Document:

exv10w2

 

Exhibit 10.2

CSXT-C-82552

CONTRACT SUMMARY

August 6, 2003

ISSUED                     , 2003      EFFECTIVE                     , 2003

 

 

COAL TRANSPORTATION AGREEMENT

BETWEEN

INDIANTOWN COGENERATION, L.P.

AND

CSX TRANSPORTATION

CSXT-C-82552

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	TABLE OF CONTENTS	 	 	 	 
	Article	 	 	 	Page
	
	 	 	 	

	I	 	 	 	Definitions
	 	 	1	 
	II	 	Effective Date and Term
	 	 	4	 
	III	 	Incorporation of Documents
	 	 	5	 
	IV	 	Tender of Unit Train Shipments
	 	 	5	 
	V	 	 	 	Minimum/Maximum Per Car Weights
	 	 	7	 
	VI	 	Loading and Unloading
	 	 	7	 
	VII	 	Equipment Obligations
	 	 	9	 
	VIII	 	Equipment Maintenance
	 	 	11	 
	IX	 	Routing
	 	 	12	 
	X		 	 	Receiver Car Movements
	 	 	13	 
	XI	 	Diversion or Reconsignment
	 	 	13	 
	XII	 	Rates and Incentives
	 	 	13	 
	XIII	 	Rate Adjustment
	 	 	15	 
	XIV	 	Receiver Volume Guarantee
	 	 	19	 
	XV	 	Dead Freight for Solid Fuel Shortfall
	 	 	19	 
	XVI	 	Unit Train Shipment Detention Provisions
	 	 	19	 
	XVII	 	Coal Weights & Weighing Provisions
	 	 	19	 
	XVIII	 	Rounding
	 	 	20	 
	XIX	 	Payment & Credit Provisions
	 	 	20	 
	XX	 	Claims & Responsibility
	 	 	21	 

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	 	 	 	 	TABLE OF CONTENTS (cont’d.)	 	 	 	 
	Article	 	 	 	Page
	
	 	 	 	

	XXI	 	Default
	 	 	22	 
	XXII	 	Force Majeure
	 	 	23	 
	XXIII	 	Abandonment
	 	 	24	 
	XXIV	 	Adjustment of Miscellaneous Charges
	 	 	24	 
	XXV	 	Tonnage Certification
	 	 	25	 
	XXVI	 	Notices
	 	 	26	 
	XXVII	 	Corporate Authority
	 	 	27	 
	XXVIII	 	Assignment
	 	 	27	 
	XXIX	 	Captions
	 	 	29	 
	XXX	 	Applicable Law
	 	 	29	 
	XXXI	 	No Waiver of Performance
	 	 	29	 
	XXXII	 	Counterparts
	 	 	29	 
	XXXIII	 	Confidentiality
	 	 	29	 
	XXXIV	 	Entire Route
	 	 	30	 
	XXXV	 	Records Inspection
	 	 	30	 
	XXXVI	 	Assumption Obligation & Refund Payment
	 	 	30	 
	XXXVII	 	Relationship with FP&L
	 	 	31	 

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     THIS SOLID FUEL AGREEMENT is entered into as of           2003, by and
between Indiantown Cogeneration, L.P., a Delaware limited partnership
(“Receiver”), and CSX Transportation, Inc. (“Carrier”) for rail transportation
services to Indiantown under the following terms and conditions.

WITNESSETH:

     WHEREAS, Receiver will source and supply Solid Fuel for use in an electric
generating facility located at Indiantown, Florida, known as the Indiantown
Generating Plant (“Indiantown, “Destination” or “ICLP” herein) and Receiver is
in need of transportation service to move that Solid Fuel; and

     WHEREAS, Carrier provides railroad transportation for compensation and
owns equipment and track necessary for rail movement of Receiver’s Solid Fuel
from Origin via Direct Rail Shipments to ICLP.

NOW THEREFORE:

     For and in consideration of mutual covenants, provisions, benefits and
agreements hereinafter made and contained and other good and valuable
considerations flowing between the parties hereto, Carrier and Receiver do
hereby covenant and agree as follows:

ARTICLE I – DEFINITIONS

     For purposes of this Agreement, the following definitions shall apply:

     1.     AAR – Shall mean the Association of American Railroads.

     2.     Actual Placement – Shall mean when the first Car of a Unit Train
Shipment is placed in position for loading at Origin or unloading at
Destination.

     3.     Ash Waste – Shall mean dry fly ash waste generated at the facility
suitable for transportation in P.D. Cars, as specified herein.

     4.     Carrier Cars – Shall mean bottom dump, open top hoppers owned, leased
or rented by Carrier and moving at Carrier Car Rates.

     5.     Carrier Car Rates – Shall mean the Rates per Ton stated in Appendix A
for transportation of Receiver’s Solid Fuel from Origin to Destination in Cars
supplied by Carrier, including all adjustments of such rates according to the
provisions of Article XIII hereof.

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     6.     Carrier Unit Train – A Unit Train made up entirely of Carrier owned,
leased or rented Cars.

     7.     Cars – Shall mean any bottom dump open top hoppers, regardless of
ownership.

     8.     Coal – Shall mean bituminous steam coal for delivery to ICLP.

     9.     Consignment – Shall mean all loaded Cars tendered to Carrier at one
time under a single bill of lading. Except as otherwise provided by this
Agreement, each Consignment shall be received subject to the terms and
conditions of the Uniform Bill of Lading as published in the Uniform Freight
Classifications, UFC 6000, Uniform Classification Committee, Agent, unless the
parties otherwise agree to another bill document.

     10.     Constructive Placement – Shall occur when Actual Placement is
prevented due to any cause, other than a Force Majeure event as set forth in
Article XXII, attributable to Receiver or Origin. In the event of Constructive
Placement, Cars shall be placed or held at the rail yard nearest to the
scheduled Origin or Destination. Time spent in transporting a shipment from
point of Constructive Placement to ICLP or Origin shall not be counted toward
elapsed free time or detention charges.

     11.     Contract Year – Shall be each of the successive twelve-month periods
matching a calendar year comprising the Term of this Agreement. Should any
Contract Year hereunder be comprised of less than 365 days, then the
obligations of each party hereto shall be honored on a pro rata basis.

     12.     Direct Rail Shipments – Shall mean a Unit Train movement of Solid Fuel
originating from Origin on Carrier’s lines and terminating at ICLP and which
remains on Carrier’s rail lines throughout the route of movement.

     13.     Effective Date – Shall have the meaning set forth in Article II.

     14.     Holidays – The following days are recognized as Holidays:

	 
	Day before New Year’s Day
	New Year’s Day
	Washington’s Birthday (President’s Day)
	Good Friday
	Easter
	Memorial Day
	Independence Day
	Labor Day
	Veterans Day

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	Thanksgiving Day
	Day after Thanksgiving Day
	Day before Christmas Day
	Christmas

     15.     If one of these days falls on Saturday, the previous Friday shall be
considered a Holiday unless a different day is designated as such by contract,
applicable law, regulation, or proclamation, or labor agreement with either
party’s employees. Home Shop – One or more facilities designated by Receiver
and located on Carrier’s rail lines on the Normal Route of movement, used to
repair or maintain Receiver owned/leased open top hopper equipment.

     16.     Monthly Loading Schedule – Shall mean a monthly schedule prepared by
Receiver comprised of the following information:

		
	 	     Total Unit Train tonnage to be tendered by Receiver during the
month.

     Unit Train tonnage to be tendered by Receiver at each Origin
during the month.

     A schedule which sets forth the expected date for each Unit
Train to be tendered during the month.

     17.     NSTB – Shall mean the National Surface Transportation Board.

     18.     Normal Route – Carrier’s designated route of movement of Unit Trains
from Origin Rate District to Destination and return.

     19.     Origin or Origins – Shall mean a loading point as set forth in
Appendix A.

     20.     Rate District – Multiple origin loading points under one coal rate
district as defined in Tariff CSXT 8200

     21.     Rates – Rates for transportation of Solid Fuel as defined in Appendix
A and as adjusted in Article XIII.

     22.     Receiver Cars – Shall mean bottom dump open top hoppers owned, leased
or rented by Receiver. In addition, any Carrier Cars which are moving at
Receiver Car Rates under the provision of Article VIII shall be considered
Receiver Cars only for the purpose of rate per ton application. The addition
of new Shipper Unit Train trainsets will be rated at 286,000 pounds gross
weight on rail (gwr).

     23.     Receiver Car Rates – Shall mean the Rates per Ton stated in Appendix A
for transportation of Receiver’s Solid Fuel between Rate District or Origin and
ICLP in Cars supplied by Receiver, including all adjustments of such Rates
according to the provision of Article XII hereto.

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     24.     Receiver Unit Train – A Unit Train made up wholly of Receiver Cars.

     25.     Solid Fuel – Shall mean all non-hazardous solid fuels including coal,
pet coke, and synfuel, STCC’s 11-212-90 and 29-911-91 and 29-913-40 for
delivery and consumption at ICLP.

     26.     Straggler – Shall mean a Car listed on Bill of Lading ticket as part
of a Consignment, which becomes separated from the block of Cars making up the
Consignment prior to placement for unloading.

     27.     Supplier – Shall mean any Solid Fuel or terminal operation(s)
producer(s) or mine operator(s) or tipple operator(s) supplying Solid Fuel to
Receiver for transportation hereunder.

     28.     Tariff
8200 Series – Shall mean the document titled Tariff CSXT 8200
as filed with the NSTB, including amendments thereto and reissues thereof in
effect on the date of tender. In accordance with Tariff Governing Rules,
changes to the Tariff shall apply uniformly to Carrier customers and not only
Receiver.

     29.     Ton or Net Ton – Shall mean a ton of 2,000 pounds avoirdupois.

     30.     Unit Train or Train – Shall mean a shipment of at least 95 car
trains of Solid Fuel billed on one day, from one loading point at one Origin,
via one route, to one consignee, for one delivery at one Destination and
necessary locomotives used in transporting Receiver’s Solid Fuel from Origin to
ICLP pursuant to this Agreement.

ARTICLE II – EFFECTIVE DATE & TERM

     The Effective Date of this Agreement shall be the date on which Receiver’s
Financing Parties and independent engineer consent to Receiver entering into
this Agreement, or, if such consent is not received within forty-five (45) days
from the Execution Date and such independent engineer shall have been deemed to
consent to the execution of this Agreement under Receiver’s financing
documents, the date on which such deemed consent shall have occurred
(“Effective Date”). Receiver shall give prompt written notice to Carrier of
the occurrence of the Effective Date. In no event shall this Agreement expire
later than December 31, 2025, provided, however that this Agreement shall
remain in effect with respect to any Solid Fuel tendered prior to, but not
delivered to Destination by, December 31, 2025.

4

 

ARTICLE III – INCORPORATION OF DOCUMENTS

     This Agreement incorporates all tariffs (including late payment finance
charges and fuel surcharges), and exempt circulars price lists that would apply
if this Agreement did not exist as of the date of shipment tender. In the
event of direct conflict between any incorporated item and the express terms of
this Agreement, the express terms of this Agreement shall control.

ARTICLE IV – TENDER OF UNIT TRAIN SHIPMENTS

     1.     Monthly Loading Schedule – Receiver shall notify Carrier of Monthly
Loading Schedules by telephone no later than the 25th day of the month
preceding each month in which Receiver intends to make Unit Train tenders of
Solid Fuel hereunder. Receiver shall also enter Monthly Loading Schedules via
electronic computer based tools provided by Carrier. Management of train
schedules will be governed by the then current Tariff 8200 Series. Once the
schedule has been agreed to either party will make a good faith effort to
accommodate such changes which shall also be coordinated with the supplier.

     2.     Unit Train Tender – A Consignment of Solid Fuel hereunder shall be
deemed to be made by Receiver when the Solid Fuel is loaded in Cars at an
Origin point. Carrier agrees to accept all such Consignments and deliver the
Solid Fuel to the Destination as described in this Agreement, and subject to
the terms and provisions of this Agreement.

     3.     Minimum Unit Train Weight – The Minimum Unit Train Weight tendered to
Carrier hereunder shall be:

	 	 	 	 	 
	Carrier	 	 	 	 
	Aluminum Cars	 	Carrier Steel Cars	 	Receiver Aluminum Cars
	
	 	
	 	

	95 Cars – Average

10,600 tons per

train during the

calendar month	 	
95 Cars – Average

9,500 tons per

train during

the calendar

month
	 	95 Cars – Average 

10,200 tons per

train during

the calendar

month

     4.     Light Loading of Unit Trains Caused by Receiver – If the average of all
Unit Train consignments made under this Agreement in any calendar month is
tendered to Carrier with less than the applicable Minimum Unit Train Weight for
any reason caused by Receiver other than as a result of a Force Majeure event
as provided in Article XXII, Receiver shall pay the difference of the Minimum
Unit Train Weight and the Actual Average Unit Train Weight times the applicable
rate originally on the freight bill.

