EXHIBIT 10.44
PIPELINE OPERATING AGREEMENT
BETWEEN
PANDA ENERGY CORPORATION AND PANDA-XXXXXXXX CORPORATION
("PANDA")
AND
NORTH CAROLINA NATURAL GAS CORPORATION ("NCNG")
DATED: February 14, 1990
________________________________
PIPELINE OPERATING AGREEMENT TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 3
ARTICLE II. CONSTRUCTION OF PIPELINE 10
ARTICLE III. OPERATION AND MAINTENANCE OF PIPELINE 12
ARTICLE IV. TERM 19
ARTICLE V. USE OF PIPELINE 20
ARTICLE VI. BALANCING 21
ARTICLE VII. EASEMENTS AND RIGHTS-OF-WAY 26
ARTICLE VIII. TAXES 26
ARTICLE IX. PAYMENTS 26
ARTICLE X. NOTICES 27
ARTICLE XI. METERING AND MEASUREMENT 28
ARTICLE XII. INDEMNIFICATION 31
ARTICLE XIII REPRESENTATIONS AND WARRANTIES 32
ARTICLE XIV. DEFAULT AND FORCE MATURE 34
ARTICLE XV. OPTION TO PURCHASE PIPELINE 37
ARTICLE XVI. ARBITRATION 41
ARTICTE XVII. INSURANCE 44
ARTICLE XVIII COMPROMISE AND SETTLEMENT OF LITIGATION 45
ARTICLE XIX. MISCELLANEOUS PROVISIONS 46
SIGNATURES 50
PIPELINE OPERATING AGEEMENT
THIS AGREEMENT is made and effective on this 14th Day of
February 1990, by and between:
PANDA ENERGY CORPORATION, a Texas Corporation,
and PANDA-XXXXXXXX CORPORATION, a Delaware
Corporation and a subsidiary of PANDA ENERGY
CORPORATION with principal offices in Dallas, Texas
7S244, hereinafter referred to as "PANDA";
AND
NORTH CAROLINA NATURAL GAS CORPORATION, a Delaware
Corporation with principal offices in Fayetteville,
North Carolina, hereinafter referred to as "NCNG".
WITNESSETH, THAT:
WHEREAS, PANDA is engaged in the development,
construction and operation of cogeneration and electricity
generation facilities; and
WHEREAS, NCNG is a natural gas utility that is in
the business of providing natural gas sales and
transportation services to various residential, commercial
and industrial customers in North Carolina; and
WHEREAS, PANDA is authorized, by virtue of a
Certificate of Public Convenience and Necessity granted by
the North Carolina Utilities Commission, to construct, own
and operate a cogeneration facility located in Roanoke
Rapids, North Carolina, for the production of electricity
and steam and PANDA will require a supply of Natural Gas to
be used as fuel for the cogeneration facility; and
WHEREAS, Panda intends to construct a 108'
natural gas pipeline from the high pressure lines of two
interstate pipelines approximately 10 miles to PANDA's
Facilities so as to supply Natural Gas solely to its
Facilities; and
WHEREAS, NCNG desires to have the ability to
utilize the excess capacity in PANDA's Pipeline, which is
located within NCNG's certificated territory, to augment the
operation of its own system by interconnecting NCNG's system
and PANDA's Pipeline, and PANDA is agreeable to such use and
interconnection; and
WHEREAS, PANDA desires that NCNG operate
PANDA's Pipeline and NCNG desires to operate said Pipeline;
and
WHEREAS, PANDA desires assistance in balancing
its volumes of Natural Gas supplies received from its
interstate Pipeline suppliers and NCNG is desirous of
assisting in such balancing efforts; and
WHEREAS, both PANDA and NCNG desire to dispense
with any further litigation with respect to whether PANDA has
the right to construct and operate a Pipeline to provide Gas
to its Facilities.
NOW, THEREFORE, in consideration of the mutual
covenants, obligations and considerations hereinafter set
forth, the parties hereto do hereby contract and agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.01: "British thermal unit" or "Btu" shall mean the
amount of heat required to raise the temperature of one pound
of water one degree (1 degree) Fahrenheit at sixty degrees (60 degree)
Fahrenheit.
Section 1.02: "Commercial Operations Date" shall
mean the date referred to in that certain Power Purchase and
Operating Agreement dated January 24, 1989 between Virginia
Electric & Power Company and Panda Energy Corporation when
tests have confirmed that PANDA can begin generating
electricity for commercial sale to Virginia Electric & Power
Co. but in no event shall the Commercial Operations Date be
after November 30, 1991.
Section 1.03: "Cubic Foot of Gas" shall mean the volume of
Gas which would occupy one cubic foot of space when such Gas
is at a temperature of sixty degrees (60 degree) Fahrenheit and a
pressure of 14.73 pounds per square inch absolute.
Section 1.04: "Current Carryover Gas Volume" shall mean the
product of the decimal equivalent of twenty-five (25%)
percent multiplied by the absolute value of the Receipt
Volume or the absolute value of the Delivery Volume,
whichever is higher; provided, however, that, the product of
said calculation shall never exceed the absolute value of the
Net Imbalance Volume. The Current Carryover Gas Volume shall
be considered to be a positive number when NCNG owes PANDA
Gas, and shall be considered to be a negative number when
PANDA owes NCNG Gas.
