
mutually agree otherwise, pursuant to the following procedures:
(a) Notice of demand for arbitration shall be filed in writing
with the other party to this Agreement and with the American
Arbitration Association.
(b) Such arbitration shall be conducted by a panel of three
arbitrators appointed as follows:
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(i) one (1) arbitrator (the "SELLER Appointee") shall be appointed
by SELLER;
(ii) one (1) arbitrator (the "PURCHASER Appointee") shall be
appointed by PURCHASER;
(iii) one (1) arbitrator (the "Independent Arbitrator") shall be
selected by SELLER Appointee and PURCHASER Appointee.
Each arbitrator shall be an attorney familiar with the electric utility
and coal industries and unaffiliated with any Party and otherwise
disinterested in the outcome of the arbitration. The SELLER Appointee
and the PURCHASER Appointee shall be appointed within twenty-one (21)
days after a Disputed Matter is submitted to arbitration; provided,
however, if any Party fails to designate its appointee within such
period, the American Arbitration Association shall appoint such
appointee and shall be requested to appoint a person meeting the
objective qualifications set forth in this paragraph. If the SELLER
Appointee and PURCHASER Appointee are unable to agree upon an
Independent Arbitrator within fourteen (14) days after the latter of
such Appointees is appointed, then the American Arbitration Association
shall appoint the Independent Arbitrator and shall be requested to
appoint a person meeting the objective qualifications set forth in this
paragraph.
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(c) A determination by a majority of the panel of three
arbitrators shall be binding. In making such determination the
arbitrators shall be required to choose between the positions
presented by PURCHASER and SELLER.
(d) Reasonable discovery shall be allowed in the arbitration.
(e) The Independent Arbitrator shall set the schedule for the
arbitration, provided that the Independent Arbitrator shall
set such schedule in a manner designed to complete the
arbitration in as expeditious a manner as is reasonably
practicable.
(f) The arbitrators shall abide by the terms of this Agreement in
resolving the dispute.
(g) SELLER and PURCHASER shall be entitled to be represented at
the arbitration by legal counsel and shall be entitled to
adduce evidence.
(h) The governing law shall be as specified in Section 30.01.
(i) Unless otherwise agreed by the Parties to the dispute, all
arbitration proceedings shall be held in New Orleans,
Louisiana.
(j) Each Party agrees to comply with any award made in such
proceeding that has become final and to the entry of a
judgment in accordance with applicable law in any court having
jurisdiction thereof upon any award rendered in such
proceeding that has become final.
(k) The decision of the arbitrators shall be rendered in writing
and within sixty (60) days of the final submissions of the
Parties to the dispute in writing or in a hearing before the
arbitrators.
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(l) Each such arbitration award that has become final shall be
conclusive and binding upon the Parties to the dispute and
shall not be appealable, subject to the provisions of
applicable law regarding the vacation, modification and
correction of awards.
(m) Attorneys' fees, costs and other out-of-pocket expenses may be
awarded by the arbitrators in their discretion to the party
that prevails in any such arbitration, provided that each
party to the dispute shall pay its own expenses pending the
awarding thereof to the party that prevails in any such
arbitration.
The foregoing agreement to arbitrate shall be specifically enforceable and,
subject to the provisions of applicable law regarding the vacation, modification
and correction of awards, the award rendered by the arbitrators shall be final
and judgment may be entered upon it in accordance with applicable law in any
court having jurisdiction thereof.
25.03 EXCEPTIONS. Nothing in Section 25.01 or 25.02 shall limit the
rights of either of the parties to seek in any court of competent jurisdiction:
(a) legal or equitable relief in circumstances other than a
Disputed Matter;
(b) in any circumstances, such interim relief as may be needed to
maintain the status quo, to prevent irreversible harm, or
otherwise to protect the subject matter of the mediation
and/or arbitration until the matter shall have been finally
resolved; provided, however, any such interim relief ordered
by a court shall not determine or prejudge the substantive
issues to be decided by such mediation and/or arbitration; or
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(c) the collection by either party, as liquidated debt, of any
costs, charges or fees due from the other party under this
Agreement.
