Indiantown Cogeneration, L.P.
Document Control No. 3637
File No. 6.7.7
June 30, 1995
Gene Holdaway
Costain Coal, Inc.
249 E. Main Street
Lexington, Kentucky 40507
Re: Ash Disposal
Dear Gene:
Pursuant to the Coal Purchase Agreement, dated as of August 4, 1992, between
Indiantown Cogeneration, L.P. ("ICL") and Costain Coal, Inc. ("Costain"), as
amended and supplemented (the "Coal Purchase Agreement"), Costain is obligated
to remove and dispose of ash from ICL's cogeneration facility (the "Facility")
during the start-up period. Costain and ICL have discussed this obligation and
have agreed to proceed as follows:
1. Commencing on the date hereof and continuing until terminated pursuant to
paragraph 6, ICL shall have the right, but not the obligation, to arrange
for, and effect, the disposal of all bottom ash/pyrites produced by the
Facility at a disposal site other than as contemplated by the Coal
Purchase Agreement.
2. Costain agrees that any action ICL may take pursuant to Paragraph 1 hereof
will be in lieu of Costain's performance of such services under the Coal
Purchase Agreement.
3. Costain hereby waives any claims, fees, actions, and demands whatsoever
which Costain, its successors, assigns or heirs, could or may have against
ICL under the Coal Purchase Agreement (including, but not limited to,
Section 10.8 thereof), or otherwise as a result of ICL's actions pursuant
to Paragraph 1 hereof.
4. ICL hereby waives any claim which ICL, its successors, assigns or heirs,
could or may have against Costain under the Coal Purchase Agreement or
otherwise for incremental costs incurred as a result of ICL's actions
pursuant to Paragraph 1 hereof.
[GRAPHIC OMITTED]
Doing business in Florida as Indiantown Cogeneration, L.P. Limited Partnership
June 30, 1995
Page 2
5. Costain acknowledges that this letter agreement in no way diminishes its
obligations under the Coal Purchase Agreement, including the
transportation and disposal of bottom ash/pyrites that is not disposed of
pursuant to Paragraph 1 hereof.
6. Either Costain or ICL may terminate this letter agreement upon seven (7)
days' written notice.
7. The Coal Purchase Agreement in all other respects remains in full force
and effect.
Please indicate your acceptance of the terms and conditions contained herein by
executing a copy of this letter agreement in the space provided below.
INDIANTOWN COGENERATION, L.P.
By: /s/ Joseph P. Kearney
----------------------------
Name:
---------------------------
Title:
--------------------------
Accepted and Agreed,
COSTAIN COAL, INC.
By: /s/ Eugene C. Holdaway
---------------------------
Name: Eugene C. Holdaway
--------------------------
Title: VP -- Sales & Marketing
-------------------------
AMENDMENT NO. 2 TO COAL PURCHASE AGREEMENT
BETWEEN
COSTAIN COAL INC.
AND
INDIANTOWN COGENERATION, L.P.
This Amendment No. 2 to Coal Purchase Agreement ("Amendment No. 2")
is made and entered into as of April 19, 1995 by and between COSTAIN COAL
INC., a Delaware Corporation ("Seller") and INDIANTOWN COGENERATION, L.P.,
a Delaware limited partnership ("Buyer").
RECITALS:
WHEREAS, Seller and Buyer have entered into a Coal Purchase
Agreement (the "Agreement") dated as of August 4,1992, as amended as of
September 30, 1992, which provides for, among other things, the supply and
sale of coal by Seller to Buyer and the removal, transportation and
disposal by Seller of ash residue from the Facility;
WHEREAS, Buyer and Seller desire to amend the Agreement as set forth
in this Amendment No. 2;
NOW, THEREFORE, in consideration of the premises and mutual
agreements and covenants contained in this Amendment No. 2 and for other
good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree that the Agreement is hereby
amended as follows:
Section 1. Definitions. Capitalized terms used but not defined in
this Amendment No. 2 have the respective meanings given to them in the
Agreement.
Section 2. Amendment of Exhibit 3.2. All references to Elkhorn #54,
Eagle Land (Area 8) and Buchannon Land (Area 1 & 2) and to the Seam and
Recoverable Coal Tons (1,000) for the three referenced leases as currently
set forth in Exhibit 3.2 are hereby deleted and the following substituted
therefore:
(Various Leases Shown (Various Leases Shown
on Attached Map) on Attached Map)
Seams Seams
- ----- -----
Clarion Elkhorn #2
Broas #3
Broas #2
Broas #1
Peach Orchard
Upper Hazard
Middle Hazard
Lower Hazard
Subtotal Subtotal
--------- ---------
4,635,056 6,175,000
Section 3. Balance of Agreement Unamended. The Agreement shall in all
other respects remain unamended.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 by
their respective duly-authorized officers as of the date first stated above.
Seller:
COSTAIN COAL INC.
By: /s/ Eugene C. Holdaway
---------------------------------
Its: Vice President
---------------------------------
Buyer:
INDIANTOWN COGENERATION, L.P.
By: /s/ P. Chrisman Iribe
---------------------------------
Its: P. Chrisman Iribe
Senior Vice President
---------------------------------
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---------------
EXHIBIT 4
MAP OF ORR AREA
---------------
[MAP OMITTED]
Chapperal Reserves
[MAP OMITTED]
AMENDMENT NO. 1 TO COAL PURCHASE AGREEMENT
BETWEEN
COSTAIN COAL INC.
AND
INDIANTOWN COGENERATION, L.P.
This Amendment No. 1 to Coal Purchase Agreement ("Amendment No. 1") is
made and entered into as of September 30, 1992 by and between COSTAIN COAL
INC., a Delaware corporation ("Seller"), and INDIANTOWN COGENERATION, L.P., a
Delaware limited partnership ("Buyer").
RECITALS:
WHEREAS, Seller and Buyer have entered into a Coal Purchase Agreement (the
"CPA") dated as of August 4, 1992 which provides for, among other things, the
supply and sale of coal by Seller to Buyer and the removal, transportation and
disposal by Seller of ash residue from the Facility; and
WHEREAS, Buyer and Seller desire to amend the Coal Purchase Agreement,
as set forth in this Amendment No. 1;
NOW, THEREFORE, in consideration of the premises and mutual agreements and
covenants contained in this Amendment No. 1 and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree that the Coal Purchase Agreement is hereby amended as
follows:
ss. 1. Definitions. Capitalized terms used but not defined in this
Amendment No. 1 have the respective meanings given to them in the Coal Purchase
Agreement.
ss. 2. Amendment of CPA ss. 2.4. ss. 2.4 of the CPA is hereby amended by
deleting ss. 2.4(d) in its entirety and renumbering ss. 2.4(e) as ss. 2.4(d).
ss. 3. Amendment of CPA ss. 3.2. (a) The final sentence of ss. 3.2 of the
CPA is hereby amended by deleting the words "provided, however" and replacing
those words with the words "it being expressly understood that"; and by adding
the following words:
"and the purchaser"
between the words "party" and "is."
(b) Replacement Exhibit 3.2. The original Exhibit 3.2 is replaced
with Exhibit 3.2 attached to this Amendment.
ss. 4. Amendment of CPA ss. 6.5(b). The first five sentences of ss. 6.5(b)
of the CPA are deleted and replaced with the following:
"In the event ICL reasonably determines that the quality of coal
delivered hereunder is the primary cause of an operating problem at the
Facility because such coal quality is outside the range of specifications
set forth in Exhibit 6.5(b) hereto, ICL and Seller shall promptly meet to
discuss possible remedies to such operating problem. The term "operating
problem" as used herein shall include, but is not limited to, problems
experienced by ICL in complying with the terms, conditions or provisions
of any permit applicable to the Facility ("a permit problem"). As soon as
is practicable Seller shall inform ICL
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(i) whether in order to remedy the operating problem it would be capable
of delivering coal from the Primary Source that meets the specifications
in Exhibit 6.5(b) by altering its operating or other procedures, and if
not thus capable of delivering from the Primary Source then from other
sources that will meet the specifications in Exhibit 6.5(b) and (ii) if
so, the additional reasonable expenses it would incur in making such
alterations or use of such other sources (which might include but not be
limited to additional expenses for ash disposal). Within 30 days of
receiving such information, ICL may at its option agree to adjust the
price provisions in Article VII to fully compensate Seller for such
expenses, in which event Seller shall to the extent it is capable proceed
to deliver coal meeting such specifications. If Seller is not capable of
delivering such coal by making such alterations, or ICL does not agree to
adjust the price provisions, ICL will take other economically reasonable
steps to eliminate the operating problems, and, if there are none to be
taken, then ICL will take reasonable steps to seek amendment of its
Permits (if in its reasonable judgment taking such steps cannot be
expected to have an adverse effect on the Facility or its operations). If
and when the "operating problem" includes a "permit problem" primarily
caused by the coal quality being outside the range of specifications set
forth in Exhibit 6.5(b), ICL may suspend its purchases of coal hereunder
until the earlier of (i) such time as any of the aforesaid results in a
remedy to the permit problem and (ii) a period of 90 days, which period
may be extended by mutually reasonable agreement. If none of the aforesaid
results in a remedy to the operating problem, or if Seller and ICL are
unable to agree on the terms relating to the supply of coal from other
sources which will eliminate the operating problem, ICL may terminate this
Agreement upon 30 days written notice to Seller, as its exclusive remedy
with respect to the matters referred to in this Section 6.5(b)."
ss. 5. Amendment of CPA ss. 10.4. (a) Clause (ii) in subsection (c) of ss.
10.4 of the CPA is hereby amended by
-3-
deleting the period at the end thereof and inserting thereafter the following:
", except for the addition of lime, ammonia and waste water from the
combustion process."
ss. 5A. Amendment of CPA ss. 8.3. The phrase "OS" at the end of the
definitions of "CF" in the formula set forth in ss. 8.3 of the CPA is replaced
with the phrase "GS."
ss. 6. Amendment of CPA ss. 10.7. Section 10.7 of the CPA is hereby
amended by adding the following sentence at the end thereof:
"Seller agrees that it will endeavor but not be obligated to find ways to
recycle and/or market Ash Residue as contemplated by this Section."
ss. 7. Amendment of CPA ss. 13.5. Clause (ii) in subsection (c) of ss.
13.5 of the CPA is hereby amended by deleting the period at the end thereof and
inserting thereafter the following:
", except for the addition of lime, ammonia and waste water from the
combustion process."
ss. 8. Amendment of CPA ss. 13.8. ss. 13.8 of the CPA is hereby amended by
adding the following sentence at the end thereof:
"Seller agrees that it will endeavor but not be obligated to find ways to
recycle and/or market Ash Residue as contemplated by this Section."
ss. 9. Amendment of CPA ss. 13.17. ss. 13.17 of the CPA is hereby amended
by adding as a last sentence thereto the following:
-4-
Any disposition (other than the grant of a security interest) of the
Pelletizing Facility or any substantial part thereof shall be subject to
ICL's following right of first refusal. If Seller wishes to make any such
disposition, it shall first offer the subject property to ICL in a notice
stating the material terms of such offer, and ICL shall have 60 days
within which to accept the subject offer, and if ICL exercises such right
Seller and ICL shall consummate the transaction within 120 days of the
initial notice to ICL of the offer's material terms. If ICL does not
exercise such right within such 60-day period, then Seller shall have the
unrestricted right to offer or dispose of the subject property to any
third party during such 120-day period; provided that such other offer or
disposition is not on terms more favorable to such third party than those
offered to ICL. Seller shall use its best efforts (to the extent within
its control) to assure that any lien imposed upon the Pelletizing Facility
or any part thereof, and any disposition resulting from the exercise of
remedies with regard to such liens, shall be subject to ICL's right of
first refusal described in this Section 13.17.
ss. 10. Amendment of CPA ss. 21.5. ss. 21.5 of the CPA is amended by
deleting "Delaware" and inserting in place thereof "Kentucky".
ss. 11. New CPA ss. 7.8. In the event that the Florida Public Service
Commission does not approve Amendment No. 2 to the Agreement for the Purchase of
Firm Capacity and Energy between Indiantown Cogeneration, L.P. and Florida Power
& Light Company, a new ss. 7.8 will be added to the CPA to read as follows:
"Section 7.8 Market Price Reopener.
(a) In addition to the market price reopener provisions the
effects of which are reflected in the provisions of Sections 7.1
through 7.7 of this Agreement, it is agreed
-5-
that every five years ICL will collect available FERC data for
Comparable Quality Coal bid to Florida Utilities for contracts with
a term of not less than fifteen years. In the event three or more
bona-fide bids are identified on a good faith basis, the three
lowest bids (FOB mine price) will be averaged and compared to the
then Current Coal Price payable to Seller pursuant to this
Agreement. If the difference calculated pursuant to the immediately
preceding sentence is greater or less than 5%, the then Current Coal
Price paid to Seller will be increased or decreased (as the case may
be) by 10% of such difference.
(b) The maximum Adjustment for any five year reopener period
pursuant to Section 7.8(a) shall be +/- 1% of the then Current Coal
Price paid to Seller.
(c) For purposes of this Section 7.8, "Comparable Quality
Coal" shall mean coal with the following characteristics:
12,500 btu/lb
1.6 1bSO2/mm btu
9% Ash
Appalachian Source
CSX Rail Origin
Non Union Production
(d) It is recited for the avoidance of doubt that this Section
7.8 shall be in effect only if the condition stated in the first
sentence of this Section of this Amendment No. 1 is not met.
ss. 12. Amendment of CPA ss. 18.2(b). ss. 18.2(b) of the CPA is hereby
amended by inserting a period (i.e., ".") after the words "Consent of ICL" in
the seventh line of that section and deleting all of the words following that
period.
ss. 13. Amendment of CPA ss. 18.3(c). ss. 18.3(c) of the CPA is hereby
amended by moving the figure (i) from its
-6-
present location in the third line to the location immediately following the
words "provided that" and by deleting all clauses (ii) and (iii) and the figure
(iv) and replacing them with the following:
"(ii) the FPL Power Purchase Agreement between FPL and ICL shall
have been contemporaneously assigned to the proposed Assignee in
accordance in all respects with ss. 2 of the Consent to Assignment of FPL
dated as of September 30, 1992 and ss.ss. 21.3 and 24.1 of the FPL Power
Purchase Agreement, (iii) all then-existing defaults of ICL under this
Agreement shall have been remedied in all material respects, and (iv) the
proposed Assignee".
ss. 14. Amendment of CPA Exhibit 6.1. The figure in column 2 of Exhibit
6.1 opposite the reference to Ash Fusion is changed from "2,600" to "2,400."
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 by
their respective duly-authorized officers as of the date first stated above.
Seller:
COSTAIN COAL INC.
By: /s/ John C. Wilson
---------------------------------
Its: Vice President
---------------------------------
Buyer:
INDIANTOWN COGENERATION, L.P.
By: /s/ J.R. Cooper
---------------------------------
Its: Vice President
---------------------------------
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EXHIBIT 3.2
Description of Dedicated Coal Reserves
Recoverable Coal
Lease Seam Tons (1,000)
- ---------------- ----------- ----------------
Leslie Elkhorn #2
Elkhorn #3
Fireclay
Subtotal
------------
2,800,000
Waddington Elkhorn #2
Elkhorn #3
Fireclay
Subtotal
------------
6,000,000
Beusy Elkhorn #2
Elkhorn #3
Fireclay
Subtotal
------------
12,000,000
Elkhorn #631 Elkhorn #3
Fireclay
Subtotal
------------
4,500,000
Elkhorn #642 Haddix
L. Peach Orchard
H. Peach Orchard
U. Peach Orchard
Subtotal
------------
1,000,000
Elkhorn #54 Peach Orchard
L. Broas
U. Broas
Subtotal
------------
5,000,000
Eagle Land U. Cedar Grove
(Area 8) L. Cedar Grove
Williamson
Hernshaw
Chilton
Winifrede
Coalburg
Subtotal
------------
2,281,270
Buchannon Land Peerless
(Area 1 & 2) No. 2 Gas
UCC
Powerton
Eagle A
Eagle
Subtotal
------------
3,999,755
Total Dedicated Reserves 37,581,025
-5-
Execution Copy
COAL PURCHASE AGREEMENT
Between
COSTAIN COAL INC. (Seller)
and
INDIANTOWN COGENERATION, L.P. (ICL)
for
Indiantown Cogeneration Project
Indiantown, Florida
Dated August 4, 1992
TABLE OF CONTENTS
Page
----
ARTICLE I -- DEFINED TERMS ................................................ 2
1.1 Calendar Periods ............................................ 3
1.2 Singular and Plural ......................................... 3
1.3 Sections of the Agreement ................................... 3
1.4 Terms of Art ................................................ 3
1.5 Certain Defined Terms ....................................... 4
ARTICLE II -- TERM; COMMENCEMENT OF DELIVERIES AND CONDITIONS PRECEDENT ... 7
2.1 Term ........................................................ 7
2.2 [Not used] .................................................. 7
2.3 Commencement of Deliveries .................................. 7
2.4 Conditions Precedent of ICL ................................. 8
2.5 ICL's Right to Terminate .................................... 9
2.6 Seller's Right To Terminate ................................. 9
2.7 ICL's Obligation to Construct ............................... 9
ARTICLE III -- SOURCE OF COAL ............................................. 9
3.1 Source ...................................................... 9
3.2 Dedication of Coal .......................................... 10
3.3 Substitution ................................................ 11
3.4 ICL's Right to Purchase Replacement Coal .................... 12
ARTICLE IV -- QUANTITY, ESTIMATES AND ORDERS .............................. 13
4.1 Coal Requirements ........................................... 13
4.2 Estimates of Requirements ................................... 13
4.3 Monthly Orders .............................................. 14
4.4 First Delivery of Coal ...................................... 14
4.5 Stockpiles .................................................. 15
ARTICLE V -- POINT OF DELIVERY; METHOD OF DELIVERY ........................ 15
5.1 Point of Delivery ........................................... 15
5.2 Method of Delivery .......................................... 15
5.3 [Not used] .................................................. 16
5.4 Notices of Shipments ........................................ 16
ARTICLE VI -- QUALITY ..................................................... 17
6.1 General Quality Provisions .................................. 17
6.2 [Not used] .................................................. 17
6.3 Rejection of Coal ........................................... 17
6.4 Suspension of Shipments ..................................... 18
6.5 Coal Handling or Operating Problems ......................... 19
6.6 Corrective Actions .......................................... 21
ARTICLE VII -- PRICE FOR COAL ............................................. 22
7.1 Phase 2 Base Coal Price ..................................... 22
7.2 Phase 2 Base Mine Price ..................................... 22
7.3 Current Coal Price During Phase 2 ........................... 23
7.4 Calculation of Current Mine Price
During Phase 2 .......................................... 23
7.5 Calculation of the Current Transportation Price ............. 26
7.6 Substitute Method of Calculating the Current
Mine Price ............................................... 27
7.7 Intent of the Parties ....................................... 27
ARTICLE VIII -- PREMIUMS AND PENALTIES FOR VARIATIONS IN QUALITY .......... 28
8.1 Premiums and Penalties for Calorific Value .................. 28
8.2 Premiums and Penalties for Ash .............................. 28
8.3 Premiums and Penalties for SO(2)............................. 29
ARTICLE IX -- BILLING AND PAYMENT ......................................... 30
9.1 Billing ..................................................... 30
9.2 Payment ..................................................... 31
9.3 Disputed Invoices ........................................... 31
9.4 Records of Seller ........................................... 31
ARTICLE X -- DISPOSAL OF ASH RESIDUE (NON-PELLETIZED) ..................... 32
10.1 Election of Seller .......................................... 32
10.2 Disposal of Ash Residue ..................................... 33
10.3 Quantity and Removal Schedules .............................. 33
10.4 Quality of Ash Residue ...................................... 34
10.5 Ash Disposal Site ........................................... 34
10.6 Loading, Weighing and Transportation of Ash
Residue ................................................... 35
10.7 Seller's Right to Utilize Alternative Ash
Residue Disposal Methods .................................. 36
10.8 Ash Residue Disposal Fee .................................... 37
10.9 Provisions Regarding PD Cars ................................ 37
10.10 Permits For Ash Disposal Site ............................... 38
10.11 Ash Residue From Replacement Coal ........................... 39
10.12 Failure of Seller to Dispose of Ash Residue ................. 40
10.13 Title and Risk of Loss ...................................... 41
10.14 Hazardous Ash Residue ....................................... 41
10.15 Noncomplying Ash Residue other than
Hazardous Ash Residue ..................................... 42
10.16 Governmental Impositions .................................... 42
ARTICLE XI -- WEIGHING, SAMPLING AND ANALYSIS ............................. 43
11.1 Weighing .................................................... 43
11.2 Sampling .................................................... 44
11.3 Analysis .................................................... 44
11.4 Independent Laboratory ...................................... 45
ARTICLE XII -- FORCE MAJEURE .............................................. 46
12.1 Definition of Force Majeure ................................. 46
12.2 Consequence of Force Majeure ................................ 47
12.3 Events Beyond Control of a Party ............................ 47
12.4 Substitute Coal Obligation of Seller ........................ 48
ARTICLE XIII -- DISPOSAL OF PELLETIZED ASH ................................ 49
13.1 Election of Seller .......................................... 49
13.2 Ash Pelletizing Facility .................................... 50
13.3 Pelletizing, Transportation, and Disposal
Obligation ................................................ 50
13.4 Quantity and Removal Schedules .............................. 51
13.5 Quality of Ash Residue ...................................... 52
13.6 Ash Disposal Site ........................................... 52
13.7 Pelletizing, Storage and Weighing ........................... 53
13.8 Seller's Right To Utilize Alternative Ash
Residue Disposal Methods .................................. 54
13.9 Ash Residue Disposal Fee .................................... 55
13.10 Permits For Ash Residue Disposal Site ....................... 55
13.11 Ash Residue From Replacement Coal ........................... 57
13.12 Damages for Failure of Seller to Pelletize,
Transport and Dispose of Ash Residue ...................... 58
13.13 Title and Risk of Loss ...................................... 58
13.14 Hazardous Ash Residue ....................................... 59
13.15 Noncomplying Ash Residue other than Hazardous
Ash Residue ............................................... 59
13.16 Governmental Impositions .................................... 60
13.17 Seller's Right to Subcontract the Pelletizing
Facility .................................................. 61
13.18 ICL's Option to Acquire the Pelletizing Facility ............ 61
ARTICLE XIV -- DEFAULT AND REMEDIES ....................................... 62
14.1 Events of Default ........................................... 62
14.2 Remedies for Default ........................................ 63
14.3 Other Defaults and Remedies ................................. 64
14.4 Disclaimer of Certain Damages ............................... 65
14.5 Limitation of Liability ..................................... 65
14.6 Waiver of Default ........................................... 65
14.7 Cumulative Remedies ......................................... 65
ARTICLE XV -- REPRESENTATIONS, WARRANTIES AND COVENANTS ................... 66
15.1 Seller's Representations and Warranties ..................... 66
15.2 Representations and Warranties of ICL ....................... 66
15.3 Exclusions of Warranties .................................... 68
15.4 Special Covenants of Seller ................................. 68
15.5 Covenants of Good Faith ..................................... 68
ARTICLE XVI -- INDEMNIFICATION ............................................ 69
16.1 Seller Indemnity ............................................ 69
16.2 ICL Indemnity ............................................... 69
16.3 Effect of Indemnification ................................... 70
16.4 Notice and Legal Defense .................................... 70
16.5 Failure to Defend Claim ..................................... 71
16.6 Joint Cause ................................................. 71
16.7 Survival .................................................... 72
ARTICLE XVII -- NOTICES ................................................... 72
17.1 Notices ..................................................... 72
ARTICLE XVIII -- ASSIGNMENT .............................................. 73
18.1 General ..................................................... 73
18.2 Seller's Right to Assign .................................... 73
18.3 ICL's Right to Assign ....................................... 74
18.4 Curing of Prior Defaults .................................... 78
ARTICLE XIX -- INSURANCE .................................................. 79
19.1 Seller Coverages ............................................ 79
19.2 Certificates ................................................ 80
19.3 Required ICL Insurance Coverages ............................ 80
ARTICLE XX -- DISPUTE RESOLUTION .......................................... 80
20.1 Negotiations to Resolve Disputes ............................ 80
20.2 Arbitration ................................................. 80
20.3 Appointment of Arbitrators .................................. 81
20.4 Conclusion of Arbitration Proceedings ....................... 81
ARTICLE XXI -- MISCELLANEOUS PROVISIONS .................................. 82
21.1 Rounding .................................................... 82
21.2 Consequences of Termination ................................. 82
21.3 Amendments; Waiver .......................................... 83
21.4 Severability ................................................ 83
21.5 Governing Law ............................................... 83
21.6 Independent Contractor; No Partnership ...................... 83
21.7 Captions, Exhibits and the Table of Contents ................ 84
21.8 Entire Agreement ............................................ 84
21.9 Counterparts ................................................ 84
21.10 Confidentiality ............................................. 84
21.11 Attorney Fees ............................................... 85
21.12 Further Assurances .......................................... 85
TABLE OF EXHIBITS
Exhibit
Number Description
- ------ -----------
1.5 Description of the Facility
2.4(d) Amendment to Appendix I of the Power Purchase Agreement between ICL
and FP&L
3.1 Source of Coal
3.2 Description of Dedicated Coal Reserves
5.1 Map Showing the Facility, Tracks, Unloading Area, Holding Area for
Empty Cars, etc.