Section 1.05: "Current Imbalance Volume'' shall mean the
difference between the Monthly Entitlement Volume and the
quantity of Gas measured at the Delivery Point in such Month.
Section 1.06: "Daily Entitlement Volume" shall mean the
totalquantity of cubic feet of Gas measured at the Receipt
Point on a given Day less one (1%) percent of such volume as
an allowance to NCNG for unaccounted for and lost volumes.
Section 11.07: "Day" shall mean a period of twenty-four (24)
consecutive hours beginning at eight o'clock AM Eastern time.
Section 1.08: "Dekatherm" or "dt" shall be equivalent to one
MMBtu.
Section 1.09: "Delivery Point" shall mean the outlet
flange(s) on the meter runts) at the Facilities.
Section 1.10: "Delivery Volume" shall mean the total number
of cubic feet of Gas measured at the Delivery Point in a
given Month.
Section 1.11: "Excess Gas Volume" shall equal the difference
between the Net Imbalance Volume and the Current Carryover
Gas Volume. The said Excess Gas Volume number will be
positive when NCNG owes Gas to PANDA and negative when PANDA
owes Gas to NCNG.
Section 1.12: "Facilities" shall mean the steam, chilled
water and power generation facilities to be constructed and
owned by PANDA its successors and assigns in Roanoke Rapids,
North Carolina or in the immediate vicinity of Roanoke
Rapids.
Section 1.13: "Financier" means (a) any individual or entity
lending money to PANDA for the construction or term financing
of the Facilities, or the establishment and/or maintenance of
working capital requirements, or the refinance or take-out of
any such loan; or, (b) any lessor under a single investor or
leveraged lease finance arrangement.
Section 1.14: "Force Majaure" as employed herein and for all
purposes relating hereto shall mean any situation or
occurrence not reasonably within the control of the party
claiming suspension and which, by the exercise of due
diligence, such party is unable to prevent or overcome, and
shall include, not by way of limitation, acts of God,
strikes, lockouts or other industrial disturbances, acts of
the public enemy, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, fires, storms,
hurricane warnings, crevasses, floods, washouts, arrests and
restraints of governments, civil disturbances, explosions,
breakage or accident to machinery or lines of pipe, temporary
failure of gas supply, the necessity for making repairs or
alterations to machinery or lines of pipe, freezing of xxxxx
or lines of pipe, inability of any party hereto to obtain
necessary materials, supplies or permits due to existing or
future rules, regulations, orders, laws or proclamations of
governmental authorities (both Federal and State), including
both civil and military, and any other causes whether of the
kind herein enumerated or otherwise, not reasonably within
the control of the party claiming suspension and which by the
exercise of due diligence such party is unable to prevent or
overcome; such term shall likewise include (a) in those
instances where either party hereto is required to obtain
servitudes, right-of-way grants, permits or licenses to
enable such party to perform hereunder, the inability of such
party to acquire, or delays on the part of such party in
acquiring, at reasonable cost and after the exercise of
reasonable diligence, such servitudes, right-of-way grants,
permits or licenses, and (b) in those instances where either
party hereto is required to furnish materials and supplies
for the purposes of constructing or maintaining facilities,
the PANDA Pipeline and appurtenant equipment, or is required
to secure permits or permission from any governmental agency
to enable such party to fulfill its obligations hereunder'
the inability of either party to acquire, or delays on the
part of such party in acquiring at reasonable cost and after
the exercise of reasonable diligence, such materials and
supplies, permits and permissions. It is understood and
agreed that the settlement of strikes or lockouts shall be
entirely within the discretion of the party having the
difficulty, but shall not require the settlement of strikes
or lockouts by acceding to the demands of the opposing party
when such course is inadvisable in the discretion of the
party having difficulty. However, Force Majeure shall not be
applicable to a failure to pay sums of money owed.
Section 1.15: "Gas" or "Natural Gas" shall mean Gas in its
natural state as produced from oil, Gas or Gas condensate
xxxxx as well as residue Gas resulting from Gas processing,
and which Gas is then treated by others prior to receipt at
the Receipt Point so as to comply with the quality
specifications of the interstate pipeline transporting such
Gas to markets for consumption.
Section 1.16: "Interest" shall mean the compensation for the
accrual of monetary obligations under this Agreement computed
monthly and prorated Daily, from the time each such
obligation becomes due and payable, based on an annual
interest rate equal to the Prime Rate plus one (1) percent.
For purposes hereof, Prime Rate shall mean the rate of
interest from time to time publicly announced by The Chase
Manhattan Bank, N.A., at its principal office, presently
located at 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
as its prime commercial lending rate, determined as of the
time such obligation becomes due and payable, or the maximum
non-usurious rate of interest allowed by the laws of the
State of North Carolina, whichever is less.
Section 1.17: "MCF" shall denote one thousand (1,000) cubic
feet of Gas.
Section 1.18: "MMBtu" shall denote one million (1,000,000)
British thermal units.
