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Exhibit 10.14
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is made and executed
as of this 20 day of February, 1998, by and between CSX Transportation, Inc.
("CSX"), Norfolk Southern Corporation and Norfolk Southern Railway Company
(collectively, "NS"), and NGE Generation, Inc. ("NGE"), a wholly-owned
subsidiary of New York State Electric & Gas Corporation ("NYSEG"). Each party
shall be referred to herein individually as a "Party" and collectively as the
"Parties".
RECITALS
WHEREAS, NYSEG and Consolidated Rail Corporation ("Conrail")
have entered into various rail transportation contracts (including amendments
thereto) (the "Contracts") under which Conrail undertook to transport coal to
NYSEG's coal-fired electrical generating facilities in New York State;
WHEREAS, CSX and NS filed an application (the "Application")
before the Surface Transportation Board ("STB") designated as Finance Docket No.
33388, CSX Corporation and CSX Transportation, Inc., Norfolk Southern
Corporation and Norfolk Southern Railway Company -- Control and Operating
Leases/Agreements -- Conrail Inc. and Consolidated Rail Corporation wherein CSX
and NS sought, inter alia to acquire control of Conrail's rail lines and
contracts;
WHEREAS, NYSEG filed a responsive application with the STB in
which it opposed the STB granting the Application unless the STB imposed
conditions which would avoid prejudice to NYSEG's rights under the Contracts;
WHEREAS, NYSEG has transferred its electrical generating
assets, including the Kintigh and Xxxxxxxx Stations and the Contracts pertaining
thereto, to NGE in a corporate restructuring preparatory to possible future
auctions of NYSEG generating assets as part of New York State's electricity
deregulation efforts; and
WHEREAS, the Parties have reached agreement on a series of
obligations which CSX and NS will perform in order to preserve NGE's rights
under the Contracts, and now desire to set forth within this Agreement the
specific terms and
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conditions of their agreement, including those terms and conditions which
supersede the corresponding terms and conditions of the Contracts;
NOW, THEREFORE, in consideration of the premises and mutual
obligations contained herein, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree to enter into this Agreement, which shall be
governed by the following terms and conditions:
Section 1
Definitions and Abbreviations
The following terms, when used in this Agreement, have the
meanings described in this section:
"Business Days" means Monday, Tuesday, Wednesday, Thursday and
Friday, unless a legal holiday, as defined in Rule 6(a) of the Federal Rules of
Civil Procedure, falls on that date.
"Central Pennsylvania Coal Fields" means all of the mines
located in the following Rate Districts, as contained in Conrail's current Coal
and Transportation Guide:
Clearfield North New Castle
Clearfield South Bullskin
Avonmore Xxxxxxxxxxxx (with the exception of Mine 84)
Jubilee
"Closing Date" means the commencement of separate operations
by NS and CSX pursuant to the decision in which the STB grants (with or without
conditions attached thereto) the Application.
"Xxxxxxx Contract" means the rail transportation contract
between NGE and Conrail providing for transportation of coal to NGE's Xxxxxxx
Station (including the "Contract Service Commitment Letter of Agreement" between
NYSEG and Conrail dated April 1, 1992), including all amendments thereto as of
the date of this Agreement.
"Xxxxxxx Station" means NGE's coal-fired electric generating
station at West Somerset, NY.
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"Xxxxxxxx Station" means NGE's coal-fired electric generating
station at Ludlowville, NY.
"Mine 84" means Eighty-Four Mining Company's Mine 84 situated
in Washington County, Pennsylvania.
"Net Ton" means a ton weighing 2000 pounds, and "NT" shall
have a corresponding meaning.
"Non-Railroad Owned Equipment" means railcars for which NS or
CSX, insofar as their operations pursuant to this Agreement are concerned, are
not obligated to pay the car owner car hire fees.
"Powhatan" means Ohio Valley Coal Company's Powhatan #6 Mine
situated at or near Alledonia, Ohio.
"RCAF(U)" means the Rail Cost Adjustment Factor (Unadjusted),
published quarterly by the STB.
"SRC" means Somerset Railroad Corporation, a wholly-owned
subsidiary railroad of NGE, which owns the rail line connecting the present
Conrail Lockport Branch with NGE's Xxxxxxx Station, as well as the railcars
presently used to transport coal to Xxxxxxx and Milliken Stations.
"Unit Train" means not less than 10,000 NT train.
Section 2
Term and Obligations
2.1 Term. This Agreement shall commence as of the date first
set forth above, and shall remain in effect until December 31, 2007 (unless
extended as provided in the next paragraph), when the obligations of the Parties
shall cease.