6.1 Coal Quality Specifications
6.5(b) Handling and Operating Specifications of the Coal
7.2(a) Example of calculation of Phase 1 Spot Price FOB mine
7.2(b) Example of calculation of Phase 2 Base Mine Price
7.4 Example of calculation of Current Mine Price
10.4 Ash Residue Chemical Composition and Handling Characteristics
10.5 Description of Dry Ash Residue Disposal Sites and Services
11.3 Seller's Procedure for Sampling and Analysis
13.5 Ash Residue Chemical Composition and Handling Characteristics
13.6 Description of Pelletized Ash Residue Disposal Sites and Services
19.3 Copy of Section 16.0 of the FPL Power Purchase Agreement.
COAL PURCHASE AGREEMENT - INDIANTOWN COGENERATION PROJECT
This COAL PURCHASE AGREEMENT (the "Agreement"), entered into as of August
4, 1992, is by and between COSTAIN COAL INC., a Delaware corporation, with a
place of business at 249 East Main Street, Lexington, Kentucky 40507 ("Seller")
and INDIANTOWN COGENERATION L.P. ("ICL"), a Delaware limited partnership, having
its principal place of business in Bethesda, Maryland. Seller and ICL shall be
referred to herein collectively as the "Parties" and each may individually be
referred to as a "Party."
RECITALS
A. ICL intends to finance, design, construct, own, operate and maintain a
330 MW coal-fired cogeneration facility (the "Facility") to be located on a site
north of Indiantown, an unincorporated area in Martin County, Florida.
B. It is contemplated that the Facility will produce steam and electricity
and will burn coal with the specifications set forth in this Agreement as a
source of fuel.
C. Seller is engaged in the mining and selling of bituminous coal for use
as fuel in boilers to produce steam and electricity.
D. ICL desires to purchase the coal requirements of the Facility from
Seller, and Seller agrees to supply and sell such coal to ICL on the terms and
conditions set forth herein.
E. ICL desires that Seller remove, transport and dispose of the Ash
Residue (as defined below) produced at the Facility, and Seller agrees to
perform such service on the terms and conditions set forth herein.
F. ICL will sell electricity generated at the Facility to Florida Power &
Light Company ("FPL") under an Agreement for the Purchase of Firm Capacity and
Energy dated as of March 31, 1990, hereinafter referred to as the FPL Power
Purchase Agreement, and ICL will sell steam to a qualifying facility.
G. FPL is a joint owner with Jacksonville Electric Authority of Units No.
1 and 2 of St. Johns River Power Park, an electric generating station consisting
of two coal-fired units, the first of which commenced commercial operation in
1987.
H. It is expected that coal will be delivered to the Facility by CSX
Transportation, Inc., a railroad serving coal mines in the Eastern states of the
United States.
I. ICL will enter into a Private Car Use, Demurrage and Guarantee
Agreement with CSX ("Private Car Agreement"), and will provide to Seller a copy
of such agreement and all amendments thereto.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, Seller and ICL hereby agree as follows:
ARTICLE I
DEFINED TERMS
Some of the terms used in this Agreement are defined in this Article I.
Other terms are defined in the opening paragraph and in the Recitals. Additional
terms are defined in the Agreement in the
2
Section where such terms are first used. Except for the defined terms set forth
in Sections 1.1 and 1.4 below, the first letter of a defined term is
capitalized.
1.1 Calendar Periods. The terms "day", "week", "month", and "quarter"
shall mean, respectively, a period of 24 hours commencing at 12:01 a.m. local
time, a period of seven days beginning on Sunday, a calendar month, and a
calendar quarter. The term "year" shall mean a period of 365 days, except that
if February has 29 days during any such period, the term "year" shall mean a
period of 366 days.
1.2 Singular and Plural. The singular of a defined term shall include the
plural and the plural shall include the singular as the context requires.
1.3 Sections of the Agreement. The term "Section" when used in combination
with a section number refers to that Section of this Agreement. For the sake of
brevity, the text of the various Sections of this Agreement does not include the
word "Section" immediately preceding such number.
1.4 Terms of Art. Certain terms used in this Agreement are terms of art in
the coal and electric generation industries and have commonly understood
meanings. Examples include, but are not limited to, terms such as "Appalachian
coal fields," "Btu," "as received," "bottom ash," "fly ash" and other terms of
this nature. The parties hereto agree that such terms shall have such commonly
understood meanings and that it is not necessary to define such terms.
3
1.5 Certain Defined Terms:
"Adequate Assurances" means adequate assurance of performance as described
in Section 2-609 of the UCC.
"Applicable Laws" means any valid statute, ordinance, regulation, order,
rule, directive, decree, judgment or Permit enacted, adopted, issued or
promulgated by any legislative, executive or judicial branch of any federal,
state or local government or any administrative tribunal or agency thereof,
including any interpretation or enforcement thereof binding on the Parties as a
matter of law.
"ASTM" means the American Society for Testing Materials.
"Ash Disposal Site" means the physical locations at which Seller shall
dispose of the Ash Residue in accordance with Article X or Article XIII,
whichever is applicable.
"Ash Residue" means fly ash and bottom ash generated or produced by
combustion of coal with lime at the Facility and made available by ICL to Seller
for removal by Seller in accordance with this Agreement. Fly ash includes dry
scrubber waste but excludes boiler cleaning sludge produced during boiler
cleaning operations.
"Commercial Operations Date" means the date which ICL notifies Seller in
writing is the initial date of commercial operation of the Facility pursuant to
Section 1.14 of the FPL Power Purchase Agreement.
"CSX" means the CSX Transportation, Inc.
4
"Facility" means the cogeneration facility, described in Recital A and in
Exhibit 1.5 attached hereto, to be built and operated by ICL on the Site.
"Financing Closing Date" means the date on which ICL obtains initial
funding and binding commitments for substantially all additional funding needed
by ICL to provide for the construction and operation of the Facility.
"Financing Documents" means any and all loan agreements, notes,
indentures, security agreements, registration statements, disclosure statements,
subordination agreements, mortgages, partnership agreements, subscription
agreements, participation agreements and other documents relating to the
construction, interim and long-term financing (both debt and equity) of the
Facility and any refinancing of the Facility (including a leveraged lease),
including any and all modifications, extensions, renewals and replacements of
any such financing or refinancing.
"Financing Parties" means any and all equity participants, lenders,
lessors and bondholders providing funds for the construction, interim or
long-term financing (including any refinancing thereof, including a leveraged
lease) of the Facility, and any trustee or agent acting on their behalf.
"JEA" means Jacksonville Electric Authority, operator of the St. Johns
Station.
"Operating Year" means a period of 12 full calendar months beginning at
the end of the preceding Operating Year. The first Operating Year shall be a
period beginning on the first day of the
5
calendar month following the Commercial Operations Date (except that it shall
begin on the Commercial Operations Date if the Commercial Operations Date is on
the first day of such month) and continuing for a period of 12 full calendar
months.
"Pelletize" or "Pelletizing" the Ash Residue shall mean any processing of
dry ash to a form which is acceptable to ICL in accordance with Section 13.1.
"Permit" means any valid waiver, exemption, variance, franchise, permit,
authorization, license or similar order of or from any Federal, state or local
government, authority, agency, court or other body having jurisdiction over the
matter in question, as in effect from time to time.
"Preliminary Operations Date" means the date that the Facility first burns
coal for Start-up, testing and shakedown.
"Prime Rate" means the interest rate publicly announced from time to time
as its prime rate by Morgan Guaranty Trust Company of New York. If such banking
entity should cease to exist, the parties will agree on a successor banking
entity for this purpose.
"Private Car Agreement" has the meaning provided in Recital I, above.
"St. Johns Station" means the St. Johns River Power Park described in
Recital G.
"Shipment" shall mean a unit train of coal delivered to ICL, as described
in Section 5.2.
6
"Site" means the tract of land acquired by ICL in Martin County, Florida
on which the Facility will be constructed.
"Start-up" means the period from the initial firing of the boiler until
the Commercial Operations Date.
"Transportation Agreement" means the Coal and Ash Waste Transportation
Agreement referred to in Section 5.2.
"Ton" means a short Ton of 2,000 pounds (avoirdupois).
"UCC" means the Uniform Commercial Code as in effect in the state of
Delaware.
ARTICLE II
TERM; COMMENCEMENT OF DELIVERIES
AND CONDITIONS PRECEDENT
2.1 Term. This Agreement shall be effective from the date hereof and,
unless earlier terminated in accordance with the provisions hereof, shall
continue for a Term of 30 Operating Years.
2.2 [Not used]
2.3 Commencement of Deliveries. Seller shall commence deliveries of coal
hereunder pursuant to the first monthly Order of ICL sent to Seller pursuant to
Section 4.3. ICL agrees to provide reports to Seller (and such related
information as Seller may reasonably request) at least quarterly beginning as of
January 1, 1993 as to the status of the construction of the Facility and
promptly to provide notices to Seller of any changes in the now anticipated
Preliminary Operations Date of June 1, 1995 or the anticipated Commercial
Operations Date of December 1, 1995.
7
2.4 Conditions Precedent of ICL. The obligations of ICL under this
Agreement are subject to the following conditions precedent:
(a) The occurrence of the Financing Closing Date. In connection with
ICL's efforts to obtain financing for the Facility, Seller will provide
such financial information as ICL and the Financing Parties may reasonably
request (subject to any confidentiality agreement that Seller may
reasonably request) concerning Seller's financial condition and its
ability to perform its obligations under this Agreement. On written
request of Seller, ICL will provide status reports and such other
information regarding the proposed Financing Parties, financing
arrangements, and the matters referred to in Section 2.3, as Seller may
reasonably request;
(b) The execution of the Transportation Agreement.
(c) The execution of the Private Car Agreement on terms acceptable
to CSX and ICL.
(d) The final execution of all agreements, leases, licenses and
other undertakings of any kind between ICL and third parties reasonably
deemed necessary by ICL on terms reasonably satisfactory to ICL.
8
2.5 ICL's Right to Terminate. ICL will make good faith efforts to obtain
financing in order that the Financing Closing Date can be achieved at the
earliest possible date. ICL agrees that it will give written notice to Seller
within ten days after Financial Closing has occurred and also within ten days
after the conditions precedent set forth in Section 2.4 have been met. If
despite the good faith best efforts of ICL, the conditions precedent in Section
2.4 have not been satisfied by February 1, 1993, ICL may terminate this
Agreement without any liability to Seller upon ten days written notice to the
Seller, unless such date has been extended by agreement of the Parties.
2.6 Seller's Right To Terminate. If ICL has failed to satisfy all
conditions precedent set forth in Section 2.4 by August 1, 1993 (and Seller has
not waived any unsatisfied conditions precedent), or if the Commercial
Operations Date does not occur by May 1, 1997 (all without regard to any delays
due to Force Majeure), Seller may terminate this Agreement without any liability
to ICL on 30 days written notice to ICL.
2.7 ICL's Obligation To Construct. After the Financing Closing Date, ICL
shall diligently proceed with the construction and completion of the Facility.
ARTICLE III
SOURCE OF COAL
3.1 Source. Subject to Seller's right of substitution pursuant to Section
3.3, the primary source of the coal to be
9
supplied hereunder shall be as described on Exhibit 3.1 attached hereto,
("Primary Source") and the coal loading facility therein described shall be
known as the "Ivel Loading Facility."
3.2 Dedication of Coal.
(a) Seller represents and warrants that it owns, leases or otherwise
controls a sufficient number of Tons of recoverable coal from the Primary
Source or from other sources which meet the specifications hereunder (the
"Coal Reserves") to provide the quantity of coal with the quality
specified in Article VI which ICL may require during the Term of this
Agreement. Seller hereby dedicates for ICL 30,000,000 Tons of coal (the
"Dedicated Quantity") from the Coal Reserves for this purpose. Attached as
Exhibit 3.2 is a description of the recoverable coal constituting or
including the Coal Reserves. From time to time, Seller may substitute
recoverable coal from other sources which Seller owns, leases or otherwise
controls for recoverable coal then included in the Coal Reserves if such
substitute coal meets the specifications hereunder, subject to the
approval of ICL which will not be unreasonably withheld. Nothing in this
Section 3.2(a) shall limit Seller's right to deliver coal from another
source which meets the specifications hereunder, subject to the additional
requirements of subsections (ii), (iii) and (iv) of Section 3.3. Except
for transactions in accordance with Article XVIII, Seller covenants that
it will not lease, convey, assign, sell, transfer, mortgage, grant a
security interest in
10
or otherwise dispose of, encumber or agree to dispose of or encumber any
of its interests in the Coal Reserves in any quantity which could
jeopardize Seller's ability to supply the Dedicated Quantity; it being
expressly understood that, this covenant shall not prohibit Seller from
granting a mortgage or other security interest in the Coal Reserves
pursuant to any arms length transaction providing secured financing to
Seller or an affiliate of Seller on commercially reasonable terms under
which the secured party and the purchaser is subject to ICL's rights to
the Coal Reserves under this Section 3.2.
(b) Seller agrees to provide such information as ICL may reasonably
request at any time during the Term hereof, and to permit ICL, its
consultants, or representatives of any Financing Parties to inspect the
Coal Reserves and any mines operating thereon to verify the covenants,
representations and warranties contained in this Section 3.2 at any time
during the Term hereof.
(c) The Dedicated Quantity shall be reduced by the quantity of coal
delivered hereunder each Operating Year, but if such delivery is less than
1,000,000 Tons in an Operating Year, the Dedicated Quantity shall be
reduced by 1,000,000 Tons for that Operating Year.
3.3 Substitution. Seller shall have the right to deliver coal to ICL under
this Agreement from a source other than the Primary Source if the following four
conditions are met: (i) the coal shall meet the specifications set forth in this
Agreement,
11
(ii) the monthly average delivered cost per million Btus (as adjusted for
quality) to ICL of such substituted coal shall be the Current Coal Price, (iii)
ICL shall have given its prior written consent to such substitution which
consent shall not be unreasonably withheld, and (iv) compliance by Seller with
the first sentence of Section 10.6(d). It shall be unreasonable for ICL to
withhold consent if ICL shall reasonably determine, based on information
provided by Seller, that such substitute coal will not be the primary cause of
operating problems within the meaning of Section 6.5(a), and Section 6.5(b).
3.4 ICL's Right to Purchase Replacement Coal. ICL shall have the right to
purchase replacement coal (to the extent and for the duration reasonably
necessary to enable ICL to replace the coal not delivered by Seller) under the
following circumstances:
(a) Force Majeure preventing delivery of coal by Seller, as provided
in Section 12.2.
(b) The suspension of Shipments by ICL under Section 6.3, Section
6.4, or Section 6.5(a).
(c) Seller's failure to arrange for the delivery of replacement coal
for a rejected Shipment within the time specified in Section 6.3.
(d) Seller's unexcused failure to load coal for the delivery of
Shipments of coal pursuant to Orders of ICL submitted under Section 4.3
within seven days of the date specified for the loading of the Shipment.
12
ARTICLE IV
QUANTITY, ESTIMATES AND ORDERS
4.1 Coal Requirements. Seller agrees to sell and cause coal to be
delivered to ICL, pursuant to Orders sent by ICL to Seller in accordance with
Section 4.3, and ICL agrees to purchase from Seller, 100% of the coal
requirements of the Facility. ICL has no obligation to purchase any minimum
quantity of coal hereunder, but Seller shall not be obligated to supply more
than 1,200,000 tons during any Operating Year. ICL shall have the right to use
fuels other than coal for ignition and Start-up of the main boiler and for
operation of its two non-coal auxiliary boilers. ICL agrees that it will burn
coal for at least 95% (measured in Btus) of the fuel requirements of the
Facility after the Commercial Operations Date.