5

 

     5.     Use of Carrier Cars in Receiver Unit Trains – If Receiver is unable to
furnish sufficient equipment to satisfy the Minimum Unit Train Weight or
otherwise desires to include Carrier Cars in a Receiver Unit Train, Receiver
may request that Carrier Cars be provided and Carrier may supply such Cars.
Unless otherwise provided, all Solid Fuel transported in Carrier Cars pursuant
to this Paragraph will be charged for at the applicable Carrier Car Rate in
Appendix A including all adjustments thereto according to Article XIII.

     6.     Light
Loading of Receiver Unit Trains Caused by Carrier – If Carrier
restricts loading for any reason or places at Origin a Receiver Unit Train of
less than the scheduled number of Cars or less than the scheduled trainload
weight, for any reason including damage to or shortage of Receiver Cars caused
by Carrier, Carrier will substitute Carrier Cars of a minimum marked capacity
of 100 tons and sufficient in number to meet the scheduled number of Cars and
the scheduled trainload weight. In such instances, Carrier shall charge the
Receiver Car Rate for Solid Fuel moving in Carrier Cars. When Carrier Cars
have been substituted for Receiver Cars under the provision of this paragraph,
then no demurrage shall accrue on substituted Cars for a period equal to free
time plus twenty-four (24) hours. If Carrier fails to substitute such Carrier
Cars or such Carrier Cars are insufficient to accept the full portion of the
scheduled unit train weight that would otherwise have been carried by the
scheduled number of Cars, then Receiver shall be relieved of its obligations
under paragraph 4 of this Article IV and under paragraph 1 of Article XV to the
extent of such shortfall.

     7.     Notice of Light Loaded Trains – Receiver shall require its Supplier to
indicate on the Bill of Lading, or other similar document, on Unit Train
shipments if Carrier tenders to Supplier at Origin insufficient Cars to allow
Supplier to load the scheduled Minimum Unit Train Weight and the reason such
Car shortage occurred, if known. If the Carrier actually caused the light
loaded Train, Receiver shall be entitled to be billed at the scheduled Unit
Train Rate.

     8.     Unit Train Size – Carrier will evaluate and report to Receiver on an
annual basis whether capital changes or modifications to the existing rail
infrastructure and route of movement safely and effectively support changes in
Receiver Car Unit Train sizes.

6

 

ARTICLE V – MINIMUM/MAXIMUM PER CAR WEIGHTS

     1.     Minimum Per Car Weight – Except as otherwise provided, the minimum
weight of each loaded Car in a Solid Fuel shipment
will be the lesser of the marked capacity of the Car or 100 tons. When a
Car is loaded with Solid Fuel to full visible or cubical capacity, and Supplier
indicates on the shipping order or Bill of Lading that the Car is so loaded,
then the actual weight will apply for billing. Receiver provided cars from the
period of October 1, 2003 through June 30, 2004 and Receiver provided trip or
short term lease cars allowed under Article VII.4 will have a minimum 3,800
cubical capacity. Receiver provided cars after July 1, 2004 will have a 4,200
cubical capacity.

     2.     Maximum Per Car Weight – Each Car in a shipment/consignment transported
hereunder shall not exceed 286,000 pounds in gross loaded weight or the load
limit of the Car. If Cars are found to be loaded in excess of the load limit
of the Car or 286,000 pounds in gross loaded weight, the provisions and charges
of the then current Tariff CSXT 8200 Series, including supplements thereto or
reissues thereof, will apply.

     These charges are not subject to the provisions of Article XIII and will
be increased only in the event that Carrier increases and publishes its
standard tariff charges for all other receivers and receivers of Solid Fuel
which other receivers’ and receivers’ Solid Fuel shipments are subject to such
Tariff charges (See Article XXV).

ARTICLE VI – LOADING AND UNLOADING

     1.     Loading

Twenty-four (24) Hour Loading – Carrier shall coordinate the placement of empty
Cars at Origins with the Suppliers. Subject to the provisions of Tariff CSXT
8200 Series, each Consignment tendered shall be loaded within twenty-four (24)
hours.

Four (4) Hour Loading – If, subject to the provisions of Tariff CSXT 8200,
Receiver elects to load a Unit Train in four (4) hours, then the four (4) hours
loading Rates shall apply as stated in Appendix A. The four (4) hour period
will be governed by the then current Tariff CSXT 8200 Series.

Receiver Notification – Receiver shall require all of its Suppliers tendering
Solid Fuel to Carrier for transportation under this Agreement to accept Unit
Trains upon arrival at Origin, twenty-four (24) hours a day, seven (7) days a
week, except Holidays, provided Supplier receives proper notice from Carrier
pursuant to Article VI, Paragraph 3. Loading and scheduling coordination will
be in compliance with Tariff 8200 series provisions, including amendments
thereto and reissues thereof.

7

 

     2.     Unloading – Carrier shall coordinate the Actual Placement of loaded
Cars at ICLP and shall provide advance notice of arrival as specified in
Paragraph 3 of this Article. Twelve (12) hours unloading free time shall be
allowed at Destination as provided for in Article XVI. ICLP shall receive an
additional four (4) hours of unloading free time if receipt of the train is +
or – eight (8) hours from the time of notification by Carrier. Demurrage
charges shall be in accordance with Tariff 8200 series.

     3.     Advance Notice – Carrier will provide Receiver not less than four (4)
hours on weekdays, weekends and holidays advance notice upon leaving Baldwin
yard of the arrival of Trains at ICLP via either voice, electronic, e-mail or
other agreed upon means.

     4.     Approach and Departure – Unit Train shipments of Solid Fuel to
Destination will approach from the north and Unit Train shipment of empty Cars
and Ash Waste will depart Destination to the north.

     5.     Applicable Laws – Carrier will comply with all applicable laws
regarding the blocking of any public or private road crossings serving
Destination or the adjacent steam host facility. Blocking, as used in the
prior sentence, means the time that a Unit Train is stopped at a road crossing.
Carrier reserves the right to oppose at its cost and expense, any such road
crossing that would interfere with its efficient operation of the Unit Train or
other trains operating over such proposed road crossing.

     6.     Delivery Times – For its own purposes, Receiver has expressed a desire
for delivery of Unit Train Solid Fuel shipments to Destination during daylight
hours, but understands that it is not entitled to preferential treatment, that
Carrier operates on a twenty-four (24) hour a day basis and that many factors
are involved in determining the arrival time. Carrier is aware of Receiver’s
desire and will attempt to accommodate that desire, so long as Carrier incurs
no additional expense or adverse impact on its other train service or
operation.

     7.     Sidetrack Agreement – Carrier’s rail operations at Destination shall be
governed by a separate private sidetrack agreement previously executed by
Carrier and Receiver.

8

 

ARTICLE VII – EQUIPMENT OBLIGATIONS

     1.     Carrier Equipment Obligation – Carrier shall furnish locomotives and
Carrier supplied Cars in accordance with the
terms of this Agreement. Carrier shall furnish sufficient locomotives to
transport Receiver Cars in Unit Train service. Carrier shall provide
locomotives maintained for good working order and Carrier Cars in sufficient
quantities for the purposes contemplated under this Agreement. Once Carrier
has committed Carrier Cars to this service, Receiver must request AAR OT-5
approval from Carrier to place Receiver Cars into this service under this
Agreement, subject to the provisions of this Article VII, Paragraph 2.

     2.     Receiver Equipment Obligation – Receiver Cars may be placed in service
on or after the Effective Date. If Receiver elects to remove dedicated
Receiver Cars from service, Receiver shall provide Carrier twelve (12) months
advance written notice. After removing dedicated Receiver Cars from service,
Receiver shall provide Carrier with twelve (12) months advance written notice
before placing dedicated Receiver Cars back in service.

     Not withstanding anything herein, to the contrary, if Receiver places or
removes a set of Receiver Cars with less than twelve (12) months advance
written notification, then Receiver will pay to Carrier a capital impact fee of
$25,000.00 per set per month short of the twelve month notification. Example;
five (5) months advance notification is provided for set removal. A capital
impact fee of (twelve minus five) times $25,000 or $175,000 will apply.
Payment shall occur within thirty (30) days of placement or removal of Receiver
Cars. This impact fee would not apply to the placement of the initial three (3)
sets of Receiver cars in calendar year 2003. If ICLP requires additional
equipment during this period Carrier will supply Carrier Cars at the Carrier
Car Rate levels defined in Appendix A.

     3.     Receiver Equipment Amount – It is intended that a maximum of three (3)
sets of Receiver Cars may be placed in ICLP services. The first three (3) sets
are subject to the provisions of Article VIII, paragraph 2. Each set will
consist of at least 95 Cars plus 7% additional spare Cars in actual service and
an additional 3% spare Cars to be secured as required from the leasing company.
Receiver Cars shall be suitable and in sufficient quantities for the purpose
contemplated in this Agreement and Receiver shall maintain Receiver Cars in
good working order and repair (or cause such maintenance to take place). If
from time to time greater than three (3) sets are required, Receiver is
permitted to trip lease or short-term lease additional Receiver Car sets to
support additional needs or unique loading schedule requirements. These
additional Receiver Cars will be coordinated with Carrier in advance to
minimize operational conflicts. Receiver shall provide seven (7) days prior
written notice before putting additional Receiver Car sets in service,
including expected load date and location. If

9

 

 Carrier cannot reasonably accommodate such schedule, Carrier shall notify
Receiver within three (3) days of such notice from Receiver.

     4.     Damage to Receiver Cars – If Receiver Cars are damaged, derailed, or
destroyed while in the custody and control of Carrier, Receiver’s designated
employee shall be notified as soon as practicable within forty-eight (48) hours
of such occurrence. Written notification of the damage, derailment or
destruction of such Receiver Cars will be furnished to Receiver within five (5)
days of the occurrence and will include, but will not be limited to (1) Car
Initial and Number; (2) a description of the damaged, derailed, or destroyed
Receiver Cars; (3) cause of the damage, derailment or destruction (if known);
(4) the date, time and location of the damage, derailment or destruction
occurred; and (5) any known substantiating details. If the damaged Receiver Car
can be economically repaired (depreciated value of damaged Receiver Car exceeds
the estimated cost of repair per Association of American Railroads Interchange
Rules), Carrier will make such repairs at its own expense to the reasonable
satisfaction of the Receiver and return repaired Receiver Cars to service as
soon as commercially practicable based on parts availability and repair shop
schedules, or other factors that would delay the return of the affected Cars to
service. Carrier agrees to use all reasonable measures to expedite the repair
of such Cars. Notwithstanding the foregoing, Receiver may request and Carrier
will supply periodic written reports on the progress made by Carrier in its
efforts to meet its obligations to expedite repair or replacement of the
affected Cars. If Receiver Cars are damaged under the conditions stated herein
(except for damage due to defect in design, materials and original
workmanship), Carrier will furnish Carrier Cars in sufficient number to replace
the tonnage lost at no additional cost to the Receiver and at Receiver Car
Rates, until such time as the damaged or derailed Receiver Cars are repaired
and/or settlement for destroyed Cars is received. Should Receiver choose to
replace damaged Receiver Cars, Receiver must notify Carrier in writing of this
intent within thirty (30) days following the damage to the Receiver Cars, and
provide periodic updates regarding the status of the replacement Receiver Cars.
All repairs and/or replacements must meet standard Association of American
Railroad rules and regulations. If the Receiver Cars cannot be economically
repaired (estimated cost of repair exceeds depreciated value of damaged
Receiver Car per Association of American Railroads Interchange Rules Rule 107,
Carrier shall provide settlement value to Receiver. Settlement for all
Receiver Cars destroyed while in Carrier control shall be on the basis of new
cost reproduction less the accumulated depreciation and salvage value of the
destroyed equipment in accordance with the then current Association of American
Railroads Interchange Rules, provided,

10

 

 however, that such destruction is not the result of a defect in design,
materials and/or workmanship in the Cars. Such amount will be processed by
Carrier in accordance with Article XX. Disputes under this provision shall be
handled under the procedures set forth under Article XXII of this Agreement.

     5.     Non-Application of Mileage Allowance – Carrier shall not use Receiver
Cars for transporting any product other than as provided for in this Agreement.
All such Receiver Cars must have AAR OT-5 approval from Carrier prior to
placement on Carrier. No mileage allowance payments, per diem charges or
similar charges will be paid by Carrier for use of Receiver Cars for
transportation subject to this Agreement.

ARTICLE VIII– EQUIPMENT MAINTENANCE

     1.     Preventative Maintenance on Receiver Cars – Upon request from Receiver,
confirmed in writing within five (5) days, designated Receiver Cars moving in
Unit Train service will be delivered by Carrier for repair or maintenance to
Receiver’s designated Home Shop on Normal Route of movement. For the switching
service involved, Carrier will charge and Receiver agrees to pay in accordance
with the provisions of the then current Tariff CSXT 8200 Series.

     2.     “Bad Order” Receiver Cars – Carrier agrees that if a Receiver Unit
Train is stopped by Carrier for removal of Receiver Cars designated as
“bad-order” or requiring “running” repairs or maintenance, Carrier will
transport such Cars to the nearest maintenance facility operated by or for
Carrier for repair or maintenance. In addition, Carrier agrees that upon
completion of repairs or maintenance to such Receiver Cars, Carrier will pick
up such Cars from the specific maintenance facility and replace them in the
next scheduled Receiver Unit Train on either the loaded or return empty
movement as discussed with Receiver. No charges shall be assessed for the
movement of Cars requiring said repairs or maintenance to and from Carrier’s
maintenance facility or for removal and replacement of such Cars in Receiver
Unit Train.

