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Confidential Treatment
EXHIBIT 10.8
COAL TRANSPORTATION
AGREEMENT
Between
BIRCHWOOD POWER PARTNERS, L.P.
And
ER&L-BIRCHWOOD, INC.
For the Birchwood Cogeneration Project
SEI Birchwood Contract No. 6709-P-004
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TABLE OF CONTENTS
ARTICLE 1. Definitions................................... 1
1.1. Definitions................................... 1
1.2. Other Definitions............................. 4
ARTICLE 2. TERM.......................................... 4
2.1. 25-Year Term.................................. 4
2.2. Build-Up Period............................... 4
2.3. Anticipated Commercial Operation Date......... 4
2.3.1. Power Agreement Is Terminated -
Reinstated or Renegotiated................ 4
2.3.2. Commercial Operation Date Not Met .... 5
2.4. Effect of Continuation Under Power
Agreement.................................. 5
2.5. Effect of the Termination of a Coal
Supply Agreement........................... 5
2.6. Filing with the ICC........................... 6
2.7. Effect of Termination......................... 7
ARTICLE 3. TRANSPORTATION RATES AND ESCALATION........... 7
3.1. Rates......................................... 7
3.2. Quarterly Adjustments of Rates................ 7
3.3. Notice to ERLB of Price Redetermination....... 7
3.4. Special Adjustments Agreement................. 7
ARTICLE 4. VOLUME REQUIREMENT............................ 8
4.1. 100% Requirement.............................. 8
4.2. Liquidated Damages............................ 8
4.3. Non-Hazardous Materials....................... 8
ARTICLE 5. BILLS AND PAYMENTS............................ 9
5.1. Billing and Payment........................... 9
5.2. Time of Billing and Payment................... 9
5.2.1. Coal.................................. 9
5.2.2. Late Payment.......................... 9
5.2.2.1. Undisputed
Transportation Charges........ 9
5.2.2.2. Disputed Transportation
Charges....................... 9
ARTICLE 6. TRANSPORTATION................................ 9
6.1. Tender........................................ 9
6.2. Railcars and Locomotives...................... 10
6.3. Shipment; Tariffs, Etc........................ 10
6.4. Schedules..................................... 10
6.5. Unacceptable Shipments........................ 10
6.5.1. Shipments Rejected for Failure by
Underlying Carrier..................... 10
6.5.2. Shipments Rejected for Failure to
Meet Coal Specifications............... 10
6.6. Weighing by Carrier........................... 11
6.7. Placement at the Facility..................... 11
6.8. Demurrage..................................... 11
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6.8.1 Unit Train Shipments................... 11
6.8.2 Straggler Cars Shipments............... 12
6.9. Loading and Unloading......................... 12
6.10. Reclassification of Track..................... 12
ARTICLE 7. FORCE MAJEURE................................. 13
7.1. Effect of Force Majeure....................... 13
7.2. Events Not Included........................... 13
7.3. No Automatic Extension........................ 14
ARTICLE 8. TERMINATION, REMEDIES......................... 14
8.1. Termination Upon Default...................... 14
8.2. Effect of Termination......................... 15
8.3. Nonwaiver..................................... 15
8.4. No Consequential, etc. Damages................ 15
ARTICLE 9. MISCELLANEOUS PROVISIONS...................... 15
9.1. Entire Agreement.............................. 15
9.2. Notices....................................... 15
9.3. Choice of Law................................. 16
9.4. Counterparts.................................. 16
9.5. Confidentiality............................... 16
9.6. Assignment.................................... 17
9.7. Arbitration................................... 17
Attachment A Other Origins
Attachment B Determination of Quarterly
Adjustments
Attachment C Rail Facilities at Site
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COAL TRANSPORTATION AGREEMENT
BIRCHWOOD COGENERATION PROJECT
THIS COAL TRANSPORTATION AGREEMENT (the "Agreement"), dated as of the
22nd day of July, 1993 is between BIRCHWOOD POWER PARTNERS, L.P., a Delaware
limited partnership ("BPP"), and ER&L-BIRCHWOOD, INC., a Delaware corporation
("ERLB").
WHEREAS, BPP plans to design, finance, build, own, operate and maintain
a coal-fired cogeneration facility (the "Facility") in King George County,
Virginia (such undertaking referred to as the "Project");
WHEREAS, AgipCoal Holding USA, Inc., Laurel Creek Co., Inc., Rockspring
Development, Inc. and AgipCoal Sales USA, Inc. (collectively, the "Coal
Supplier") and BPP have entered into or shall enter into a coal purchase
contract (the "Coal Supply Agreement") to provide a supply of coal for the
Facility;
WHEREAS, BPP and ERLB desire that ERLB arrange for rail transportation
of the coal from the Coal Supplier to the Facility, and ERLB is willing to
arrange for such transportation;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
1.1. Definitions. The following shall have the meanings indicated:
Anticipated Commercial Operation Date - November 29, 1996.
BPP. Birchwood Power Partners, L.P., a Delaware Limited partnership,
its successors and assigns.
Buildup Period. The period of time immediately prior to the
Commercial Operation Date during which the Facility accumulates coal for test
burns and start-up testing and in anticipation of full commercial operation.
Coal. The Coal purchased for the Facility.
Coal Base Transportation Rate. The rate provided in Section 3.1.