4.2 Estimates of Requirements. For the sole purpose of assisting Seller in
its planning of production, ICL estimates the Facility will require
approximately 700,000 to 1,200,000 Tons of coal of the quality specified herein
per Operating Year. At least 120 days prior to the beginning of each Operating
Year, ICL will provide Seller with a forecast of the quantity of coal to be
delivered by Seller hereunder during each month of the ensuing Operating Year.
ICL shall provide Seller with a revised forecast for the balance of any
Operating Year promptly if ICL becomes aware of material changes (more than 10%)
in its pre-Operating Year forecast previously given to Seller. Thirty days prior
to the beginning of each three month period during each Operating Year,
13
ICL shall provide an estimate of the quantity of coal to be delivered during
each of such months. ICL will provide Seller with an estimate of the quantity of
coal required during each month of the period between the first delivery of coal
hereunder and the Commercial Operations Date at least 12 months prior to the
date when the first delivery of coal is required hereunder.
4.3 Monthly Orders. On or before the 15th day of each month beginning with
the month preceding the month when the first delivery of coal is required
hereunder, ICL shall give to Seller an order ("Order") setting forth the number
of Shipments of coal to be delivered by Seller during each week which begins
during the following month. ICL may increase or decrease by one Shipment the
number of Shipments of coal to be delivered during any week by notifying Seller
at least seven days in advance of the beginning of such week, but the total
number of Shipments during any week shall not exceed five unless mutually agreed
to by the parties. The specific date of loading and estimated date of delivery
of each Shipment shall be mutually agreed upon by Seller and ICL at least five
days before the beginning of each week. Subject to seasonal variations and fuel
requirements of the Facility, ICL will submit Orders for Shipments of coal in
substantially equal numbers of Shipments each month.
4.4 First Delivery of Coal. ICL may submit an Order for the first delivery
of coal hereunder and subsequent monthly Orders prior to the first Operating
Year for the purpose of the stockpiles described in Section 4.5 hereof, and for
testing and Start-up
14
purposes. Such Order will be given by ICL approximately 60 days prior to the
estimated Preliminary Operations Date.
4.5 Stockpiles. ICL will establish a permanent stockpile of a quantity of
coal sufficient to operate the Facility for a period of approximately 30 days
(in addition to a live storage stockpile of 10 days of operations) at the
Facility. Seller agrees to deliver approximately 90,000 Tons of coal for the
permanent stockpile pursuant to monthly Orders, as described in Sections 4.3 and
4.4.
ARTICLE V
POINT OF DELIVERY: METHOD OF DELIVERY
5.1 Point of Delivery. The Point of Delivery shall be in rail cars on
tracks at the holding area for unloading at the Site, as shown on Exhibit 5.1.
Title to the coal shall pass to ICL at the Point of Delivery, and risk of loss
shall follow passage of title.
5.2 Method of Delivery. The coal is to be delivered to the Point of
Delivery by CSX, or its successor or assigns or other rail carrier reasonably
acceptable to the Parties, in unit trains of a minimum of 75 open top hopper
rail cars of a type compatible with ICL's unloading facility. Rail cars will be
furnished by CSX. Seller shall enter into the Transportation Agreement with CSX
and shall pay all freight charges related to the direct haul from origin to
destination incurred thereunder which are not the direct responsibility of ICL
to CSX under the Private Car Agreement.
15
Seller will provide ICL with a copy of the Transportation Agreement and any
amendments thereto. The Transportation Agreement and any amendments thereto
which have an economic impact on ICL, shall be subject to ICL's approval. The
Transportation Agreement is for the mutual benefit of Seller and ICL and each
shall have the right to enforce the Transportation Agreement as it affects its
respective interests. Seller and ICL shall cooperate in any enforcement thereof
which affects both of their respective interests. Seller shall not be liable to
ICL for any performance, act or omission of CSX under the Transportation
Agreement. ICL will be responsible for constructing rail unloading facilities at
the Site, and for dispatching and unloading the rail cars.
5.3 [Not used]
5.4 Notices of Shipments. For each Shipment, Seller shall send ICL a
shipping notice within 24 hours following loading thereof by legible facsimile
or by other mutually agreed upon means. The shipping notice shall include the
train number, mine or other source from which supplied, tonnage shipped,
shipping date, destination and other information reasonably required by ICL to
the extent it is reasonably available to Seller. Bills of Lading shall include
name of Seller, contract number, train number, date loaded and Seller's shipped
weights.
16
ARTICLE VI
QUALITY
6.1 General Quality Provisions. Seller represents and warrants that all
coal delivered hereunder will be substantially free from impurities and
extraneous materials. Seller further represents and warrants that the quality of
each Shipment of coal hereunder shall conform to each Rejection Limit set forth
in Exhibit 6.1 and that the weighted average quality ("as received") of all coal
delivered during any month hereunder shall conform to the monthly weighted
average specifications set forth in Exhibit 6.1.
6.2 [Not used]
6.3 Rejection of Coal. Any Shipment of coal which does not conform to each
Rejection Limit as set forth in Exhibit 6.1 shall be deemed to be Rejection
Point Coal. ICL may reject any Shipment of coal which is Rejection Point Coal by
notice to Seller by telephone, confirmed in writing. Any such notice of
rejection shall be given within 12 hours after receipt of the analysis of the
Shipment of coal given pursuant to Section 11.3. In lieu of rejecting Rejection
Point Coal, ICL may elect to accept delivery thereof on terms mutually agreeable
to the Parties in which event such Shipment shall not count as a rejected
Shipment for any purpose under this Agreement, including quality averages. If a
rejected Shipment has reached the Point of Delivery before the expiration of the
12 hour period during which ICL may reject a Shipment, then Seller shall cause
such Shipment of coal to be
17
removed from the Site within three days after notice of such rejection, and
Seller shall be responsible for all costs of such removal. If a Shipment of coal
is rejected by ICL, then Seller shall cause a replacement Shipment of coal which
meets Rejection Limits to be loaded within five days of such rejection. If two
Shipments of coal are rejected by ICL during any three month period, and Seller
fails to load replacement Shipments for both Shipments as specified above, ICL
may suspend delivery of further Shipments pending receipt of Adequate Assurances
that future Shipments will comply with the Rejection Limits. If such Adequate
Assurances are not received within 30 days after receiving notice of suspension
from ICL, Seller shall have committed a Default as specified in Section 14.1.
Seller shall have no obligation to replace Shipments of Rejection Point Coal
which are accepted by ICL on terms mutually agreeable to the Parties.
6.4 Suspension of Shipments. If the monthly weighted average quality of
all coal delivered during any month hereunder, as reported by Seller to ICL
pursuant to Section 11.3, fails to conform to each monthly weighted average
specifications set forth in Exhibit 6.1, and Seller does not provide Adequate
Assurances with such report that future Shipments will conform to such monthly
weighted average quality, ICL may suspend further Shipments not then in transit
by notice to Seller given within ten days following receipt of Seller's report
on quality pursuant to Section 11.3. Such suspension shall continue until Seller
provides Adequate Assurances satisfactory to ICL that future Shipments will
conform
18
to the monthly weighted average quality specifications set forth in Exhibit 6.1.
If Seller has not provided such Adequate Assurances within 30 days after
receiving notice from ICL of the suspension of Shipments, then Seller shall have
committed a Default as specified in Section 14.1.
6.5 Coal Handling or Operating Problems.
(a) If ICL experiences any coal handling or operating problem at the
Facility which ICL reasonably concludes is the direct result of Seller's
delivering coal hereunder which has any of the following characteristics (and
which is not the direct result of design deficiencies of the Facility): (i)
contains, on a monthly average basis, in excess of 10% coal with a top size of
greater than two inches; (ii) contains, on a monthly average basis, in excess of
50% coal of less than 1/4 inch size, (iii) a monthly average grindability (HGI)
of less than 40, or (iv) a monthly average ash fusion temperature (I.D. -
Reducing) of less than 2,600 degrees F., then ICL may notify Seller of the
nature of such problem and the particular specification(s) which ICL concludes
to be causing such problem, together with such additional information
reasonably available to ICL which Seller may request. Unless Seller has provided
Adequate Assurances to ICL within 30 days following receipt of such notice that
future deliveries hereunder will conform to the specifications set forth in this
Section 6.5(a), ICL may, by a second notice to Seller, suspend further Shipments
until Seller can provide such Adequate Assurances. If Seller has not provided
such Adequate Assurances to ICL within 30
19
days following receipt of such notice of suspension of Shipments, then Seller
shall have committed a Default as specified in Section 14.1.
(b) In the event ICL reasonably determines that the quality of the
coal delivered hereunder is the primary cause of an operating problem at the
Facility because such coal quality is outside the range of specifications set
forth in Exhibit 6.5(b) hereto, ICL and Seller shall promptly meet to discuss
possible remedies to such operating problem. The term "operating problem," as
used herein shall include, but is not limited to, problems experienced by ICL in
complying with the terms, conditions or provisions of any Permit applicable to
the Facility ("a permit problem").
20
If Article X is in effect, ICL shall arrange and pay for the transportation of
the Ash Residue to the Ash Disposal Site, and Seller shall unload and dispose of
such Ash Residue at the Current Ash Disposal Fee set forth in Section 10.8. If
Seller has elected to Pelletize the Ash Residue pursuant to Section 13.1, Seller
shall Pelletize, load, unload and dispose of the Ash Residue at the Current Ash
Residue Disposal Fee set forth in Section 13.9, less the amount thereof payable
to CSX for transportation of the Ash Residue as provided in the Transportation
Agreement. ICL shall arrange and pay for the transportation of Pelletized Ash
Residue to the Ash Disposal Site.
6.6 Corrective Actions. Promptly following any suspension of deliveries
hereunder pursuant to Section 6.3, Section 6.4 or Section 6.5(a), Seller shall,
to the extent practicable, undertake corrective actions diligently and in good
faith in order to provide ICL Adequate Assurances as required under such
Sections. During the continuance of any such suspension, Seller shall no less
frequently than once every week advise ICL of Seller's determinations as to the
nature of the conditions causing such noncompliance with such specifications,
all efforts underway by Seller to correct such conditions, and the results of
such efforts.
21
ARTICLE VII
PRICE FOR COAL
7.1 Phase 2 Base Coal Price. The Base Coal Price per ton for coal
delivered by Seller to the Point of Delivery effective as of the beginning of
Phase 2 as defined in Section 7.4(h) shall be the sum of (a) an FOB mine
component per Ton ("Phase 2 Base Mine Price") as determined pursuant to Section
7.2, (b) a rail transportation component per Ton (the "Current Transportation
Price") as determined pursuant to Section 7.5, and (c) an administrative charge
equal to 0.7% of the Current Transportation Price (the "Administrative Charge").
7.2 Phase 2 Base Mine Price. The Base Mine Price to be effective as of the
beginning of Phase 2 (Phase 2 Base Mine Price) shall be determined by
multiplying (a) the fraction the numerator of which is (i) the weighted average
Spot Price FOB mine, as adjusted for coal quality, on a cost per million Btu
basis for Qualifying Coal (all references to coal purchased for St. Johns
Station herein refer to qualifying coal as defined in Section 7.4(c)) purchased
for the St. Johns Station during the last calendar quarter of Phase 1 as defined
in Section 7.4(h), provided such Spot Coal purchases are equal to or more than
20% of the total quantity of all coal purchased for the St. Johns Station during
such calendar quarter, and the denominator of which is (ii) $0.833 per million
Btu's times (b) $26.00 per Ton. In the event the quantity of Spot Coal purchased
for the St. Johns Station during the last calendar quarter of Phase 1 is less
than 20% of the total
22
quantity of all coal purchased during such calendar quarter, then the numerator
above referenced shall be determined by calculating a weighted average of Spot
Coal actually purchased and a sufficient tonnage of coal included in lowest bona
fide bids for Spot Coal evaluated in accordance with JEA criteria and which JEA
would have next purchased if additional Spot Coal had been purchased during such
calendar quarter to equal 20% of all coal purchases during such calendar
quarter. An example of determining the Spot Price FOB mine pursuant to the
preceding sentence is set forth on Exhibit 7.2(a). The Phase 2 Base Mine Price
shall become effective as of the first day of the first calendar quarter of
Phase 2. An example is set forth on Exhibit 7.2(b).
7.3 Current Coal Price During Phase 2. The Current Coal Price in effect
during Phase 2 shall be the sum of the Current Mine Price as calculated pursuant
to Section 7.4, the Current Transportation Price as calculated pursuant to
Section 7.5 and the Administrative Charge. The quarterly adjustment dates to
determine the Current Mine Price, the Current Transportation Price and the
Administrative Charge shall be January 1, April 1, July 1 and October 1 (the
"Quarterly Adjustment Dates") of each year.
7.4 Calculation of Current Mine Price During Phase 2.
(a) The Current Mine Price shall be determined as of each Quarterly
Adjustment Date beginning with the first Quarterly Adjustment Date during Phase
2 by multiplying (a) the fraction the numerator of which is (i) the weighted
average FOB mine price for the current quarter on a cost per million Btu's (as
adjusted for
23
coal quality) for coal purchased for the St. Johns Station pursuant to term coal
contracts (as defined in subsection 7.4(d)) and spot coal contracts (as defined
in subsection 7.4(e)) and the denominator of which is (ii) the weighted average
FOB mine price on a cost per million Btu's basis (as adjusted for coal quality)
for coal purchased for the St. Johns Station pursuant to term coal contracts and
spot coal contracts during the last full calendar quarter of Phase 1 times (b)
the Phase 2 Base Mine Price. An example of the above is set forth in Exhibit
7.4. If actual quantities and prices are not available for any portion of such
purchases during the applicable calendar quarter, the then Current Mine Price
shall remain in effect until such information becomes available, at which time
appropriate retroactive adjustments shall be made in the Current Mine Price.
(b) Adjustment for coal quality as used herein shall be made as reported
by FPL on FPSC Forms No. 423-2 and 423-2(a) or any forms which supersede such
forms.
(c) The term "qualifying coal," as used in this Article VII, means coal
which has a low/medium sulfur content (0.60 to 2.00%) and coal which is
medium/high in Btu content (11,000 to 13,500 Btus per pound) which has been
produced from mines in the Appalachian coal fields of the United States. (Both
sulfur and Btu content are on an "as received" basis.) Coal which is "purchased"
means coal which has been purchased and delivered to St. Johns Station.
24
(d) "Term coal contracts" means qualifying coal purchased pursuant to
contracts which have a delivery term of one year or more.
(e) "Spot coal contracts", (sometimes called "Spot Price" or "Spot Coal")
means qualifying coal purchased pursuant to contracts which have a delivery term
of less than one year.
(f) If coal is purchased for St. Johns Station during Phase 2 pursuant to
a term coal contract entered into after the date of this Agreement which does
not provide for the adjustment of the price of the coal delivered thereunder to
reflect increased costs due to changes in Applicable Laws, for the purposes of
the calculations made under Section 7.4(a), the FOB mine price in cost per
million Btus for purchases made for St. Johns Station pursuant to such term coal
contract shall be increased by the amount per million Btu's which would have
been in effect if such term coal contract had included a provision which
provided for the adjustment of the FOB mine price to recover increased costs of
the producer and seller due to changes in Applicable Laws. Seller shall provide
such substantiating information to support any such calculations made under such
formula as may be reasonably requested by ICL, and ICL shall provide such
information relating to qualifying coal purchases at St. Johns Station pursuant
to term coal contracts as may be reasonably required by Seller for the purpose
of implementing this Section 7.4(f).
(g) ICL has made arrangements with FPL to obtain the information relating
to qualifying coal purchases at St. Johns
25
Station on a monthly basis, and ICL shall make all calculations required by this
Section 7.4. ICL shall furnish Seller with supporting information for all such
calculations. Seller shall have the right to audit any such information and
calculations.
(h) Phase 1 shall be the period between January 1, 1992 and the end of the
first full calendar quarter after the effect of the 1992 contract reopener
provision in the Term Coal Supply Contract between Jacksonville Electric
Authority and Ashland Coal, Inc. dated February 20, 1986 (the Ashland Contract)
is reflected in the weighted average FOB mine price paid for qualifying coal
purchases for the St. Johns Station. The period thereafter shall be known as
Phase 2.
(i) For the purpose of computing the Current Mine Price hereunder, any tax
imposed by the State of Florida on the purchase, use or consumption of coal at
the St. Johns Station shall be excluded from the F.O.B. mine price of coal
purchased for the St. Johns Station.
7.5 Calculation of the Current Transportation Price. The Current
Transportation Price for coal shall be the Base Transportation Price for coal,
as adjusted on the Quarterly Adjustment Dates as provided in the Transportation
Agreement. The Base Transportation Price for coal shall be the rate for Four
Hour Loading from Ivel, Kentucky for 75 and 90 car Unit Trains in Carrier
Equipment, as set forth in Appendix A to the Transportation Agreement. Any
rebates received by Seller from CSX as a result of exceeding specified volumes
of coal delivered pursuant to the
26
Transportation Agreement or any credits received by Seller from CSX for
non-delivery of loaded coal shall be promptly credited against amounts due by
ICL to Seller hereunder.
7.6 Substitute Method of Calculating the Current Mine Price. In the event
of a long term interruption (more than one full quarter) in or permanent
cancellation of the delivery of coal to St. Johns Station, as described in
Section 1.4 of Exhibit 2.4(d), the Parties shall, within one year of such
interruption or cancellation, agree upon a comparable replacement index. Until
such "replacement index" becomes effective, the Current Coal Price will be
calculated as described in Exhibit 2.4(d), but with the following assumptions
and adjustments:
(a) The quantities of coal assumed to be taken from each of the then current
long term domestic contract(s) will be the same as they were during the
quarter prior to the interruption.
(b) The F.O.B. coal price will be escalated according to the indices in the
St. Johns Station long term domestic Appalachian coal contracts which had
been in effect until the interruption in deliveries.
(c) The remaining components will continue to escalate according to Section
1.3(ii) of Exhibit 2.4(d).
7.7 Intent of the Parties. It is the intent of the Parties that the coal
and transportation prices be indexed in accordance with the index provisions of
this Agreement and the Transportation Agreement, respectively, which were
prepared to be connected with Exhibit 2.4(d), Sections 1.3 and 1.4.
7.8 See Amend #1 pgs 5-6. N/A
27
ARTICLE VIII
PREMIUMS AND PENALTIES FOR VARIATIONS IN QUALITY
8.1 Premiums and Penalties for Calorific Value. The Current Coal Price is
based on coal with a calorific value of 12,500 Btus per pound (the "Btu
Specification"). The following formula shall be utilized to determine the
premium or penalty for Btu content:
BA = [ P x A-B] x T
---
[ B ]
Where:
BA is the premium or penalty for calorific value in dollars for the
month.
P is the Current Coal Price in effect for the month.
A is the weighted average Btus per pound of all coal delivered
hereunder during the month.
B is the Btu Specification.
T is the number of Tons of coal delivered hereunder during the month.
If BA is a positive number, then such amount shall be added as a premium
to the amount due Seller for the month. If BA is a negative number, then such
amount shall be deducted as a penalty from the amount due Seller for the month.
8.2 Premiums and Penalties for Ash. The Current Coal Price is based on
coal with an ash content of 9 percent (the "Ash
28
Specification"). The following formula shall be utilized to determine the
premium or penalty for ash content:
AA = [A(1) - A(2)] x ADP x T
-----------
[ 100% ]
Where:
AA is the premium or penalty for ash content in dollars for the month.
A(1) is the Ash Specification.
A(2) is the weighted average ash content of all coal delivered hereunder
during the month (stated as a percentage).
T is the number of Tons of coal delivered hereunder during the month.
ADP is the weighted average per Ton cost to ICL of disposal of Ash
Residue for the month, including loading, Pelletizing (if
applicable), transporting, unloading and disposal.
If AA is a positive number, then such amount shall be added as a premium
to the amount due Seller for the month. If AA is a negative number, then such
amount shall be deducted as a penalty from the amount due Seller for the month.
8.3 Premiums and Penalties for SO(2). The Current Coal Price is based on
coal with a sulfur content which produces SO(2) emissions of 1.6 pounds of
sulfur per million Btus (the "SO(2) Specification"). The following formula shall
be utilized to determine the premium or penalty due each month for sulfur
content: SA = ({[GS - AS) x CF] x CT/BT} x T)
29
Where:
SA is the premium or penalty amount in dollars for the month for sulfur
content.
GS is the SO(2) Specification.