Section 1.19: "Month" shall mean the period beginning at
eight o'clock AM Eastern Time on the first Day of a calendar
Month and ending at eight o'clock AM on the first Day of the
following calendar Month.
Section 1.20: "Monthly Entitlement Volume" shall mean the sum
of the Daily Entitlement Volumes for a given Month.
Section 1 21: "NCNG's System" shall mean the Natural Gas
pipeline and distribution system owned by NCNG within NCNG's
certificated territory in North Carolina.
Section 1.22: "NCUC" shall mean the North Carolina Utilities
Commission and any successor agency or administrative body
possessing similar powers.
Section 1.23: "Net Imbalance Volume'' shall mean the sum of
the Current Imbalance Volume and the previous Month's Current
Carryover Gas Volume, if any.
Section 1.24: "PANDA Pipeline" or "Pipeline" shall mean that
certain Natural Gas Pipeline which PANDA shall design and
build or contract to have built between the Receipt Point and
the Facilities, together with all permits, rights-of-way,
easements, pipe, valves and fittings, sales and check
meters, pigging equipment, tanks, separators, line heaters,
radio and telephonic system control and data acquisition
telemetry equipment, interconnection and metering facilities
between the PANDA Pipeline and other pipelines and other
associated equipment, spare parts, supplies, and
appurtenances used in the operation and maintenance of said
Pipeline.
Section 1.25: "Receipt Point" shall mean the outlet flange on
the sales meter run(s) at the interconnection point(s)
between the facilities of Transcontinental Gas Pipe Line
Corporation ("Transco") and/or the facilities of Columbia Gas
Transmission Corporation ("Columbia") with PANDA's Pipeline
at a point(s) near Pleasant Hill, North Carolina.
Section 1.26: "Receipt Volume" shall mean the total quantity
of cubic feet of Gas measured at the Receipt Point in a given
Month.
Section 1.27: "Subsidiary Corporations" shall mean any
corporation, now extant or hereinafter created, in which
Panda Energy Corporation or Panda-Xxxxxxxx Corporation owns a
controlling interest.
Section 1.28: "Year" shall mean a contract year (rather than
a calendar year unless the context clearly contemplated a
calendar year) which shall mean a period of three hundred
sixty-five (365) consecutive Days, the first such contract
year beginning at eight o'clock AM Eastern Time on the Day of
first delivery of Gas hereunder, provided, however, that any
such year which contains a date of February 29 shall consist
of three hundred sixty-six (366) consecutive Days.
ARTICLE II.
CONSTRUCTION OF PIPELINE
Section 2.01: PANDA shall, at its sole cost, risk, expense
and liability, design and construct the PANDA Pipeline or
cause it to be designed and constructed in such a manner that
it is sufficient to meet the anticipated requirements of the
Facilities including any compression equipment needed to meet
and maintain the Pressure requirements of PANDA's Facilities.
In addition, PANDA shall install at its expense check
meter(s) at the Receipt Point; two (2) 10" tie-ins, including
flow-control valves, between PANDA's Pipeline and NCNG's
existing 12" transmission line at points mutually agreeable
to PANDA and NCNG; and telemetry equipment needed for NCNG's
Gas Control Department to monitor Gas consumption of PANDA's
Facilities and the Receipt Point meter(s) and to operate the
Receipt Point valve and the two tie-in valves. PANDA shall
also furnish and provide for the operation of, at its
expense, the necessary equipment and supplies for odorization
of the Gas prior to its entering the PANDA Pipeline and NCNG
shall not be responsible for operating the same. The said
PANDA Pipeline shall be constructed and operated in
accordance with all applicable Federal and State laws, rules,
regulations and orders. The transmission portion of the
Pipeline will be designed, constructed, tested and certified
to comply with applicable safety requirements for a maximum
allowable operating pressure of 800 psig in a Class 3
location as defined by Section 49 CFR Part 192. PANDA shall
have the exclusive right to make modifications to the design
and operating parameters of the PANDA Pipeline from time to
time, provided that such modifications shall comply with all
applicable safety laws, rules, regulations and orders, and do
not adversely affect NCNG's operations under the terms of
this Agreement.
Section 2.02: PANDA will provide NCNG with a complete as-
built set of plans of the Pipeline and appurtenant equipment
together with copies of all rights of way easements and
operating information and data in PANDA's possession from
time to time. PANDA will give NCNG not less than thirty (30)
Days notice prior to changing the operating parameters or
commencing any modification of the PANDA Pipeline.
Section 2.03: NCNG will have the right to review the plans
and specifications of the PANDA Pipeline and to have its
agents present, at their own risk, to inspect and review the
methods used in the construction and testing of the Pipeline
as well as any subsequent modifications or repairs performed
by PANDA or its agents to verify compliance with such plans
and specifications and applicable laws, rules, regulations
and orders prior to NCNG being required to assume operation
of the PANDA Pipeline; but the design and construction of the
PANDA Pipeline, and any risk related thereto, shall be and
remain the sole responsibility of PANDA. PANDA will furnish
NCNG with a certification upon completion of the construction
of the Pipeline and any modification thereto that said
construction and/or modification is in compliance with all
applicable State and Federal rules, regulations and orders
including, but not limited to, Xxxxxxx 00 XXX 000 and provide
NCNG with a copy of all Regulatory Compliance records.