26.01 NOTICES. With the exception of PURCHASER's invoices or shipping
notices as required by Section 7.01, any notice, request, protest, consent,
demand, report or statement given by one party to the other shall be in writing
and deemed duly given when hand delivered to the person designated below, when
it is transmitted by facsimile to the facsimile number below or seventy-two (72)
hours after it is deposited in the United States mail, by certified mail,
postage prepaid, and properly addressed as follows:
(1) If the notice is to PURCHASER, to:
Vice President, Fuel
Louisiana Generating
with copy to:
Plant Manager, Big Cajun II
Louisiana Generating
(or to such other person or addresses as PURCHASER shall have designated in
writing to SELLER).
(2) If the notice is to SELLER, to:
President
Triton Coal Company
113 S. Gillette Avenue
Suite 203
Gillette, WY 82716
and
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President
Franklin Coal Sales Company
50 Jerome Lane
Fairview Heights, IL 62208
(or to such other person or address as SELLER shall have designated in writing
to PURCHASER).
Notwithstanding the foregoing, the parties agree that, if the
exigencies of the circumstances so require, verbal notices that are directed to
the official of the other party who is appropriate under the circumstances and
that are promptly followed by a written notice delivered in accordance with the
foregoing procedures shall be deemed to be duly given as of the giving of such
verbal notice.
27.01 REMEDIES CUMULATIVE. Except as otherwise provided herein,
remedies provided under this Agreement shall be cumulative and in addition to
other remedies provided at law or in equity.
28.01 AGENT FOR PURCHASER. PURCHASER may designate an individual or
entity to act for and on behalf of PURCHASER for the purpose of giving or
receiving any notice, demand or request required or authorized by this
Agreement, for the purpose of designating the quantity, size, destination and
routing of Shipments to be made from time to time to PURCHASER hereunder, and
for such other purposes as may from time to time be designated by PURCHASER.
PURCHASER may change agent by giving notice thereof to SELLER as provided in
Section 26.01.
29.01 CAPTIONS. The captions to sections hereof are for convenience
only and shall not be considered in construing the intent of the parties.
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30.01 APPLICABLE LAW. All questions concerning the execution,
construction, performance, breach or enforcement of this Agreement shall be
construed under the substantive laws of the State of Illinois and not just the
Illinois laws regarding conflicts of laws.
31.01 COMPLIANCE WITH LAWS AND REGULATIONS. In connection with the
performance of this Agreement, PURCHASER and SELLER agree to comply in all
material respects with all applicable governmental laws and regulations.
PURCHASER and SELLER each agree and warrant that it or its agent will acquire
and maintain, in a timely manner, all licenses and permits required by
governmental authorities to engage in the mining and selling of coal and the
operation of a power plant and the sale of electricity and to otherwise perform
their respective obligations under this Agreement.
32.01 ENTIRE AGREEMENT. This Agreement (including the Appendices
attached hereto, which shall be deemed to be an integral part of this
Agreement), contains the entire agreement between the parties; and there are no
representations, understandings or agreements, oral or written, which are not
included herein. This Agreement cannot be changed except by duly authorized
representatives of both parties in writing.
33.01 CONFIDENTIAL AND PROPRIETARY INFORMATION. The terms and
conditions (including, but not limited to, prices and mining plans) set forth in
this Agreement are considered by both PURCHASER and SELLER to be confidential
and proprietary information. Neither party shall disclose any such information
to any third party without advance written consent of the other (which consent
shall not be unreasonably withheld) except where such disclosure may be required
by law, regulation or regulatory agencies having jurisdiction over
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SELLER or PURCHASER or is required in connection with the assertion of a claim
or defense in judicial or administrative proceedings involving the parties
hereto, in which event the party intending to make such disclosure shall advise
the other in advance and cooperate to the extent practicable to minimize the
disclosure of any such information. Either party hereto shall be permitted to
disclose any information contained herein to a prospective purchaser of the
stock, ownership interests or assets of said party, to prospective lenders, to
the independent auditors described in this Agreement and to the parties' own
such auditors' or prospective purchasers' or lenders' legal and financial
advisors in each case on a need to know basis provided that any such third party
shall be bound by the provisions of this Section 33.01. For purposes of this
Section 33.01, the term "third party" shall not include a parent, subsidiary,
affiliate or sister corporation of either party hereto.