AS is the calculated weighted average sulfur dioxide content of all coal
delivered hereunder during the month (stated in pounds per million Btus).
CF is a cost factor of (a) 2.0124 if AS is less than GS or (b) 2.5194 if AS
is greater than GS.
CT is the Current Transportation Price for coal excluding any consideration
for rebate amounts.
BT is the Base Transportation Price for coal excluding any consideration for
rebate amounts.
T is the number of Tons of coal delivered hereunder during the month.
If SA is a positive number, then such amount shall be added as a premium
to the amount due Seller for the month. If SA is a negative number, then such
amount shall be deducted as a penalty from the amount due Seller for the month.
ARTICLE IX
BILLING AND PAYMENT
9.1 Billing. Seller shall submit to ICL an invoice by the 10th of each
month for all coal loaded for delivery to ICL and Ash Residue loaded into rail
cars or trucks at the Facility during the preceding month. Each monthly invoice
shall show the quantity of coal loaded for delivery and Ash Residue loaded
during the month, itemized by Shipment, the Current Mine Price, the Current
Transportation Price, premiums and penalties for variations in
30
quality as provided for in Article VIII and the Current Ash Residue Disposal
Fee. If any revision of the Current Mine Price, Current Transportation Price or
Current Ash Residue Disposal Fee is in process, invoicing shall be made on the
basis of the existing Current Mine Price, Current Transportation Price and
Current Ash Residue Disposal Fee, and appropriate retroactive adjustments shall
be made when the new Current Mine Price, Current Transportation Price and
Current Ash Residue Disposal Fee has been calculated.
9.2 Payment. ICL shall pay Seller all undisputed amounts due as shown on
invoices rendered pursuant to Section 9.1 within 20 days of receipt of the
invoice. Payments shall be made by wire transfer in immediately available funds
to Seller's account at a bank designated by Seller. In the event part or all of
a payment is not made when due, interest shall accrue and be payable on the
overdue amount at the Prime Rate plus one percentage point computed for the
number of days that payment is late, without prejudice to Seller's remedies
under Section 14.2, Section 14.7 or otherwise.
9.3 Disputed Invoices. If any portion of any invoice is in dispute, ICL
shall inform Seller of the particulars of such dispute and shall pay the
undisputed portion thereof, and the disputed portion shall be paid with interest
at the rate specified in Section 9.2 upon settlement of the dispute. Any dispute
concerning an invoice shall be raised by ICL within eighteen (18) months of
receipt of such invoice.
9.4 Records of Seller. Seller shall maintain complete and accurate records
to support and document all invoices submitted
31
pursuant to Section 9.1 hereof for a period of seven years. ICL shall have the
right to inspect and review at Seller's offices such records at any reasonable
time for the purpose of verifying the correctness of any invoice submitted by
Seller to ICL, any adjustment to the Current Coal Price, the Current
Transportation Price and the Current Ash Residue Disposal Fee and any
calculation of premiums and penalties for variations in quality. ICL has called
to the attention of Seller the provisions of Section 10.0 of the FPL Power
Purchase Agreement.
ARTICLE X
DISPOSAL OF ASH RESIDUE
Dry (Non-Pelletized)
10.1. Election of Seller. Not later than 12 months after the Financing
Closing Date, Seller shall notify ICL in writing whether or not it elects to
exercise the right to pelletize the Ash Residue as provided for in Section 13.1.
If Seller elects to pelletize the Ash Residue, the provisions of Article XIII
shall be applicable and the provisions of this Article X shall become
inapplicable until such time as the Parties agree that this Article X shall be
applicable in lieu of Article XIII. If no such notice is given by Seller by the
date specified, the provisions of this Article X shall remain applicable and the
provisions of Article XIII shall become applicable only upon agreement of the
Parties. The provisions which follow in this Article X pertain only to
non-pelletized or dry ash.
32
10.2. Disposal of Ash Residue. ICL shall give Seller at least 12 months
notice of the date on which ICL expects Seller to commence disposal of Ash
Residue. Such notice shall provide Seller with an estimate of the quantities of
fly ash and bottom ash to be produced on a weekly basis between such date and
the Commercial Operations Date. ICL shall also give Seller prompt notice of any
change in such date and any change in tonnage. Upon commencement of Ash Residue
removal and disposal hereunder, ICL will load fly ash into pneumatic rail cars
(PD Cars) provided by ICL in accordance with Section 10.9 and bottom ash into
open top hopper cars (0Th Cars) of CSX in accordance with the Transportation
Agreement. Seller shall dispose and ICL shall provide and load one-hundred
percent (100%) of the Ash Residue produced at the Facility. ICL guarantees to
Seller that fly ash and bottom ash will be free flowing from the rail car at the
unloading point for the Ash Disposal Site except to the extent caused by factors
beyond the control of ICL after it is loaded into rail cars. ICL agrees that it
will reimburse Seller for all reasonable additional costs incurred by Seller in
unloading fly ash and bottom ash which is not in accordance with such guarantee.
10.3. Quantity and Removal Schedules.
ICL estimates that the quantity of fly ash to be disposed of by Seller is
approximately 144,000 Tons per Operating Year and that the quantity of bottom
ash to be disposed of by Seller is approximately 16,000 Tons per Operating Year.
ICL will provide estimates of the quantities of fly ash and bottom ash to be
33
disposed of by Seller at the same time and for the same periods as provided for
coal requirements pursuant to Section 4.2. ICL will provide Seller with a
definitive estimate of the quantity of fly ash and bottom ash to be disposed of
during any month at the same time an Order for coal is submitted pursuant to
Section 4.3.
10.4 Quality of Ash Residue.
(a) ICL agrees that the specifications and handling characteristics
of the fly ash and bottom ash will be in compliance with Exhibit 10.4
attached hereto.
(b) ICL shall reimburse Seller for all reasonable additional costs
incurred by Seller in unloading or disposing of fly ash or bottom ash
which are the result of noncompliance with Exhibit 10.4 except to the
extent such deviation in specifications is the result of the quality of
the coal delivered by Seller hereunder.
(c) ICL represents and warrants that (i) the fly ash and bottom ash
as delivered to Seller will consist only of the reaction products
resulting from the burning of Seller's coal or substitute coal of
comparable quality at the Facility, including byproducts of the sulfur
removal process, and (ii) such fly ash and bottom ash will be free of any
foreign or extraneous materials, except for the addition of lime, ammonia
and waste water from the combustion process.
10.5 Ash Disposal Site. Seller agrees to dispose of all Ash Residue at
landfills which are authorized by Permits to receive such Ash Residue outside
the state of Florida unless ICL permits disposal within the state of Florida,
and agrees to dedicate
34
sufficient landfill capacity to dispose of ICL's Ash Residue during the Term.
Seller's initial Ash Disposal Site is located near Ivel, Kentucky and is further
described on Exhibit 10.5. Seller will provide regular reports to ICL on the
status of all Permits and will provide ICL with access to applications for
Permits, correspondence relating thereto, and of draft Permits, and copies of
final Permits relating to the Ash Disposal Site. ICL agrees that all such
documents shall be subject to the provisions of Section 21.10. Seller represents
and warrants that it will obtain all necessary Permits for the disposal of Ash
Residue at the initial or any subsequent Ash Disposal Site utilized or as may be
required for any other method of such disposal utilized by Seller. Seller
further represents and warrants that it will comply with all Applicable Laws
relating to receiving, removal, transporting, and disposing of Ash Residue.
10.6. Loading. Weighing and Transportation of Ash Residue.
(a) [Not used]
(b) Storage Silos. ICL will construct a storage silo for fly ash
with a minimum capacity of 4,000 Tons, with a discharge rate of 250 Tons
per hour. ICL will construct a storage building for bottom ash with a
storage capacity of a minimum 130 Tons.
(c) Loading and Weighing. ICL will provide all equipment required
for loading fly ash into PD Cars and bottom ash into OTH Cars. Using
certified scales, ICL will determine the weight of fly ash loaded into PD
Cars and bottom ash
35
loaded into OTH Cars, and will deliver a statement of such weight to
Seller within 24 hours after loading. Such scales will be certified,
maintained and operated in accordance with the Association of American
Railroads' Scale Handbook. Such weights will be used to calculate the Ash
Disposal Fees due hereunder. If ICL's scales are inoperable for any
reason, ICL shall be responsible for the cost of weighing Ash Residue
utilizing other certified scales.
(d) Trains. Not every train delivering Coal will necessarily include
PD Cars and OTH Cars for Ash Residue transportation, but Seller agrees to
instruct CSX that two out of every three consecutive trains will include
PD cars and OTH cars for transportation of Ash Residue, unless agreed to
otherwise by ICL. Seller will designate which trains include rail cars for
transportation of Ash Residue. The Transportation Agreement provides for
the transportation of Ash Residue from the Site to Seller's Ash Disposal
Site.
10.7. Seller's Right to Utilize Alternative Ash Residue Disposal Methods.
It is the intent of the Parties to provide Seller with the option to dispose of
the Ash Residue using methods different from those designated by Seller pursuant
to Exhibit 10.5, subject to ICL's prior written consent, not to be unreasonably
withheld. It shall not be unreasonable to withhold consent if after considering
all relevant factors, ICL reasonably determines that it would be materially
adversely affected by such alternative plan. Such alternative methods of
disposal shall include, without
36
limitation, the sale of the Ash Residue for commercial use. Seller shall provide
ICL with a detailed plan for any such proposed alternative disposal method for
the Ash Residue and shall provide such additional information related to such
plan as ICL shall reasonably request. Seller agrees that it will endeavor but
not be obligated to find ways to recycle and/or market Ash Residue as
contemplated by this Section.
10.8. Ash Residue Disposal Fee. The Base Ash Residue Disposal Fee ("Base
Disposal Fee") to be paid to Seller for the disposal of Ash Residue under this
Article X shall be $14.00 per Ton as of January 1, 1992, which Fee is for
handling and disposal of the Ash Residue at the Ash Disposal Site. The Base
Disposal Fee shall be adjusted as of the Quarterly Adjustment Dates in the same
manner as the Transportation Price is adjusted pursuant to Section 7.5 hereof,
and as adjusted shall be known as the Current Ash Residue Disposal Fee. ICL
shall also reimburse Seller for the Ash Waste Rates per Ton paid by Seller to
CSX for the transportation of Ash Residue as set forth in Appendix A of the
Transportation Agreement (as adjusted on the Quarterly Adjustment Dates), plus
the Administrative Charge. ICL will provide PD Cars at no cost to Seller for the
transportation of fly ash.
10.9. Provisions Regarding PD Cars.
(a) ICL will provide such number of PD Cars as will be necessary to
transport all of the fly ash produced at the Facility in accordance with
the schedule provided for in Section 10.6(d), and ICL will enter into a
separate agreement with CSX regarding the operation of such PD Cars. A
copy of
37
such agreement and any amendments thereto will be provided to Seller.
(b) ICL agrees that all PD Cars will be maintained in accordance
with Association of American Railroad (AAR) standards. Seller shall have
no responsibility for the operating condition of PD Cars and for payment
of any taxes associated with ownership or operation of PD Cars.
(c) Seller will be responsible for the PD Cars while in its custody
and not in the custody of CSX. If due to the negligence or other fault of
Seller, PD Cars are damaged or destroyed while in the custody of Seller
and not in the custody of CSX, Seller shall be liable therefor.
10.10. Permits For Ash Disposal Site.
(a) Obtaining of Permits. ICL and Seller will cooperate in
developing the data necessary for Seller to obtain Permits or modified
Permits required in connection with the disposal of Ash Residue. ICL and
Seller agree to cooperate in the Permit application process to ensure that
the modified Permits for the Ash Residue Disposal Sites will allow for the
disposal of Ash Residue having the chemical composition set forth on
Exhibit 10.4. If the Ash Residue is not in compliance with Seller's
Permits, Seller shall immediately notify ICL and the Parties shall meet to
determine the cause of such non-compliance. If such non-compliance is the
result of coal supplied by Seller, Seller shall continue to be required to
dispose of such Ash Residue and shall bear
38
any additional costs and fines resulting from such disposal. If the Ash
Residue is not in compliance with Seller's Permits due to constituents
added by ICL, Seller and ICL shall cooperate in determining and
implementing a cure to such noncompliance and ICL shall bear any
additional costs and fines resulting from such non-compliance including
interim disposal costs in excess of Seller's normal disposal costs.
(b) Testing by Seller. Seller shall test the performance and impact
of the Ash Disposal Sites periodically to the extent such testing is
required by Applicable Laws. Testing shall include ground water monitoring
and water leaching tests as required by law.
(c) Testing by ICL. ICL shall test the Ash Residue at the Facility
every three months. Testing shall include the EPA toxicity test and the
TCLP leaching test. ICL shall provide Seller with results of such tests as
soon as available. Seller shall have the right at its own expense to test
the Ash Residue more frequently if necessary in its discretion or in order
to ensure compliance with Seller's Permits and Applicable Laws. Seller
recognizes that the chemical composition of the fly ash will be determined
by the characteristics of the ash in the coal delivered hereunder, except
for the addition of lime, ammonia and waste water.
10.11. Ash Residue From Replacement Coal. Subject to the limitations of
Seller's Permits and Applicable Laws, Seller shall have a continuing obligation
to dispose of Ash Residue produced
39
from the burning of replacement coal purchased by ICL pursuant to Section 3.4.
If such replacement coal is purchased for the reason specified in Section
3.4(a), ICL shall be responsible for the transportation of such Ash Residue to
the Ash Disposal Site. If such replacement coal is purchased for the reasons
specified in Section 3.4(b), (c) or (d), Seller shall be paid (i) the Current
Ash Residue Disposal Fee as specified in Section 10.8, (ii) the adjusted Ash
Waste Rate for transportation of Ash Residue, as specified in the Transportation
Agreement, and (iii) the Administrative Charge on the adjusted Ash Waste Rate
paid by Seller. Seller shall have the right to make such arrangements as it
deems appropriate for the transportation and disposal of such Ash Residue. The
provisions of this Section 10.11 shall not be construed to limit other rights
and remedies of the Parties hereto including the right to terminate this
Agreement under applicable legal principles by reason of the events specified in
Section 3.4(a).
10.12. Failure of Seller to Dispose of Ash Residue. If Seller shall fail
to dispose of any Ash Residue as required under this Agreement, (unless such
failure shall be excused by Force Majeure) and if such failure by Seller is not
remedied within 120 hours of written notice given to Seller by ICL, and Seller
has not located and made available alternative Ash Residue disposal services,
ICL shall have the right to purchase replacement Ash Residue removal,
transportation, and disposal services from alternative sources to the extent and
for the duration reasonably
40
necessary to enable ICL to replace the services not provided by Seller. In the
event that ICL purchases replacement Ash Residue removal, transportation, or
disposal services pursuant to this Section 10.12 which is not excused by Force
Majeure, Seller shall reimburse ICL for (i) any fines or penalties that ICL
incurs under any Applicable Laws as a direct result of such failure by Seller,
and (ii) the excess, if any, of the reasonable net costs incurred by ICL for the
purchase of such replacement services over the costs that otherwise would have
been incurred for the removal, transportation, or disposal of Ash Residue under
the terms of this Agreement. Seller shall have the right to audit and verify
such costs of replacement services purchased by ICL.
10.13. Title and Risk of Loss. Title to and risk of loss with respect to
the Ash Residue to be transported, and disposed of hereunder shall pass from ICL
to Seller upon loading of such Ash Residue into rail cars at the Site.
10.14. Hazardous Ash Residue. Except as provided in this Section 10.14,
Seller shall not be required at any time to dispose of any Ash Residue hereunder
which is reclassified as a hazardous waste under Applicable Laws. If Ash Residue
is reclassified as a hazardous waste, Seller shall submit to ICL a proposal as
soon as possible containing the terms under which Seller will arrange for the
disposal of such hazardous Ash Residue, which proposal may include an increase
in the Ash Residue Disposal Fee provided for in Section 10.8 based on additional
costs reasonably incurred as a result of disposing of such hazardous Ash
Residue. If ICL accepts
41
Seller's proposal, an amendment to this Agreement shall be executed embodying
the terms of such proposal. If ICL rejects Seller's proposal, either Party may
terminate this Article X relating to disposal of Ash Residue without further
liability to the other Party.
10.15. Noncomplying Ash Residue other than Hazardous Ash Residue. Except
as provided in this Section 10.15, Seller shall not be required at any time to
dispose of any Ash Residue which is reclassified by Applicable Laws to a
category similar to that of a hazardous waste if such reclassification causes
such Ash Residue to violate existing Permits of Seller, or if such
reclassification prevents Seller from carrying out its Ash Residue disposal
obligations hereunder. If Ash Residue is reclassified to such category and
cannot be disposed of under Seller's existing Permits, Seller shall submit to
ICL a proposal as soon as possible containing terms under which Seller would
modify its Permits to allow Seller to dispose of such reclassified Ash Residue,
which proposal may include an increase in the Ash Residue Disposal Fee provided
for in Section 10.8 based on Seller's additional costs reasonably incurred as a
result of disposing of such reclassified Ash Residue. If ICL accepts Seller's
proposal, an amendment to this Agreement shall be executed embodying the terms
of such proposal. If ICL rejects Seller's proposal, the dispute shall be subject
to Dispute Resolution under Article XX.
10.16. Governmental Impositions. In the event Seller's costs of
transporting, handling or disposing of the Ash Residue are
42
increased after the date of this Agreement due to (1) the enactment or adoption
of new federal, state or local laws or regulations; (2) the amendment of
existing federal, state or local laws or regulations; or (3) judicial or
administrative decisions affecting the interpretation and enforcement of
existing laws or regulations, the Current Ash Residue Disposal Fee shall be
increased by an amount necessary to reimburse Seller for such cost increases.
Seller shall submit to ICL substantiating documentation to show the cause and
amount of such cost increases. Seller shall notify ICL of any such cost
increases. Such cost increases shall be billed to ICL as a part of Seller's
regular monthly billings pursuant to Section 9.1. ICL will have full audit
rights to verify Seller's claim under this provision.
ARTICLE XI
WEIGHING, SAMPLING AND ANALYSIS
11.1 Weighing. The weights of coal delivered hereunder shall be determined
by use of Seller's belt or batch scales at the source mines. Such scales shall
be certified, maintained and tested by Seller in accordance with the Association
of American Railroads' Scale Handbook. ICL shall have the right, at its expense,
to have a representative present at any and all times to observe the weighing of
coal hereunder or Seller's maintenance or testing of its scales. If, for any
reason, Seller's scales are unavailable or do not record a weight for any
Shipment, then the nearest available railroad scales shall be used at Seller's
expense. If no railroad scales are reasonably available, then weights shall be
determined
43
by reference to the average loaded weight per rail car of the same size which
was utilized to deliver coal hereunder during the most recent five prior
Shipments, or by other accepted common carrier methods.
11.2 Sampling. A representative sample of all coal from each loading
facility contained in each Shipment of coal shall be taken by Seller at the time
the coal is loaded into rail cars using a mechanical sampling system taking full
stream increments or other approved ASTM method. Each representative sample of a
Shipment shall be divided into three parts, and each part shall be placed into
an airtight container and suitably labeled. One part of each sample shall be
retained for analysis by Seller; one part shall be delivered to ICL if requested
by ICL; and the third part shall be retained by Seller for a period of 45 days
from the date of sampling for referee analysis pursuant to Section 11.4.
Seller's sampling and sample preparation shall be performed in accordance with
ASTM Methods D-2234 and D-2013, respectively. ICL shall have the right at its
expense to have a representative present at any and all times to observe the
sampling and sample preparation hereunder and to obtain sample splits for check
purposes.
11.3 Analysis. Seller shall analyze Seller's part of each sample in
accordance with the procedures set forth in Exhibit 11.3. The analysis of each
Shipment consisting of coal loaded at more than one loading facility shall be
the mathematical weighted average analysis of all samples taken from such
Shipment. The analysis for moisture, ash, sulfur (expressed in pounds of SO(2)
per
44
million Btus) and Btus per pound shall be reported by Seller to ICL by fax or
telephone within 24 hours following the loading of such Shipment, and shall be
confirmed in writing. Such analysis shall be used to determine ICL's right to
reject coal pursuant to Section 6.3. As soon as practicable following the end of
each month, Seller shall provide to ICL a report of the monthly average analysis
of each of the characteristics listed in Exhibit 6.1 for all coal delivered
hereunder during such month. If ICL disputes any analysis made by Seller, then
the referee part of the same sample shall be sent promptly by Seller to an
independent laboratory as specified in Section 11.4. Seller's analysis shall be
determinative of coal quality under this Agreement unless such analysis is
superseded pursuant to the provisions of Section 11.4. ICL shall have the right
at its expense to have a representative present at any and all times to observe
Seller's analyses hereunder.