Coal Supplier. AgipCoal Holding USA, Inc., Laurel Creek Co., Inc.,
Rockspring Development, Inc. and AgipCoal Sales USA, Inc., their successors and
assigns.
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Coal Supply Agreement. The agreement for the supplying of coal to the
Facility as previously defined in the recitals hereto.
Commercial Operation Date. The first day following the day SEI
Birchwood, Inc., or its assignee notifies Virginia Power that the Facility is
available for dispatch as provided in the Power Purchase and Operating
Agreement between SEI Birchwood, Inc. and Virginia Electric and Power Company.
Construction Contract. The contract for the engineering, procurement
and construction of the Facility, as such contract may be amended, supplemented
or replaced, from time to time.
CSXT. CSX Transportation, Inc., a Virginia corporation.
Destination Carrier. The rail carrier serving the Facility.
ERLB. ER&L-Birchwood, Inc., a Delaware corporation, its successors and
assigns.
Event of Default. A default under this Agreement as provided in
Section 8.1.
Facility. The cogeneration Facility to be located in King George
County, Virginia, which BPP intends to build and operate and which will have
the capability to generate approximately 220 net megawatts of electricity and
provide process steam to one or more industrial users.
Financing Documents. Those documents which provide for the construction
and/or permanent financing of the Project.
GDP-IPD. The second release of the quarterly gross domestic product
implicit price deflator published by the Bureau of Economic Analysis of the
U.S. Department of Commerce in the Survey of Current Business, Table 7.13, Line
# 1.
Hazardous Materials. All pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes proscribed under any
applicable Federal, State, local or foreign statute, law, regulation,
ordinance, rule, judgment, order or decree including, without limitation, the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, et.
seq., the Federal Clean Water Act, as amended, 33 U.S.C. Section 1251, et.
seq., the Federal Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.,
and the Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601, et seq.
ICC. The Interstate Commerce Commission.
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Index Factor. The price indexing factor set forth in Article 3.
Locomotive Lease Agreement. The Locomotive Lease Agreement between
CSXT and BPP including all appendices and all amendments thereto that may be
made from time to time.
Mines. Coal Supplier's coal mines and rail car loading facilities
which shall supply the coal under the Coal Supply Agreement.
Party or Parties. BPP and/or ERLB as appropriate.
Power Agreement. The Power Purchase and Operating Agreement dated as
of July 13, 1990 between SEI Birchwood, Inc. and Virginia Electric and Power
Company, including all appendices and all amendments thereto that may be made
from time to time.
Prime Rate. The rate announced publicly from time to time by
Citibank, N.A., New York, New York as its prime rate.
Project. The planning, designing, financing, building, operation and
maintenance of the Facility.
Railcar. A railroad car suitable for loading at the Mines and
unloading at the Facility.
Senior Lenders. Those lenders providing senior debt financing for the
Project and holding a first mortgage or similar security interest in the
Project.
Special Adjustments Agreement. The Special Adjustments Agreement
dated as of even date herewith by and among Agip Coal Holdings USA, Inc.,
Laurel Creek Co., Inc., Rockspring Development, Inc., AgipCoal Sales USA, Inc.,
ER&L-Birchwood, Inc. and Birchwood Power Partners, L.P.
Straggler Car. The Railcars of a unit train of coal, but delivered
after the unit train is tendered to the Facility, due to a cause not
attributable to the Facility and subject to Section 6.8.2.
Substantial Completion. The date upon which the Facility meets the
criteria for substantial completion or similar event or act as set forth in the
Construction Contract.
Ton. A short ton or two thousand (2,000) pounds (avoirdupois).
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Underlying Carrier. CSXT, the Destination Carrier, or any other
carrier by rail providing transportation of Coal to the Facility.
Unit Train. A train with 90 loaded cars of Coal or such other number
of cars as required by the Underlying Carrier for unit trains.
Virginia Power. Virginia Electric and Power Company.
1.2. Other Definitions. Other terms in this Agreement whose
initial letters are capitalized and which are not otherwise defined herein
shall have the respective meanings given to such terms in the Power Agreement.
ARTICLE 2. TERM
2.1. 25-Year Term. Subject to earlier termination as hereinbelow
provided in this Agreement, the term of this Agreement shall commence on the
date of its execution and shall continue for a period of twenty-five (25) years
following the Commercial Operation Date; provided, however, that this Agreement
shall continue to apply to any shipment loaded and tendered to ERLB prior to
the end of the twenty-five (25) years, but delivered after such date. BPP
shall notify ERLB in writing of the Commercial Operation Date within thirty
(30) days of BPP becoming aware of such date.
2.2. Build-Up Period. This Agreement shall also apply to any
transportation of Coal arranged by ERLB for the Facility during the Build-Up
Period. BPP shall give ERLB not less than thirty (30) days' prior notice of
each of the dates on which any of the shipments of Coal will be tendered to
ERLB by the Coal Supplier during this Build-Up Period.
2.3. Anticipated Commercial Operation Date. The Anticipated
Commercial Operation Date under the Power Agreement is November 29, 1996,
provided, that SEI Birchwood, Inc. or its assignee under the Power Agreement is
entitled to delay the Commercial Operation Date until November 24, 1997.