     3.     Authorization for Repair on Receiver Cars – Carrier shall report to
Receiver any maintenance work which Carrier believes is necessary under the AAR
Interchange Rules, but Carrier shall not undertake to do any such maintenance
unless the repair work is approved in advance by Receiver except for such
running maintenance repairs as are necessary to keep Receiver Cars in safe
working order. Any maintenance repairs performed by Carrier shall be done in
accordance with the AAR Interchange Rules and at a charge no greater than that
contained in the aforementioned Rules, as amended or superseded. Claims against
Receiver for

11

 

 equipment maintenance shall be made in writing, supported by all relevant
documentation, and shall be processed by the Receiver in accordance with the
same time frames specified for payment as outlined in Article XX. Receiver
also has the right to inspect any and all such bad-order maintenance, or
running maintenance repairs performed by Carriers and reject any claim, or
portion of claim, for work that does not meet the standards of the AAR
interchange Rules.

     4.     Third Party Inspection – If Receiver disputes Carrier’s claimed
bad-order or running maintenance and repairs for any or all Receiver Cars,
Receiver may, at its option, solicit the services of a qualified third party
mutually selected by Receiver and Carrier to inspect and evaluate any and all
bad-ordered and running repair claims of the Carrier. The AAR Mechanical
Division Arbitration Committee may serve as the third party inspector. The
decision of this third party shall be final and binding on all parties to this
Agreement.

     5.     Inspection and Repairs – When Carrier performs any maintenance and
repairs, Carrier agrees to provide a complete inspection of such Receiver Cars
and notify Receiver at that time of any additional observed problems that need
correction. If the facility at which Carrier performs this inspection cannot
handle such repairs, Carrier will transport the Cars to the nearest facility
located on Carrier lines that can perform such repairs or to the Receiver’s
maintenance facility at Receiver’s option at no cost to the Receiver.

ARTICLE IX – ROUTING

     All shipments transported hereunder shall be routed wholly over Carrier’s
line haul routes. Freight rates in this contract apply only via Carrier’s line
haul routes. However, in the case of a disability such as pronounced
congestion, washout, wreck or other condition preventing Carrier from moving a
Unit Train via Carrier’s Normal Routes, other than in the case of a Force
Majeure event as provided in Article XXII, Carrier will exert reasonable
efforts to select an alternative route or routes during the period of
disability and will observe and apply the Rates as provided herein. In the
event that the routing set forth in this Agreement become inoperable, or
otherwise impassable, except as excused under the provisions of Article XI, it
will be the sole responsibility of the Carrier to ensure the Receiver’s actual
contract tonnage guarantee tendered by Shipper under the provisions of this
Agreement is transported to the Facility at no additional cost to Receiver.

12

 

ARTICLE X – RECEIVER CAR MOVEMENTS

     For service under this Agreement, Carrier agrees to move any newly
acquired Receiver Cars from the point of purchase or lease to the Origin for
the first loading of Solid Fuel at no cost to the Receiver. This provision
shall apply to all new Receiver Cars acquired for service over the life of the
Agreement. Receiver will be responsible for any charges assessed by a railroad
other than Carrier.

ARTICLE XI– DIVERSION OR RECONSIGNMENT

     If Receiver wishes to divert or reconsign a shipment/consignment
transported under this Agreement, the charges and provisions published in
Tariff CSXT 8200 Series, rules and regulations, including amendments thereto
and reissues thereof, which would be applicable to such diversion or
reconsignment, absent this Agreement, shall apply.

ARTICLE XII – RATES AND INCENTIVES

     1.     Rates – Receiver agrees to pay Carrier the applicable Carrier Car and
Receiver Car Rates for the transportation and delivery of Solid Fuel from
Origins to Destination as of the Effective Date of this Agreement as set forth
in Appendix A as adjusted. These Rates apply on all Solid Fuel transported
under this Agreement and are applicable to shipments on the date shipments are
loaded at Origin. The Solid Fuel Rates shall be adjusted according to the
provisions of Article XIII of this Agreement.

     2.     Adding Rate Districts – Receiver and Carrier will mutually work
together to add new Origin Rate Districts as new sources of Solid Fuel are
identified.

     3.     Ash Waste Tonnage Declaration – In respect of the Contract Year ending
on December 31, 2003, Receiver declares that it will tender a minimum of 100
carloads of Ash Waste during the remainder of calendar year 2003 assuming a
contractual agreement has been signed by Receiver and an Ash Waste disposer on
the CSX system by October 1, 2003. Receiver shall pay Carrier Level 1 Rates
(which shall not be adjusted to Level 2 Rates) for period of the Effective Date
of this Agreement through the end of calendar year 2003, if no acceptable Ash
Waste disposal firm is found that is located on the CSX system. No later than
December 1, 2003, and each December 1 thereafter, Receiver will make a
declaration to Carrier of the total carloads of Ash Waste expected to be
Tendered during the following Contract Year. ICLP shall notify Carrier of any
revisions to the Declared Carloads prior to the start of a Contract Year as
soon as the need therefore becomes known. To the extent known and practicable
at

13

 

 the time. The Rates initially billed pursuant to Appendix A shall be based
on Shippers Declared Carloads.

		
	 	     4.     Rate Level Billing Adjustments

		
	 	     A. Receiver and Carrier acknowledge that they anticipate that
shipments will be billed at the Level I Rates set forth on Appendix A.
The Level II Rates set forth on Annex A shall only be applicable in the
event the Minimum Threshold of Ash Waste (as defined below) is not met.
In the event the actual Carloads of Ash Waste Tendered by Receiver do not
meet the Minimum Threshold of Ash Waste thereby resulting in the Level II
Rate being applicable to shipments in accordance with this Article XII
and Appendix A, then the charges for the Tons Tendered in the Contract
Year shall be recalculated at the Level II Rate. The total amount of the
difference between the transportation charges paid using the Level I Rate
and those so recalculated using the Level II Rate shall be recalculated
within 15 business days from the end of the Contract Year and shall be
paid by Receiver to Carrier via check or wire transfer within 45 days
after the recalculation is made.
	 
	 	     B. The minimum volume of Carloads of Ash Waste is, subject to the
remaining provision of this Article XII, anticipated to be 500 Carloads.
This projection of 500 Carloads is based on the assumption that the
Destination will consume 900,000 tons of Solid Fuel. In the event the
Destination does not consume 900,000 tons of Solid Fuel as a result of
dispatch by Florida Power & Light, Force Majeure or any other reason
outside the reasonable control of Receiver, such 500 Carloads shall be
reduced by one (1) Carload for each 1,000 Tons of Solid Fuel less than
900,000 Tons actually consumed by the Destination. The 500 Carloads of
Ash Waste, as adjusted above, is the “Minimum Volume of Ash Waste.”
	 
	 	     C. In the event that the Receiver does not declare to the Minimum
Volume of Ash Waste during any Contract Year, Level II Rates are applied
to shipments of Solid Fuel until the Minimum Threshold of Ash Waste is
satisfied for such Contract Year, then (i) Level I Rates shall apply for
the following Contract Year, (ii) Level I Rates shall apply for that
Contract Year as of the date of the first shipment after that which
resulted in the Minimum Threshold of Ash Waste being satisfied and
subsequent bills will be calculated using the Level I Rate; and (iii) the
charges for the Tons Tendered earlier in the Contract Year shall be
recalculated at the Level I Rate within 15 business days of

14

 

		
	 	when the Minimum Volume of Ash Waste is satisfied. The total amount
of the difference between the transportation charges paid using the Level
II Rate and those so recalculated using the Level I Rate shall be paid by
Carrier to Receiver via check or wire transfer within 45 days after the
recalculation is made.

ARTICLE XIII – RATE ADJUSTMENT

     1.     Procedure – All Solid Fuel charges contained herein shall be adjusted
quarterly, upward or downward, utilizing the adjustment index described in
Paragraph 2 of this Article XIII. Adjustments shall become effective January
1, April 1, July 1, and October 1 of each calendar year, with the first
adjustment to become effective on July 1, 2003. Carrier shall provide Receiver
with written notice of each adjustment along with supporting calculations, as
soon as the adjustment index information is available

     2.     Indices and Sources – The adjustment index is available from the
following sources:

          2.1 Components of Adjustment Index:

	 	 	 	 	 
	 	 	
2.1(A).
	 	     Rail Cost Adjustment Factor,
Adjusted for Productivity [RCAF(A)] – Source: 2.2(A)
	 	 	 	 	 
	 	 	
2.1(B).
	 	     Rail Cost Adjustment Factor,
Unadjusted for Productivity [RCAF(U)] – Source: 2.2(A)
	 	 	 	 	 
	 	 	
2.1(C).
	 	     Implicit Price Deflator for
Gross National Product, Gross National Product – Source
2.2 (B)
	 	 	 	 	 
	 	 	
2.1(D).
	 	     Implicit Price Deflator, Gross
National Product, Personal Consumption Expenditures –
Source: 2.2(B)
	 	 	 	 	 
	 	 	
2.1(E).
	 	     Producer Price Index, All
Commodities – Except Farm Products Table 8 – Source: 2.2(C)
	 	 	 	 	 
	 	 	
2.1(F).
	 	     Producer Price Index, Industrial
Commodities Less Fuel and Related Products and Power –
Source: 2.2(C)

15

 

          2.2. Sources of Components:

	 	 	 	 	 
	 	 	
2.2(A).
	 	     Ex Parte No. 290 (sub-No. 5),
Quarterly Rail Cost Adjustment Factor (the Sub-No. 5
Proceeding), disseminated by the American Association of
Railroads. This document includes both RCAF(A) and
RCAF(U).
	 	 	 	 	 
	 	 	
2.2(B).
	 	     United States Government
Printing Office, Economic Indicators, prepared for the
Joint Economic Committee by the Council of Economic
Advisors
	 	 	 	 	 
	 	 	
2.2(C).
	 	     Producer Prices and Price Index
Data, Monthly Report, U.S. Department of Labor, Bureau
of Labor Statistics, U.S. Government Printing Office

     The parties recognize that the RCAF(A) and RCAF(U) as promulgated
quarterly by the NSTB in the Sub-No. 5 Proceeding are each calculated in
accordance with the procedures and computational methodologies adopted by the
NSTB in Ex Parte 290 (Sub-No. 2), Railroad Cost Recovery Procedures, 1 NSTB. 2d
207 (1984) [for RCAF(U)] (the Sub-No. 2 Proceeding), and in Ex Parte 290
(Sub-No. 4), Railroad Cost Recovery Procedures – Productivity Adjustment, 5
NSTB 2d 434 (1989), aff’d sub nom. Edison Electric Institute, et al. v. NSTB,
969 F.2d 122 (D.C. Cir. 1992) [for RCAF(A)] (the Sub-No. 4 Proceeding). The
parties agree that the RCAF(A) and RCAF(U) promulgated by the NSTB shall be
used in calculating rate adjustments pursuant to this Article XIII only so long
as any changes, modifications or alterations in the procedures and
computational methodologies, which are used to derive the RCAF(A) and RCAF(U)
are made in accordance with the requirements of 5 USC 551-706 (Administrative
Procedure Act) and/or other governing statute. If the RCAF(A) and RCAF(U) or
the procedures and computational methodologies used to derive the RCAF(A) and
RCAF(U) are changed by any means other than as specified above, then Paragraph
9 of this Article XIII shall be applicable. The thirty (30) days specified
therein shall commence from date any such change is publicly announced by the
NSTB by a Notice, a Decision, or an Order.

     3.     Adjustment Index

          A. The amount of each quarterly adjustment for Carrier and Receiver Car
Rates and other charges referencing this Article

16

 

           XIII shall be determined according to the following weighted average
index:

	 	 	 	 	 	 	 	 	 
	 	 	 	
25.0	%	 	–
	 	RCAF(A)
	 	 	 	 	 	 	 	 	 
	 	 	 	
25.0	%	 	–
	 	RCAF(U)
	 	 	 	 	 	 	 	 	 
	 	 	 	
12.5	%	 	–
	 	Producer Price Index (All Commodities – except

Farm Products – Table 8)
	 	 	 	 	 	 	 	 	 
	 	 	 	
12.5	%	 	–
	 	Gross National Product – Implicit Price

Deflator
	 	 	 	 	 	 	 	 	 
	 	 	 	
12.5	%	 	–
	 	Personal Consumption Expenditures – Implicit

Price Deflator
	 	 	 	 	 	 	 	 	 
	 	 	 	
12.5	%	 	–
	 	Producer Price Index – Industrial Commodities
Less Fuel and Related Products and Power.
	 	 	 	