11.4 Independent Laboratory. The parties hereby designate Mineral Labs,
Inc., headquartered at Salyersville, Kentucky, as the Independent Laboratory for
referee analysis of any disputed analysis made by Seller. The parties hereby
designate Standard Laboratories, Inc. with an office at South Charleston, West
Virginia, as an alternate Independent Laboratory if for any reason the first
named Independent Laboratory is unavailable or becomes unacceptable to either
party. With respect to the characteristics of the coal in dispute, the analysis
of Seller shall be deemed to have been confirmed if the difference between the
analysis of such
45
Independent Laboratory and Seller's analysis is within the tolerance as
specified within the applicable ASTM standards. If Seller's analysis is so
confirmed, then all costs of such referee analysis shall be borne by ICL. If
Seller's analysis is not so confirmed, then such analysis shall be superseded by
the analysis of the Independent Laboratory, and all costs of such referee
analysis shall be borne by Seller.
ARTICLE XII
FORCE MAJEURE
12.1 Definition of Force Majeure. The term "Force Majeure" shall mean any
event beyond the control of a Party and not caused by the fault of such Party,
including, but not limited to, an act of God or of the public enemy; sabotage;
fire; flood; war; tornado, hurricane or other severe weather or climatic
condition; riot; insurrection; vandalism; sabotage; explosion; embargo;
blockade; changes in any Applicable Laws; act or restraint of any civil or
military governmental authority; a strike or other labor dispute; or any other
event, whether or not foreseen or foreseeable by either or both of the parties,
and whether similar or dissimilar to those enumerated herein, which causes a
failure or inability of such Party to perform any obligation hereunder,
including (i) production, loading or delivery of the coal by Seller, (ii)
receiving, removal, transportation or disposal of Ash Residue by Seller, (iii)
the receiving, transporting, unloading, storing or burning of the coal by ICL,
(iv) the loading of Ash Residue by ICL,
46
or otherwise prevents the performance of a Party's obligations hereunder.
12.2 Consequence of Force Majeure. A Party's failure or inability to
perform any of its obligations hereunder, except obligations to make payments of
money due to the other Party hereunder, shall be excused to the extent caused by
Force Majeure. Deficiencies in the quantity of coal delivered hereunder due to
Force Majeure shall not be made up except by mutual consent of the Parties. The
Party claiming excuse because of Force Majeure shall give notice by telephone to
the other Party immediately upon becoming aware of such Force Majeure, with such
notice being confirmed in writing as soon as practicable under the
circumstances. Such notice to the other Party shall describe the circumstances
of the event or cause giving rise to the claim of Force Majeure and the
anticipated duration thereof. During the existence of any Force Majeure
preventing delivery of coal by Seller, ICL shall have the right to purchase and
utilize replacement coal from other suppliers to the extent of such nondelivery.
During the existence of any Force Majeure preventing utilization of coal by ICL,
Seller shall have the right to sell coal dedicated to ICL to third parties in
the quantity which would have been delivered to ICL but for such Force Majeure.
12.3 Events Beyond Control of a Party. A strike or other labor dispute
shall be deemed to be beyond the control of the Party whose performance is
interrupted or prevented by such strike or labor dispute, and the settlement of
such strike or labor dispute
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shall be at the sole discretion of such Party. Economic hardship experienced by
a Party in carrying out its obligations hereunder shall not constitute Force
Majeure. Subject to the foregoing, a Party claiming excuse by reason of a Force
Majeure event shall exercise commercially reasonable good faith efforts to
remedy or overcome such event as soon as practicable under all the
circumstances. The suspension of performance shall be of no greater scope or
duration than is reasonably attributable to such Force Majeure.
12.4 Substitute Coal Obligation of Seller. In the event Force Majeure
causes a failure or inability of Seller to supply coal from the Ivel Loading
Facility pursuant to Orders sent to Seller by ICL hereunder, Seller will, at
ICL's option, and to the extent of "available capacity" as hereinafter defined,
supply substitute coal at the Current Coal Price as adjusted for any additional
amounts required to compensate Seller for the added cost incurred in supplying
coal from the alternate location in question (including, without limitation, the
cost of loading, preparation, transportation, mining or increase in work force)
from any of Seller's mines in Eastern Kentucky, West Virginia and Alabama;
provided, however, that if for a continuous period of 6 months or more prior to
the event of Force Majeure, Seller was supplying coal hereunder at the
applicable Current Coal Price from a location other than the Ivel Loading
Facility (hereinafter called an "Actual Pre-existing Source"), whether from
another mine of Seller or by purchase from another supplier, then Seller shall
continue to
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supply substitute coal hereunder in the same quantities at the Current Coal
Price from such Actual Pre-existing Source. In the case of Actual Pre-Existing
Sources which are coal suppliers other than Seller, Seller's obligation to
supply substitute coal shall be limited to the remaining term of any existing
purchase order from such coal supplier, and shall include reasonable efforts to
renew such purchase orders. In the case of coal supplied from Seller's other
mines, "available capacity" means coal that can be produced without a
significant increase in Seller's mining costs, a significant change in Seller's
work force or schedule, or adversely affecting the overall mine plan, which coal
is in excess of the total quantity scheduled to be produced for all of Seller's
customers under binding contracts or purchase orders. At ICL's request, Seller
will use its best efforts to assist ICL in procuring suitable substitute coal on
the best terms available.
ARTICLE XIII
DISPOSAL OF PELLETIZED ASH
13.1. Election of Seller. Seller shall have the right to elect to
Pelletize the Ash Residue as provided for in this Article XIII, subject to the
approval by ICL of the Pelletizing process to be used, such approval not to be
unreasonably withheld. Not later than 12 months after the Financing Closing
Date, Seller shall notify ICL in writing whether or not it elects to exercise
such right to Pelletize the Ash Residue. As a part of such notice or prior
thereto, Seller shall furnish detailed information concerning
49
the proposed Pelletizing process, Permits required, proposals for utilization of
ICL property, capital improvements required and how such improvements will be
financed and other relevant information required for ICL to determine whether it
will consent. If Seller elects to Pelletize the Ash Residue, the provisions of
this Article XIII shall be applicable and the provisions of Article X shall
become inapplicable. If no such notice is given by Seller by the date specified,
the provisions of Article X shall remain applicable and the provisions of this
Article XIII shall become effective only by agreement of the Parties.
13.2 Ash Pelletizing Facility. If ICL approves Seller's proposed method of
Pelletizing the Ash Residue, ICL and Seller may enter into a mutually agreed
upon lease whereby ICL leases to Seller a suitable tract of land at the Site for
the construction and operation of an ash Pelletizing facility ("Pelletizing
Facility"). Seller's right to subcontract with a third party for the
construction and operation of the Pelletizing Facility is governed by Section
13.17. The Pelletizing Facility shall be completely operational by the
Preliminary Operations Date, and shall comply with all Applicable Laws and all
reasonable regulations of ICL relating to the Site.
13.3. Pelletizing, Transportation, and Disposal Obligation. ICL shall give
Seller at least 12 months notice of the date on which ICL expects Seller to
commence Pelletizing of Ash Residue. Such notice shall provide Seller with an
estimate of the quantities of fly ash and bottom ash to be produced on a weekly
basis between
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such date and the Commercial Operations Date. ICL shall also give Seller prompt
notice of any change in such date and any change in tonnage. Upon commencement
of Seller's obligations to accept Ash Residue produced at the Facility, ICL
shall provide and deliver 100% of such fly ash and bottom ash to a location to
be described in Seller's plan for the Pelletizing Facility ("Acceptance Point")
for delivery to the Pelletizing Facility. Seller shall cause such fly ash and
bottom ash to be Pelletized, loaded into rail cars used to deliver coal to the
Site, transported to the Ash Disposal Site and disposed of at the Ash Disposal
Site.
13.4. Quantity and Removal Schedules.
(a) Quantity. ICL estimates that the quantity of fly ash to be
delivered to the Acceptance Point for Pelletizing shall be approximately
144,000 Tons per Operating Year, and that the quantity of bottom ash to be
delivered to the Acceptance Point for Pelletizing shall be approximately
16,000 Tons per Operating Year.
(b) ICL will provide estimates of the quantities of fly ash and
bottom ash to be removed by Seller at the same time and for the same
periods as provided for coal requirements pursuant to Section 4.2. ICL
will provide Seller with a definitive estimate of the quantity of fly ash
and bottom ash to be removed during any month at the same time an Order
for coal is submitted pursuant to Section 4.3.
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13.5 Quality of Ash Residue.
(a) ICL agrees that the specifications and handling characteristics
of the fly ash and bottom ash will be in compliance with Exhibit 13.5
attached hereto.
(b) ICL shall reimburse Seller for all reasonable additional costs
incurred by Seller in Pelletizing or disposing of fly ash or bottom ash
which is the result of noncompliance with Exhibit 13.5 except to the
extent such deviation in specifications is the result of the quality of
the coal delivered by Seller hereunder.
(c) ICL represents and warrants that (i) the fly ash and bottom ash
as delivered to Seller will consist only of the reaction products
resulting from the burning of Seller's coal or substitute coal of
comparable quality in the Facility, including byproducts of the sulfur
removal process, and (ii) such fly ash and bottom ash will be free of any
foreign or extraneous materials, except for the addition of lime, ammonia
and waste water from the combustion process.
13.6 Ash Disposal Site. Seller agrees to dispose of all Pelletized Ash
Residue at landfills which are authorized by Permits to receive such Ash Residue
outside the state of Florida unless ICL permits disposal within the state of
Florida, and Seller agrees to dedicate sufficient landfill capacity to dispose
of ICL's Ash Residue during the Term hereof. Seller's initial Ash Disposal Site
is located near Ivel, Kentucky, and is further described on Exhibit 13.6. Seller
will provide regular reports to ICL on the status of all Permits, and will
provide ICL with access to
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applications for Permits, correspondence relating thereto, and of draft Permits
and copies of final Permits relating to the Ash Disposal Site. ICL agrees that
all such documents shall be subject to the provisions of Section 21.10. Seller
represents and warrants that it will obtain all necessary Permits for the
disposal of Ash Residue at the initial or any subsequent Ash Disposal Site
utilized or as may be required for any other method of such disposal utilized by
Seller. Seller further represents and warrants that it will comply with all
Applicable Laws relating to receiving, removal, transporting, and disposing of
Ash Residue.
13.7. Pelletizing, Storage and Weighing.
(a) Pelletizing Activities. The activities of Seller or Seller's
subcontractor at the Site shall not interfere with the operations of ICL
at the Facility or any other operations at the Site. ICL shall use
reasonable efforts to coordinate the unloading of coal with the loading of
Pelletized Ash Residue.
(b) Storage of Unpelletized Ash. ICL will construct a storage silo
for fly ash with a minimum capacity of 4,000 Tons, with a discharge rate
of 250 Tons per hour. ICL will construct a storage building for bottom ash
with a storage capacity of a minimum 130 Tons. ICL will provide all
equipment required for delivery of the fly ash and bottom ash to the
Acceptance Point for the Pelletizing Facility.
(c) Weighing. Using certified scales, ICL will determine the weight
of the Ash Residue as delivered to the
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Acceptance Point, and will deliver a statement of such weight to Seller
within 24 hours after such delivery. Such scales will be certified,
maintained, and operated in accordance with the Association of American
Railroads' Scale Handbook. Such weights will be used to calculate the Ash
Residue Disposal Fee provided for in Section 13.9. If ICL's scales are
inoperable for any reason, ICL shall be responsible for the cost of
weighing Ash Residue utilizing other certified scales.
(d) [Not used]
(e) [Not used]
(f) It is agreed that Seller shall be responsible for any demurrage
payable to CSX as a result of empty OTH Cars remaining at the Site at the
request of Seller for the purpose of loading Pelletized Ash Residue.
(g) The Transportation Agreement provides for the transportation of
Pelletized Ash Residue from the Site to the Ash Disposal Site.
13.8 Seller's Right To Utilize Alternative Ash Residue Disposal Methods.
It is the intent of the Parties to provide Seller with the option to dispose of
the Ash Residue utilizing methods different from those provided for in this
Article XIII. Such alternative methods shall be subject to ICL's prior written
consent, not to be unreasonably withheld. It shall not be unreasonable to
withhold consent if after considering all relevant factors, ICL reasonably
determines that it would be materially adversely affected by such alternative
plan. Such alternative
54
methods of disposal shall include without limitation the sale of the Ash Residue
for commercial use. Seller shall provide ICL with a detailed plan for any such
proposed alternative disposal method for the Ash Residue and shall provide such
additional information related to such plan as ICL shall reasonably request.
Seller agrees that it will endeavor but not be obligated to find ways to recycle
and market Ash Residue as contemplated by this Section.
13.9. Ash Residue Disposal Fee. ICL agrees to pay Seller Base Ash Residue
Disposal Fee of $32.93 as of January 1, 1992 per Ton of fly ash and bottom ash
weighed as it is delivered to the Acceptance Point of the Pelletizing Facility.
The Base Ash Residue Disposal Fee includes: (i) all costs of delivery of Ash
Residue from the Acceptance Point to the Pelletizing Facility; (ii) all costs of
Pelletizing; (iii) the Ash Waste Rate payable to CSX for transporting the
Pelletized Ash Residue to the Disposal Site as provided in Appendix A to the
Transportation Agreement; and (iv) disposal costs at the Disposal Site. The Base
Ash Residue Disposal Fee shall be adjusted as of the Quarterly Adjustment Dates
in the same manner as the Transportation Price is adjusted pursuant to Section
7.5 hereof, and as adjusted shall be known as the Current Ash Residue Disposal
Fee. ICL agrees to pay Seller the Administrative Charge on the adjusted Ash
Waste Rate payable to CSX for transportation of the Ash Residue.
13.10. Permits For Ash Residue Disposal Site.
(a) Obtaining of Permits. ICL and Seller will cooperate in
developing the data necessary for Seller to obtain the Permits or modified
Permits required in connection with the Pelletizing, transportation, and
disposal of Ash Residue. ICL
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and Seller agree to cooperate in the Permit application process to ensure
that the Permits for the Ash Residue Disposal Sites will allow for the
disposal of Ash Residue having the chemical composition set forth in
Exhibit 13.5. If the Ash Residue is not in compliance with Seller's
Permits, Seller shall immediately notify ICL and the Parties shall meet to
determine the cause of such non-compliance. If such non-compliance is the
result of coal supplied by Seller, Seller shall continue to be required to
dispose of such Ash Residue and shall bear any additional costs and fines
resulting from such disposal. If the Ash Residue is not in compliance with
Seller's Permits due to constituents added by ICL, Seller and ICL shall
cooperate in determining and implementing a cure to such non-compliance
and ICL shall bear any additional costs and fines resulting from such
non-compliance including interim disposal costs in excess of Seller's
normal disposal costs.
(b) Testing by Seller. Seller shall test the performance and impact
of the Ash Residue Disposal Sites periodically to the extent such testing
is required by Applicable Laws. Testing shall include ground water
monitoring and water leaching tests as required by law.
(c) Testing by ICL. ICL shall test the Ash Residue at the Facility
every three months. Testing shall include the EPA toxicity test and the
TCLP leaching test. ICL shall provide Seller with results of such tests as
soon as available. Seller shall have the right at its own expense to
56
test the Ash Residue more frequently if necessary in its discretion or in
order to ensure compliance with the Seller's Permits and Applicable Laws.
Seller recognizes that the chemical composition of the fly ash will be
determined by the characteristics of the ash in the coal delivered
hereunder, except for the addition of lime, ammonia and waste water.
13.11. Ash Residue From Replacement Coal. Subject to the limitations of
Seller's Permits and Applicable Laws, Seller shall have a continuing obligation
to accept, Pelletize, transport and dispose of Ash Residue produced from the
burning of replacement coal purchased by ICL pursuant to Section 3.4. If such
replacement coal is purchased for the reason specified in Section 3.4(a), ICL
shall be responsible for the transportation of such Ash Residue to the Ash
Disposal Site, and ICL shall pay Seller the Current Ash Residue Disposal Fee
less the adjusted Ash Waste Rate payable to CSX. If such replacement coal is
purchased for the reasons specified in Section 3.4(b), (c) or (d), Seller shall
be paid the Current Ash Residue Disposal Fee specified in Section 13.9. ICL
shall pay Seller the Administrative Charge on Ash Waste Rates paid by Seller.
Seller shall have the right to make such arrangements as it deems appropriate
for the transportation and disposal of such Pelletized Ash Residue. The
provisions of this Section 13.11 shall not be construed to limit other rights
and remedies of the Parties hereto including the right to terminate this
Agreement under applicable legal principles by reason of the events specified in
Section 3.4(a).
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13.12. Damages for Failure of Seller to Pelletize, Transport and Dispose
of Ash Residue. If Seller shall fail to take delivery of at the Acceptance
Point, Pelletize, transport, and dispose of any Ash Residue as required under
this Agreement (unless such failure shall be excused by Force Majeure) and if
such failure is not remedied within 120 hours of written notice given by ICL to
Seller, ICL shall have the right to purchase replacement Ash Residue removal,
transportation, and disposal services from alternative sources to the extent and
for the duration reasonably necessary to enable ICL to replace the services not
provided by Seller. Upon notice by ICL, Seller shall use its best efforts to
assist ICL in finding and acquiring such services from alternative sources. In
the event that ICL purchases replacement Ash Residue removal, transportation, or
disposal services pursuant to this Section 13.12 which is not excused by Force
Majeure, Seller shall reimburse ICL for (i) any fines or penalties that ICL
incurs under any Applicable Laws as a result of such failure by Seller, and (ii)
the excess, if any, of the reasonable net costs incurred by ICL for the purchase
of such replacement services over the costs that otherwise would have been
incurred for the removal, transportation, or disposal of Ash Residue under the
terms of this Agreement. Seller shall have the right to audit and verify such
costs of replacement services purchased by ICL.
13.13. Title and Risk of Loss. Title to and risk of loss with respect to
the Ash Residue to be removed, transported, and disposed of hereunder shall pass
from ICL to Seller upon delivery
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of such Ash Residue at the Acceptance Point of the Pelletizing Facility.
13.14. Hazardous Ash Residue. Except as provided in this Section 13.14,
Seller shall not be required at any time to accept, Pelletize, transport or
dispose of any Ash Residue hereunder which is reclassified as a hazardous waste
under Applicable Laws. If Ash Residue is reclassified as a hazardous waste,
Seller shall submit to ICL a proposal as soon as possible containing the terms
under which Seller will arrange for the Pelletizing, transportation and disposal
of such hazardous Ash Residue, which proposal may include an increase in the Ash
Residue Disposal Fee provided for in Section 13.9 based on additional costs
reasonably incurred as a result of Pelletizing, transporting, and disposing of
such hazardous Ash Residue. If ICL accepts Seller's proposal, an amendment to
this Agreement shall be executed embodying the terms of such proposal. If ICL
rejects Seller's proposal, either Party may terminate this Article XIII relating
to disposal of Ash Residue without further liability to the other Party.
13.15. Noncomplying Ash Residue other than Hazardous Ash Residue. Except
as provided in this Section 13.5, Seller shall not be required at any time to
accept, Pelletize, transport and dispose of any Ash Residue which is
reclassified by Applicable Laws to a category similar to that of a hazardous
waste if such reclassification causes such Ash Residue to violate existing
Permits of Seller or if such reclassification otherwise prevents Seller from
carrying out its Ash Residue disposal obligations
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hereunder. If Ash Residue is reclassified to such category and cannot be
disposed of under Seller's existing permits, Seller shall submit to ICL a
proposal as soon as possible containing terms under which Seller would modify
its Permits to allow Seller to accept, Pelletize, transport and dispose of such
reclassified Ash Residue, which proposal may include an increase in the Ash
Residue Disposal Fee based on Seller's additional costs reasonably incurred as a
result of Pelletizing, transporting and disposing of such reclassified Ash
Residue. If ICL accepts Seller's proposal, an amendment to this Agreement shall
be executed embodying the terms of such proposal. If ICL rejects Seller's
proposal, the dispute shall be subject to Dispute Resolution under Article XX.
13.16. Governmental Impositions. In the event Seller's costs of
Pelletizing, transporting, handling or disposing of the Ash Residue are
increased after the date of this Agreement due to (1) the enactment or adoption
of new federal, state or local laws or regulations; (2) the amendment of
existing federal, state or local laws or regulations; or (3) judicial or
administrative decisions affecting the interpretation and enforcement of
existing laws or regulations, the Current Ash Residue Disposal Fee shall be
increased by an amount necessary to reimburse Seller for such cost increases.