2.3.1. Power Agreement Is Terminated - Reinstated or Renegotiated.
In the event the Power Agreement is terminated either before or after the
Commercial Operation Date, BPP and ERLB shall each have the right exercisable
in its discretion to terminate this Agreement upon thirty (30) days' written
notice served on the other; provided however, that if ERLB exercises such right
and within the thirty (30) day period following BPP's receipt of such
termination notice, BPP notifies ERLB in writing that BPP intends to reinstate
the Power Agreement or to negotiate
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a new power agreement with Virginia Power, then such termination notice from
ERLB shall be deemed withdrawn and ERLB shall not be entitled to terminate this
Agreement for a six (6) month period starting as of the date of the aforesaid
termination of the Power Agreement. If the Power Agreement is reinstated on or
before the end of the six (6) month period described in the immediately
preceding sentence, this Agreement shall remain in effect. Alternatively, if a
new power agreement is negotiated and executed with Virginia Power on or
before the end of such six (6) month period this Agreement shall remain in
effect, provided, however, if either ERLB or BPP believes, in its reasonable
discretion, that such new power agreement will have an adverse economic effect
on ERLB or BPP, as the case may be, ERLB or BPP may terminate this Agreement on
thirty (30) days' written notice to the other.
2.3.2. Commercial Operation Date Not Met. In the event the
Commercial Operation Date is not achieved by November 24, 1997, ERLB and BPP
shall each have the right, at its sole election, to terminate this Agreement
upon thirty (30) days' written notice to the other; provided, however, that if
within the thirty (30) day period following BPP's receipt of any such
termination notice from ERLB under this Section 2.3.2, BPP provides ERLB
written notice that BPP intends to achieve the Commercial Operation Date on or
before November 24, 1998, the aforesaid termination notice from ERLB shall be
deemed withdrawn and this Agreement shall remain in effect. In the event the
Commercial Operation Date is not achieved by November 24, 1998, and BPP or ERLB
reasonably believes that the Commercial Operation Date will not occur before
November 24, 1999, ERLB or BPP, at its sole election, may terminate this
Agreement by giving written notice of termination to the other.
2.4. Effect of Continuation Under Power Agreement. If BPP
continues to provide service under the Power Agreement beyond the twenty-five
(25) year term provided in Section 2.1, the following shall apply: (i) If the
continuation is voluntary or agreed to by BPP and if the Parties mutually agree
in writing, this Agreement shall continue for a similar length of time. (ii) If
the continuation is required by the Power Agreement or automatically continued
under Section 18.1(a) of the Power Agreement, this Agreement shall continue for
the same length of time as the Power Agreement and both Parties shall continue
to be bound thereby, provided that nothing in this Section 2.4 shall require
that this Agreement shall extend more than 10 years beyond the period of 25
years from the Commercial Operation Date provided in Section 2.1.
2.5. Effect of the Termination of a Coal Supply Agreement.
(a) If the Coal Supply Agreement terminates for any reason before the end
of the term of this Agreement, BPP and ERLB shall use their best efforts for a
period of six (6) months following
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notice from BPP to ERLB of such termination (or anticipated termination) to
secure a replacement coal supply agreement with a coal supplier(s) or
provider(s) located on the CSXT system, for the balance of the 25-year period
then remaining on this Agreement. If within such six-month period BPP does not
secure a new coal supply agreement under which the sum of (i) the price for
coal and (ii) the cost of transportation of coal under this Agreement is equal
to or less than the then applicable Fuel Compensation Price which BPP is
entitled to receive under the Power Agreement, then BPP shall be free to
arrange for an alternative coal supply and coal transportation arrangements
outside of the CSXT system and to terminate this Agreement on written notice to
ERLB; provided, however, if the sum of (x) the price of coal and (y) the cost
of transportation on such alternative system is also greater than the then
applicable Fuel Compensation Price which BPP is entitled to receive under the
Power Agreement, BPP will provide ERLB an opportunity of ten (10) business days
to match such total price prior to finalizing such alternative arrangement and
terminating this Agreement. During the period from termination of the Coal
Supply Agreement and until BPP has secured a new coal supply or terminates this
Agreement under this Section 2.5, BPP shall be free to purchase coal on the
spot market from CSXT served origination points and elect to pay the
transportation rates set forth on Attachment A hereto.
(b) In the event that the Coal Supply Agreement is
terminated before the end of the term of this Agreement and (i) BPP executes a
replacement agreement with a supplier on the CSXT system or (ii) BPP selects a
new origin on the CSXT system to supply coal to the Facility, at BPP's election
ERLB will provide transportation from the new supplier(s) or provider(s) or from
that new origin to the Facility at a rate which is consistent with the rate
schedule provided in Attachment A, provided, however, that nothing herein shall
require ERLB to provide or continue transportation service from an origin which
is on an abandoned line of railroad. Attachment A provides a schedule of rates
from origins by CSXT rate district subject, however, to the provisions of
Section 3.2. In the event that a new origin is selected, the CSXT rate district
and the corresponding transportation rate, as provided in Attachment A, will be
determined and escalated according to the provisions of Section 3.2. Such
escalated rate shall be the new coal transportation rate as provided in Section
3.1 and the new origin shall be substituted for the origin provided in Section
3.1.
2.6. Filing with the ICC. Promptly upon execution of this
Agreement, and in no event later than thirty (30) days after execution, ERLB
shall enter into a railroad transportation contract with CSXT and any other
necessary or desirable Underlying Carriers to transport Coal hereunder, shall
arrange with CSXT to file an appropriate contract summary thereof with
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the ICC and shall take all necessary steps to cause the contract between ERLB
and CSXT to be approved promptly by the ICC including, but not limited to,
filing any supplemental information requested by the ICC and diligently
contesting any challenge to ICC approval.