	 	 	 	 	 
	 	 	 	
100.0	%	 	 	 	 

     4.     Adjustments – The quarterly adjustment to the Rates in Article XII and
other adjustable items within the Agreement shall be calculated for each
component listed below by comparing the Numerator Index Figure with the
Denominator Index Figure first published on the dates indicate below:

	 	 	 	 	 	 	 
	 	 	 	 	Publishing Date	 	Publishing Date
	Adjustment	 	 	 	Numerator	 	Denominator
	Date	 	Index	 	Index Figure	 	Index Figure
	
	 	
	 	
	 	

	January 1	 	
2.1(A), 2.1(B),
	 	Quarter Ended
	 	Quarter Ended
	 	 	
2.1(C), 2.1(D)
	 	Previous Sept.
	 	Previous June
	 
	 	 	
2.1(E), 2.1(F)
	 	September
	 	June
	 
	April 1	 	
2.1(A), 2.1(B),
	 	Quarter Ended
	 	Quarter Ended
	 	 	
2.1(C), 2.1(D)
	 	Previous Dec.
	 	Previous Sept.
	 
	 	 	
2.1(E), 2.1(F)
	 	December
	 	September
	 
	July 1	 	
2.1(A), 2.1(B),
	 	Quarter Ended
	 	Quarter Ended
	 	 	
2.1(C), 2.1(D)
	 	Previous March
	 	Previous Dec.
	 
	 	 	
2.1(E), 2.1(F)
	 	March
	 	December
	 
	October 1	 	
2.1(A), 2.1(B),
	 	Quarter Ended
	 	Quarter Ended
	 	 	
2.1(C), 2.1(D)
	 	Previous June
	 	Previous March
	 
	 	 	
2.1(E), 2.1(F)
	 	June
	 	March

     5.     Index Reference Period – Quarterly adjustment of the Rates, subject to
this Agreement, shall occur when there is a change in the weighted average
index described in Paragraph 3 of this Article.

     6.     Quarterly Percent Change Factor – The product of the weighted average
for each component set forth in Paragraph 3 of this Article times the percent
increase (or decrease) in such component over the prior quarter as described in
Paragraph 4 of

17

 

this Article shall be called the Adjusted Component Average.
The Adjusted Component Average for each component shall be summed and the
resultant sum will be hereinafter called the Weighted Total. The Weighted
Total shall be added to the weighted average index for the prior quarter (Prior
Quarter Weighted Average Index) and the resultant sum will be called the
Current Quarter Weighted Average Index. The Current Quarter Weighted Average
Index shall be divided by the Prior Quarter Weighted Average Index and the
resultant quotient will be hereafter called the Quarterly Percent Change
Factor. The Quarterly Percent Change Factor for Carrier Cars shall be
multiplied by the applicable Carrier Car Rates in Appendix A, as adjusted
according to this Article, and by the other applicable charges contained herein
to determine the Carrier Car Rates and other adjustments as of the current
quarter. The Quarterly Percent Change Factor for Receiver Cars shall be
multiplied by the applicable Receiver Car Rates in Appendix A to determine the
Receiver Car Rates as of the current quarter.

     7.     Index Publication – If the publisher of any index used in the
adjustment index or a successor organization ceases to publish any index series
required for the calculations outlined in this Article, or materially alters
the methodology by which the index or indices are derived, the parties shall
agree whether to keep using the index or to substitute a different method that
most closely matches the economic structure of the discontinued or altered
index or indices to be used for adjustments for the remainder of the Contract
Term. If within ninety (90) days after the cancellation or alteration of the
index or indices, the parties are unable to reach agreement on a replacement
index or indices, then the Producer Price Index (All Commodities except Farm
Products – Table 8) published by the U.S. Bureau of Labor Statistics will be
used until a mutually acceptable replacement index is selected.

     8.     Contingency if RCAF is Rebased by the NSTB – In the event any
subsequent RCAF(A) or RCAF(U) is rebased by the NSTB, the Quarterly Percent
Change Factor for the affected quarter shall be determined by using the RCAF(A)
or RCAF(U) as if one or both, as the case may be, had not been rebased.

     9.     Limit on Quarterly Percent Change Factor – For each Contract Year the
upward or downward adjustment of the Rates shall be limited to 2.2% per
quarter, or 9.52% per Contract Year. These limits reflect a “cap” on the
upward or downward adjustment of the Rates for any one (1) quarter of the
affected year. If the Quarterly Percent Change factor reflects a change equal
to or less than the quarterly cap, then the Rates will be adjusted accordingly.
If the Quarterly Percent factor reflects a change

18

 

exceeding the quarterly cap,
then the actual adjustment to the Rates will be limited to the then effective
quarterly cap.

ARTICLE XIV – RECEIVER VOLUME GUARANTEE

     1.     During each Contract Year, Receiver agrees to tender to Carrier for
transportation pursuant to this Agreement 95% of all Solid Fuel received at
ICLP (by all transportation modes) by Receiver.

ARTICLE XV – DEAD FREIGHT FOR SOLID FUEL SHORTFALL

     1.     Rate Assessed on Tonnage Shortfall – If, in any Contract Year, Receiver
fails to tender the Receiver Volume Guarantee amount of Solid Fuel as stated in
Article XIV, Receiver agrees to pay Carrier Dead Freight for that Contract
Year. Dead Freight shall be the tonnage shortfall multiplied by $5.39 per Ton.
Receiver agrees such Dead Freight rates are reasonable and will not be
considered a penalty. Carrier agrees that (a) notwithstanding anything herein
to the contrary, such Dead Freight payments shall be Carrier’s only remedy for
any shortfall in the Receiver Volume Guarantee amount, and (b) Receiver’s
failure to tender the Receiver Volume Guarantee amount shall not be a breach or
default of this Agreement. Dead Freight charges shall be subject to adjustment
as provided in Article XIII.

ARTICLE XVI – UNIT TRAIN SHIPMENT DETENTION PROVISIONS

     1.     Carrier’s Right to Detention Charges at Destination (ICLP) – Receiver
is responsible for detention charges, if any, which are assessed at
Destination. Receiver will pay Carrier detention charges which accrue at
Destination from Receiver in accordance with detention terms, conditions and
charges set forth in Tariff CSXT 8200 Series. However, Receiver shall be
allowed twelve (12) hours for unloading a Unit Train.

ARTICLE XVII – COAL WEIGHTS AND WEIGHING PROVISIONS

     1.     Weighing Charges – The Rates in Appendix A do not include the service
of weighing by Carrier. Weights for the assessment of the Solid Fuel freight
charges will be determined by scales located at Origin. Such scales must be
installed, tested and maintained in accordance with the then current edition of
the AAR Scale Handbook. Any “Batch” weighing system at Origin must be capable
of loading each car to plus or minus one percent (1%) of its load limit
capacity. There shall be no separate Carrier weighing charge applicable to
Solid Fuel moving under the conditions of this Agreement unless those scales
located at the involved Origin or ICLP are either inaccurate or inoperable. In
that event those scales located at the Origin or ICLP are either

19

 

inaccurate or
inoperable, Receiver may request the Carrier to weigh the Cars along the Normal
Route of movement at the
applicable tariff weighing charges set forth in Tariff CSXT 8200 Series.

     2.     Estimated Weights – In the event accurate actual weights are
temporarily unavailable, freight charges will be determined by the average of
the actual weights of each Car in the five most recent accurately weighed
loaded Trains from the Origin. The average weight per car would then be
multiplied by the actual number of unweighed Cars in the unweighed Train or
Trains.

     3.     Determination of Individual Car Weights – In the event that actual per
Car weights are not available, per car weights will be determined by dividing
the actual weight of the Train by the number of Cars in the Train.

ARTICLE XVIII – ROUNDING

     Unless otherwise provided, all computations made pursuant to this
Agreement shall be calculated to the second (2nd) decimal place. If, in the
performance of a calculation, the number in the third (3rd) decimal place is
equal to or greater than five, the second (2nd) number after the decimal place
shall be raised to the next higher number. Otherwise, the number in the second
(2nd) decimal place shall not change.

 ARTICLE XIX – PAYMENT AND CREDIT PROVISIONS

     1.     Application of Rates – Rate Levels will be determined in accordance
with Appendix A. The date the Consignment was tendered to Carrier, the loading
time and Train size at Origin shall determine the Rate.

     2.     Invoice and Payment. At the end of a designated Business Week (example
Thursday through Wednesday) Carrier will transmit an invoice within twenty-four
(24) hours to Receiver. ICLP must identify any disputes within forty-eight
(48) hours of receipt of invoice from Carrier. Payment will be in accordance
with CSXT ACH DEBIT Procedures. Carrier will initiate electronic funds
transfer debits against ICLP asset account fourteen (14) days after receipt of
invoice, in connection with freight and other charges billed by Carrier, and
ICLP authorizes the financial institution named to credit such entries directly
to Carrier’s account.

     3.     Payments to Receiver – Carrier agrees to make any payment due to
Receiver under this Agreement to the following account:

     The Bank of New York Trust Company of Florida, NA

     Towermarc Plaza

     10161 Centurion Parkway

     Jacksonville, FL 32256

     ABA# 021000018

     GLA# 111-565

     TAS # 427385

     Indiantown Tax Revenue Account

     ATTN: Trustee

20

 

ARTICLE XX – CLAIMS AND RESPONSIBILITY

     1.     Claims Procedure – Carrier shall provide oral or electronic
notification to Receiver of the loss or damage of Receiver’s Solid Fuel and/or
equipment as soon as practical (within forty-eight (48) hours after such
occurrence. Written notification of the damage, derailment, or destruction of
such Receiver Cars and/or loss of Solid Fuel will be furnished to Receiver
within five (5) days and will be documented according to Article VII, paragraph
4.

     2.     Written
Detail – Claims against Carrier for loss of or damage to
Receiver Cars, Solid Fuel or other property and claims against Receiver for
loss of or damage to Carrier’s locomotives, or Cars, shall be made in writing
and supported by required documentation. Such claims shall be processed,
investigated, resolved and paid within ninety (90) days of Receiver’s notice.
Claims for loss and/or damage to Solid Fuel must be filed in writing with
Carrier by Receiver within nine (9) months from date of delivery or expected
date of delivery, and must be properly supported by copy of shipping document,
evidence of Origin, condition, evidence of value and evidence of loss. Any
suit must be filed within two (2) years from the day when notice in writing is
given by Carrier to Receiver that Carrier has disallowed the claim or any part
or parts thereof specified in the notice.

     3.     Application of AAR Interchange Rules – Receiver and Carrier shall abide
by the AAR Interchange Rules (including amendments thereto) with respect to all
matters therein contained, including without limitation, responsibility for
loss of damage to Receiver Cars, and standard charges for repairs to Receiver
Cars not specifically provided for in this Agreement. If, however, such Rules
and this Agreement conflict, the terms and conditions of this Agreement shall
govern.

     4.     Uniform Bill of Lading – Claims for loss of or damage to the Solid Fuel
to be transported hereunder shall be subject to all applicable provisions of
the Uniform Straight Bill of Lading or Tariff UFC 6000-F, including amendments
thereto and reissues thereof. If, however, such provision and this Agreement
conflict, then the provision of this Agreement shall govern.

21

 

     5.     Carrier’s Liability for Solid Fuel – The liability of Carrier for loss
of or damage to Solid Fuel transported under
this Agreement shall be governed by the provisions of 49 USC Section
11707, limited to the extent allowed by law by the following:

	 	(a)	 	The combined liability of Carrier, its
agents, servants and employees to the Receiver for such
loss or damage shall be limited to the invoice value of
such Solid Fuel plus any direct cost incurred by Receiver.
	 
	 	(b)	 	No punitive or consequential damages may be
sought or awarded for such loss or damage by any Party to
this Agreement.

ARTICLE XXI – DEFAULT AND REMEDIES

     1.     Notification Procedures – It is the intent of the parties to be bound
by the terms and conditions of this Agreement. When in the opinion of either
party to this Agreement, the other is in breach of this Agreement that could
become a default as provided in paragraph 2 of this Article XXI, the aggrieved
party shall notify the other party in writing as to: 1) the nature of the
breach; 2) the date upon which the breach appears to have commenced; 3) the
action necessary to remedy the breach; and 4) the estimated dollar amount of
injury to the aggrieved party as a result of the breach.

     2.     Time
Limit – If the Carrier or Receiver is in breach of the provisions
of this Agreement (other than as a result of a Force Majeure event as provided
in Article XXII), including without limitation for failure to tender or
transport, as the case may be, Solid Fuel in accordance with this Agreement,
and such breach is not cured within a period of thirty (30) days after written
notice thereof, then such party shall be in default hereunder and the damages
specified in paragraph 3 of this Article XXI shall apply.

     3.     Damages
– In the event of a default as provided in paragraph 2 of this
Article XXI, damages shall be as negotiated by the parties or, in the event
that the parties can not reach agreement within forty-five (45) days from the
expiration of the 30-day period provided in paragraph 2 of this Article XXI (or
such other period as the parties may agree), then the parties shall have
recourse to any rights and remedies provided under applicable law.

22

 

     4.     Remedies In the event of the occurrence of a Default the non-defaulting
party at its option may in addition to, and
without waiving any rights or remedies it may have under the Uniform
Commercial Code, or in equity or at law:

	 	(a)	 	Cancel this Agreement as permitted by applicable law, with
respect to the defaulting party, whereupon all of the obligations of
the non-defaulting party shall cease; or
	 
	 	(b)	 	Suspend performance under this Agreement until it receives
adequate assurance from the defaulting party that it will perform
its obligations hereunder. In no event shall either party be
liable for special, consequential, indirect or punitive damages as
a consequence of a Default.