ARTICLE III.
OPERATION AND MAINTENANCE OF PIPELINE
Section 3.01: PANDA shall pay NCNG a fee each Month
("Operator's Fee"), in the amount set out in Section 3.02
below, in consideration of NCNG's agreement to perform the
following described duties and responsibilities with respect
to the PANDA Pipeline and its appurtenant equipment
commencing with the initial Delivery volumes: (a) Supervise
and manage day-to-day operations in a diligent and
workmanlike manner; (b) Make all regulatory filings and
safety reports required by law in a timely manner; (c)
Receive Gas from the Receipt Point and dispatch Gas through
the PANDA Pipeline in accordance with the terms of this
Agreement; (d) Provide balancing services in accordance with
the provisions of Article VI below; (e) Test the Panda
Pipeline and appurtenant equipment for leaks as required by
law; (f) Keep rights-of-way free of high weeds, grass and
trees; (g) Monitor cathodic protection; (h) Witness all meter
tests at the Receipt and Delivery Points; (i) do other usual
and necessary maintenance, operations and repairs in
accordance with its customary gas distribution pipeline
practices; and, (j) within thirty (30) Days after the end of
each Month, provide PANDA with a detailed statement of all
operations, maintenance, repairs as well as volumes of Gas
(in both MCF and Dekatherms) received at the Receipt Point
and delivered at the Delivery Point for the preceding month.
NCNG shall operate the PANDA Pipeline in the same manner and
with the same degree of care and diligence with which it
operates its own pipeline system and in full compliance with
all applicable Federal, State and Local laws and regulations.
The foregoing notwithstanding, NCNG shall not be obligated to
operate the PANDA Pipeline under conditions exceeding the
maximum pressure allowed by the NCUC Office of Pipeline
Safety.
Section 3.02: The Operator Fee for the period between the
date of first Gas takes and one (1) Year following the
Commercial Operations Date shall be $8,000 per Month. The
Operator Fee for the first Month shall be prorated if first
Gas takes do not occur on the first Day of a Month. The
Operator Fee for the two (2) Year period commencing on the
first anniversary after the Commercial Operations Date shall
be $12,000 per Month. The Operator Fee for the two (2) Year
period commencing on the third anniversary following the
Commercial Operations Date shall be $16,000 per Month. The
Operator Fee for the four (4) year period commencing on the
fifth anniversary following the Commercial Operations Date
shall be $20,000 per month. The Operator Fee for the six (6)
Year period commencing on the 9th anniversary following the
Commercial Operations Date shall be not less than $240,000
per year adjusted by the percentage increase, if any, in the
U.S. Bureau of Labor Statistics Consumer Price Index ("CPI")
from the Commercial Operations Date to said 9th Year
anniversary of this Agreement and which yearly sum shall be
payable in equal monthly installments.
Notwithstanding the foregoing, if the Facilities
generate electricity for more than 600 hours using Gas in any
single Year of the nine (9) years following the Commercial
Operations Date, then in that event, the Operator Fee for
that entire Year and each Year thereafter through the ninth
(9th) anniversary of the Commercial Operations Date shall be
$20,000 per Month.
Section 3.03: NCNG may resign as Operator of the PANDA
Pipeline upon giving PANDA one hundred eighty (180) Days
prior written notice to such effect or upon a shorter period
of notice to the extent a shorter period is provided elsewhere
in this Agreement.
Section 3.04: NCNG may not assign its duties as Operator
without PANDA's prior written consent except that it may in its
discretion hire independent contractors and/or agents to
assist it with such duties.
Section 3.05: PANDA shall be responsible for all repairs and
equipment replacement on the PANDA Pipeline and its
appurtenant equipment. NCNG is hereby authorized to incur up
to $l,000.00 of costs on any single non-emergency repair or
equipment replacement project without first securing PANDA's
consent thereto. However, if NCNG reasonably anticipates that
a repair or replacement project could cost in excess of
$1,000.00, then NCNG shall first submit an Authority For
Expenditure ("A.F.E.") and description of the work to be
performed to PANDA for its approval (Approval shall be deemed
to have been given when NCNG receives an executed copy of the
proposed A.F.E.). If PANDA does not agree with NCNG's
estimate for the cost of such work, then PANDA shall be
required to perform such work itself or to contract for the
same to be done provided such work is performed in a diligent
and workmanlike manner and pursuant to Section 2.03 above.
Regardless of who performs such work, it will be done in
compliance with all applicable laws, orders and regulations
relating to the safety and operation of Natural Gas
Pipelines.
Section 3.06: Notwithstanding Section 3.05, NCNG is hereby
authorized to make such emergency repairs as it deems
necessary to safely operate the Pipeline and shall bring
emergency conditions under control as safely, quickly and
inexpensively as is reasonably possible under the
circumstances. "Emergency conditions" are defined for
purposes of this Section, as any condition posing an
immediate threat to human life, damage to property, loss of
PANDA Pipeline system integrity due to freezing lines or
meters, or substantial loss of Gas or Gas pressure or any
other situation that under the rules and regulations of the
NCUC would require immediate attention. NCNG will notify
PANDA of any emergency situation promptly after learning of
its existence. PANDA will reimburse NCNG for all emergency
repairs and authorized maintenance and repair projects in the
manner set forth below.