2.7. Effect of Termination. Notwithstanding anything to the
contrary contained in this Agreement, termination of this Agreement by BPP or
ERLB pursuant to the provisions of Sections 2.3.1, 2.3.2, or 2.5 shall be
without penalty or damages to either party.
ARTICLE 3. TRANSPORTATION RATES AND ESCALATION
3.1. Rates. BPP shall pay and ERLB shall receive charges for the
transportation of coal originating at Ten Mile Creek or Laurel (Baber), West
Virginia, based on a rate ("Coal Base Transportation Rate") of:
$[xxx] net Ton as of
October 1, 1989
This rate includes the use of locomotives for handling and unloading of
Railcars as provided by the Underlying Carrier pursuant to the Locomotive Lease
Agreement and the use of Railcars.
3.2. Quarterly Adjustments of Rates. The Coal Base Transportation
Rate and the transportation rates provided in Attachment A hereto shall be
adjusted, up or down, each quarter, by the same percentage and at the same time
as the percentage change of the Fuel Compensation Price provided in Sections
10.4 through 10.13 of the Power Agreement, including any adjustment resulting
from arbitration thereunder. An example of such adjustment is provided in
Attachment B.
3.3. Notice to ERLB of Price Redetermination. If a notice is
served and negotiations or arbitration undertaken under the Power Agreement to
redetermine the Fuel Compensation Price therein, BPP shall promptly advise ERLB
in writing. BPP will allow ERLB to participate in the negotiation and/or
arbitration process regarding adjustments to the Fuel Compensation Price under
the Power Agreement, to the extent permitted by Virginia Power. BPP will not
settle any negotiation or arbitration over the adjustment to the Fuel
Compensation Price under the Power Agreement without first seeking input from
ERLB and using reasonable best efforts to seek a consensus among ERLB, the Coal
Supplier and BPP as to the terms of such settlement.
3.4. Special Adjustments Agreement. The Parties agree that the
Special Adjustments Agreement may alter the amount BPP shall pay to ERLB for
transportation of Coal from the Coal Supplier to
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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the Facility, and that BPP will have no liability under this Agreement in the
event BPP pays ERLB the amounts that may be determined under the Special
Adjustments Agreement. The Parties agree that no dispute arising under the
Special Adjustments Agreement shall relieve ERLB from performing its
obligations and duties under this Agreement.
ARTICLE 4. VOLUME REQUIREMENT
4.1. 100% Requirement. Throughout the term of this Agreement, BPP
shall ship pursuant to this Agreement one hundred percent (100%) of
the Coal used at the Facility during said period, except to the extent that
ERLB is unable to provide transportation because of a force majeure event as
provided herein or due to an event of default by ERLB.
4.2. Liquidated Damages. In the event BPP fails to ship under this
Agreement one hundred percent (100%) of the Coal used at the Facility during
the time this Agreement is in effect, except to the extent that ERLB is unable
to provide transportation because of a force majeure event as provided herein
or due to an event of default by ERLB, and except as provided in Section 4.1,
BPP shall pay ERLB [xxx] dollars ($[xxx]) a ton for the difference between the
number of tons that should have been shipped under this Agreement and the
number of tons actually shipped. Such payments shall be liquidated damages and
not a penalty. It is agreed that ERLB's actual damages would be uncertain as
to amount and difficult to ascertain. Such payments shall be due and payable
within forty-five (45) days after the end of each calendar quarter in which
BPP failed to ship one hundred percent (100%) of the Coal. After said
forty-five (45) days said amount shall bear interest at the Prime Rate plus two
percent (2%) per annum until paid. The rate provided herein for determining
liquidated damages is provided as of January 1, 1993. It shall be adjusted in
the same manner and at the same time as rates are adjusted under Section 3.2.
Within fifteen (15) days after the end of each calendar quarter
if the Facility has used any coal other than Coal transported under this
Agreement, BPP shall notify ERLB of the amount of such coal and the reason for
using it. BPP's records pertaining to all Coal received shall be retained for
three (3) years and such records and the certifications shall be subject to
audit by ERLB not more than once per year.
4.3. Non-Hazardous Materials. BPP shall endeavor to provide in its
agreement with any coal supplier supplying coal to the Facility which is
transported as provided in this Agreement that such coal supplier shall not
tender any shipment which contains any Hazardous Material and that such coal
supplier will indemnify and hold harmless ERLB and any carrier of such coal
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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from any and all claims, damages, civil penalties, fines, expenses and fees,
including, but not limited to, attorneys' and experts' fees, which arise from
the tender of any shipment to the Facility which contains Hazardous Material.
ARTICLE 5. BILLS AND PAYMENTS
5.1. Billing and Payment. All bills for services hereunder shall
be billed by ERLB and paid by BPP by check or, at BPP's option, electronically
by wire transfer of immediately available funds.
5.2. Time of Billing and Payment.
5.2.1. Coal. On or after the date of delivery of a shipment of Coal
to the Facility, ERLB shall provide an invoice for said shipment to BPP.
Payment of invoice by BPP must be made within the fifteen (15) day period
allowed by the ICC's credit requirements, except that for a period of two (2)
years following the first delivery of coal under the Coal Supply Agreement BPP
shall be entitled to pay within thirty (30) days after invoice. BPP shall make
payment as provided in Section 5.1.