2.2 CSX's and NS' Obligations. The performance of the
obligations of CSX and NS under this Agreement shall commence on the Closing
Date. Should the STB fail to grant the Application or should CSX and NS choose,
despite the STB's grant of the Application, not to consummate the transaction
which forms the subject of the Application, then the obligations of CSX and NS
specified in this Agreement shall be without force or effect. For each day the
Closing Date is delayed beyond September 1, 1998, the December 31,
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2007, expiration date stated in the preceding paragraph shall be extended by the
same number of days.
CSX and NS acknowledge and agree that if the STB grants the
Application (with or without conditions attached thereto) and CSX and NS choose
to consummate the transaction which forms the subject of the Application, then
CSX will be bound by the terms and conditions of the Xxxxxxx Contract, provided
that nothing in this Agreement will be construed to extend the Xxxxxxx Contract
beyond the expiration date of that contract as it exists as of the date of this
Agreement.
2.3 NGE's Obligations. The obligations of NGE under this
Agreement shall commence on the date of this Agreement first set forth above.
2.4 All Parties' Obligations. Before the commencement of
operations under this Agreement, the Parties shall enter into a more
comprehensive rail transportation contract which shall embody the terms of this
Agreement, as well as other essential terms which are customary and usual in
rail transportation contracts. It shall be the joint responsibility of NS and
CSX to draft such a contract and to present the draft thereof to NGE in
sufficient time to assure that the contract can be reviewed and revised as
necessary by NGE (in consultation with NS and CSX) and can be executed prior to
the date NS and CSX are obligated under Section 2.2 hereof to commence
performance under terms of this Agreement.
Section 3
Support for the Application
Within two Business Days following the date of this Agreement,
NGE shall file a letter with the STB withdrawing its responsive application
filed in the Application proceeding, stating that its interest in this matter
has been settled, that it withdraws its request that conditions be imposed on
the grant of the Application, and that it supports the grant of the Application.
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Section 4
Rail Service to Xxxxxxx Station
Subject to the provisions of the second paragraph of Section
2.2, the Parties agree to establish new rail service options and new rate
arrangements for Xxxxxxx Station as follows:
4.1 Joint Line Rail Service. CSX and NS hereby agree to offer
joint line rail service to Xxxxxxx Station as follows:
4.1.1 NS shall operate over Conrail lines allocated
to NS and NS lines from Powhatan, Mine 84 and Central Pennsylvania Coal Fields
to Buffalo, NY.
4.1.2 NS shall interchange Unit Trains to CSX at
Buffalo at a mutually acceptable point between CSX and NS up to but not more
than 600,000 tons per annum. Should the period between the date of the last full
year of operations hereunder commence and the termination date of this Agreement
be less than a full year, then the 600,000 ton volume shall be prorated by the
same percentage that the remaining fraction of a year bears to one year.
4.1.3 CSX shall be governed by the terms and
conditions set forth in the operating contracts between Conrail and SRC which
govern operations on SRC property.
4.2 Joint Line Rates. CSX and NS hereby agree to transport no
more than 600,000 NT of coal per annum to Xxxxxxx at the following joint line
rates:
4.2.1 for movements originating at Powhatan, $11.50
per Net Ton;
4.2.2 for movements originating at Mine 84, $11.25
per Net Ton; and
4.2.3 for movements originating at Central
Pennsylvania Coal Fields, $10.75 per Net Ton.
4.2.4 Beginning January 1, 2000, each of the
aforesaid rates shall increase annually by a percentage equal to the percentage
by which the RCAF(U) has increased in the previous year, and in no event under
any
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circumstances shall the rates be reduced below the rates set forth in this
Section 4.2.
4.3 Service Requirements.
4.3.1 CSX and NS shall provide rail service
exclusively in Non-Railroad Owned Equipment, including but not necessarily
limited to SRC-owned or leased equipment.
4.3.2 The tonnage shipped pursuant to this Agreement
shall be counted as part of any minimum tonnage or percentage obligations of NGE
in the Xxxxxxx Contract.
Section 5
Cycle Times And Diversions
5.1 Cycle Times. NS and CSX agree to cooperate fully in the
handling of SRC-owned equipment utilized in serving Xxxxxxx and Xxxxxxxx
Stations.
5.2 Scheduled Diversions. NS and CSX recognize that (i) from
time to time, and at least fourteen times per annum, NGE is required to use in
serving Xxxxxxxx Station one of the two unit train sets that ordinarily cycles
between the coal mines and Xxxxxxx Station; (ii) this diversion is necessary to
maintain adequate coal inventory at Xxxxxxxx Station; and (iii) after the
Closing Date, this diversion will require the transfer of an empty SRC unit
train set between CSX and NS at a mutually agreed place and time before and
after the train set cycles to Milliken. NS and CSX will use their reasonable
best efforts to accommodate such scheduled train diversions and cycle times
involving the Xxxxxxx and Milliken Stations.