Section 3.07: The Facilities will require Gas to test its
various components prior to the Commercial Operations Date
and, except for the cause of Force Majeure, NCNG shall, as
Operator of the PANDA Pipeline, commence Gas delivery to the
Facilities as required hereunder upon 30 Days prior written
notice by PANDA to NCNG of the date PANDA shall be ready to
test its Facilities; and PANDA and NCNG will work together in
order to coordinate the efficient scheduling and dispatch of
such test Gas. NCNG's Operator's Fee shall be payable from
and after the Facilities' first takes of Gas. PANDA will
arrange for its own supply of Gas for line pack (the initial
filling of the PANDA Pipeline), and the testing of its
facilities and Pipeline, or in the alternative, PANDA may
purchase Gas for such purposes and NCNG agrees to sell such
Gas at NCNG's Rate 6A then effective pursuant to the Rules
and Regulations of NCNG and the NCUC and to the extent NCNG
determines it has Gas available for PANDA to purchase without
adverse impact on NCNG's other customers.
Section 3.08: In the event that the PANDA Pipeline is not
completed prior to testing of the Facilities or prior to the
Commercial Operations Date, NCNG shall on a "best efforts"
basis either (i) sell required Gas supplies to PANDA at
NCNG's 6A tariff rate or (ii) transport such Gas as PANDA may
make available at NCNG's Receipt Point(s) with Transco or
Columbia to a point of interconnection with the Pipeline at
NCNG's Rate T-l then in effect for all volumes transported
except that during the summer period (April through October,
inclusive) of 1990 the transportation rate shall be $.35 per
dt. It is understood that all such sales and transportation
shall be subject to all rules and regulations of the NCUC and
that PANDA shall be responsible for furnishing said
interconnection (to effectuate such delivery by NCNG) at some
point on its Pipeline. Said interconnection shall be the
"Delivery Point" for purposes of deliveries made pursuant to
this Section 3.08.
Section 3.09: NCNG shall be entitled to reimbursement for
authorized repairs and equipment replacement expenditures
(whether scheduled or emergency) as described in Sections
3.05 and 3.06. In the event of a dispute as to the accuracy
or authority for any charge, PANDA will pay the undisputed
sum to NCNG and shall accompany such payment with written
reasons for its disagreement as to the disputed sum. The
parties shall thereafter attempt to resolve the dispute and,
failing that, the parties shall submit the matter to binding
arbitration as hereafter described.
Section 3.10: Subject to the provisions of Section 6.02 below
and the other terms and conditions of this Agreement, NCNG
shall at all times operate the PANDA Pipeline in a manner
that reasonably will insure delivery of Daily Entitlement
Volumes required by the Facilities except where events of
Force Majeure and maintenance or repair prevents the same.
NCNG will not unreasonably interfere with the pressure
requirements of PANDA at its Facilities.
Section 3.11: PANDA assumes responsibility for the use of Gas
in its equipment and Facilities and PANDA agrees that it
shall determine the fuel specifications for its equipment in
its Facilities and install and maintain at its Facilities
such devices as it determines are adequate to protect and
safeguard its equipment at its Facilities from liquid
hydrocarbons, other liquids or any impurities that may be
present in the Gas stream at the Delivery Point and against
irregularities in the PANDA Pipeline including, but not
limited to, fluctuations or changes in Gas pressure at the
Delivery Point.
Section 3.12: PANDA will be responsible for hiring and paying
for any independent safety inspection and report thereof
required or requested by any governmental agency or
commission. PANDA will also be responsible for the cost and
expense of any action or proceeding before the NCUC or other
applicable governmental agency or commission in connection
with the ownership and/or operation of the PANDA Pipeline.
ARTICLE IV.
TERM
Section 4.01: This Agreement shall be effective from and
after the date first hereinabove written and shall have an
initial Term of fifteen (15) years from the Commercial
Operations Date, unless extended under this Article IV or
terminated as provided elsewhere in this Agreement. If the
Term is extended under this Article IV, the word "Term" shall
thereafter be deemed to mean the original Term so extended.
If the Commercial Operations Date does not occur by November
30, 1991, NCNG may terminate this Agreement without further
obligation by written notice to that effect given on or
before December 31, 1991. PANDA will give NCNG written notice
of at least thirty (30) days in advance of its anticipated
Commercial Operations Date.
Section 4.02: This Agreement may be extended beyond its
original term, with the consent of both parties for two
additional periods of five (5) Years each, provided that at
least ninety (90) Days prior to the end of the initial Term,
or subsequent extension period as the case may be, the party
desiring the extension notifies the other of its desire to
extend the term for an additional period. Except as to the
Operator Fee which shall be adjusted at the beginning of each
of the two extension periods by the percentage increase, if
any, in the CPI since the date of the last adjustment in said
Operator Fee, all conditions and provisions of this Agreement
shall remain the same during the extension periods.
ARTICLE V.