Seller shall submit to ICL substantiating documentation to show the cause and
amount of such cost increases. Seller shall notify ICL of any such cost
increases. Such cost increases shall be billed to ICL as a part of Seller's
regular monthly billings
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pursuant to Section 9.1. ICL will have full audit rights to verify Seller's
claim under this provision.
13.17 Seller's Right To Subcontract The Pelletizing Facility. If Seller
exercises the right to Pelletize Ash Residue pursuant to Section 13.1, Seller
expects to enter into a subcontract with a third party for the purpose of
constructing and operating the Pelletizing Facility. Any such subcontract with a
third party shall be subject to ICL's prior written approval, such approval not
to be withheld unless ICL reasonably determines that, considering all relevant
factors it is or would be materially adversely affected by such subcontract. In
the event Seller desires to enter into any such arrangement, Seller shall (i)
inform ICL of the identity of the party to provide such services, (ii) provide
to ICL copies of all proposed agreements between Seller and such third party
(except that Seller shall not be required to disclose the financial terms, or
terms subject to confidentiality obligations of such agreements) and (iii)
provide ICL with such other information about such third party as ICL may
reasonably request. ICL's approval of such subcontract shall not constitute
ICL's release of Seller from any of its obligations hereunder or approval of the
quality of such third party's performance.
13.18. ICL's Option to Acquire the Pelletizing Facility. In the event this
Agreement terminates for any reason, ICL shall have the following options:
(a) If the Pelletizing Facility is owned by Seller, ICL shall have
the option to acquire ownership of the Pelletizing
61
Facility upon payment to Seller of a mutually agreed upon price. Upon such
payment by ICL, the lease described in Section 13.2, if in effect, shall
be terminated.
(b) If the Pelletizing Facility is operated by a third party under
contract with Seller, ICL shall have the option to require Seller to
assign such contract for operations to ICL or its designee. Seller hereby
agrees that it will cause any such contract to be assignable to ICL.
(c) The options set forth in this Section 13.18 shall be exercised
by the giving of written notice by ICL to Seller within 30 days following
termination of this Agreement.
ARTICLE XIV
DEFAULT AND REMEDIES
14.1 Events of Default. An event of default ("Default") under this
Agreement shall be deemed to exist upon the occurrence of any one or more of the
following events:
(a) Failure by either Party to make payment of any amount due the
other Party under this Agreement, which failure continues for a period of
30 days (the "Cure Period") after written notice of such nonpayment
(unless payment of such amount is contested or otherwise disputed in good
faith in accordance with the provisions of this Agreement);
(b) Seller's unexcused failure to cause the delivery of quantities
of coal set forth by ICL on Orders submitted pursuant to Section 4.3 such
that there exists during any
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consecutive 12 month period an aggregate unexcused deficiency of 100,000
Tons.
(c) Seller's unexcused failure to accept and remove from the Site an
aggregate unexcused quantity of 10,000 Tons of Ash Residue during any
consecutive 12 month period.
(d) The failure of Seller to provide Adequate Assurances within
thirty (30) days as specified in Section 6.3, Section 6.4, or Section
6.5(a), and such failure continues for the Cure Period.
(e) The continuing failure of either Party to perform any other
material covenant, agreement or undertaking provided for in this
Agreement, and such failure continues for the Cure Period after a notice
has been given by the Party asserting that the other Party is in Default
(such notice shall state that it is a "Notice of Default" hereunder)
unless such Default could not have been corrected within such 30 day
period and the Party in Default can demonstrate that steps have been taken
to cure the Default within a reasonable period of time (which shall not
exceed 90 days) and the Party in Default proceeds with all due diligence
to cure the Default within a reasonable period of time (the "Extended Cure
Period").
(f) An assignment of this Agreement which is not permitted or
consented to pursuant to Article XVIII.
14.2 Remedies for Default. Upon the occurrence and during the continuance
of a Default under Section 14.1, the Party not in
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Default shall be entitled to any of the following remedies in addition to any
other remedies otherwise provided by law:
(a) To effect a termination of this Agreement (a "cancellation"
within the meaning of Section 2-106(4) of the UCC) by written notice to
the Party in Default upon the expiration of any applicable Cure Period, or
Extended Cure Period if applicable.
(b) Upon a showing that its remedy at law is inadequate, to obtain
an order compelling specific performance of this Agreement and injunctive
relief restraining any actual or threatened breach of any material
obligation of the other Party under this Agreement, subject to the
requirements of Applicable Law relating to such remedy.
(c) In the case of a Default of ICL in the payment of amounts due to
Seller hereunder, Seller shall have the following remedies in addition to
those otherwise specified in Section 9.2 or in this Section 14.2: (i) to
recover interest as specified in Section 9.2 hereof; and (ii) to recover
damages incurred by Seller as a result of such Default as specified in the
UCC.
14.3 Other Defaults and Remedies.
In the case of the event described in Section 3.4, Seller shall be liable
for damages specified in the UCC to the extent applicable. Seller shall be
afforded a reasonable opportunity to provide substitute coal to mitigate its
costs of cover and any other applicable damages, subject to the reasonable
determination
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of ICL that the quality of such substitute coal is suitable for burning at the
Facility.
14.4 Disclaimer of Certain Damages. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES
ARISING OUT OF THE PERFORMANCE OF OR DEFAULT ARISING UNDER THIS AGREEMENT
WHETHER BASED UPON CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY),
WARRANTY OR ANY OTHER LEGAL THEORY.
14.5 Limitation of Liability. Seller accepts the limitation on liability
of the "FPL Entities" to Seller as set forth in Section 18.3 of the FPL Power
Purchase Agreement.
14.6 Waiver of Default. Either Party may waive a Default by the other
Party, provided that no such waiver shall be binding unless reduced to writing,
and any such waiver shall be deemed to extend only to the particular Default
waived and shall not limit or otherwise affect any rights that either Party may
have with respect to any prior or subsequent Default.
14.7 Cumulative Remedies. Except as otherwise expressly provided herein,
none of the remedies provided in this Agreement is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy referred to herein
or otherwise available to either Party at law or in equity. Remedies for
deficiencies in the quality of coal shall be limited to those set forth in
Article VI.
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ARTICLE XV
REPRESENTATIONS, WARRANTIES AND COVENANTS
15.1 Seller's Representations and Warranties. In addition to the
representations and warranties contained in Sections 3.2 and 6.1, Seller
represents and warrants as follows:
(a) That Seller is a corporation organized, validly existing and in
good standing under the laws of the State of Delaware with full power and
authority to enter into this Agreement.
(b) That the persons executing and delivering this Agreement on
Seller's behalf are acting pursuant to proper authorization, and this
Agreement is the valid and binding obligation of Seller and is enforceable
in accordance with its terms.
(c) That Seller will apply for and use its best efforts to obtain on
a timely basis all Permits necessary to perform its obligations under this
Agreement, and that Seller will use its best efforts to comply with all
Applicable Laws relating to performance under this Agreement. Seller
expects that the Permits will be issued on a timely basis.
(d) The Ash Disposal Site described in Article X (or Article XIII,
if applicable) has sufficient capacity to receive all of the Ash Residue
produced by the Facility during the Term hereof.
15.2 Representations and Warranties of ICL. ICL warrants and represents as
follows:
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(a) That ICL will apply for and use its best efforts to obtain on a
timely basis all Permits necessary to construct and operate the Facility,
and that ICL will use its best efforts to comply with all Applicable Laws
relating to the Facility. ICL expects that such Permits will be issued on
a timely basis.
(b) That ICL is a Limited Partnership organized, validly existing
and in good standing under the laws of Delaware with full power and
authority to enter into this Agreement, and that its General Partners are
Palm Power Corporation, with 49% of the partnership interests, an indirect
wholly-owned subsidiary of Bechtel Group, Inc., Toyan Enterprises, Inc.,
with 49% of the partnership interests, an indirect wholly-owned subsidiary
of Pacific Gas & Electric Company; and PG&E Generating Company, a
subsidiary of Pacific Gas & Electric Company; with 2% of the partnership
interests; that all such corporate partners are validly existing, are in
good standing under their law of incorporation. It is understood that ICL
may admit additional partners, subject to the restrictions in Article
XVIII, and will promptly notify Seller of the identity of such partners
and the percentage of ownership of each.
(c) That the person executing and delivering this Agreement on ICL's
behalf is acting pursuant to proper authorization and that this Agreement
is the valid and binding
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obligation of ICL and is enforceable in accordance with its terms.
15.3 Exclusions of Warranties. SELLER HEREBY DISCLAIMS AND ICL HEREBY
WAIVES ANY AND ALL IMPLIED WARRANTIES RESPECTING THE QUALITY OF COAL DELIVERED
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
15.4 Special Covenants of Seller. In addition to all other covenants of
Seller made herein, Seller hereby covenants and agrees as follows:
(a) Seller will provide the following to the Financing Parties at
the Financing Closing Date: (i) A certificate that all representations and
warranties of Seller hereunder are true and correct in all material
respects and are in full force and effect as of such date of closing, and
that Seller has not received a Notice of Default from ICL hereunder; and
(ii) the consent or agreement and any amendment or addition to this
Agreement described in Section 18.3(b).
15.5 Covenants of Good Faith. Each Party hereby covenants that all actions
in carrying out the provisions of this Agreement will in each instance be taken
in good faith and in a spirit of commercial reasonableness.
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ARTICLE XVI
INDEMNIFICATION
16.1 Seller Indemnity. Seller agrees to defend, indemnify and hold
harmless ICL, from and against any and all liabilities (including third party
liabilities), lawsuits, claims, damages, losses, fines, penalties and
assessments by any public agency, costs and expenses (including costs and
expenses of defense, settlement and reasonable attorneys' fees), which are
incurred by ICL (i) as a result of Seller's material violation of any Applicable
Laws relating to Seller's performance under this Agreement; (ii) as a result of
Seller's fault or negligence to the extent that it renders Seller liable to ICL
under law for such liabilities, or (iii) as a result of any breach by Seller of
any warranties, representations or covenants hereunder, except to the extent
that any such damages, losses or expenses are the result of the fault,
negligence or failure to comply with this Agreement by ICL.
16.2 ICL Indemnity. ICL agrees to defend, indemnify and hold harmless
Seller from and against any and all liabilities (including third party
liabilities), lawsuits, claims, damages, losses, property damage, fines,
penalties and assessments by any public agency, costs and expenses (including
costs and expenses of defense, settlement and reasonable attorneys' fees), which
are incurred by Seller (i) as a result of ICL's material violation of any
Applicable Laws relating to ICL's performance under this Agreement; (ii) as a
result of ICL's fault or negligence to the
69
extent that it renders ICL liable to Seller under law for such liabilities; or
(iii) as a result of any breach by ICL of any warranties, representations or
covenants hereunder, except to the extent that any such damages, losses or
expenses are the result of the fault, negligence or failure to comply with this
Agreement by Seller.
16.3 Effect of Indemnification. The indemnification provided for in this
Article XVI shall not provide an alternative remedy for any failure to deliver
coal hereunder or for any deficiencies in the quality of coal delivered
hereunder or for any liabilities, damage or losses which are expressly addressed
in any other Article or Section of this Agreement; the remedies expressly
provided for in such other Article or Section of this Agreement shall, to the
extent applicable, govern the rights and obligations of the Parties instead of
the remedies provided for in this Article XVI.
16.4 Notice and Legal Defense. Promptly upon receipt by a party entitled
to indemnification under this Article XVI (the "Indemnified Party") of any claim
as to which such indemnification may be applicable ("Claim"), the Indemnified
Party shall notify the other party (the "Indemnifying Party") of such fact in
writing with the details of such Claim. The Indemnifying Party shall assume the
defense thereof with counsel of its choice, subject to the reasonable approval
of the Indemnified Party. If the parties against whom the Claim is asserted
include both the Indemnified Party and the Indemnifying Party, and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses
70
available to it which are different from, additional to or inconsistent with,
those available to the Indemnifying Party, the Indemnified Party shall have the
right to select separate counsel to participate in the defense of such Claim on
behalf of such Indemnified Party, at the Indemnifying Party's expense to the
extent the Claim in question is properly to be indemnified by the Indemnifying
Party. The Indemnified Party shall retain authority, in the reasonable exercise
of its discretion, to (i) review communications with and submission of any
documents to any court or governmental authority having jurisdiction over the
Claim; and (ii) approve any settlement of the Claim.
16.5 Failure to Defend Claim. Should the Indemnified Party be entitled to
indemnification under this Article XVI as a result of a Claim by a third party,
and should the Indemnifying Party fail to assume the defense of such Claim,
having received notice as required by Section 16.4, the Indemnified Party may at
the expense of the Indemnifying Party contest (or, with the prior written
consent of such Indemnifying Party, not to be unreasonably withheld, settle)
such Claim; provided, that no such contest need be made, and settlement or full
payment of any such Claim may be made without consent of the Indemnifying Party
(with such Indemnifying Party remaining obligated to indemnify the Indemnified
Party under this Article XVI) if, in the written opinion of the Indemnified
Party's counsel, such Claim is meritorious.
16.6 Joint Cause. If any Claims for indemnity arising out of Section 16.1
or Section 16.2 are caused by joint and concurring
71
acts or omissions of Seller and ICL, the liability of Seller and ICL therefor
shall be apportioned according to their respective degrees of fault.
16.7 Survival. The provisions of this Article XVI shall survive the
termination, cancellation or expiration of this Agreement, subject to applicable
statutes of limitation.
ARTICLE XVII
NOTICES
17.1 Notices. Any notice required or permitted under this Agreement shall
be in writing, shall be deemed to have been duly given on the date of receipt,
and shall be either served personally on the party to whom notice is to be
given, delivered by any recognized courier service, sent by telecopy or fax, or
mailed to the party to whom notice is to be given, by first class registered or
certified mail, return receipt requested, postage prepaid. Notices shall be
addressed to the addressee at the address stated opposite its name below, or at
the most recent address specified by written notice given to the other party in
the manner provided in this Section 17.1:
If to ICL:
Indiantown Cogeneration, L.P.
c/o U.S. Generating Company
7475 Wisconsin Avenue
Bethesda, MD 20814
Attention: Chief Executive Officer
72
If to Seller:
Costain Coal Inc.
249 East Main Street-Suite 200
Lexington, Kentucky 40507
Attn: President-Eastern Division
A copy of any notice required by this Agreement to be given to ICL shall at the
same time and in the same manner also be provided by Seller to any Financing
Party whose name and address ICL has given to Seller under the provisions of
this Section 17.1.
ARTICLE XVIII
ASSIGNMENT
18.1 General.
(a) Except as provided in this Article XVIII, the rights and
obligations of the Parties, including any rights to monies or payments,
may not be assigned or delegated by either Party except upon the express
written consent of the other Party.
(b) If an assignment is made in accordance with this Article XVIII,
this Agreement and the respective rights and obligations of the Parties
shall be binding upon and inure to the benefit of the respective
successors and assigns of the Parties.
18.2 Seller's Right to Assign.
(a) Seller shall have the right, without the consent of ICL, to
assign payments due from ICL under this Agreement to any third party upon
written notice given to ICL, provided that such assignment shall not be
deemed to include any of
73
Seller's obligations hereunder and shall not confer any rights against ICL
under this Agreement on such assignee.
(b) Seller shall have the right, without the consent of ICL, to
assign any or all of its rights and delegate any of its obligations
hereunder to a parent, subsidiary or affiliated company or a successor of
substantially all of the assets of Seller by way of merger, consolidation
or sale of assets, provided that Seller shall not be released from its
obligations hereunder without the consent of ICL.
(c) Seller shall have the right, but only with the consent of ICL,
which shall not be unreasonably withheld, to assign all of its rights and
interests and delegate all of its obligations under this Agreement to a
third party not referred to in Section 18.2(b).
18.3 ICL's Right to Assign.
(a) Assignment Other Than to Financing Parties. ICL shall have the
right to assign all of its rights and interests
74
and delegate all of its obligations under this Agreement to any entity
that assumes ownership or operational control of the Facility, provided
that any such assignment shall be subject to the consent of Seller which
consent shall be granted provided that the proposed assignee: (i) is, or
shall become by virtue of the assignment, the owner, operator or lessee of
the Facility, (ii) agrees in writing to be bound by and to assume the
terms and conditions of this Agreement and any and all obligations of
Buyer to Seller arising or accruing hereunder from and after the date of
such assignment, (iii) has, in the reasonable judgment of Seller, the
financial substance to perform ICL's obligations under this Agreement,
(iv) has, in the reasonable judgment of Seller, the operational skill and
ability to perform ICL's obligations under this Agreement, (v) has agreed
in writing that it will not, (either directly or indirectly through swaps,
brokerage, or other means) (A) permit coal owned by or obtained from
itself or an affiliate to be used in the Facility during the Term hereof,
or (B) during the Term hereof, itself provide, or utilize the services of
an affiliate to provide, the Ash Residue disposal services to be provided
by Seller hereunder. For this purpose, "affiliate" shall mean any person
or entity that (1) directly or indirectly controls, is controlled by, or
is under common control with the entity to which this Agreement is
assigned, or (2) any person or entity, including without limitation a
joint venture, in which any person or
75
entity referred to in the foregoing clause (1) owns an equity interest or
10% or more. If the interest of ICL in this Agreement shall be assumed,
sold or transferred as hereinbefore provided, ICL shall be released and
discharged from only those obligations to Seller arising or accruing
hereunder from and after the date of such assumption, and ICL shall not be
released and discharged from and shall remain liable for any and all
obligations to Seller arising or accruing hereunder prior to such
assumption, unless such obligations are expressly assumed by the assignee.
Upon and after the assignment and assumption described in this Section
18.3(a), Seller shall continue this Agreement with the assuming party as
if such person had thereafter been named as ICL under this Agreement.
Partnership interests in ICL may be transferred (directly or indirectly
through transfer of ownership or control of partners of ICL) provided
reasonable assurance shall have been given to Seller that the transferee
will not engage in activities described in sub-clauses (A) and (B) of
clause (v) of this paragraph 18.3(a).
(b) Assignment to Financing Parties. The Parties acknowledge that
ICL intends to finance the construction of the Facility by non-recourse
"project financing," and that the Financing Parties will require such
financing to be secured by a first lien upon the Facility and other assets
of ICL, including a collateral assignment of this Agreement and all rights
and obligations of ICL hereunder. Accordingly, this
76
Agreement may be assigned as collateral by ICL to any Financing Parties
and their successors and assigns upon reasonable advance written notice to
Seller and without further consent of Seller; provided that ICL shall
provide Seller with copies of the agreements making such assignments upon
their execution. In order to facilitate the obtaining of such financing,
Seller hereby confirms its agreement that in the event of any Default on
the part of ICL of any provision of this Agreement or the occurrence of
any other event which Seller may claim as grounds for canceling this
Agreement, Seller (having received prior written notice of the name and
address of the Financing Parties) will give written notice thereof to such
Financing Parties. The Cure Period specified in Section 14.1(a) as
applicable to the Financing Parties shall be sixty (60) days. Seller
agrees to execute a Consent and Agreement or similar document with respect
to a collateral assignment of this Agreement pursuant to a request of the
Financing Parties on terms reasonably acceptable to Seller, and shall
provide such information relating to its ability to meet its obligations
under this Agreement as the Financing Parties may reasonably request.
(c) Default Under Financing Documents. If ICL commits an event of
default under the Financing Documents which results in a foreclosure and
lease or sale of the Facility under rights granted to the Financing
Parties, the interest of ICL in the Facility and this Agreement may be
assigned to a
77
successor owner and operator (hereinafter called "Assignee"), with the consent
of Seller which consent shall be granted provided that (i) the proposed Assignee
agrees in writing to be bound by and to assume the terms and conditions of this
Agreement, has agreed in writing that it will not (either directly or indirectly
through swaps, brokerage, or other means) (A) permit coal owned by or obtained
from itself or an affiliate to be used in the Facility during the Term hereof,
or (B) during the Term hereof, itself provide, or utilize the services of an
affiliate to provide, the Ash Residue disposal services to be provided by Seller
hereunder. For this purpose, "affiliate" has the meaning set forth above in
Section 18.3 (a). Upon and after the assignment and assumption described in this
Section 18.3(c), Seller shall continue this Agreement with the new operator as
if such person had thereafter been named as ICL under this Agreement.