5.2.2. Late Payment. If BPP does not effect payment as required
herein, the payments due shall bear interest at the following rates through the
date of payment.
5.2.2.1. Undisputed Transportation Charges. Undisputed transportation
charges and related charges for services such as demurrage and storage charges,
extra switching, spotting or respotting, re-railing or wreck train service,
weighing or reweighing and reconsignment charges, shall bear interest at the
Prime Rate plus two percent (2%) for the first ninety (90) days after the bill
is due and the Prime Rate plus four percent (4%) thereafter.
5.2.2.2. Disputed Transportation Charges. Transportation charges and
related charges for services as listed in Section 5.2.2.1, which are the
subject of a bona fide dispute between the Parties shall bear interest at the
Prime Rate plus two percent (2%) per annum through the date of payment for a
ninety (90) day period from the date of resolution of the dispute and at the
Prime Rate plus four percent (4%) per annum thereafter.
ARTICLE 6. TRANSPORTATION
6.1. Tender. BPP shall require by contract or otherwise that Coal
suppliers will tender Coal in Railcars at loading facilities located at the
Mines or at other CSXT-served coal-loading facilities. Tender of a shipment
shall include making it
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available to the Underlying Carrier accompanied by proper shipping
documentation to allow transportation and delivery. Upon tender, ERLB shall be
responsible for transporting the Coal in accordance with the terms of this
Agreement.
6.2. Railcars and Locomotives. ERLB shall arrange at its sole
cost and expense for the Railcars which will transport the Coal as provided in
this Agreement. The railcars shall be of the proper type (bottom dump), in
good operating order and free of extraneous material. BPP shall require by
contract or otherwise that Coal suppliers will inspect the Railcars prior to
loading and that they shall reject any Railcar delivered which is not suitable
for loading. BPP will not incur or be charged any additional costs or expenses
in the event the Coal Supplier rejects any Railcars which are not suitable.
ERLB shall also arrange for CSXT to provide locomotives at ERLB's cost and
expense for handling and unloading of Railcars pursuant to the Locomotive Lease
Agreement.
6.3. Shipment; Tariffs, Etc. All shipments transported pursuant to
this Agreement shall be loaded and shipped in accordance with the Underlying
Carrier loading requirements and weight limitations that may be published from
time to time by the Underlying Carrier or Underlying Carriers in its or their
tariffs, circulars, rules, or similar documents.
6.4. Schedules. Prior to the twentieth (20th) day of each month,
BPP will provide ERLB with an estimated monthly schedule indicating the
anticipated quantities of Coal to be transported pursuant to this Agreement in
the next succeeding month. Actual requirements will be based primarily on
dispatch by Virginia Power, and BPP shall endeavor to provide schedules and
shipments of approximately equal amounts of Coal, as the case may be, on a
month-to-month basis, subject to prudent utility operating practices.
6.5. Unacceptable Shipments.
6.5.1. Shipments Rejected for Failure by Underlying Carrier. In
the event a shipment loaded in Railcars and not yet unloaded at the Facility is
not acceptable because of any cause directly attributable to a failure to
provide transportation as required herein, including, but not limited to, loss
or damage to a shipment, BPP may refuse to accept delivery of such Railcars,
provided the Parties shall use their best efforts to mitigate such loss or
damage.
6.5.2. Shipments Rejected for Failure to Meet Coal Specifications.
In the event a shipment loaded in Railcars and not yet unloaded at the Facility
is not acceptable because the Coal fails to meet the specifications provided in
the Coal Supply Agreement, BPP may refuse to accept delivery of such Railcars,
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provided that BPP shall be responsible, with or without the concurrence of the
Coal Supplier, to arrange for the disposition of the Coal. Any demurrage,
storage, rerouting, reconsignment or salvage associated with BPP's refusal
shall be subject to the Underlying Carrier's tariffs, circulars, rules and
regulations and BPP shall reimburse ERLB for any charges incurred thereby.
6.6. Weighing by Carrier. ERLB shall arrange with the
Underlying Carrier to weigh all loaded Railcars, and the weights determined by
the Underlying Carriers shall be used for billing purposes, provided if an
Underlying Carrier has an arrangement with the Coal Supplier for the use of
Mine weights, such weights shall be used. If the Underlying Carrier which
weighs the Railcars provides a separate or extra charge for weighing, BPP shall
reimburse ERLB for any such charges. If BPP requests any re-weighing of cars,
loaded or empty, or similar service, ERLB shall use its best efforts to arrange
for such service and BPP shall reimburse ERLB for its expenses incurred,
including but not limited to the railroad's re-weighing charges.
6.7. Placement at the Facility. Subject to the execution of a
Sidetrack Agreement between BPP and CSXT, ERLB shall arrange with the
Underlying Carrier(s) for the placement of trainload shipments of Coal,
including locomotives, on private industrial delivery tracks at the Facility
designated by BPP. After delivery onto BPP's private industrial track, the
trains will be manned by crews which BPP shall provide. BPP warrants that the
crews will be fully and adequately trained and thoroughly familiar with the
Destination Carrier's equipment, safety rules and practices and will fully
indemnify the carriers and ERLB for any damage arising from train operations
while a train is in BPP's control or possession.