USE OF PIPELINE
Section 5.01: PANDA shall use its Pipeline to provide fuel
solely to its Facilities for its own use and will not engage
in the sale to or the transportation of Gas for any unaffiliated
person, firm, or other person, firm, corporation, or entity
under any circumstance except as provided in Section 5.02
below.
ARTICLE VI.
BALANCING
Section 6.01: The parties anticipate that from time to time
the Facilities may require more or less Gas than the Daily
Entitlement Volume. To the extent NCNG determines in its sole
discretion that operating conditions and Gas needs on NCNG's
system permit NCNG's balancing of Daily Entitlement Volume
with the fuel requirements of the Facilities, NCNG will
attempt such balancing on a "best-efforts" basis by the
taking of Gas not needed by the Facilities into NCNG's system
or by delivering to the Facilities on an interruptible basis
Gas from NCNG's system when the fuel requirements of the
Facilities exceed the Daily Entitlement Volume. Such
balancing activities shall be consistent with and subject to
the rules, regulations and orders of the NCUC and the then
effective rules and regulations off NCNG. Deliveries to
PANDA's Facilities of NCNG owned Gas are subject to
curtailment or interruption caused by Force Majeure; Gas
supply deficiency from NCNG's interstate pipeline suppliers;
the demands of NCNG's residential, commercial and other
higher priority customers under the NCUC's approved
curtailment plan then effective; and other operating
conditions on NCNG's system. Panda agrees to curtail
immediately its use of NCNG owned Gas when instructed to do
so by NCNG. NCNG agrees to curtail immediately its use of
PANDA owned Gas when instructed to do so by PANDA and any
liability or penalties against NCNG shall be the same as
those set forth in Section 6.08 below.
Section 6.02: In order to assist NCNG with its balancing
efforts on PANDA's behalf, PANDA will notify NCNG on or
before the 20th Day of each calendar month of PANDA's
estimate of its Natural Gas requirements at its facilities
for each Day of the following Month; such notice to include
peak Day, minimum Day, average Day and total Monthly volumes
and PANDA shall also advise NCNG at that time of the packages
of Gas supplies PANDA has secured for its anticipated
requirements. Further, PANDA promptly will provide NCNG with
any VEPCO forecast of expected generation dispatch and notify
NCNG of any change in the same. PANDA also will contact
NCNG's dispatcher each Day by five o'clock PM Eastern Time
and advise the dispatcher of the quantity of Gas PANDA has
available for delivery from its interstate supplier for the
following Day and its expected Natural Gas needs ("Daily
Nomination"). PANDA also will contact NCNG's dispatcher at
least one hour before PANDA needs to use Gas at its
Facilities and advise the dispatcher of that need, including
the number of turbines to be used, the anticipated run time
for each turbine and whether PANDA will need to use NCNG
owned Gas or whether PANDA has sufficient Gas supplies
available for Delivery from its interstate supplier. When
PANDA ceases to use Gas in any of its turbines it will
immediately contact NCNG's dispatcher and advise the
dispatcher whether PANDA will need additional Gas that Day.
After eight o'clock AM Eastern Time on the Day of Gas use in
question, when there is any change by PANDA in its Daily
Nomination that requires additional Gas volumes, such Gas
shall be delivered to the Delivery Point by NCNG
solely on a "best efforts" basis. In no event shall NCNG be
liable for any penalties PANDA incurs by its failure to take
Gas supplies from PANDA's interstate suppliers.
Section 6.03: At the end of any Month in which there is a
positive Excess Gas Volume, NCNG will pay PANDA for the full
amount of such Excess Gas Volume at the lower of PANDA's
commodity cost for such Gas at the Receipt Point or NCNG' s
average commodity cost of Gas for that month. (NCNG's average
commodity cost of Gas shall mean the weighted average
commodity cost of Gas for all of NCNG's system supplies for
that month.) PANDA shall furnish NCNG with copies of all
receipts, invoices or other documentation evidencing
PANDA's Commodity Cost of Gas for each Month that there is a
positive Excess Gas Volume.
Section 6.04: At the end of any Month in which there is a
negative Excess Gas Volume, PANDA will pay NCNG for the full
amount of such Excess Gas Volume at NCNG's current unit price
in effect during the affected Month under NCNG's Rate
Schedule 6A. If said Rate Schedule 6A is discontinued or if
the basis for such schedule is changed materially, NCNG and
PANDA will mutually agree upon a substitute pricing schedule
which shall, to the maximum extent possible, achieve the same
result and be consistent with the rules, regulations and
orders of the NCUC.
Section 6.05: With respect to a negative Current Carryover
Gas Volume when there is a change from the previous Month to
the current Month in NCNG's average commodity cost of Gas
("Commodity Cost Change"): (a) If the average commodity cost
of Gas for the current Month is less than it was for the
preceding Month, then PANDA shall pay NCNG an amount equal to
the negative Current Carryover Gas Volume multiplied by the
Commodity Cost Change; and, (b) Likewise, if the average
commodity cost of Gas for the current Month is greater than
it was for the preceding Month, then NCNG shall pay PANDA an
amount equal to the negative Current Carryover Gas Volume
multiplied by the Commodity Cost Change. Said payment will be
made as hereinafter provided.