34.01 BIG CAJUN II, UNIT 3. Forty two percent (42%) of Unit 3 at the
Power Plant is presently owned by GSU. PURCHASER anticipates that it will
continue to operate the Power Plant pursuant to the current applicable Joint
Ownership and Operating Agreement with GSU. In the event that PURCHASER does not
perform as the agent for GSU at the Power Plant during the entire term of this
Agreement, PURCHASER and SELLER shall promptly meet and amend the provisions of
Sections 3.03, 4.06 and other provisions as appropriate to reflect such change.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers duly authorized thereunto, on the date
indicated by their signatures.
PURCHASER
LOUISIANA GENERATING, LLC
BY: NRG ENERGY, INC. ATTEST: /s/ [illegible]
By: /s/ Craig A. Matacynski
Its: Member
Date: 01 August, 97
BY: SOUTHERN ENERGY CAJUN, INC. ATTEST: /s/ [illegible]
By: /s/ G.J. Kubick
Its: Vice President
Date: 8/11/97
BY: ZENERGY, INC. ATTEST: /s/ [illegible]
By: /s/ Alan D. Williams
Its: President
Date: 8/18/97
SELLER
TRITON COAL COMPANY ATTEST: /s/ [illegible]
By: /s/ John C. Willson
Its: President
Date: 8/20/97
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APPENDIX A
COAL PROPERTY
BUCKSKIN MINE - The Mining Area owned, leased or controlled by SELLER as
described in the map attached as Appendix A-1.
NORTH ROCHELLE MINE - The Mining Area owned, leased or controlled by SELLER as
described in the map attached as Appendix A-2, including the North Roundup lease
that is continguous to the North Rochelle Mine but is not currently owned,
leased or controlled by SELLER.
BLACK THUNDER MINE - located in Campbell County, Wyoming, operated by Thunder
Basin Coal Company, a wholly-owned subsidiary of Atlantic Richfield Company.
JACOB'S RANCH MINE - located in Campbell County, Wyoming, operated by Kerr McGee
Coal Corporation.
NORTH ANTELOPE MINE - located in Campbell County, Wyoming, operated by Powder
River Coal Company, a subsidiary of Peabody Coal Company.
ROCHELLE MINE - located in Campbell County, Wyoming, operated by Powder River
Coal Company, a subsidiary of Peabody Coal Company.
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APPENDIX A-1
BUCKSKIN MINE
[see next page]
2
76
BUCKSKIN MINE
APPENDIX A-1
[graph/map]
77
APPENDIX A-2
NORTH ROCHELLE MINE
[see next page]
3
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APPENDIX A-2
NORTH ROCHELLE MINE
[graph/map]
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APPENDIX B
GOVERNMENTAL IMPOSITION WORKSHEET
(REFERENCE SECTION 4.03)
PRICE COMPONENTS PER TON
- ---------------- -------
PRICE BEFORE TAXES, ROYALTY, & RECLAMATION FEE {***}
BLACK LUNG TAX (5) {***}
GROSS PROCEEDS TAX (4) {***}
SEVERANCE TAX (3) {***}
RECLAMATION FEE (2) {***}
LESS: 1.3% EXCESS MOISTURE {***} {***}
PROPERTY TAX {***}
FEDERAL ROYALTY (1) {***}
-----
TOTAL {***}
NOTES:
1) The Federal Royalty Rate is {***}.