ARTICLE XXII – FORCE MAJEURE

     1.     Definition of Force Majeure – The term “force majeure” or “Force
Majeure” means any event which is beyond the reasonable control of and occurs
without fault or negligence of the party asserting the existence and effect of
such disabling condition, and which wholly or partially prevents the
performance of any of the duties and responsibilities of that party asserting
the force majeure (other than obligations of such party to pay or expend any
monies due to or owing to the other party under this agreement for or in
connection with the performance or such party’s duties and responsibilities
under this Agreement prior to the occurrence of the event of Force Majeure)
provided that the affected party uses reasonable efforts to mitigate or remedy
its inability to perform hereunder. Force Majeure events may include, but are
not limited to, acts of God; acts of the public enemy; fire; flood; high water;
ice; washout; explosion or other serious casualty; unusual and extremely severe
weather; war (whether declared or not); warlike circumstances; mobilization;
revolution; riot or civil commotion; legal intervention; regulations or order
of governmental authority; strike; lockout or other labor disputes (labor
disputes may be resolved solely at the discretion of the party having the
difficulty); or breakdowns of or damage to plant, equipment, track or
facilities (including rail loading and unloading facilities and equipment).

     2.     Force Majeure Occurrences Affecting Other Parties – The failure, as a
result of a Force Majeure event as provided herein, of the Supplier to deliver
Solid Fuel pursuant to Receiver’s Agreement or commitment between the Receiver
and Supplier shall constitute an event of Force Majeure assertable by Receiver
against Carrier.

     3.     Notice and Relief Under Force Majeure – If, because of an event of
Force Majeure, either Receiver or Carrier is unable to

23

 

carry out its
obligations to the other party under this agreement, the affected party must
give the other party verbal
notice within forty-eight (48) hours and written notice of such Force
Majeure within five (5) days, describing the event of Force Majeure, the
expected duration of the event and describing that portion of the affected
party’s performance it anticipates will be rendered impossible by the event of
Force Majeure. Only after such notice is given will the obligations of both
parties under this Agreement be totally excused to the extent, but only to the
extent, made necessary by such Force Majeure and only during the continuance of
the event. Each party agrees to use its commercially reasonable best efforts
to eliminate the effect of such Force Majeure with all reasonable dispatch, and
neither party shall be liable to the other for loss, damage or equipment
detention caused by such Force Majeure. During a disability period caused by
Force Majeure that affects the Receiver Volume Guarantee percentage requirement
as provided in Article XIV (e.g., a Force Majeure event that prevents rail
delivery of Solid Fuel but permits Indiantown to continue operation such
Receiver Volume Guarantee percentage requirement shall be reduced by the
percentage of Tons or portions thereof not transported hereunder during the
period affected by the Force Majeure event.

ARTICLE XXIII – ABANDONMENT

     1.     Abandonment of Origins – Except as provided in this Article, any origin
that is abandoned during the term of this Agreement is automatically deleted
from this Agreement, without further liability to any party. Carrier agrees to
withhold abandonment of Receiver’s Origins subject to the conditions set forth
in XXIII.2 below.

     2.     Rate Relief Due to Abandonment – In the event that Carrier abandons an
Origin subject to the provisions of Paragraph 1 (above), all tonnage committed
to be shipped from that Origin may be shipped from a replacement Origin at the
same Rate as the abandoned Origin. Such replacement Origin shall be in the
same Rate District as the abandoned Origin if possible.

ARTICLE XXIV – ADJUSTMENT OF MISCELLANEOUS CHARGES

     Carrier’s standard charges are published in Tariff CSXT 8200 Series as of
the Effective Date of this Agreement and are not subject to the provisions of
Article XIII and will be adjusted only in the event that Carrier adjusts and
publishes its standard tariff charges in Tariff CSXT 8200 Series.

24

 

ARTICLE XXV – TONNAGE CERTIFICATION

     1.     Not later than thirty (30) days after the end of the prior Contract
Year, Receiver shall send a written certificate to Carrier reporting the
following:

	 	 	(a) the total number of Tons of Solid Fuel which Receiver shipped to ICLP
via all transportation modes from all originating points in the
applicable Contract Year (whether an Origin listed under this Agreement
or otherwise); and
	 
	 	 	(b) the number of Tons of Solid Fuel transported to the ICLP during the
applicable Contract Year by means other than Carrier as a result of Force
Majeure or Carrier’s inability or other failure to transport Solid Fuel;
and
	 
	 	 	(c) the applicable Receiver Volume Guarantee percentage as provided in
Article XIV; and
	 
	 	 	(d) the number of Tons of Solid Fuel which Receiver shipped to ICLP
during the applicable Contract Year from all originating points (whether
an Origin listed under this Agreement or otherwise) that are subject to
the Receiver Volume Guarantee percentage requirements set forth in
Article XIV for the applicable Contract Year (((a)*(c)) - (b)); and
	 
	 	 	(e) the number of Tons of Solid Fuel which Receiver Tendered to Carrier
for transport to ICLP during the applicable Contract Year and(f) the
number of shortfall Tons of Solid Fuel transported to ICLP by means other
than Carrier that are subject to the provisions of paragraph 1 of Article
XV ((d) - (e)); and
	 
	 	 	(g) the Dead Freight rate for Solid Fuel shortfall specified in paragraph
1 of Article XV ; and
	 
	 	 	(h) Dead Freight amount pursuant to paragraph 1 of Article XV ((f)*(g)).

     2.     For purposes of auditing Receiver’s Tonnage Certification and Receiver
Volume Guarantee percentage requirement, a mutually selected third party shall
have access, during normal business hours and with reasonable advanced notice,
to the records of Carrier and Receiver to determine the accuracy of the records
and to certify tonnage’s at the end of each Contract Year. Records will be
available for Audit for two (2) years from the end of the Contract Year in
question. Such records are to include, but are not limited to, weight tickets,
vendor invoices, which would provide the necessary information for tonnage
certification.

25

 

ARTICLE XXVI – NOTICES

     All notices under this Agreement (unless specifically provided otherwise),
shall be in writing, and shall be sent by first-class mail and facsimile
transmission addressed as follows:

     Receiver:

     By overnight delivery service, not including U.S. mail:

     Indiantown Cogeneration, L.P.

     13303 S.W. Silver Fox Lane

     Indiantown, FL 34956-9704

     Attn: General Manager

     Telephone No.: (772) 597-6500

     Fax No.: (772) 597-6520

     By U.S. mail:

     Indiantown Cogeneration, L.P.

     P.O. Box 1620

     Indiantown, FL 34956-9704

     Attn: General Manager

     Telephone No.: (772) 597-6500

     Fax No.: (772) 597-6520

          Indiantown

     with a copy to:

          PG&E National Energy Group

          7600 Wisconsin Avenue

          Bethesda, MD 20814

          Attn: General Counsel

          Telephone No.: (301) 280-6800

          Fax No.: (301) 280-6319

     Carrier:

          Director Utility Coal

          CSX Transportation

          500 Water Street ( J-842 )

          Jacksonville, FL 32202

          Telephone: 904-359-3153

          Fax Number 904 359-3341

     Lender:

          The Bank of New York Trust Company of Florida N. A.

          Towermarc
Plaza, 2nd Floor

          10161 Centurion Parkway

          Jacksonville, FL 32256

26

 

or such other address as either party may designate in writing to the other.

ARTICLE XXVII – CORPORATE AUTHORITY

     Each party represents to the other that it has full corporate authority
and the necessary approval to enter into and perform this Agreement in
accordance with it’s terms.

ARTICLE XXVIII – ASSIGNMENT

     1.     Neither party may assign its rights under this Agreement without the
non-assigning party’s written approval which shall not be unreasonably
withheld. However, notwithstanding the above, Carrier may assign or delegate
its rights, duties, obligations or interests in and to this Agreement to a
subsidiary, affiliate or sister corporation; provided, however, that Carrier
shall not be thereby relieved of its responsibilities or obligations hereunder
without the written consent of Receiver, which consent shall not be
unreasonably withheld. Furthermore, notwithstanding the above, Receiver may
assign in whole or delegate in part its rights, duties, obligations or
interests in and to this Agreement, parent, subsidiary, affiliate or sister
corporation, provided that Receiver shall not be thereby relieved of its
responsibilities or obligations hereunder without the written consent of
Carrier, which consent shall not be unreasonably withheld. Receiver shall have
the right, at its sole discretion, to withdraw the assignment of this Agreement
from a third party Shipper. This Agreement shall likewise apply to any
successor in interest to either Carrier or Receiver. In addition, Receiver,
without the need for consent from Carrier, may also assign, pledge, or transfer
its rights under this Agreement as security for financing; provided, however,
that Receiver shall not be thereby relieved of its responsibilities or
obligations hereunder until such time as any such assignee, pledge or
transferee shall notify Carrier that it has exercised its rights in respect of
such assignment, pledge or transfer.

     2.     Exercise of Rights by Receiver’s Lenders. Receiver shall provide
notice to Carrier of any assignment by Receiver of this Agreement to its
lenders or any agent acting on their behalf as security for financing pursuant
to the last sentence of Article XXIII.1. The Carrier agrees to provide a copy
of any default notice delivered to Receiver hereunder to the Receiver’s lenders
or any agent acting on their behalf concurrently with the delivery of such
notice to the Receiver. Carrier agrees that Receiver’s lenders or any agent
acting on their behalf shall have a reasonable opportunity after receipt of
notice of default to

27

 

remedy the default, or cause the same to be remedied.
Upon
notice by Receiver’s lenders to Carrier that such lenders are exercising
their rights in connection with such assignment under any relevant security
documents between Receiver and its lenders, (i) such lenders and any agent
acting on their behalf shall be entitled to exercise any and all rights of, and
may, at its option, elect to perform all obligations of, the Receiver under
this Agreement (or cause a receiver to be appointed to do so), and (ii) such
lenders may assign their security interests in this Agreement, enforce their
security interests in this Agreement by any lawful means, foreclose their
security interest on this Agreement, and assign the rights, interests and
obligations of Receiver under this Agreement to any purchaser or transferee of
Receiver’s electric generating facility, if such purchaser or transferee shall
assume all of the obligations of Receiver under this Agreement. Receiver’s
lenders shall not be liable to perform any of Receiver’s obligations under this
Agreement in the absence of an express agreement with respect to such
assumption. In the event that this Agreement is rejected by a trustee or
debtor-in-possession in any bankruptcy or insolvency proceeding involving
Receiver, and if within ninety (90) days after such rejection, Receiver’s
lenders or any agent acting on their behalf or any assignee or transferee
thereof shall so request and shall certify in writing to the Carrier that it
intends to perform the obligations of Receiver under this Agreement, the
Carrier will execute and deliver to such lenders or their agent or such
assignee or transferee a new agreement, pursuant to which the Carrier shall
agree to perform the obligations contemplated to be performed by the Carrier
under this Agreement and which shall be for the balance of the remaining term
under this Agreement before giving effect to such rejection and shall contain
the same conditions, agreements, terms, provisions and limitations as this
Agreement (except for any requirements which have been fulfilled by Receiver
prior to such rejection). The parties hereto acknowledge and agree that any
material amendment of this Agreement will not be effective unless Carrier has
given Receiver’s lenders written notice thereof as provided in paragraph 3 of
this Article XXVIII together with a copy of such amendment. Such lenders (or
an agent acting on their behalf) shall have ten (10) business days after the
delivery of such notice to provide notice in writing to Carrier, with a copy to
Receiver, of approval (which approval shall not be unreasonably withheld) or
disapproval of such amendment. If the amendment is thereby disapproved, then
such amendment shall not go into effect. If such lenders (or an agent acting
on their behalf) do not respond in writing to Carrier and Receiver within such
period of ten (10) business days, the amendment shall be deemed approved by the
lenders, and Carrier and Receiver may enter into and effect the amendment with
no further requirement for consent or approval of the lenders. The provisions
of this Article XXIII.2

28

 

are for the benefit of Receiver’s lenders and may be
separately
enforced by such lenders or any agent acting on their behalf against
Carrier. Carrier and Receiver shall also execute such consent and agreement or
similar documents with respect to a collateral assignment hereof, as the
Financing Parties may reasonably request in connection with the Financing
Documents.

ARTICLE XXIX – CAPTIONS

     The captions and headings in this Agreement are for the convenience of
reference only and shall not define nor limit any of the terms or provisions
thereof.

ARTICLE XXX – APPLICABLE LAW

     To the extent not governed by applicable Federal Statute, the laws of the
State of Florida shall govern the validity, construction and performance of
this Agreement and all controversies and claims arising there under.

ARTICLE XXXI – NO WAIVER OF PERFORMANCE

     The failure of any party to insist in any one or more instances upon
performance of any of the terms, covenants or conditions of this Agreement
shall not be construed as a waiver or relinquishment of such performance of any
such term, covenant or condition, and each party’s obligation with respect to
such future performance shall remain in full force and effect.