Section 6.06: With respect to a positive Current Carryover
Gas Volume when there is a change from the previous Month to
the current Month in NCNG's average commodity cost of Gas
("Commodity Cost Change": (a) If the average commodity cost
of Gas for the current Month is greater than it was for the
preceding Month, then PANDA shall pay NCNG an amount equal to
the positive Current Carryover Gas Volume multiplied by the
Commodity Cost Change; and, (b) Likewise, if the average
commodity cost of Gas for the current Month is less than it
was for the preceding Month, then NCNG shall pay PANDA an
amount equal to the positive Current Carryover Gas Volume
multiplied by the Commodity Cost Change. Said payment will be
made as hereinafter provided.
Section 6.07: To the extent that NCNG specifically requests
that PANDA allow it to transport NCNG owned Gas through the
Receipt Point and the PANDA Pipeline for purposes other than
delivery of Gas to the Facilities in any given Month, then
the Operator's Fee described in Sections 3.01 and 3.02 for
such Month shall be reduced by ten ($.10) cents per Dekatherm
of Gas so transported through the Receipt Point and the PANDA
Pipeline provided, however, that the Operator Fee may, in no
event, be reduced below zero in any given Month.
Section 6.08: If NCNG is advised by PANDA that PANDA will be
using in its Facilities all of its Gas delivered to the
Receipt Point (less 1%) subsequent to such notice NCNG shall
not take any Gas from the PANDA Pipeline into NCNG's system
until it is advised by PANDA to the contrary. After eight
o'clock AM Eastern Time on the Day of Gas use in question,
when there is any change by PANDA in its Daily Nomination
that requires additional Gas volumes, such Gas shall be
delivered to the Delivery Point by NCNG solely on a "best
efforts" basis. NCNG acknowledges that PANDA may sustain
unnecessary expenses equalling the difference between the
current market price of PANDA's alternate fuel (#2 diesel
fuel) as delivered to the Facilities and the current market
price of Natural Gas then due PANDA if NCNG wrongfully takes
PANDA's Gas into its system as provided herein; and NCNG shall
be liable to PANDA solely for said unnecessary expenses incurred
by PANDA as a result of NCNG's wrongful taking of Gas into its
system on the Day in question contrary to the information supplied
to it by PANDA.
ARTICLE VI
EASEMENTS AND RIGHTS-OF-WAY
Section 7.01: Except as otherwise specifically provided in
this Section 7.01, PANDA shall acquire any permit, easement,
license, rental or right-of-way (collectively "Easements")
necessary to interconnect the PANDA Pipeline to the Receipt
Point as well as the points of interconnection with NCNG's
system. Further, in situations where NCNG's interests would
not adversely be affected, NCNG will cooperate with PANDA's
requests to cross NCNG's Pipeline or distribution system
using NCNG's standard pipeline crossing agreement.
ARTICLE VIII.
TAXES
Section 8.01: Each party will pay the applicable taxes on the
property or other assets owned by it.
ARTICLE IX.
PAYMENTS
Section 9.01: All payments arising out of the operation of
this Agreement and due from one party hereto to the other
party hereto shall be paid within thirty (30) Days after the
billing party's invoice together with documentation
appropriate to such invoice and as may be required under the
various provisions of this Agreement is deposited in the
U.S. Mail as provided in Article X., below.Failure to pay any
invoice or billing when due, shall entitle the billing party
to receive Interest on the amount due from the date that such
invoice became due and payable.
ARTICLE X
NOTICES
Section 10.01: Until PANDA is otherwise notified in writing
by NCNG, notices to NCNG shall be addressed to NCNG at the
address set forth below or, at such other address as may
hereafter be named:
Xx. Xxxxxx X. Xxxxx, President
North Carolina Natural Gas Corporation
P. 0. Xxx 000
Xxxxxxxxxxxx, XX 00000-0000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Section 10.02: Until NCNG is otherwise notified in writing by
PANDA, notices to PANDA shall be addressed to PANDA at the
address set forth below or at such other address as may
hereafter be named:
Xx. Xxxxx X. Xxxxxxx, Vice President
Panda-Xxxxxxxx Corporation
Suite 1001
0000 Xxxxxx Xxxxxx Xx.
Xxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
Section 10.03: Any notice, advice, instruction or other
communication from one party to the other involving a change
in the rate of receipts or deliveries of Gas shall, if given
by telephone, be immediately confirmed by facsimile
transmission to the other party being notified. Other notices
hereunder shall be given by facsimile transmission or in
writing, postage prepaid, to the last known address of the
party being notified. All invoices shall be considered
delivered when deposited in the United States Mail postage
prepaid and addressed to the last known address of the party
being invoice. All notices shall be deemed to have been
received upon actual receipt by the party being notified. Any
notice to terminate or extend this Agreement, shall be sent
by United States Mail, postage prepaid, certified, return
receipt requested, to the last known address of the party
being notified.
ARTICLE XI.