2) Lesser of {***} of the Total Price (less the Reclamation Fee itself) or
{***} per ton with a reduction for excess moisture (assumed constant at
{***}).
* Direct Cost Ratio (DCR) of {***} used to determine effective
Wyoming Tax. This rate is the 1996 rate for the Buckskin Mine
(being used in 1997).
3) The Wyoming Severance Tax (WST) rate is {***}.
WST = {***} [DCR {[Sales Price - (Recl + WST + CCGPT + BL + All
Royalty)} * } + (Recl + WST + CCGPT + BL + Private Royalty)]
4) The Campbell County Gross Proceeds Tax (CCGPT) Rate is {***}.
This is the 1995 rate, first published in September of 1996. The 1996
rate will be published in the fall of 1997.
CCGPT = {***}[DCR{[Sales Price - (Recl + WST + CCGPT + BL + All
Royalty)} + [(Recl + WST + CCGPT + BL + Private Royalty)]
5) Lesser of {***} of the Total Price (less the Black Lung Tax itself) or
{***} per ton.
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APPENDIX C
CALORIFIC VALUE ADJUSTMENT
(REFERENCE SECTION 4.04)
An adjustment is to be made monthly to the Base Price applicable to
coal received by PURCHASER hereunder as specified in Section 5.01 to reflect the
actual "as received" calorific value of the coal compared to {***} Btu/lb.
Determination of the monthly adjustment to the Base Price reflecting
the Calorific Value Adjustment shall be made as follows:
(NOTE: Figures used in the example below are purely hypothetical and are used
only for illustrative purposes, also ( ) denotes a reduction in the Base Price.)
Example Example Example
Case 1 Case 2 Case 3
{***} at a {***} {***}
Specified Period at a Specified at a Specified
CalorificValue of Period Calorific Period Calorific
Btu/lb. Value of Btu/lb. Value of Btu/lb.
------- ---------------- ----------------
(a) Base Price (per ton) $3.240 $3.240 $3.240
(b) Transportation Rate per ton $14.750 $14.750 $14.750
(c) Purchaser's Total Delivered Cost per ton $17.990 $17.990 $17.990
(a+b)
(d) Calorific Value as specified in Section 16.9000 16.9000 16.9000
10.01 in MMBtu/ton
(e) Purchaser's Total Delivered Cost expressed 1.06450 1.06450 1.06450
in $/MMBtu (c/d)
(f) Calorific Value of coal received during the 16.9000 17.2000 16.6000
specified period in MMBtu/ton
(g) Price per ton to be paid for coal received {***} {***} {***}
during the specified period {***}
(h) Calorific Value Adjustment to Base Price {***} {***} {***}
{***}
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APPENDIX D
EMISSIONS ALLOWANCE ADJUSTMENT
(REFERENCE SECTION 4.05)
Following is an example of the Emissions Allowance Adjustment to be made
annually to the Base Price in accordance with Section 4.05. The price adjustment
shall be rounded to the nearest one-tenth of a cent per ton. The figures used in
the example are hypothetical and are used only for illustrative purposes.
Example for January 2000; adjustment to be calculated by PURCHASER: Tons shipped
by SELLER in January 2000 is 550,000 tons. Cantor-Fitzgerald Market Price Index
for January 2000 is $129.68.
Determination of actual price of SO2 Emissions Allowances for January 2000:
P(C) = $158.00 (value for Calendar Year 2000)
P(A) = $129.68 (for January)
A(S) = {***}/ton (value for Calendar Year 2000)
Adjustment = ([P(A) - P(C)] / P(C)) x A(S)
Adjustment = [$129.68 - $158.00]/$158.00 x {***}
Adjustment = {***} per ton
Since P(A) is less than P(C), then the absolute value of the adjustment, or
{***} per ton, shall be remitted by PURCHASER to SELLER. Amount paid to SELLER =
{***} x 550,000.00 = {***}.