18.4 Curing of Prior Defaults. In the case of any assignment under this
Article XVIII, any consent required and granted shall be subject to the
condition that the party consenting thereto shall be provided with reasonable
assurances satisfactory to such party that
78
any existing Defaults or unperformed obligations will be cured or performed by
either the assignor or the assignee.
ARTICLE XIX
INSURANCE
19.1 Seller Coverages. Seller shall obtain and maintain, or cause to be
obtained and maintained as a minimum during the term of this Agreement the
following insurance in form and with insurance companies acceptable to ICL, and
with ICL named as an additional insured, and with such deductibles and
retentions as may be reasonable and customary under Seller's usual practices:
(a) Comprehensive General Liability Insurance with bodily injury and
property damage combined single limits of at least $5,000,000 per
occurrence. Such insurance shall include, but shall not necessarily be
limited to, specific coverage for contractual liability encompassing the
indemnification provisions in Section 16.1 hereof, broad form property
damage liability, personal injury liability, explosion and collapse hazard
coverage, products/completed operations liability, and, where applicable,
watercraft protection and indemnity liability; and
(b) Comprehensive Automobile Liability Insurance with bodily injury
and property damage combined single limits of at least $5,000,000, per
occurrence, covering vehicles owned, hired or non-owned.
79
(c) The amounts of insurance required in this Section 19.1 may be
satisfied by Seller purchasing primary coverage in the amounts specified
or by buying one or more excess Umbrella type policies, together with
lower limit primary underlying coverage. The failure to comply with the
insurance provisions of this Agreement shall not limit or relieve Seller
from indemnifying and holding harmless ICL as provided by any provision of
this Agreement.
19.2 Certificates. Seller shall provide ICL with certificates of insurance
pertaining to any insurance policies purchased to satisfy Seller's obligations
under this Article XIX.
19.3 Required ICL Insurance Coverages. ICL shall obtain and maintain the
insurance coverages specified in Section 16.0 of the FPL Power Purchase
Agreement. A copy of such Section 16.0 is attached as Exhibit 19.3.
ARTICLE XX
DISPUTE RESOLUTION
20.1 Negotiations to Resolve Disputes. If any dispute or claim arises
between the Parties to this Agreement, the Parties shall endeavor in good faith
to resolve such dispute or claim by negotiations.
20.2 Arbitration. Any dispute or claim arising out of or related to this
Agreement or any alleged Default arising hereunder which is not resolved by
negotiations, shall be settled by
80
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA Rules").
20.3 Appointment of Arbitrators. The Party initiating an arbitration
proceeding shall file a written notice thereof in accordance with the Commercial
Arbitration Rules of the AAA, which notice shall contain the name, address and
telephone number of its designated arbitrator. The respondent shall file its
answering statement within the time and in the manner specified in the AAA
Rules, and shall include with such answering statement the name, address and
telephone number of its designated arbitrator. The two arbitrators thus
appointed shall appoint a third neutral arbitrator within 30 days after the
designation of the second party-appointed arbitrator. If a neutral arbitrator is
not appointed within such 30-day period by the two party-appointed arbitrators,
the AAA Rules governing appointment of a neutral arbitrator from a panel shall
be applicable, and a neutral arbitrator shall be appointed pursuant to such AAA
Rules.
20.4 Conclusion of Arbitration Proceedings. The Parties shall proceed with
the arbitration expeditiously and shall direct the arbitration panel to take all
steps reasonably necessary to conclude all proceedings thereunder, including any
hearing, in order that a decision may be rendered within 120 days from the
filing of the demand for arbitration by the initiating Party. The award of the
arbitration panel will be final and binding on both Parties and may be enforced
in any court having jurisdiction over the Party against which enforcement is
sought. Each Party shall
81
bear its own expenses, including but not limited to counsel fees and the
expenses of its designated arbitrator, except that all expenses of the
arbitration shall be apportioned in the award of the arbitration panel based
upon the respective merit of the claims of the Parties. The provisions of this
Article XX shall survive any termination or expiration of this Agreement.
ARTICLE XXI
MISCELLANEOUS PROVISIONS
21.1 Rounding. For purposes of all calculations pursuant to this
Agreement, (i) amounts per Ton shall be rounded to the nearest one-tenth of one
cent, (ii) amounts per million Btus shall be rounded to the nearest
one-hundredth of one cent, (iii) all other amounts shall be rounded to the
nearest third place after the decimal, and (iv) if the fourth place after the
decimal point is 5 or greater, the third place shall be rounded up.
21.2 Consequences of Termination. In the event of a termination of this
Agreement pursuant to Section 2.5, Section 2.6 or Section 6.5(b), neither Party
shall have any further obligation but no such termination shall excuse the
payment of any amount due and owing by one Party to the other hereunder, nor
shall such termination affect the survival provisions of Section 16.7 and
Section 20.4.
82
21.3 Amendments; Waiver. This Agreement may not be amended, supplemented,
or modified except by an instrument in writing signed by both of the Parties
hereto. Any failure by either Party to enforce any provisions hereof shall not
constitute a waiver by that Party of its right subsequently to enforce the same
or any other provision hereof.
21.4 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
21.5 Governing Law. This Agreement shall in all respects be governed and
construed in accordance with the laws of the State of Kentucky including all
matters of construction, validity and performance.
21.6 Independent Contractor; No Partnership. Seller shall be an
independent contractor with respect to the sale of the coal, disposal of Ash
Residue, and to the performance of its obligations hereunder. Nothing in this
Agreement or the arrangement for which it is written shall constitute or create
a joint venture, partnership, agency or any other similar arrangement between
the Parties, and neither Party is authorized to act as agent for the other
Party.
83
21.7 Captions. Exhibits and the Table of Contents. Titles or captions of
Sections contained in this Agreement are inserted only as a matter of
convenience and for reference, and in no way define, limit, extend, describe or
otherwise affect the scope or meaning of this Agreement or the intent of any
provision hereof. All Exhibits attached hereto shall be considered a part hereof
as though fully set forth herein.
21.8 Entire Agreement. This Agreement contains the entire Agreement
between the Parties with respect to the subject matter hereof. All previous
agreements, representations, warranties, promises and conditions of sale are
superseded by this Agreement.
21.9 Counterparts. The Parties may execute this Agreement in two or more
counterparts, which shall, in the aggregate, be signed by both the Parties; and
each counterpart shall be deemed an original instrument as against any Party who
has signed it.
21.10 Confidentiality. Each Party shall retain in confidence the contents
of this Agreement and any information obtained as a result of negotiation and
performance of this Agreement which either Party identifies to the other as
being proprietary or confidential in nature, except that ICL may disclose such
information to any proposed Financing Parties, equity investors, or operators of
the Facility (if other than ICL) and to consultants employed by any of such
persons, and to FPL as required by the Power Purchase Agreement. Further, such
information may be
84
disclosed when requested by a court or government agency, or to the extent
required by state regulatory agencies, the Federal Energy Regulatory Commission,
the Securities and Exchange Commission and the U.S. Environmental Protection
Agency.
21.11 Attorney Fees. The Parties agree that if one Party brings an action
against the other with respect to this Agreement, including the resolution of
disputes pursuant to arbitration under Article XX, the successful Party will be
indemnified by the unsuccessful Party for all reasonable legal fees and other
related expenses. Neither Party will be deemed successful in any action until
(i) a final order has been entered by the arbitrators, court or government
agency having jurisdiction over such action and (ii) all appeals have been
exhausted or rights to appeal have elapsed.
21.12 Further Assurances. The Parties shall execute and deliver such
additional documents and shall cause such additional action to be taken as may
be reasonably necessary to carry out the purposes and intent of this Agreement.
85
IN WITNESS WHEREOF, this Agreement is executed by the duly authorized
representatives of the Parties, pursuant to the authority vested in them by the
lawful action of their Boards of Directors, as of the date and year first above
written.
ICL: SELLER:
- ---- -------
INDIANTOWN COGENERATION, L.P. COSTAIN COAL INC.
/s/ P. Chrisman Iribe By: /s/ Thomas H. Parker
- ---------------------------------- ----------------------------------
By: P. Chrisman Iribe Thomas H. Parker
Senior Vice President President
Attest: Attest:
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- ---------------------------------- ----------------------------------
ASSISTANT GENERAL COUNSEL Asst. Secretary
- ---------------------------------- ----------------------------------
Title Title
86
DESCRIPTION OF THE FACILITY
EXHIBIT 1.5
The Facility shall consist of all new major equipment, including one
pulverized coal-fired boiler, and one steam turbine-generator. Two auxiliary
noncoal-fired boilers will be built. When operating the coal-fired boiler shall
be capable of generating 2.5 million pounds per hour of steam and 330 MW of
electricity for sale to FPL. The Facility shall be designed, as generally
described below, to provide an uninterrupted supply of steam to Caulkins
Indiantown Citrus Company of up to 175,000 pounds per hour.
The Facility shall include the following systems:
Coal unloading and storage. Sufficient permanent storage shall be
maintained to accommodate interruptions in coal deliveries of up to 30
days. Coal shakers will be provided to facilitate removal of the coal at
the site.
Fuel deliveries to the boilers. The fuel system shall be designed to
minimize interruptions to boiler operations in the event of breakdowns of
conveyors, pulverizers, or other equipment.
Boiler. The boiler shall be designed to operate on pulverized coal, with
natural gas, propane, or fuel oil as a backup fuel.
Flue gas treatment. Particulate removal shall be achieved via baghouses.
Sulfur dioxide reduction shall be achieved via dry-scrubbers (lime spray
towers). Provision shall be made to repair flue gas dryer atomizers
without shutdown of the entire boiler train.
Ash removal and disposal. Bottom ash and fly ash will be collected and
disposed of offsite in an environmentally acceptable way. Provision shall
be made to prevent dust emissions.
One steam turbine-generator. Normally, steam shall be delivered to
Caulkins via an automatic extraction valve from an intermediate stage of
the turbine. Provision shall be made to operate an auxiliary boiler and
supply steam to Caulkins without interruption during a turbine-generator
outage.
Exhibit 2.4(d)
AMENDMENT NO. 2
TO
AGREEMENT FOR THE PURCHASE OF FIRM CAPACITY
AND ENERGY BETWEEN
INDIANTOWN COGENERATION, L. P. AND FLORIDA POWER & LIGHT COMPANY
THIS AMENDMENT NO. 2, effective July 15, 1992, hereby amends the Agreement For
The Purchase of Firm Capacity and Energy between INDIANTOWN COGENERATION, L.P.,
("ICL"), and FLORIDA POWER & LIGHT COMPANY ("FPL"), effective March 31, 1990, as
amended by AMENDMENT NO. 1 thereto dated December 5, 1990 (such Agreement as
amended hereinafter, the "Agreement").
WITNESSETH:
WHEREAS, the Parties desire to amend the Unit Energy Cost Calculation, Appendix
I to the Agreement, in order to clarify the methodology used to develop the
escalation index and to make other revisions related thereto; and
WHEREAS, the Parties desire to amend certain provisions of Section 10.1 of the
Agreement regarding the period of time certain books and records should be
maintained by ICL and its suppliers; and
WHEREAS, the Parties desire to provide ICL with the option to provide a letter
of credit to satisfy the reserve fund requirements of Section 21.2 of the
Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements of the Parties hereinafter set forth, the Parties agree as follows:
1.0 Appendix I, UNIT ENERGY COST CALCULATION, to the Agreement is hereby
deleted in its entirety and replaced with Appendix I attached hereto.
2.0 Section 3.5.2 of the Agreement is deleted in its entirety and replaced
with the new Section 3.5.2 contained in item (A) of Exhibit A attached
hereto.
3.0 The second sentence of Section 10.1 of the Agreement is hereby deleted in
its entirety and replaced with a new sentence contained in item (B) of
Exhibit A attached hereto.
4.0 Section 21.2 of the Agreement is hereby amended to add as an additional
sentence, following the sixth sentence of such section, a new sentence
contained in item (C) of Exhibit A attached hereto.
5.0 All other terms and conditions of the Agreement shall remain unchanged.
6.0 The parties acknowledge and agree that this Amendment No. 2 is contingent
upon final approval of the Florida Public Service Commission and that in
the event such approval is not obtained the above referenced Agreement
shall remain in effect and unchanged without reference to this Amendment
No. 2.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 2 to be
executed by their respective duly authorized officers.
FLORIDA POWER & LIGHT COMPANY INDIANTOWN COGENERATION, L. P.
By: /s/ R. L. Taylor 7-27-92 By: /s/ P. Chrisman Iribe 7-23-92
------------------------------ ----------------------------------
R. L. Taylor Date P. Chrisman Iribe Date
Vice President, Power Delivery Senior Vice President
APPENDIX I
UNIT ENERGY COST CALCULATION
I.1 Prior to the Commercial Operation Date, ICL and FPL shall agree on the
relative weighting of anticipated costs for F.O.B. mine coal and the
remaining cost components (i.e., coal transportation, lime supply and ash
disposal) of the Unit Energy Cost, based on ICL's contracts for such
items. Such relative weighting shall be included in the calculation in
Section I.3 to determine the Unit Energy Cost for the first Agreement
Year. Such Unit Energy Cost shall be retroactively adjusted as provided in
Section I.2 subsequent to the end of the first Agreement Year.
I.2 At the end of each Agreement Year, based on the information provided by
ICL pursuant to Section 8.4, BASIS FOR PAYMENT BY FPL, ICL shall provide
FPL with the actual relative weighting of ICL's F.O.B. coal price and the
remaining cost components of its Actual Energy Cost described in Appendix
D, ICL's ACTUAL ENERGY COST. Such items shall be used to adjust the
Adjusted Energy Cost for the Agreement Year immediately preceding such
adjustment. It shall also be used as the estimated Unit Energy Cost for
the subsequent Agreement Year.
I.3 For the period January 1, 1990 until the effects of the 1992 Shamrock and
Ashland contract reopeners have been reflected in the weighted average St.
Johns River Power Park (SJRPP) domestic Appalachian coal contract price
for one full quarter ("Phase-1"), the Unit Energy Cost shall be
$23.20/MWh, effective January 1, 1990, indexed quarterly, as shown on I.5.
The index shall be composed of two parts, (a) the F.O.B. mine coal
component, as set forth in (i) and (b) the remaining cost components, as
set forth in (ii).
(i) The F.O.B. mine coal component referenced in Section I.1,
multiplied by the percent change in the F.O.B. mine spot
price, from the first quarter of 1990 through the end of
Phase-1 (based on the "Effective Purchase Price" ($/ton) as
shown on FPSC form 423-2(a) or its equivalent, including
quality adjustments, divided by the Btu content as shown on
FPSC Form No. 423-2 and converted to units of $/million Btu,
extended to three decimal places) for low/medium sulfur (0.60%
to 2.00%), medium/high Btu (11,000 Btu/lb to 13,500 Btu/lb)
coal, provided such coal comprises at least 20% of the total
coal delivered to SJRPP during the quarter. If the total is
less than 20% for a given quarter, the total will be
supplemented with additional
Page I1
quantities of domestic Appalachian spot coal from bid(s) shown
on the quarterly "Evaluation Of Spot Coal Bids," which would
be the next bid(s) which would have been accepted by FPL, if
such purchases were actually made, and which meet the sulfur
and Btu criteria set forth herein, up to the amount that would
be needed to account for 20% of domestic Appalachian spot coal
delivered at SJRPP for the quarter. The corresponding pricing
from such additional quantities of coal together with the
price of coal delivered to SJRPP will be used to develop the
F.O.B. mine price for the quarter (see Example 1).
(ii) The remaining cost components referenced in Section I.1 will
be multiplied by the percentage change in the transportation
index for carrier equipment contained in the then current rail
transportation contract for the SJRPP. As of the effective
date of this Agreement, the rail transportation index for the
SJRPP is composed of the following weighted average index:
50% Rail Cost Adjustment Factor (RCAF) unadjusted for
productivity, ICC, "Railroad Cost Recovery Procedures,"
prescribed by the ICC in Ex Parte No. 290 (Sub. No. 2)
and published in the Title 49 of the Code of Federal
Regulations, Part 1102, Section 1102.1, or as the same
may hereafter be amended.
12.5% Producer Price Index (PPI) all commodities, Producer
Prices and Price Index Data, Monthly Report, U.S.
Department of Labor, Bureau of Labor Statistics, U.S.
Government Printing Office.
12.5% Gross National Product - Implicit Price Deflator, United
States Government Printing Office, Economic Indicators,
prepared for the Joint Economic Committee by the Council
of Economic Advisors.
12.5% Personal Consumption - Implicit Price Deflator, United
States Government Printing Office, Economic Indicators,
prepared for the Joint Economic Committee by the Council
of Economic Advisors.
12.5% Producer Price Index - Industrial
Page I2
Commodities Less Fuel and Power Expenditures, Producer
Prices and Price Index Data, Monthly Report, U.S.
Department of Labor, Bureau of Labor Statistics, U.S.
Government Printing Office.
I.4 Following Phase-I, and for the remaining term of this Agreement
("Phase-2"), the then current Unit Energy Cost shall be indexed quarterly,
as shown on I.5. The index shall be composed of (i) the F.O.B. mine coal
component referenced in Section I.1, or I.2, as appropriate, multiplied by
the weighted average percent change from the last quarter of Phase-1
through the quarter for which the Unit Energy Cost is being calculated in
(a) SJRPP's Appalachian coal contract(s)' (at least one year in duration)
F.O.B. mine price (based on the "Effective Purchase Price" ($/ton) as
shown on FPSC form 423-2(a), including quality adjustments, divided by the
Btu content as shown on FPSC Form No. 423-2 and converted to units of
$/million Btu, extended to three decimal places), for low/medium sulfur,
medium/high Btu coal and (b) SJRPP's domestic Appalachian spot
contract(s)' (less than one year in duration) F.O.B. mine price (based on
the "Effective Purchase Price" ($/ton) as shown on FPSC form 423-2(a),
including quality adjustments, divided by the Btu content as shown on FPSC
Form No. 423-2 and converted to units of $/million Btu, extended to three
decimal places), for low/medium sulfur, medium/high Btu coal plus (ii) the
remaining cost components proportion referenced in Section I.1 or I.2, as
appropriate, multiplied by the percent change in the transportation index
for carrier equipment contained in the then current rail transportation
contract for the SJRPP.
I.5 The following is a sample Unit Energy Cost calculation for first quarter
1996 using the criteria in this Appendix I:
Assumptions (Phase-1):
----------------------
Unit Energy Cost $23.20/MWh (1Q-90)
% Coal (F.O.B. Mine) 50%
% Other 50%
Shamrock/Ashland reopeners resolved
during (4Q-92)
First full quarter reflecting the
Shamrock/Ashland reopeners (1Q-93)
End of Phase-1/beginning of Phase-2 (4/1/93)
Calculation:
------------
Average spot price for coal (F.O.B. Mine)
Page I3
$1.050/Million Btu (1Q-90)
$1.100/Million Btu (1Q-93)
Remaining Cost Components Index
100 (1Q-90)
120 (1Q-93)
Unit Energy Cost (1Q-93)
Coal:
(23.20/2) x (1.100/1.050) = $12.15/MWh
Remaining Components:
(23.20/2) x (120/100) = $13.92/MWh
Total = $26.07/MWh
Assumptions (Phase-2):
----------------------
Unit Energy Cost $26. 07/MWh (1Q-93)
Calculation:
------------
Average cost of all Appalachian coal (F.O.B. Mine)
$1.200/Million Btu (1Q-93)
$1.300/Million Btu (1Q-96)
Remaining Cost Components Index
120 (1Q-93)
140 (1Q-96)
Unit Energy Cost (1Q-96)
Coal:
(12.15) x (1.300/1.200) = $13.16/MWh
Remaining Components:
(13.92) x (140/120) = $16.24/MWh
Total = $29.40/MWh
Page I4
I.6 In the event of a long term interruption (more than one full quarter) in
or permanent cancellation of the delivery of coal to SJRPP, as described
in Section I.4 herein, the Parties shall, within one year of such
interruption or cancellation, agree upon a comparable replacement index.
Until such "replacement index" becomes effective, the Unit Energy Cost
will continue to be calculated as described in this Appendix I, but with
the following assumptions and adjustments:
(a) The quantities of coal assumed to be taken from each of the then
current long term domestic contract(s) will be the same as they were
during the quarter prior to the interruption.
(b) The F.O.B. coal price will be escalated according to the indices in
the SJRPP long term domestic Appalachian coal contracts which had
been in effect until the interruption in deliveries.
(c) The remaining components will continue to escalate according to
Section I.3(ii).