5.3 Non-Scheduled Diversions. NS and CSX agree to work with
NGE each year to effect non-scheduled diversions of loaded trains up to a limit
of 100,000 NT of coal shipped in the event that SRC-owned unit train sets are
required to be diverted from Xxxxxxx Station to Xxxxxxxx Station or vice versa.
In the event that a non-scheduled diversion is caused by factors beyond the
control of NGE but within the control of NS and/or CSX, the involved tonnage
shall be counted toward the 600,000 ton maximum contained in Section 4.1.2. NGE
shall in each case inform CSX and
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NS whether a diversion is scheduled or non-scheduled. If a diversion is
non-scheduled, NGE shall fully inform CSX and NS as to the basis and expected
extent of the non-scheduled diversion. If rates are not already contained in an
applicable contract, rates applicable to non-scheduled diversions under this
Section will be included in rail transportation contract required by Section
2.4.
Section 6
Severability of Provisions
Any Party may transfer or assign all or any portion of its
rights in this Agreement upon receiving the prior written approval of the other
Parties, which approval shall not be unreasonably withheld. Any transferee of
any rights under this Agreement shall, as a condition precedent to any transfer
of rights under this Agreement be required to execute an appropriate amendment
to this Agreement in which such Party agrees to be bound by the terms and
conditions of this Agreement.
Section 7
Binding Agreement; Final Settlement
7.1 Binding Agreement; Authority of Signers. This Agreement
shall take effect and shall be binding on all Parties hereto as of the date
first set forth above. The signatories hereto represent and warrant that they
(i) have read, know and understand completely the contents hereof, and (ii) have
full authority and are legally entitled to bind the Party on whose behalf they
are executing this Agreement.
7.2 Agreement is Final. The Parties are each aware that
although they may hereafter discover facts in addition to or different from
those they now know or believe to be true in relation to the subject of this
Agreement, this Agreement constitutes their final agreement concerning the
subjects addressed herein. This Agreement may not be altered, amended or
modified in any respect whatsoever, except by a writing duly executed by all of
the Parties.
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Section 8
Confidentiality of Agreement
This Agreement shall remain confidential among the Parties,
their employees, contractors and agents, and shall not otherwise be disclosed by
the Parties absent an order to do so from the STB, a court of proper
jurisdiction or other similar authority or the written consent of all the
Parties.
Section 9
Dispute Resolution, Governing Law and Construction
9.1 Agreement and Arbitration. Any dispute or disagreement
between the Parties arising under or in connection with this Agreement shall be
resolved through amicable discussion in good faith. If any dispute or
disagreement cannot be resolved through such discussions, it shall be settled by
binding arbitration under the commercial arbitration rules of the American
Arbitration Association. The arbitration shall take place at a mutually
agreeable place and, if any place cannot be agreed upon by the involved Parties,
in Binghamton, NY.
9.2 New York Law Governs; Forum for Suits. This Agreement
shall be governed by and interpreted under the laws of the State of New York,
except any conflict of laws provision which would require the application of
another state's laws in the interpretation and application of this Agreement.
Any suit concerning this Agreement shall be brought in a court situated in New
York State, and each Party hereby waives objection to jurisdiction of any such
court over matters arising or alleged to arise under this Agreement. Judgment on
any award may be entered in any court having jurisdiction thereof.
9.3 Construction. The language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and
shall not be strictly construed against any of the Parties, preparation of this
Agreement having received the input of all Parties hereto.
9.4 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, so that all counterparts taken
together shall constitute one and the same instrument.
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Section 10
Notices
All notices and other communications hereunder shall be in
writing and shall be personally delivered or shall be transmitted by facsimile
with confirming copy sent postage prepaid, addressed as follows:
a. To NGE-
Manager, Fuel Supply
New York State Electric & Gas Corp.
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
b. To NS-
Xx. X. X. Xxx
Vice President, Coal Marketing
Norfolk Southern Corporation
000 Xxxxxxxx Xxxx XX
Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
c. To CSX-
Xx. Xxxxxxx X. Xxxxx
Vice-President, Coal Sales and Marketing
CSX Transportation
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000.
Any Party may designate another person, address and/or fax
number to which communications with such Party pertaining to this Agreement are
to be sent by providing notice of same in writing to each other Party to this
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Agreement at their notice address stated in this Section or their subsequent
current notification address if they have previously filed a change of same.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed by their respective authorized representatives as of the date first
set forth above.
CSX TRANSPORTATION, INC.
By:
Name: Xxxxxxx X. Xxxxx
Title: Vice President Coal
NORFOLK SOUTHERN CORPORATION
AND NORFOLK SOUTHERN RAILWAY COMPANY
By:
Name: X.X. Xxx Xx.
Title: Vice President Coal
NGE GENERATION, INC., a wholly-owned subsidiary of
NEW YORK STATE ELECTRIC & GAS CORPORATION
By:
Name: Xxxx X. Xxxxxxx
Title: President
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