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Lodestar Energy - Coal Purchase Agreement
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
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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:
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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
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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
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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
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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 Conclusi...
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