6.8. Demurrage.
6.8.1. Unit Train Shipments. Subject to the exceptions hereafter
provided, twenty-four (24) hours' free time will be allowed for unloading all
Railcars in unit train shipments, except as to Straggler Cars. Free time will
begin at the time of actual or constructive placement of the train onto BPP's
private industrial tracks on the Facility premises, together with locomotives
provided by CSXT under the Locomotive Lease Agreement. Actual placement is
made when Railcars are placed at the private industrial track at the Facility's
premises designated by BPP as the delivery tracks. If such actual placement is
prevented due to any cause attributable to BPP, the Railcars shall be
considered constructively placed. When the Railcars are held short of the
Facility, notice shall be sent or given BPP in writing, by telephone, by
telecopy, or in a manner otherwise agreed to, that shipments are held under
constructive placement. After expiration of the free time, BPP shall be
assessed and pay detention charges of [xxx] dollars ($[xxx]) per
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[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
15
car per day (twenty-four (24) hours), or fraction thereof, including Saturdays,
Sundays and holidays for each Railcar until the last Railcar is unloaded and
released to the Destination Carrier, provided that when at the time of actual
or constructive placement lading is frozen so as to require heating, thawing or
loosening to unload, the twenty-four (24) hours' free time for unloading will
be extended an additional twenty-four (24) hours, and provided, further,
charges shall not accrue for time when BPP is prevented from unloading due to
CSXT's act or omission. BPP shall, prior to the expiration of five (5) days
after the date on which car or cars were released, send or give the Destination
Carrier's agent a written statement stating by Railcar initial and number, the
day or days during which any time was expended in heating, thawing or loosening
the lading to unload the Railcar or Railcars, or in which BPP was unable to
unload due to CSXT's act or omission. It is understood that for operating and
cost reasons all Railcars of the unit train must be transported at one time
and, therefore, demurrage charges shall be assessed as to all Railcars in a
shipment until the last Railcar is unloaded and released, except in the case of
"bad order" Railcars, which will not be required to be unloaded and released
in order to avoid or end demurrage charges. Unloading and release requires
notice by BPP given to authorized personnel of the Destination Carrier in
writing, by telephone, telecopy or in a manner otherwise agreed to in writing,
that cars are unloaded and available to the Destination Carrier. Railcars will
be considered released on the date and time the notice is received by the
Destination Carrier. Such notice must include the identity of BPP, the person
furnishing data and the train symbol. The charges provided herein shall
escalate at the same time and by the same method as detention and/or demurrage
charges of the Underlying Carrier are escalated. It is understood that said
charges currently are published in freight tariff ICC CSXT 8200.
6.8.2 Straggler Cars Shipments. BPP shall pay ERLB any amount
arising from demurrage assessed by the Underlying Carrier for demurrages which
arise under such carrier's published charges in effect from time to time as to
shipments of coal in Straggler Cars. The charges provided herein shall
escalate at the same time and by the same method as demurrage rates of the
Underlying carrier are escalated.
6.9. Loading and Unloading. BPP shall promptly unload shipments of
Coal at the Facility pursuant to the Destination Carrier's rules and practices.
6.10. Reclassification of Track. ERLB shall use its reasonable best
efforts with CSXT to convert the rail facilities, as identified on Attachment
C hereto, to an industrial spur for use by BPP as part of BPP's coal unloading
operations prior to Financial Closing. Assuming such conversion is
accomplished, ERLB shall obtain CSXT's written agreement at the time of such
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conversion that CSXT shall maintain at CSXT's cost and expense such converted
industrial spur in a suitable condition during the term of this Agreement.
ARTICLE 7. FORCE MAJEURE
7.1. Effect of Force Majeure. Neither Party shall be responsible
or liable for or deemed in breach or default under this Agreement because of
any delay in the performance of, or inability to perform, its respective
obligations hereunder due solely to circumstances beyond the reasonable
control of the Party experiencing such delay, or inability to perform,
including, but not limited to, acts of God; unusually severe weather
conditions; strikes or other labor difficulties; war; riots; requirements,
actions or failures to act on the part of governmental authorities preventing
performance; inability despite due diligence to obtain required licenses,
permits and approvals; change of law; failure or faulty design of major
equipment which could not reasonably be detected by prudent industry operating
practices; or fire (such causes hereinafter called "Force Majeure"); provided
that:
(a) The non-performing Party gives the other Party, within
forty-eight (48) hours of the non-performing Party
becoming aware of the occurrence, written notice
describing the particulars of the occurrence;
(b) The suspension of performance is of no greater scope and
of no longer duration than is required by the Force
Majeure;
(c) The non-performing Party uses all reasonable efforts to
remedy its inability to perform;
(d) When the non-performing Party is able to resume
performance of its obligations under this Agreement,
that Party shall give the other Party written notice to
that effect;
(e) The Force Majeure was not caused by or connected with any
negligent or intentional acts, errors, or omissions, or
failure to comply with any law, rule, regulation, order
or ordinance or for any breach or default of this
Agreement; and
(f) The Force Majeure was not attributed to normal wear and
tear of materials and equipment.
7.2. Events Not Included. The term Force Majeure does not include
(i) governmental action that affects a Party's cost or availability of supplies
or the demand for a Party's goods or
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services, or (ii) changes in market conditions that affect a Party's cost or
availability of a Party's supplies or the demand for a Party's goods or
services. In addition, Force Majeure does not include unavailability of
equipment, inability to obtain or renew permits, labor strikes or slowdowns of
employees specifically following the Commercial Operations Date, or failure or
unavailability of transportation, transmission or distribution capability,
unless same is caused by an occurrence which would fit the definition of Force
Majeure in this Article 7.