ARTICLE XXXII – COUNTERPARTS

     This agreement may be executed in counterparts, each of which shall be
deemed an original.

ARTICLE XXXIII – CONFIDENTIALITY

     A party shall not disclose to any third party the terms of this Agreement
or any information received from the other party and designated as proprietary
or confidential (“Confidential Information”) except to comply with any
applicable law, order, or regulation; provided, that each party shall notify
the other party in writing of any proceeding of which it is aware that may
result in disclosure of Confidential Information. The parties shall be
entitled to all remedies available at law or in equity to enforce, or seek
relief in connection with this confidentiality obligation. Notwithstanding the
foregoing, a party may disclose Confidential Information to those of its
officers, directors, employees, affiliates, investors or potential investors,
consultants, lenders (and such lenders’ counsel and consultants), counsel,
accountants, power purchasers,

29

 

or permitted assignees (or delegees) who have a
need or legal
right to know such Confidential Information and who have been made aware
of and have acknowledged the obligation of confidentiality hereunder. The
foregoing obligations of the receiving party shall terminate if and when, but
only to the extent that, the Confidential Information (i) is or shall become
publicly known through no fault of the receiving party, (ii) is in the
receiving party’s possession as supported by written records prior to receipt
of the Confidential Information from the disclosing party, or (iii) is
disclosed to the receiving party by a third party who is legally free to
disclose the Confidential Information.

ARTICLE XXXIV – ENTIRE ROUTE

     The Receiver may not use this Agreement as a proportional rate or as part
of the transportation of the Solid Fuel transported hereunder in a through
route without the written permission of the Carrier.

ARTICLE XXXV – RECORDS INSPECTION

     In addition to auditing tonnage to monitor Receivers compliance with its volume
guarantee, each party shall have access during normal business hours with
reasonable advance notice for a period not to exceed seven (7) years from the
Contract Year in question to the records of the other party to determine
accuracy of the records and to certify tonnages at the end of the Contract
Year. These records are to include, but not limited to weight tickets, vendor
invoices, mine manifest tickets, which would provide the necessary information
for tonnage certification.

ARTICLE XXXVI – ASSUMPTION OBLIGATION & REFUND PAYMENT

     In further consideration of this Agreement, within ten (10) days after the
effective date of this Agreement, Carrier will rebate to Receiver the
difference between the Tariff Rates and System Car Rates shown in Appendix A
for all trains tendered by Carrier to Receiver for the period of April 1, 2003
through the effective date of this Agreement (the “Gross Rebate”) less the
amount of $1,112,960.54 (the “Net Rebate”). Receiver is permitting Carrier
to rebate the Net Rebate, rather than the Gross Rebate, (i) to exercise
certain of the Receiver’s rights under that certain PRIVATE CAR USE, DEMURRAGE
AND GUARANTEE AGREEMENT, CSXT-C-04339 (the “Private Car Agreement”), and (ii)
as consideration for the assignment by Carrier to Receiver of all of Carrier’s
claims and rights against Lodestar Energy, Inc. (“Lodestar”)for amounts due
under the Private Car Agreement and any other contract, agreement, or invoice.
Following the payment

30

 

of the Net Rebate to Receiver, all obligations of Carrier
to
Receiver under the Private Car Agreement and all obligations of Receiver
to Carrier under the Private Car Agreement shall be terminated, and all of
Carrier’s claims and rights against Lodestar for amounts due under the Private
Car Agreement and any other contract, agreement or invoice shall thereupon be
assigned to the Receiver pursuant to an assignment agreement in form and
substance reasonably acceptable to Receiver and containing customary
representations and warranties as to the validity of Carrier’s claims against
Lodestar and similar matters. Receiver and Carrier acknowledge and agree that
performance under Article XXXV and execution of this Contract fully satisfies
and discharges the obligations of Carrier to Receiver and Receiver to Carrier
under the Private Car Agreement, but expressly acknowledge and agree that such
performance and execution neither satisfies nor discharges or in any way
affects the Carrier’s claims and rights against Lodestar under the Private Car
Agreement or any other contract, agreement, or invoice, all of which claims and
rights are being assigned to Receiver as described above.

ARTICLE XXXVII – RELATIONSHIP WITH FP&L

     Carrier agrees that it will not pursue a claim against Florida Power &
Light Company (“FP&L”) for any indirect, incidental or consequential damages
that Carrier may incur from the performance, nonperformance or delay in the
performance by FP&L of its obligations in the Agreement for the Purchase of
Firm Capacity and Energy between Receiver and FP&L dated March 31, 1990.
Nothing in this Article XXXVII shall affect or limit Carrier’s rights and
remedies under this Agreement against Receiver or any successor or assignee of
Receiver under this Agreement.

31

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date set forth above.

	 	 	 	 	 	 	 
	 	 	 	 	CSX Transportation, Inc.
	Witness	 	 	 	 
	BY:	 	
\s\ MIKE SULLIVAN
	 	BY:
	 	\s\ CHRIS JENKINS
	 	 	

	 	 	 	

	 	 	 	 	Title: Senior VP Coal Service Group
	 
	Indiantown	 	Indiantown Cogeneration, L.P.,
	 
	Witness	 	 	 	 
	BY:	 	
\s\ PAULA FOSTER
	 	BY:
	 	\s\ F. JOSEPH FEYDER
	 	 	

	 	 	 	

	 	 	 	 	Title: Vice President

32

 

APPENDIX A

INDIANTOWN CSXT-C-82552

CSXT SOLID FUEL RATES TO INDIANTOWN

Level I Rates

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	24 Hr Load	 	4 Hr Load
	 	 	System	 	Private	 	Private	 	System	 	Private	 	Private
	 	 	RR	 	Aluminum	 	Steel	 	RR	 	Aluminum	 	Steel
	 	 	95 Car	 	95 Car	 	95 Car	 	95 Car	 	95 Car	 	95 Car
	Origin District
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	JM-Harlan
	 	$	22.54	 	 	$	20.44	 	 	$	21.74	 	 	$	22.19	 	 	$	20.09	 	 	$	21.39	 
	Hazard / Elkhorn
	 	$	23.64	 	 	$	21.54	 	 	$	22.84	 	 	$	23.34	 	 	$	21.24	 	 	$	22.54	 
	W. Kentucky
	 	$	23.64	 	 	$	21.54	 	 	$	22.84	 	 	$	23.34	 	 	$	21.24	 	 	$	22.54	 
	Clinchfield
	 	$	21.99	 	 	$	19.89	 	 	$	21.19	 	 	$	21.68	 	 	$	19.58	 	 	$	20.88	 
	Southwest VA
	 	$	21.99	 	 	$	19.89	 	 	$	21.19	 	 	$	21.68	 	 	$	19.58	 	 	$	20.88	 
	Big Sandy
	 	$	23.09	 	 	$	20.99	 	 	$	22.29	 	 	$	22.73	 	 	$	20.63	 	 	$	21.93	 
	Kanawha
	 	$	24.19	 	 	$	22.09	 	 	$	23.39	 	 	$	23.86	 	 	$	21.76	 	 	$	23.06	 
	Alabama
	 	$	19.29	 	 	$	17.19	 	 	$	18.49	 	 	$	18.93	 	 	$	16.83	 	 	$	18.13	 
	Gauley North
	 	XXX	 	XXX	 	XXX	 	$	27.38	 	 	$	25.28	 	 	$	26.58	 
	Fairmont
	 	XXX	 	XXX	 	XXX	 	$	25.58	 	 	$	23.48	 	 	$	24.78	 
	MGA
	 	XXX	 	XXX	 	XXX	 	$	26.01	 	 	$	23.91	 	 	$	25.21	 
	Origin Specific
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Charleston SC*
	 	$	20.22	 	 	$	18.12	 	 	$	19.42	 	 	XXX	 	XXX	 	XXX
	Mobile, AL*
	 	$	21.72	 	 	$	19.62	 	 	$	20.92	 	 	XXX	 	XXX	 	XXX

 *The Charleston, SC and Mobile, AL rates will remain within Appendix A through 5/31/06. These rates wil be re-negotiated effective 6/1/06.
These rates are void and expired if not used within a rolling 18 month period starting with the Effective Date of this Contract.

Notes:

**Private Aluminum Rates apply to shipments in Receiver Cars that meet a cubical capacity as specified in Article V.1. and a maximum tare weight of 48,000
lbs. and are designated as aluminum cars. Private Steel Rates apply to Receiver Cars not meeting these specifications, regardless of the manufactures’s
railcar composition desigination

For shipments of Synthetic fuel (STCC-29-911-91), the above rates will be increased by $0.75/Net Ton

LEVEL II RATES

If pursuant to Article XII Level II Rates are to apply, such Level II Rate shall equal the Level I Rate determined above plus $0.25/NT.

33exv4w1

 

Exhibit 4.1

THIRD SUPPLEMENTAL INDENTURE

Dated as of August 14, 2003

among

GENERAL DYNAMICS CORPORATION

and

THE GUARANTORS

and

THE BANK OF NEW YORK,

as Trustee

to the

INDENTURE

Dated as of August 27, 2001

Providing for the issuance of

4.500% Notes due 2010

and 5.375% Notes due 2015

 

 

     THIS THIRD SUPPLEMENTAL INDENTURE, dated as of August 14, 2003 (this
“Third Supplemental Indenture”), among General Dynamics Corporation, a
Delaware corporation (the “Company”), the Guarantors (as defined herein)
and The Bank of New York, a New York banking corporation, as trustee (the
“Trustee”) to the Indenture, dated as of August 27, 2001 (the “Base
Indenture”), among the Company, the guarantors named therein and the
Trustee, as previously supplemented by the First Supplemental Indenture, dated
as of August 27, 2001, among the Company, the guarantors named therein and the
Trustee and the Second Supplemental Indenture, dated as of May 15, 2003, among
the Company, the guarantors named therein and the Trustee.

     WHEREAS, the Company, the Guarantors and the Trustee have heretofore
executed and delivered the Base Indenture to provide for the issuance from time
to time of Securities (as defined in the Base Indenture) of the Company, to be
issued in one or more series;

     WHEREAS, Section 9.01(5) of the Base Indenture provides, among other
things, that the Company and the Trustee may enter into indentures supplemental
to the Base Indenture for, among other things, the purpose of establishing the
designation, form, terms and provisions of Securities of any series as provided
by Articles 2 and 3 of the Base Indenture;

     WHEREAS, the Company (i) desires the issuance of two new separate series
of Securities to be designated as hereinafter provided and (ii) has requested
the Trustee to enter into this Third Supplemental Indenture for the purpose of
establishing the designation, form, terms and provisions of the Securities of
such series;

     WHEREAS, all action on the part of the Company necessary to authorize the
issuance of said Securities under the Base Indenture and this Third
Supplemental Indenture has been duly taken.

     NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:

     That, in order to establish the designation, form, terms and provisions
of, and to authorize the authentication and delivery of, said Securities, and
in consideration of the acceptance of said Securities by the Holders thereof
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

2

 

ARTICLE I

DEFINITIONS

     (a) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed thereto in the Base Indenture.

     (b) The rules of interpretation set forth in the Base Indenture shall be
applied hereto as if set forth in full herein.

     (c) For all purposes of this Third Supplemental Indenture, except as
otherwise expressly provided or unless the context otherwise requires, the
following terms shall have the following respective meanings (such meanings
shall apply equally to both the singular and plural forms of the respective
terms).

     “Comparable Treasury Issue” means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Notes.

     “Comparable
  Treasury Price” means, with respect to any Redemption Date for the
  Notes, the average of four Reference Treasury Dealer Quotations obtained by
  the Trustee for that applicable Redemption Date, after excluding the highest
  and lowest of such Reference Treasury Dealer Quotations, or, if the Trustee
  obtains fewer than four Reference Treasury Dealer Quotations, the average of
  all Reference Treasury Dealer Quotations obtained by the Trustee. 

     “Guarantors”
  means, initially, American Overseas Marine Corporation, a Delaware corporation,
  Bath Iron Works Corporation, a Maine corporation, Electric Boat Corporation,
  a Delaware corporation, General Dynamics Armament and Technical Products, Inc.,
  a Delaware corporation, General Dynamics Government Systems Corporation, a Delaware
  corporation, General Dynamics Land Systems Inc., a Delaware corporation, General
  Dynamics Ordnance and Tactical Systems, Inc., a Virginia corporation, Gulfstream
  Aerospace Corporation, a Delaware corporation, Material Service Resources Company,
  a Delaware corporation, and National Steel and Shipbuilding Company, a Nevada
  corporation. 

     “Independent
  Investment Banker” means one of the Reference Treasury Dealers, to
  be appointed by the Company. 

3

 

     “Notes”
  means the Notes due 2010 and the Notes due 2015. 

     “Notes due
  2010” shall have the meaning ascribed thereto in Section 2.1(a) hereof.
  

     “Notes due
  2015” shall have the meaning ascribed thereto in Section 2.1(a) hereof.
  

     “Reference
  Treasury Dealer Quotations” means, with respect to each Reference Treasury
  Dealer and any Redemption Date, the average, as determined by the Trustee, of
  the bid and asked prices for the Comparable Treasury Issue (expressed in each
  case as a percentage of its principal amount) quoted in writing to the Trustee
  by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third
  Business Day preceding the Redemption Date. 