NOTE: The Cantor-Fitzgerald Market Price Index for SO(2) allowance for the month
is published in the prior month. In other words, the January 2000 Market Price
Index will be published in December 1999.
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APPENDIX E
SO(2) ALLOWANCE DUE SELLER
(REFERENCE SECTION 4.06)
Following is an example of the SO(2) Allowance due SELLER to be calculated
annually in accordance with Section 4.06. The figures used in the example are
hypothetical and are used only for illustrative purposes:
Example for Calendar Year 2000; if the Annual Plant Burn is LESS THAN
85,000,000MM Btu:
Assume APB = 84,000,000MM Btu
Assume APE = 36,000 tons SO(2) Actual Emissions in Calendar Year 2000
ADS = [{***} - 36,000 - {({***}-84,000,000) x {***}}] x {***}
ADS = {***}
ADS = {***}
ADS = 4,905
Example for Calendar Year 2000; if the Annual Plant Burn is GREATER THAN
85,000,000MM Btu:
Assume APB = 88,000,000MM Btu
Assume APB = 37,500 tons SO(2) Actual Emissions in Calendar Year 2000
ADS = {***}
ADS = {***}
ADS = 4,205
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APPENDIX F
SUMMARY OF PERTINENT PROVISIONS OF
THE COAL TRANSPORTATION AGREEMENT
(A) PURCHASER is to provide a sufficient number of empty coal cars to
assemble unit trains of {***} cars or more.
(B) The Minimum Shipment Weight for coal cars shall be {***} tons for
aluminum cars and {***} tons for steel cars.
(C) Coal tendered with a shipment weight of less than the Minimum Shipment
Weight shall be billed on the basis of the Minimum Shipment Weight.
(D) The number of tons on which transportation charges are paid shall be
counted toward meeting the Minimum Volume Commitment.
(E) Each unit train shall contain no less than {***} coal cars unless cars
have been damaged, destroyed or derailed by carriers and if carriers
are unable to provide substitute cars, then the unit train shall be
reduced by cars destroyed or damaged but not to less than 105 cars.
(F) PURCHASER shall make the coal cars available for loading. BN shall
furnish mine operator not less than four (4) hours advance notice of
the arrival of railcars at origin.
(G) PURCHASER and mine operator shall be responsible for loading of cars.
BN shall provide locomotives and train crews to move trains through
loading facilities at a controlled speed which will allow for full and
uniform loading of each coal car.
(H) Mine operator shall have four (4) hours free time to load each unit
train. Free time shall start when locomotives have arrived at the
loading point and the train crew has requested loading instructions and
shall end when the mine operator has released the train.
(I) Loading free time shall be extended when a Loading Disability occurs
during a train's free time.
(J) "Loading Disability" means any of the following events which result in
the inability to load coal at Origin:
(i) a cause directly attributable to BN;
(ii) an act of God;
(iii) a strike or other labor disturbance;
(iv) a riot or other civil disturbance;
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(v) unusual snow and/or ice accumulation sufficient to immobilize
train operations and prevent loading of such train;
(vi) governmental acts or regulations; or
(vii) mechanical or electrical breakdown, explosion or fire, not
reasonably within the control of PURCHASER or its mine
operator, in a Loading Facility.
"Loading Disability Time" means the period of time from which PURCHASER
or the mine operator is prevented from loading the train at origin due
to a Loading Disability. PURCHASER or the mine operator shall notify BN
immediately by telephone (i) as to the time and nature of commencement
of the Loading Disability and (ii) as to the time of termination of the
Loading Disability.