Page I5
Example 1
---------
The following example illustrates how the F.O.B. mine coal price would be
adjusted if the total domestic spot purchases for the quarter are less than 20%
of the total coal delivered to SJRPP for the same quarter.
1. Total coal delivered to SJRPP
(4th quarter 1991) 154,021 Tons
-------
2. Total domestic Appalachian spot coal
delivered to SJRPP (4th quarter 1991) 17,199 Tons
-------
3. Spot as a percent of total 11.17 %
-------
4. Effective F.O.B. mine price
of domestic Appalachian spot coal
delivered to SJRPP $ 0.898 /million Btu
-------
5. Additional domestic Appalachian spot
purchases necessary to account for 20%
of coal delivered to SJRPP
(4th quarter 1991)
[(0.20) 154,021-17,199] = 13,605 Tons
-------
6. Next domestic Appalachian spot coal
bid from "Evaluation Of Spot Coal
Bids," (4th quarter 1991) 160,000 Tons (1)
$ 0.845 /million Btu
-------
7. Adjusted Effective F.O.B. mine
price of domestic Appalachian
spot coal
(0.898) 17,199 + (0.845) 13,605
[--------------------------------] = $ 0.875 /million Btu
(17,199 + 13,605) -------
Notes: (1) If the quantity of such coal available from the next spot bid,
which would have been accepted by FPL if such purchase were
actually made and which met the sulfur and Btu criteria set
forth herein, is not enough to satisfy the 20% requirement,
additional bid(s) for such coal, in the order in which they
appear on the "Evaluation Of Spot Coal Bids," would also be
factored into the evaluation until the 20% requirement is
satisfied.
Page I6
Exhibit A
---------
(A) Section 3.5.2 of the Agreement shall read as follows:
3.5.2 On or before the Commercial Operation Date, ICL fails to
execute a long-term fuel contract (or contracts) between ICL
and its fuel supplier(s), which (i) has a term of at least
fifteen years, (ii) provides for at least 50% of its
requirements and (iii) includes market price reopener
provisions (however, if the indexing provisions for the F.O.B.
mine coal component in Appendix I of this Agreement are
incorporated into the fuel contract(s) without modification,
this item (iii) will be deemed to be satisfied);
(B) The second sentence of Section 10.1 of the Agreement shall read as
follows:
For the purpose of evaluating or verifying such actual or claimed
costs incurred or units expended, FPL and its authorized
representatives shall, from the effective date of the Agreement with
respect to each Agreement Year, have access to said Records until
seven years after the close of such Agreement Year.
(C) A new sentence to be added to Section 21.2 of the Agreement shall read as
follows:
In lieu of cash deposits, ICL may obtain unconditional and
irrevocable direct pay letter(s) of credit issued by banks
acceptable to FPL, in form and substance acceptable to FPL, in
amounts equal to the cash contributions set forth above.
SOURCE OF COAL
EXHIBIT 3.1
-----------
Name: Transcontinental Coal Processing, Inc., a
wholly-owned subsidiary of Costain Coal Inc.
Loading Facility: Ivel, Floyd County, Kentucky (CSXT Mine No. 4091).
Property is held by long-term leases which expire
December 31, 2010 with four-five year extensions
at the option of Seller.
Primary Origin of Coal: Coal delivered to the Coal Loading Facility shall
originate from the dedicated reserves as stated in
Exhibit 3.2 or other acquired reserves.
Raw Coal Facility: Phase I Phase II
------- --------
Completion Date July 1989 As Required by Seller
Coal Loading Rate - 1,000 3,000
(Tons Per Hour):
Unit Train Track 7,000 10, 000
Capacity (Tons):
Coal Preparation A Daniels 750-ton-per-hour (raw feed), heavy media
Plant: preparation plant completed in 1981 is on the
property. This plant may be used to meet the
quality specifications required hereunder.
DESCRIPTION OF DEDICATED COAL RESERVES
EXHIBIT 3.2
-------------
See Amend. #1
Recoverable Coal
Lease Seam (1,000) Tons
----- ---- ----------------
Leslie Cont. Miner Elkhorn #2 2,800
Weddington ESI MILLER CK Elkhorn #2 6,000
Beury ESI Elkhorn #3 12,000
Elk Horn #831 Fireclay 4,500
MILLER CK/LONGFORK
Elk Horn #842 SPURLOCK Peach Orchard and
All Seams Above 1,000
Elk Horn #54 Wolverine Peach Orchard and
All Seams Above 5,000 4.7
------
Total 31,300
Exhibit 5.1
Site Plan
COSTAIN
EXHIBIT 6.1
Monthly Rejection
Weighted Limit Per
Characteristic Average Shipment
-------------- ------- --------
("As Received") ("As Received")
Btus per lb. (minimum) 12,500 12,000
Moisture (%) (maximum) 8 9
Ash (%) (maximum) 9 12
SO(2) (lbs. per million Btus) (maximum) 1.6 2.0
Volatile Matter (%) (minimum) 31 --
Fixed Carbon (%) (minimum) 51 --
Ash Fusion (ID-reducing)
(degrees F) (minimum) 2,400 --
Grindability (HGI) (minimum) 40 --
Fines (minus 1/4 inch) (%) (maximum) 50 --
Top size (Greater than 2 inches) (%)
(maximum) 10 --
EXHIBIT 6.5(b)
HANDLING AND OPERATING SPECIFICATIONS
Monthly Range
--------------------
Minimum Maximum
------- -------
TRACE ELEMENTS (Coal Basis)
(In Parts Per Million)
Lead 3.00 10.00
Mercury 0.04 0.25
Arsenic 2.00 27.00
Beryllium 0.90 3.50
Fluoride 40.00 87.50
Exhibit 7.2(a)
Determination of Spot Price F.O.B. Mine
Assumptions
1. Actual total quarterly coal purchases (TQP) for the St. Johns Station are
900,000 tons.
2. Actual spot qualifying coal purchases (AQP) for the last calendar quarter
of Phase 1 are 90,000 tons at a cost per million btu, as adjusted for
quality, of $0.840.
3. The following are the most recent spot bids for deliveries to the St.
Johns Station in the last full calendar quarter of Phase 1 for qualifying
coal:
Quantity *Cost per
Supplier Offered MMBTU
-------- ------- -----
'A' 20,000 $0.801
'B' 90,000 $0.821
'C' 30,000 $0.831
=== ====== ======
* On a fully evaluated basis
Calculation of 20% minimum:
Minimum = TQP x 20%
Minimum = 900,000 x 20%
Minimum = 180,000 tons
AQP is less than minimum so bids must be utilized.
Alternative calculation of Spot F.O.B. mine price:
Cost per
Quantity MMBTU
-------- ------
AQP 90,000 $0.840
Supplier 'A' 20,000 $0.801
Supplier 'B' 70,000 $0.821
------- ------
Total/Average 180,000 $0.828
======= ======
Note: In order to reach 20% minimum none of Supplier 'C's quantity was needed
and only a part of Supplier 'B's quantity was used.
Conclusions:
Since 20% minimum was not met from actual purchases, sufficient bid
quantities were averaged with actual purchases to determine the weighted average
Spot F.O.B. mine price of $0.828 to be used pursuant to Section 7.4.
All amounts used above are merely for the purpose of Illustration.
Exhibit 7.2(b)
Example of Base Mine Price Determination
Assumptions:
1. Ashland Contract price is renegotiated and this renegotiated price is
reflected in the weighted average F.O.B. mine price paid for qualifying
coal purchases for the St. Johns Station effective October 1, 1992, which
makes the fourth quarter of 1992 the last quarter of Phase 1.
2. The Spot Prices of Qualifying Coal purchased for the St. Johns Station for
the fourth calendar quarter of 1992 (on a weighted average F.O.B. mine
basis in cost per million btus) is $0.821.
Formula:
BMP = [(SP2/SP1) x BP]
Where:
BMP = Base Mine Price
SP2 = Spot Price F.O.B. mine on a weighted average cost per
million btu basis for Qualifying Coal purchased for the St.
Johns Station during the last full calendar quarter of Phase 1.
SP1 = $0.833 (as set forth in Section 7.2).
BP = $26.000 (as set forth in Section 7.2).
Determination of the Base Mine Price Effective October 1, 1992:
BMP as of 10/1/92 = [(SP2/SP1) x BP]
BMP as of 10/1/92 = [($0.821/$0.833) x $26.000]
BMP as of 10/1/92 = [0.986 x $26.000]
BMP as of 10/1/92 = $25.636
Note: All amounts and time frames listed as assumption are used merely for the
purpose of illustration. The actual amounts and time frames may differ
significantly.
Exhibit 7.4
Calculation of Current Mine Price
Assumptions:
1. Because the Base Mine Price must be determined prior to the calculation of
the Current Mine Price those assumptions set forth on Exhibit 7.2(b) are
also applicable to this example.
2. The Spot Prices and Term Coal Contracts prices of Qualifying Coal
purchased for the St. Johns Station for the following calendar quarters
(on a weighted average F.O.B. mine basis in cost per million btus) are:
Amount
------
Fourth Quarter 1992 $0.895
First Quarter 1993 $0.886
Second Quarter 1993 $0.891
Third Quarter 1993 $0.901
Formula:
CMP = [(CP/BP) x BMP]
Where:
CMP = Current Mine Price
CP = Spot Price and Term Coal Contracts weighted average price
F.O.B. mine on a cost per million btu basis for Qualifying
Coal purchased for the St. Johns Station during the calendar
quarter containing the current Quarterly Adjustment Date.
BP = Spot Price and Term Coal Contracts weighted average price
F.O.B. mine on a cost per million btu basis for Qualifying
Coal purchased for the St. Johns Station for which the Base
Mine Price is effective.
BMP = Base Mine Price of $25.636 as determined in Exhibit 7.2(b),
for example purposes only.
Calculation for the Quarterly Adjustment Date of January 1, 1993:
CMP as of 1/1/93 = [(CP for 1st quarter 1993/BP far the 4th
quarter 1992) x BMP]
CMP as of 1/1/93 = [($0.886/$0.895) x $25.636]
CMP as of 1/1/93 = [0.990 x $25.636]
CMP as of 1/1/93 = $25.380
Calculations for the Quarterly Adjustment Date of April 1, 1993:
CMP as of 4/1/93 = [(CP for 2nd quarter 1993/BP for the 4th
quarter 1992) x BMP]
CMP as of 4/1/93 [($O.891/$0.895) x $25.636]
CMP as of 4/1/93 = [0.996 x $25.636]
CMP as of 4/1/92 = $25.533
Calculations for the Quarterly Adjustment Date of July 1, 1993:
CMP as of 7/1/93 = [(CP for 3rd quarter 1993/BP for the 4th
quarter 1992) x BMP]
CMP as of 7/1/93 = [($0.901/$0.895) x $25.636]
CMP as of 7/1/93 = [1.007 x $25.636]
CMP as of 7/1/93 = $25.815
Exhibit 10.4
ASH RESIDUE CHEMICAL COMPOSITION
AND HANDLING CHARACTERISTICS
CHEMICAL MAXIMUM POUNDS PER HOUR
CaSO4 8028.0
CaSO3 14048.0
Ca(OH)2 9419.0
(NH4)SO4 416.9
Carbon 2303.0
SiO2 21317.0
A12O3 11286.5
Fe2O3 2146.3
TiO2 619.1
CaO 1044.0
MgO 763.9
NaO2 174.0
K2O 730.8
P2O5 87.0
S 24.3
SiP2O3 201.5
Mn 201.5
Lead 49.23
Mercury 0.11
Arsenic 17.21
Chronium 18.47
Beryllium 1.01
Fluoride 30.90
Calcium 81.125
Magnesium 27.1
Sodium 510.5
Potassium 11.2
Iron 0.2
Chloride 988.5
Sulfate 191.5
Nitrate 0.2
Phosphate 0.2
Silica 4.3
NH3 10.6
Total 74752.9
HANDLING CHARACTERISTICS
Fly ash will be free flowing from the fly ash silo into PD Cars and from
PD Cars at time of unloading and will contain a maximum moisture content of no
more than three percent (3%). Bottom ash will be free flowing from the bottom
ash storage shed into OTH Cars and from OTH Cars at time of unloading.
Exhibit 10.5
DESCRIPTION OF DRY ASH RESIDUE
DISPOSAL SITES AND SERVICES
Dry Ash Disposal Site: ________________________________________________________
(Name of Mine or Area)
Rail Unloading Point: Ivel, Floyd County, Kentucky (CSXT Mine No. 4091)
Transportation: Fly ash will be loaded into P.D. Cars at the Facility.
Bottom ash will be loaded into open top hopper cars at
the Facility. PD Cars and open top hopper cars
containing Ash Residue shall be delivered to the rail
unloading point by the same rail carrier which delivers
coal to the Facility.
Disposal Procedure: Ash Residue will be unloaded by Seller at the Rail
Unloading Point. The Ash Residue will be disposed of in
a residual landfill meeting all the requirements under
applicable solid waste disposal laws and regulations.
Ground water at the disposal site will be analyzed
through a network of monitoring wells positioned within
analytical parameters as required by applicable law.
Testing Procedures: All testing will be in accordance with applicable
performance standards pertaining to a residual landfill
under 401 KAR 30:030. The site will be inspected to
ensure compliance with environmental performance
standards in 401 KAR 30:030.
Alternate Disposal Subject to Section 10.7 hereof, Seller reserves the
Sites: right to dispose of Ash Residue at facilities other than
the Disposal Site described above.
EXHIBIT 11.3
SAMPLING & ANALYSIS PROCEDURE
Present plans are to install a three-stage automatic sampling system at
Transcontinental. After installation is completed and proper calibrations and
adjustments are made, a bias test will be performed on the unit. The system will
be checked before and during the loading of all coals using a standard
inspection checklist to insure proper operation of the unit. The Costain
laboratory will also perform routine monthly inspections. This system crushes
the material to eight mesh. Save samples will be transported to Costain's
laboratory in the original save containers.
Once the sample reaches the laboratory facility, it will be reduced to a
workable size by hand riffling using a Holmes Model 50 XL enclosed splitter box.
A 2,000-gram, 8-mesh split will be saved for a 60-day period. A 1,000-gram,
8-mesh split will be used for testing purposes.
Costain's laboratory is capable of performing moisture, ash, Btu, sulphur, and
sizing analysis. The air-dried moistures are run in a dispatch oven using 1,000
grams of 8-mesh material. Oven temperature is 85(degrees) for at least an 8-hour
period. This coal is then reduced to a 60-mesh sample using a Holmes Model 501
pulverizer. After riffling with a Holmes 15 FXL, approximately 50 to 60 grams of
the 60-mesh material will be used for analytical purposes.
A mechanical convection oven is used to determine the residual moistures.
Samples are run for one hour at 106(degrees)C.
Lindberg ash furnaces and controllers are used for ash analysis. Testing time is
four hours.
Parr 1261 isoperibol calorimeter is used in Btu determination. This is a
closed-water system. Benzoic acid tests are performed weekly and monthly for
calibration purposes; a known value is also run daily.
Leco SC-132 sulphur analyzer is used for sulphur determinations and is checked
daily using NBS standards.
All Costain sampling and laboratory functions are performed under the guidelines
of ASTM.
If the Costain laboratory cannot provide analysis on specific elements, or for
whatever reason the sampling or analysis functions cannot be performed, Costain
has access to several qualified independent laboratories meeting all ASTM
industry standards.
Exhibit 13.5
ASH RESIDUE CHEMICAL COMPOSITION
AND HANDLING CHARACTERISTICS
CHEMICAL MAXIMUM POUNDS PER HOUR
CaSO4 8028.0
CaSO3 14048.0
Ca(OH)2 9419.0
(NH4)SO4 416.9
Carbon 2303.0
SiO2 21317.0
A12O3 11286.5
Fe2O3 2146.3
TiO2 619.1
CaO 1044.0
MgO 763.9
NaO2 174.0
K2O 730.8
P2O5 87.0
S 24.3
SiP2O3 201.5
Mn 201.5
Lead 49.23
Mercury 0.11
Arsenic 17.21
Chronium 18.47
Beryllium 1.01
Fluoride 30.90
Calcium 81.125
Magnesium 27.1
Sodium 510.5
Potassium 11.2
Iron 0.2
Chloride 988.5
Sulfate 191.5
Nitrate 0.2
Phosphate 0.2
Silica 4.3
NH3 10.6
Total 74752.9
HANDLING CHARACTERISTICS
Fly ash will be free flowing as delivered to the Acceptance Point of the
Pelletizing Facility and will contain a maximum moisture content of no more than
three percent (3%). Bottom ash will be free flowing as delivered to the
Acceptance Point of the Pelletizing Facility.
Exhibit 13.6
DESCRIPTION OF PELLETIZED ASH RESIDUE
DISPOSAL SITES AND SERVICES
Pelletized Ash ___________________________________________
Disposal Site: (Name of Mine or Area)
Rail Unloading Ivel, Floyd County, Kentucky (CSXT Mine No. 4091)
Point:
Transportation: Pelletized Ash Residue will be loaded into open top
hopper cars at the Facility, and shall be delivered to
the rail unloading point by the same rail carrier which
delivers coal to the Facility.
Disposal Procedure: Pelletized Ash Residue will be unloaded by Seller at the
Rail Unloading Point. The Pelletized Ash Residue will be
disposed of in a residual landfill meeting all the
requirements under applicable solid waste disposal laws
and regulations. Ground water at the disposal site will
be analyzed through a network of monitoring wells
positioned within analytical parameters as required by
applicable law.
Testing Procedures: All testing will be in accordance with applicable
performance standards pertaining to a residual landfill
under 401 KAR 30:030. The site will be inspected to
ensure compliance with environmental performance
standards in 401 KAR 30:030.
Alternate Disposal Subject to Section 13.8 hereof, Seller reserves the
Sites: right to dispose of Ash Residue at facilities other than
the Disposal Site described above, subject to ICL's
consent.
Exhibit 19.3
16.0 INSURANCE
16.1 ICL shall procure or cause to be procured a policy of liability
insurance issued by an insurer satisfactory to FPL on a standard
"insurance Services Office" commercial general liability form. Said
policy shall cover liabilities which might arise under, or in the
performance or nonperformance of, this Agreement. An FPL certificate
of insurance in accordance with Section 16.4 shall be delivered to
FPL at least fifteen calendar days prior to the start of any
interconnection work. At a minimum, said policy shall contain (i) an
endorsement providing coverage, including, but not limited to,
products liability/completed operations coverage for a period of
three years, and (ii) a broad form contractual liability endorsement
for FPL Entities. Effective at least fifteen calendar days prior to
the synchronization of the Facility with FPL's system, the policy
shall be amended to include coverage for interruption or curtailment
of power supply in accordance with industry standards.
16.2 The policy in Section 16.1 shall have a minimum limit of Twenty
Million Dollars ($20,000,000) per occurrence, and in the annual
Facility-specific aggregate combined single limit, for bodily injury
(including death) or property damage; provided, however, in the
event that such insurance becomes totally unavailable or procurement
becomes commercially impracticable, such unavailability shall not
constitute an Event of Default under this Agreement, but FPL and ICL
shall enter into negotiations to develop substitute protection for
FPL Entitles which FPL, in its reasonable judgment, deems adequate.
Any premium assessment or deductible shall be for the account of ICL
and not FPL Entities.
16.3 In the event that the policy is on a "claims made" basis, the
retroactive date of the policy shall be the effective date of this
Agreement or such other date as to protect the interests of FPL
Entitles. Furthermore, if the policy is on a "claims made" basis,
ICL's duty to provide such coverage shall survive the termination of
this Agreement until the expiration of the maximum statutory period
of limitations in the State of Florida for actions based on contract
or in tort; if coverage is on an "occurrence" basis, such insurance
shall be maintained by ICL during the entire period of
interconnection and performance by the Parties under this Agreement.
The policy shall not be canceled or materially altered without at
least thirty calendar days written notice to FPL. Coverage must be
reasonably acceptable to FPL.
16.4 ICL shall provide to FPL evidence of such liability insurance
coverage on FPL Form 1364-23, without modification except that ICL
may delete the sentence "It is agreed that a copy of these policies
will be delivered to Florida Power & Light Company prior to
interconnection"; an example of such form is attached hereto as
Appendix C, INSURANCE. A copy of the policy(ies) shall be made
available for inspection by FPL at ICL's offices upon reasonable
request.
16.5 FPL Entities shall be designated as an Additional Named Insured for
all policies, and the policy shall be endorsed to be primary to any
insurance which may be maintained by, or on behalf of, FPL Entities.