     “Reference
  Treasury Dealer” means each of Bear, Stearns & Co. Inc. and Banc
  of America Securities LLC (so long as they continue to be primary U.S. Government
  securities dealers) and any two other primary U.S. Government securities dealers
  chosen by the Company, and their respective successors. If Bear, Stearns &
  Co. Inc. or Banc of America Securities LLC ceases to be a primary U.S. Government
  securities dealer, the Company will appoint in its place another nationally
  recognized investment banking firm that is a primary U.S. Government securities
  dealer. 

     “Remaining
  Scheduled Payments” means, with respect to each Note that the Company
  is redeeming, the remaining scheduled payments of the principal thereof and
  interest thereon that would be due after the related Redemption Date if such
  Note were not redeemed. However, if the Redemption Date is not a scheduled interest
  payment date with respect to that Note, the amount of the next succeeding scheduled
  interest payment on that Note will be deemed to be reduced by the amount of
  interest accrued on such Note to the Redemption Date. 

     “Treasury
Rate” means, with respect to any Redemption Date, the yield, under the
heading which represents the average for the immediately preceding week, appearing
in the most recently published statistical release designated “H.15(519)”
or any successor publication which is published weekly by the Board of Governors
of the Federal Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities,” for the maturity corresponding to the
Comparable Treasury Issue; provided that if no maturity is within three months
before 

4 

 

or after the maturity date for the notes, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue will be
determined and the Treasury Rate will be interpolated or extrapolated from
those yields on a straight line basis rounding to the nearest month, or, if
that release, or any successor release, is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that Redemption Date. The Treasury Rate will be calculated
on and as of the third Business Day immediately preceding the Redemption Date.

ARTICLE II

GENERAL TERMS AND CONDITIONS OF THE NOTES

     SECTION 2.1 Designation and Principal Amount.

     (a) There is hereby authorized two new separate series of Securities
designated the 4.500% Notes due 2010 (the “Notes due 2010”) and the 5.375%
Notes due 2015 (the “Notes due 2015”).

     (b) The aggregate principal amount of the Notes due 2010 authorized by
this Third Supplemental Indenture shall initially be $700,000,000. The
aggregate principal amount of the Notes due 2015 authorized by this Third
Supplemental Indenture shall initially be $400,000,000.

     (c) The Notes may be issued from time to time upon written order of the
Company to the Trustee for the authentication and delivery of the Notes
pursuant to Section 3.03 of the Base Indenture.

     (d) The Notes shall have and be subject to such other terms as provided in
the Base Indenture and shall be evidenced by one or more Securities of that
series in the form of Section 4.1 with respect to the Notes due 2010 and
Section 4.2 with respect to the Notes due 2015.

     (e) The Notes shall be issuable in denominations of $1,000 and integral
multiples of $1,000.

5

 

     SECTION 2.2 Maturity.

     (a) The date upon which the Notes due 2010 shall become due and payable at
final maturity, together with any accrued and unpaid interest, is August 15,
2010 (the “2010 Notes Maturity Date”).

     (b) The date upon which the Notes due 2015 shall become due and payable at
final maturity, together with any accrued and unpaid interest, is August 15,
2015 (the “2015 Notes Maturity Date” and, together with the 2015 Notes Maturity
Date, the “Maturity Dates”).

     SECTION 2.3 Interest.

     (a) The Notes will bear interest at the respective Interest Rate (as
defined below) from August 14, 2003, until the principal thereof becomes due
and payable. Interest on the Notes will be payable semi-annually in arrears on
the Interest Payment Dates (as defined in the Base Indenture) with respect to
the Notes, which shall be August 15 and February 15 of each year, commencing
February 15, 2004, to the Person in whose name any such Note or any predecessor
Note is registered, at the close of business on the Regular Record Date with
respect to the Notes for such interest installment, which, in the case of a
Global Security, shall be the close of business on the August 1 and February 1
next preceding such Interest Payment Date. If the Notes are no longer in
book-entry only form, the Regular Record Dates for the Notes shall also be the
close of business on the August 1 and February 1 next preceding such Interest
Payment Date.

     (b) The interest rate in respect of the Notes due 2010 will be 4.500% per
annum (the “2010 Notes Interest Rate”). The interest rate in respect of the
Notes due 2015 will be 5.375% (the “2015 Notes Interest Rate and, together with
the 2015 Notes Interest Rate, the “Interest Rates”).

     (c) In the event that any Interest Payment Date with respect to the Notes
is not a Business Day, then payment of interest payable on such date will be
made on the next succeeding day which is a Business Day, with the same force
and effect as if made on such date, and no interest shall accrue on the amount
so payable from the period from and after such Interest Payment Date.

     SECTION 2.4 Global Securities.

     Each series of Notes shall be issued in the form of one or more Global
Securities in an aggregate principal amount equal to the aggregate principal
amount of all

6

 

outstanding Notes of that series, to be registered in the name of the
Depository, or its nominee, and delivered by the Trustee to or upon the order
of the Depository for crediting to the accounts of its participants pursuant to
the written instructions of the Company. The Company upon any such
presentation shall execute one or more Global Securities in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Base Indenture and this Third Supplemental
Indenture. Payments on Notes issued as one or more Global Securities will be
made to the Depository.

ARTICLE III 

REDEMPTION OF THE NOTES

     SECTION 3.1 Optional Redemption of the Notes.

     (a) The Company may, at its option, at any time and from time to time,
redeem the Notes of any of the two series of Notes issued under this Third
Supplemental Indenture, in whole or in part, upon payment of a redemption price
equal to (A) the greater of (i) 100% of the principal amount of the Notes to be
redeemed or (ii) the sum of the present values of the Remaining Scheduled
Payments discounted to the Redemption Date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months), at the Treasury Rate plus 25
basis points in the case of the Notes due 2010 and 30 basis points in the case
of the Notes due 2015, plus (B) accrued and unpaid interest, if any, on the
principal amount of Notes being redeemed to but excluding the Redemption Date
(the “Redemption Price”).

     (b) With respect to the Notes due 2010 and the Notes due 2015, all
references to Redemption Price in the Base Indenture shall mean Redemption
Price as defined in this Third Supplemental Indenture.

     SECTION 3.2 No Sinking Fund.

     The Notes are not entitled to the benefit of any sinking fund.

7

 

ARTICLE IV 

FORM OF NOTES

     SECTION 4.1 Form of Note due 2010

[TO BE INSERTED ON GLOBAL SECURITIES]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR CEDE & CO. IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.

8

 

	 	 	 
	No. [   ]	 	
CUSIP 369550AL2
	 	 	
ISIN: US369550AL24
	 	 	
Common Code: 017485920

$[_______________]

GENERAL DYNAMICS CORPORATION

4.500% Notes Due 2010

     GENERAL DYNAMICS CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the “Company,” which term includes
any successor corporation under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to [   ] or
registered assigns, the principal sum of [   ] $ [   ] on August
15, 2010, and to pay interest thereon from and including August 14, 2003 or
from and including the most recent Interest Payment Date (as hereinafter
defined) to which interest has been paid or duly provided for, as the case may
be.

     Interest will be paid semi-annually on August 15 and February 15 of each
year (each, an “Interest Payment Date”), commencing February 15, 2004, at the
rate of 4.500% per annum, until the principal hereof is paid or made available
for payment. The interest so payable and punctually paid or duly provided for
on any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the August 1 or February 1, as the case may be, immediately preceding
such Interest Payment Date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
(i) to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof is to be
given to Holders of Notes not less than 10 calendar days prior to such Special
Record Date, or (ii) in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of and interest on this
Note will be made at the offices or agencies of the Company maintained for such
purpose in the Borough of Manhattan, The City of New York; provided that
interest on this Note will be paid by check mailed to the address of the Person
entitled thereto as such address shall appear in the

9

 

Security Register or, at the option of the Company, by wire transfer to an
account designated by such Person in a bank located in the United States.
Interest on overdue principal and (to the extent permitted by applicable law)
on overdue installments of interest shall accrue at the rate of 4.500% per
annum. Interest on this Note shall be computed on the basis of a 360-day year
of twelve 30-day months.

     Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.

     This Note shall not be entitled to any benefit under the Indenture, or be
valid or obligatory, until the Certificate of Authentication hereof shall have
been duly signed by the Trustee acting under the Indenture.

     The provisions of this Note are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

10

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be executed
on this 14th day of August, 2003.

  	 	 	 
	 	GENERAL
          DYNAMICS
          CORPORATION

	 	 	 
	 	By: 	__________________________ 
          

	 	 	 Name:
	 	 	Title:

  	 	 	 
	Attest:

	 	 	 
	By:________________________

	 	Name:
	
          

	 	Title:	 
	 	 	

11

 

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated as the Notes due
2010 herein referred to in the within-mentioned indenture.

  	 	 	 
	Dated:__________________   
	 	 THE BANK OF NEW YORK, as Trustee
	 
	 	 	 By:_______________________
	 	 	       
          Authorized Signatory

12

 

(FORM OF REVERSE OF NOTE DUE 2010)

     This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the “Notes”), all issued or to be issued under
and pursuant to an Indenture dated as of August 27, 2001, duly executed and
delivered by and among the Company, the Guarantors named therein and The Bank
of New York, as trustee (the “Trustee”), as supplemented to date, including by
the Third Supplemental Indenture dated as of August 14, 2003, by and among the
Company, the Guarantors named therein and the Trustee (the Indenture, as so
supplemented, the “Indenture”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, the Guarantors named therein and the Holders of the
Notes. By the terms of the Indenture, the Notes are issuable in series that may
vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Notes is initially offered in
aggregate principal amount as specified in said Third Supplemental Indenture.

     The Company at its option may, at any time and from time to time, redeem
the Notes, in whole or in part, upon payment of a redemption price equal to (A)
the greater of (i) 100% of the principal amount of the Notes to be redeemed or
(ii) the sum of the present values of the Remaining Scheduled Payments
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months), at the Treasury Rate plus 25 basis
points plus (B) accrued and unpaid interest, if any, on the principal amount of
Notes being redeemed to but excluding the Redemption Date (the “Redemption
Price”). On and after the Redemption Date, interest will cease to accrue on the
Notes or any portion thereof called for redemption, unless the Company defaults
in the payment of the Redemption Price and accrued interest.

     Any redemption pursuant to the preceding paragraph will be made upon not
less than 30 nor more than 60 days’ prior notice before the Redemption Date to
the Holders, at the Redemption Price. If the Notes are only partially
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate; provided, that if at the
time of redemption the Notes are registered as Global Securities, the
Depository shall determine, in accordance with its procedures, the principal
amount of such Notes held by each Holder of Notes to be redeemed. The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the
Redemption Date or such earlier time as the Company determines, provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.

13

 

     In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.

     In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with
the effect and subject to the conditions provided in the Indenture.

     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Notes of each series affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Notes; provided, however, that no
such supplemental indenture shall, among other things, (i) change the fixed
maturity of any Notes of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
Holder of each Note so affected, or (ii) reduce the aforesaid percentage of
Notes, the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of each Note then outstanding and
affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Notes of any series
at the time outstanding affected thereby, on behalf of all of the Holders of
the Notes of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default
in the payment of the principal of or premium, if any, or interest on any of
the Notes of such series. Any such consent or waiver by the registered Holder
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange therefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and

14

 

unconditional, to pay the principal of and premium, if any, and interest
on this Note at the time and place and at the rate and in the money herein
prescribed.

     As provided in the Indenture and subject to certain limitations therein
set forth, this Note is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Note for registration
of transfer at the office or agency of the Trustee in the City and State of New
York accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of authorized denominations and for the same aggregate principal
amount and series will be issued to the designated transferee or transferees.
No service charge will be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in relation thereto.

     Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and the Security Registrar may deem and
treat the registered Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or any Guarantor or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.

     The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. This
Global Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. As provided in the Indenture
and subject to certain limitations herein and therein set forth, Notes of this
series so issued are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.

15

 

     All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

     THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THIS NOTE WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

[FORM OF TRANSFER NOTICE]

     FOR VALUE RECEIVED, the undersigned registered Holder hereby sell(s),
assign(s) and transfer(s) unto

Please insert Taxpayer Identification No.:

Please print or typewrite name and address including zip code of assignee:

the within
  Note and all rights thereunder, hereby irrevocably constituting and appointing
  _________attorney to transfer said Note on the books of the
  Company with full power of substitution in the premises. 

By: __________________________

Date: ________________________

16

 

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been made:

  	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 Date of	 	 Amount of 	 	Amount of 	 	Principal Amount of	 	 Signature of
	Exchange 	 	 Decrease in 	 	Increase in 	 	this Global Note	 	Authorized
	 	 	 Principal Amount of 	 	Principal Amount of 	 	Following such 	 	Signatory of Trustee
	  	 	 this Global Note 	 	this Global Note 	 	Decrease or 	 	 
	 	 	 	 	 	 	Increase	 	 
	

	

     SECTION 4.2 Form of Note due 2015

[TO BE INSERTED ON GLOBAL SECURITIES]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS
CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON OTHER THAN THE DEPOSITORY TRUST COMPANY OR CEDE & CO. IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE

17

 

NAME OF A DEPOSITORY OR A NOMINEE THEREOF. TRANSFERS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE
DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.