(K) If a train cannot be positioned on origin trackage due to any cause
attributable to PURCHASER or if a train cannot be positioned on mine
operator's trackage at origin due to any cause attributable to
PURCHASER or its mine operator, that train shall be considered
"Constructively Placed." A Constructively Placed train shall be held at
the nearest available hold point as determined by BN. Immediately upon
arrival of the train at the hold point, BN shall notify the mine
operator or PURCHASER by radio, telephone, wire or other reasonable
means, of the date and hour that hold time begins. Immediately upon
departure of the train from the hold point, BN shall notify the mine
operator or PURCHASER by radio, telephone, wire or other reasonable
means, of the date and hour that the hold time ends. For purposes of
computing the loading or unloading time of a Constructively Placed
train:
(i) the time elapsed while transporting a Constructively Placed
train from the hold point to origin shall be excluded from
loading free time; and
(ii) if the train must reverse direction to reach the nearest
available hold point, the time required for the train to
return to the point of reverse direction shall be included in
loading free time.
(L) If, due to any cause attributable to BN, a train arrives at origin
before another train has been released, the second and subsequent
train(s) shall not be considered placed or Constructively Placed, and
Loading Free Time for such train shall not commence until the
locomotives have arrived at the Designated Loading Point on origin
trackage and the crew has requested loading instructions.
(M) The weight of the coal in the coal cars will be determined at origin by
the mine operator. Carriers shall not be responsible for such weight
determination.
(N) If any unit train cannot be weighed due to a breakdown of scales, the
lading weight per car of such train shall be determined by averaging
the lading weight per car of the last five (5) trains of like equipment
(i.e., aluminum or steel railcars) weighed at that origin prior to such
breakdown. If fewer than five (5) trains under this Agreement were
weighed at that origin prior to the breakdown, the weight per car shall
be determined by averaging the
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weight per car of the train(s) (of like equipment) under this Agreement
weighed at that origin prior to the breakdown as well as the lading
weight per car of train(s) under the Agreement first weighed at that
origin after the scales are repaired, so as to comprise a five (5)
weighted train average.
(O) Unless PURCHASER is notified by BN that heavier weights are acceptable,
if a loaded railcar is found by BN, as determined by weighing
procedures set forth above, to weigh in excess of maximum gross weight
on rail of 286,000 pounds for shipment in aluminum railcars, or 268,000
pounds for shipments in steel railcars (plus or minus one-half of one
percent), BN may, at its discretion, switch said overloaded railcars
and remove them from the train. PURCHASER or the mine operator shall
then cause excess coal to be removed from the overloaded railcar, and
BN shall replace such car into the train.
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APPENDIX G
COAL SAMPLE PREPARATION AND ANALYSES
LABORATORY PROCEDURES
Procedures to be utilized for coal sample preparation and analysis will be
performed manually or by utilization of automated equipment which conforms with
the referenced ASTM Standards.
1. Total Moisture in Coal (Air drying will be continued for ASTM D-3302
predetermined time necessary to achieve a loss in weight
of no more than 0.1 percent per hour).
2. Preparing Coal Samples for Analysis ASTM D-2013
3. Moisture in the Analysis Sample of Coal ASTM D-3173
4. Ash in the Analysis Sample of Coal ASTM D-3174
5. Gross Calorific Value of Coal by the Adiabatic Bomb Calorimeter ASTM D-2015
or
Gross Calorific Value of Coal by Microprocessor Controlled Isoperibol ASTMD-1989
Bomb Calorimeter
6. Total Sulfur in the Analysis Sample of Coal Using High Temperature ASTM D-4239
Tube Furnace Combustion Method
7. Volatile Matter in the Analysis Sample of Coal ASTM D-3175
8. Fusibility of Coal Ash ASTM D-1857
9. Grindability of Coal by the Hardgrove Grindability Machine Method (No. ASTM D-409
8 coal samples will be used for this analysis)
10. Fixed Carbon is a calculated value. Fixed Carbon is the resultant of ASTM D-5142
the summation of percentage moisture, ash and volatile or
matter subtracted from 100. All percentages used in the ASTM D-3172
calculation must be on the same moisture basis.
11. Nitrogen in the Analysis Sample of Coal ASTM D-5373
or
ASTM D-3179
12. Calculating Coal Analyses from As-Determined to Different Basis ASTM D-3180
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