7.3. No Automatic Extension. In no event will any condition of
Force Majeure extend the term of this Agreement. If any condition of Force
Majeure delays a Party's performance for a time period greater than eighteen
(18) months, the other Party may terminate this Agreement, without further
obligation, or extend such period at its sole discretion if the Party delayed
by such Force Majeure is exercising due diligence in its efforts to cure the
condition of Force Majeure.
ARTICLE 8. TERMINATION, REMEDIES
8.1 Termination Upon Default. Subject to Section 7 above, either
Party may terminate this Agreement, effective upon written notice of
termination to the other Party, upon an occurrence of an Event of Default of
the other Party. An Event of Default as to any Party shall mean the following:
(a) Failure by such Party to perform any material
obligations under this Agreement, including, but not
limited to, failure to pay transportation charges, if
such failure continues uncorrected sixty (60) days
after notice thereof from the other Party;
(b) Dissolution of such Party; or
(c) The filing of a petition for relief as to such Party as
debtor or bankrupt under the Bankruptcy Code of 1978 or
like provision of law of any jurisdiction (except if
such petition is contested by such Party and has been
dismissed within sixty (60) days); insolvency of such
Party as finally determined by a court proceeding;
filing by such Party of a petition or application to
accomplish the same or for the appointment of a
receiver or a trustee for such Party or a substantial
part of its assets; commencement of any proceedings
relating to such Party under any other reorganization,
arrangement, insolvency, adjustment of debt or
liquidation
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law of any jurisdiction, whether now in existence or
hereinafter in effect, either by such Party or by
another, provided that if such proceeding is
commenced by another, such Party indicates its
approval of such proceeding, consents thereto or
acquiesces therein, or such proceeding is contested
by such Party and has not been finally dismissed
within sixty (60) days.
8.2. Effect of Termination. Except as provided in Section 8.4,
upon termination of this Agreement pursuant to Section 7.1, Effect of Force
Majeure, neither Party (unless such termination was because of the occurrence
of an Event of Default relating to it) shall have any further liability or
obligation to the other Party hereunder, except that each Party shall remain
liable to the other with respect to any charges which arose prior to such
occurrence and with respect to any Event of Default as to such Party prior to
such termination, and the provisions of Section 9.7 shall survive termination.
8.3. Nonwaiver. The specifications of remedies herein shall not be
deemed to exclude the Parties from any other legal or equitable remedies they
may have with respect to this Agreement. Failure on the part of any Party to
exercise any remedies upon default hereunder for any period or periods shall
not operate as an estoppel, or as a waiver, or prevent it at any subsequent
time from electing to exercise any rights as to any subsequent default
hereunder.
8.4. No Consequential, etc. Damages. Neither Party shall be
liable for indirect, consequential, special or punitive damages as a result of
an Event of Default under Article 8.
ARTICLE 9. MISCELLANEOUS PROVISIONS
9.1. Entire Agreement. This Agreement contains the entire
agreement of the Parties relating to its subject matter, and supersedes all
prior and contemporaneous negotiations, undertakings and agreements, written or
oral, between the Parties relating to such subject matter. This Agreement
shall not be amended or modified, and no waiver of any provision hereof shall
be effective, unless set forth in a written instrument authorized and executed
by all the Parties hereto with the same formality as this Agreement.
9.2. Notices. Notices under this Agreement shall be in writing and
shall be effective when delivered to an officer of a Party, sent by mail,
postage prepaid, or sent by facsimile transmission. If to BPP, such notices
shall be addressed:
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Birchwood Power Partners, L.P.
c/o SEI Birchwood, Inc.
Suite 400
100 Ashford Center, North
Atlanta, GA 30338
Attention: President
Facsimile No: (404) 393-9871
or at any subsequent address of which BPP may notify ERLB in writing. If to
ERLB, such notice shall be addressed to:
ER&L-Birchwood, Inc.
c/o Energy Resources & Logistics, Inc.
550 Water Street
Jacksonville, Florida 32202-4057
Facsimile No: (904) 366-5358
or at a subsequent address of which ERLB may notify BPP in writing.
9.3. Choice of Law. This Agreement shall be deemed to be a
contract made under, and for all purposes shall be construed in accordance
with, the laws and judicial decisions of the Commonwealth of Virginia. For the
purposes hereof, BPP and ERLB hereby submit to the jurisdiction of the state
and federal courts in Virginia.
9.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5. Confidentiality. Each Party shall retain all information
obtained hereunder in strict confidence and shall not use or disclose it to any
person or entity not a party hereto, (a) except for any information which (i)
is at the time of such disclosure known to the public or thereafter becomes so
known, through no violation by such Party of this Agreement; (ii) such Party
can demonstrate that such information was in its possession prior to disclosure
hereunder, or under any prior agreements or negotiations between the Parties
hereto; or (iii) is required by law to be so disclosed; and (b) BPP may provide
a copy of this Agreement to the purchasers of electricity and steam to be
generated by the Facility, under a written confidentiality agreement as long as
all pricing information is deleted from the Agreement so provided, and (c) ERLB
may provide such information to CSXT so long as CSXT maintains the
confidentiality of such information. Notwithstanding the foregoing, if any
Party communicates information to a third party, including but not limited to
affiliates, lenders, lessors, attorneys, consultants and other representatives
the disclosing Party shall be responsible for such third party's disclosures.