18

 

	 	 	 
	No. [___]	 	
CUSIP 369550AM0
	 	 	
ISIN: US369550AM07
	 	 	
Common Code: 017485822

$[__________] 

GENERAL DYNAMICS CORPORATION

5.375% Notes Due 2015

     GENERAL DYNAMICS
  CORPORATION, a corporation duly organized and existing under the laws of Delaware
  (herein called the “Company,” which term includes any successor corporation
  under the Indenture referred to on the reverse hereof), for value received,
  hereby promises to pay to [___] or registered assigns, the principal
  sum of [___] $ [___] on August 15, 2015, and to pay interest
  thereon from and including August 14, 2003 or from and including the most
  recent Interest Payment Date (as hereinafter defined) to which interest has
  been paid or duly provided for, as the case may be. 

     Interest will be paid semi-annually on August 15 and February 15 of each
year (each, an “Interest Payment Date”), commencing February 15, 2004, at the
rate of 5.375% per annum, until the principal hereof is paid or made available
for payment. The interest so payable and punctually paid or duly provided for
on any Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Note (or one or more predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be the August 1 or February 1, as the case may be, immediately preceding
such Interest Payment Date. Except as otherwise provided in the Indenture, any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
(i) to the Person in whose name this Note (or one or more predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof is to be
given to Holders of Notes not less than 10 calendar days prior to such Special
Record Date, or (ii) in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in said Indenture. Payment of the principal of and interest on this
Note will be made at the offices or agencies of the Company maintained for such
purpose in the Borough of Manhattan, The City of New York; provided that
interest on this Note will be paid by check mailed to the address of the Person
entitled thereto as such address shall appear in the

19

 

Security Register or, at the option of the Company, by wire transfer to an
account designated by such Person in a bank located in the United States.
Interest on overdue principal and (to the extent permitted by applicable law)
on overdue installments of interest shall accrue at the rate of 5.375% per
annum. Interest on this Note shall be computed on the basis of a 360-day year
of twelve 30-day months.

     Reference is made to the further provisions set forth on the reverse
hereof. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.

     This Note shall not be entitled to any benefit under the Indenture, or be
valid or obligatory, until the Certificate of Authentication hereof shall have
been duly signed by the Trustee acting under the Indenture.

     The provisions of this Note are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.

20

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be executed
on this 14th day of August, 2003.

  	 	 	 
	 	GENERAL
          DYNAMICS CORPORATION

	 	 	 
	 	By: 	__________________________ 
          

	 	 	 Name:
	 	 	Title:

	 	 	 
	Attest:

	 	 	 
	By:________________________

	 	Name:
	 

	 	Title:	 
	 	 	

21

 

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated as the Notes due
2015 herein referred to in the within-mentioned indenture.

	 	 	 
	Dated:  ____________________
	 	
THE BANK OF NEW YORK, as Trustee
	 
	 	 	 By:___________________
	 
	 	 	
   
Authorized Signatory

22

 

(FORM OF REVERSE OF NOTE DUE 2015)

     This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the “Notes”), all issued or to be issued under
and pursuant to an Indenture dated as of August 27, 2001, duly executed and
delivered by and among the Company, the Guarantors named therein and The Bank
of New York, as trustee (the “Trustee”), as supplemented to date, including by
the Third Supplemental Indenture dated as of August 14, 2003, by and among the
Company, the Guarantors named therein and the Trustee (the Indenture, as so
supplemented, the “Indenture”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, the Guarantors named therein and the Holders of the
Notes. By the terms of the Indenture, the Notes are issuable in series that may
vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Notes is initially offered in
aggregate principal amount as specified in said Third Supplemental Indenture.

     The Company at its option may, at any time and from time to time, redeem
the Notes, in whole or in part, upon payment of a redemption price equal to (A)
the greater of (i) 100% of the principal amount of the Notes to be redeemed or
(ii) the sum of the present values of the Remaining Scheduled Payments
discounted to the date of redemption on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months), at the Treasury Rate plus 30 basis
points plus (B) accrued and unpaid interest, if any, on the principal amount of
Notes being redeemed to but excluding the Redemption Date (the “Redemption
Price”). On and after the Redemption Date, interest will cease to accrue on the
Notes or any portion thereof called for redemption, unless the Company defaults
in the payment of the Redemption Price and accrued interest.

     Any redemption pursuant to the preceding paragraph will be made upon not
less than 30 nor more than 60 days’ prior notice before the Redemption Date to
the Holders, at the Redemption Price. If the Notes are only partially
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate; provided, that if at the
time of redemption the Notes are registered as Global Securities, the
Depository shall determine, in accordance with its procedures, the principal
amount of such Notes held by each Holder of Notes to be redeemed. The
Redemption Price shall be paid prior to 12:00 noon, New York time, on the
Redemption Date or such earlier time as the Company determines, provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Redemption Price by 10:00 a.m., New York time, on the date such Redemption
Price is to be paid.

23

 

     In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.

     In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with
the effect and subject to the conditions provided in the Indenture.

     The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Notes of each series affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Notes; provided, however, that no
such supplemental indenture shall, among other things, (i) change the fixed
maturity of any Notes of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, without the consent of the
Holder of each Note so affected, or (ii) reduce the aforesaid percentage of
Notes, the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of each Note then outstanding and
affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Notes of any series
at the time outstanding affected thereby, on behalf of all of the Holders of
the Notes of such series, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to such series, and its consequences, except a default
in the payment of the principal of or premium, if any, or interest on any of
the Notes of such series. Any such consent or waiver by the registered Holder
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange therefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and

24

 

unconditional, to pay the principal of and premium, if any, and interest
on this Note at the time and place and at the rate and in the money herein
prescribed.

     As provided in the Indenture and subject to certain limitations therein
set forth, this Note is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Note for registration
of transfer at the office or agency of the Trustee in the City and State of New
York accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of authorized denominations and for the same aggregate principal
amount and series will be issued to the designated transferee or transferees.
No service charge will be made for any such transfer, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in relation thereto.

     Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and the Security Registrar may deem and
treat the registered Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or any Guarantor or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.

     The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. This
Global Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. As provided in the Indenture
and subject to certain limitations herein and therein set forth, Notes of this
series so issued are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.

25

 

     All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

     THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THIS NOTE WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

[FORM OF TRANSFER NOTICE] 

     FOR VALUE RECEIVED,
  the undersigned registered Holder hereby sell(s), assign(s) and transfer(s)
  unto 

Please
  insert Taxpayer Identification No.: 

Please
  print or typewrite name and address including zip code of assignee: 

the within
  Note and all rights thereunder, hereby irrevocably constituting and appointing
  _________attorney to transfer said Note on the books of the Company with full
  power of substitution in the premises. 

By: __________________________
  

Date: ________________________
  

26 

 

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been made:

	 	 	 	 	 	 	 	 	 
	 Date of	 	  Amount of 	 	 Amount of 	 	Principal Amount of	 	 Signature of
	 Exchange	 	 Decrease in 	 	Increase in	 	this Global Note	 	 Authorized
	 	 	 Principal Amount of 	 	Principal Amount of 	 	Following such
	 	Signatory of Trustee
	 	 	 this Global Note 	 	this Global Note 	 	Decrease or
	 	 
	  	 	 	 	 	 	Increase
	 	 

ARTICLE V 

ORIGINAL ISSUE OF NOTES

     SECTION 5.1 Original Issue of Notes due 2010; Further Issuances.

     (a) The Notes due 2010 in the initial aggregate principal amount of
$700,000,000 may, upon execution of this Third Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company pursuant to Section 3.03 of the Base Indenture
without any further action of the Company.

     (b) The Company may, from time to time create and issue additional Notes
due 2010 under this Third Supplemental Indenture ranking equally and ratably
with the outstanding Notes due 2010 in all respects (or in all respects except
for the payment of interest accruing prior to the issue date of such additional
Notes due 2010 or except for the first payment of interest following the issue
date of such additional Notes due 2010) without notice to or the consent of the
Holders of outstanding Notes. The initially issued Notes and any additional
Notes subsequently issued shall be consolidated and form a single series with
the outstanding Notes for all purposes of this Third Supplemental Indenture and
shall have the same terms as to

27

 

status, redemption or otherwise as the outstanding Notes. Any such
additional Notes referred to in this Section 5.1 will be issued under a further
supplemental indenture.

     SECTION 5.2 Original Issue of Notes due 2015; Further Issuances.

     (a) The Notes due 2015 in the initial aggregate principal amount of
$400,000,000 may, upon execution of this Third Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and
the Trustee shall thereupon authenticate and deliver said Notes to or upon the
written order of the Company pursuant to Section 3.03 of the Base Indenture
without any further action of the Company.

     (b) The Company may, from time to time create and issue additional Notes
due 2015 under this Third Supplemental Indenture ranking equally and ratably
with the outstanding Notes due 2015 in all respects (or in all respects except
for the payment of interest accruing prior to the issue date of such additional
Notes due 2015 or except for the first payment of interest following the issue
date of such additional Notes due 2015) without notice to or the consent of the
Holders of outstanding Notes. The initially issued Notes and any additional
Notes subsequently issued shall be consolidated and form a single series with
the outstanding Notes for all purposes of this Third Supplemental Indenture and
shall have the same terms as to status, redemption or otherwise as the
outstanding Notes. Any such additional Notes referred to in this Section 5.2
will be issued under a further supplemental indenture.

ARTICLE VI 

MISCELLANEOUS

     SECTION 6.1 Ratification of Base Indenture, First Supplemental
Indenture and Second Supplemental Indenture

     The Base Indenture, the First Supplemental Indenture and the Second
Supplemental Indenture, as supplemented by this Third Supplemental Indenture,
are in all respects ratified and confirmed, and this Third Supplemental
Indenture shall be deemed part of the Base Indenture in the manner and to the
extent herein and therein provided.

     SECTION 6.2 Trustee Not Responsible for Recitals.

     The recitals contained herein and in the Notes, except with respect to the
Trustee’s certificates of authentication, shall be taken as the statements of
the

28

 

Company, and the Trustee assumes no responsibility for the correctness of
the same. The Trustee makes no representations as to the validity or
sufficiency of this Third Supplemental Indenture or of the Notes.

     SECTION 6.3 Governing Law.

     THIS THIRD SUPPLEMENTAL INDENTURE AND EACH NOTE OF EACH SERIES CREATED
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

     SECTION 6.4 Separability.

     In case any one or more of the provisions contained in this Third
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Third
Supplemental Indenture or of the Notes, but this Third Supplemental Indenture
and the Notes shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.

     SECTION 6.5 Counterparts.

     This Third Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

29

 

     IN WITNESS WHEREOF, the parties have caused this Third Supplemental
Indenture to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.

	 	GENERAL DYNAMICS CORPORATION

	 	By:  /s/ David A. Savner    

Name: David A. Savner

Title: Senior Vice President and General Counsel

	 	AMERICAN OVERSEAS MARINE CORPORATION

	 	By:  /s/ David A. Savner    

Name: David A. Savner

Title: Vice President and General Counsel

	 	BATH IRON WORKS CORPORATION

	 	By: /s/ Thomas A. Brown    

	 	Name: Thomas A. Brown

Title: Treasurer and Secretary

	 	ELECTRIC BOAT CORPORATION

	 	By:_/s/ David A. Savner    

	 	Name: David A. Savner

Title: Vice President and Secretary

 

	 	GENERAL DYNAMICS ARMAMENT AND TECHNICAL PRODUCTS, INC.

	 	By:_/s/ David A. Savner   

	 	Name: David A. Savner

Title: Vice President

	 	GENERAL DYNAMICS GOVERNMENT SYSTEMS CORPORATION

	 	By:_/s/ David A. Savner    

	 	Name: David A. Savner

Title: Vice President

	 	GENERAL DYNAMICS LAND SYSTEMS INC.

	 	By:_/s/ David A. Savner   

	 	Name: David A. Savner

Title: Vice President

	 	GENERAL DYNAMICS ORDNANCE AND TACTICAL SYSTEMS, INC.

	 	By:_/s/ David A. Savner   

	 	Name: David A. Savner

Title: Vice President

 

	 	GULFSTREAM AEROSPACE CORPORATION

	 	By:_/s/ David A. Savner   

	 	Name: David A. Savner

Title: Vice President

	 	MATERIAL SERVICE RESOURCES COMPANY

	 	By:_/s/ Deborah T. Framarin   

	 	Name: Deborah T. Framarin

Title: Vice President

	 	NATIONAL STEEL AND SHIPBUILDING COMPANY

	 	By:_/s/ David A. Savner   

	 	Name: David A. Savner

Title: Senior Vice President

	 	THE BANK OF NEW YORK, as Trustee

				
	 	 	By:    /s/ Geovanni Barris	 
	 	 	
	 
	 	 	
Name:    Geovanni Barris

Title:      Vice President, Corporate

    
    
           Trust
Administration

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