The provisions of this Section 9.5 shall survive termination of this Agreement
for a period of three (3) years.
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9.6. Assignment. Any Party may assign its benefits under this
Agreement to a corporation or other entity which is owned by the assignor or by
a corporation or other entity which owns or controls all of the capital stock
or other equity interests of the assignor, (ii) to any entities which require
such assignment in connection with the financing of the acquisition,
rehabilitation or construction of the Facility, and (iii) by BPP to any
purchaser or other successor of the Facility; provided, however, that the
assignee executes a written assumption of the obligations of the assignor
hereunder and delivers it to the nonassigning Party to this Agreement, and
provided further, that the assignor shall not thereby be released from its
obligations hereunder. Otherwise, no Party hereto may assign all or any part
of its benefits or burdens under this Agreement, in whole or in part, by
operation of law or otherwise, except with the prior written consent of the
other Party. The benefits and burdens of this Agreement shall inure to and be
binding upon the legal representatives, successors and assigns of the Parties
hereto.
9.7. Arbitration. The Parties hereto agree that any disputes
arising under this Agreement shall be resolved by arbitration, following the
procedures of the American Arbitration Association, and each shall be deemed
bound by the award. Each Party consents to the entry of judgment by any court
having jurisdiction in the matter in accordance with the decision of the
arbitrator. Any other provisions of this Agreement notwithstanding, any
arbitration award resulting from arbitration under this Section 9.7 shall bear
interest starting at the time set by the award initially at a rate of the Prime
Rate plus two percent (2%) through the date of payment. If the award does not
set such a time, interest on the award shall start on the date of the award and
shall initially be at a rate of the Prime Rate plus two percent (2%) through
the date of payment. After the first fifteen (15) days after any arbitration
award, it shall bear interest at the Prime Rate plus four percent (4%) through
the date of payment. Unless otherwise agreed by the Parties, all arbitration
proceedings shall be held in confidence and the arbitrator(s) selected shall
agree to maintain the confidentiality of all information submitted in the
arbitration.
9.8 Non-Recourse. Notwithstanding any other provision of this
Agreement, no partner, affiliate, parent corporation, shareholder, officer,
director, agent or employee of BPP or any partner of BPP shall have any
personal liability for the payment or performance of any of BPP's obligations
under this Agreement, and in furtherance thereof ERLB agrees to look solely to
BPP and BPP's assets to satisfy any and all claims of liability or damages
against BPP arising out of this Agreement or the relationship created hereby.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
ER&L-BIRCHWOOD, INC. BIRCHWOOD POWER PARTNERS, L.P.
by SEI BIRCHWOOD, INC.,
a General Partner
By: /s/ Derrick W. Smith By: /s/ R.S. Shepard
--------------------------- ------------------------------
Derrick W. Smith Title: Vice President
---------------------------
Title: General Manager
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ATTACHMENT A
RATES FOR UNIT TRAIN TRANSPORTATION OF COAL
FROM ALTERNATIVE ORIGIN DISTRICTS TO
THE BIRCHWOOD POWER FACILITY
EFFECTIVE OCTOBER 1, 1989
ORIGIN
RATE DISTRICT TRANSPORTATION RATE
- ------------- -------------------
[S] [C]
Belington $[xxx]
Clarksburg [xxx]
Cumberland-Piedmont East [xxx]
Cumberland-Piedmont West [xxx]
Fairmont [xxx]
Elk River North [xxx]
Elk River South [xxx]
Gauley Middle [xxx]
Gauley North [xxx]
Gauley South [xxx]
Grafton [xxx]
Mountain [xxx]
Big Sandy [xxx]
Kanawha [xxx]
New River [xxx]
Rates shall be adjusted as provided in Section 3.2 of the Agreement. Size of
shipment and other loading and transportation requirements shall be subject to
CSX Transportation, Inc.'s rules and regulations in effect at time of shipment.
As information, the current CSXT origins are provided in current CSXT Origin
Rate Districts. Origin Rate Districts are subject to change.
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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ATTACHMENT B
EXAMPLE OF THE ADJUSTMENT TO THE BASE TRANSPORTATION
RATE DESCRIBED IN SECTION 3.2 OF THIS AGREEMENT
Base Assumptions:
EBCI = Eastern Bituminous Coal Index as used in Article 10 of the Power
Agreement
Base Transportation Rate as of 10/01/89 [xxx]
Base EBCI Value (2nd Quarter 1989) 147.7
Assumed EBCI Value (First Quarter 1997) 171.17
Therefore:
EBCI escalated Transportation Rate
for the 3rd Quarter 1997 is:
($[xxx]) X (171.17-1)/(147.7-1) [xxx]
-----
- ------------
[xxx] These portions of this exhibit have been omitted and filed separately
with the Commission pursuant to a request for confidential treatment.
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ATTACHMENT C
DESCRIPTION OF RAIL FACILITIES
[DIAGRAM]
Approximately 2.2 miles of the railroad track facilities between Route 601 and
the Industrial Switch for serving the BPP Facility shall be the focus of
ER&LB's reclassification efforts as described in Section 6.10 of this
Agreement.