METERING AND MEASUREMENT
Section 11.01: The measurement volume unit of the Gas
delivered under this Agreement shall be an MCF. The gross
British thermal unit content per cubic foot of Gas delivered
hereunder shall be determined in accordance with the
requirements of Transco or Columbia, as the case may be. In
any Month during which Gas is received into the PANDA
Pipeline from both Transco and Columbia, NCNG shall take the
Btu information received from the suppliers and determine the
heating value of the Gas by calculating the weighted average
of the heating values of the Gas from each source.
Section 11.02: The meters at the Receipt Point shall be
tested and calibrated by personnel of the interstate
pipeline, with NCNG having the right to observe the same, as
often as may be required by the interstate pipeline
delivering Gas there through, but in no event less often than
once each Month. The Delivery Point meters will be tested and
calibrated by NCNG personnel as often as deemed necessary by
NCNG but no less often than once each month.
Section 11.03: PANDA shall install two meters at the Delivery
Point which meet specifications approved by AGA Report #3 so
as to facilitate the accurate measurement of diverse volumes.
Section 11.04: If upon any test of the Delivery Point,
meter(s) at PANDA's Facilities, the meter(s) is/are found to
be inaccurate:
(a) By less than two percent (2%), previous readings thereof
shall be considered correct, but such meter shall be
adjusted at once to read correctly.
(b) By two percent (2%) or more, such meter shall be adjusted
at once to read correctly and previous readings thereof shall
be corrected to zero error for the period of time during
which said meter was known or agreed by the parties to be
inaccurate, and in the event the extent of such period of
inaccuracy is not known or agreed upon, then such corrections
shall be made for a period of one-half (1/2) of the elapsed
time since the date o f the last preceding test. In the event
the Delivery Point meters are out of service or
registering inaccurately, and the inaccuracy cannot be
calculated, the volume of Gas delivered hereunder shall be
estimated, by using the registration of any check meter or
meters, if installed and accurately registering, or, (2) by
correcting the error if the percentage of error is
ascertainable by calibration, test, or mathematical
calculation, or, if neither such method is feasible, (3) by
estimating the quantity of delivery by deliveries during a
period under similar conditions when the meter was
registering accurately, or (4) by any other method agreed
upon.
Section 11.05: All test data, charts, and other similar
records shall be preserved by NCNG for a period of not less
than two (2) years and NCNG shall send any part or all of
such data as may be requested by PANDA from time to time at
PANDA's expense. All such test data, charts and any other
similar records shall be returned to NCNG within thirty (30)
Days after receipt of same. In addition, PANDA's right to
obtain test data, charts and other similar records shall
extend to and shall cover any information to which NCNG might
be entitled to receive from Transco or Columbia.
Section 11.06: Payment for corrected volumes shall be made by
the party owing therefor in the manner provided elsewhere in
this Agreement.
ARTICLE XII.
IDENTIFICATION
Section 12.01: Each party ("Indemnitor") shall indemnify,
defend and hold harmless the other party ("Indemnitee"), and
their officers, directors, employees, heirs, successors,
assigns and administrators from and against any and all
claims, demands, suits, actions, liabilities, losses,
damages, judgments, and/or legal or other expenses
(collectively "Claims") to the extent that they arise from or
in connection solely with the negligent performance or non-
performance of the Indemnitor's obligations hereunder.
Further, PANDA (as Indemnitor) specifically agrees to
indemnify, defend and hold harmless NCNG (as Indemnitee) its
officers, directors, employees, heirs, successors, agents and
assigns from and against any and all claims, demands, suits,
actions, liabilities, losses, damages, judgments, and/or
legal or other expenses ("claims") which may arise from any
defect in the design and/or construction of the PANDA
Pipeline or from PANDA's use or application of said Gas, or
lack of use of said Gas, in its Facilities. If a claim is
asserted or action brought against Indemnitee as to which it
believes it is entitled to indemnification under this
Article, Indemnitee shall promptly notify Indemnitor in
writing of such claim or action. Prompt notice as
contemplated in the preceding sentence shall mean such notice
as would be required to enable Indemnitor to assert and
prosecute appropriate defenses relative to such claim or such
action in a timely fashion. If Indemnitee fails to give
Indemnitor prompt notice of any claim or action as provided
in this Section, Indemnitor shall have no obligation to
indemnify pursuant to this Article. Upon receipt of such
notice request for indemnification, Indemnitor shall
promptly make a determination of whether it is required to
indemnify and shall promptly notify Indemnitee in writing of
that determination.
Section 12.02: At no time during the continuance of this
Agreement will NCNG allow any suit, action, or lien for
nonpayment of services or materials contracted for by NCNG to
be levied against the PANDA Pipeline provided, however, that
such indemnity in this section shall not be effective as to
NCNG's invoices to PANDA which are not timely paid.
ARTICLE XIII.
REPRESENTATIONS AND WARRANTIES
Section 13.01: NCNG represents and warrants the following to
PANDA: That it is a duly incorporated and validly existing
Delaware corporation qualified to do business in the State of
North Carolina; that it is solvent and has not sought
protection from its creditors in Bankruptcy; that it has the
power to enter into this Agreement; that all corporate
actions required to enter and to perform this Agreement have
been taken or will be taken when required; that the parties
executing this Agreement on behalf of NCNG are duly
authorized and empowered to bind NCNG under the terms of this
Agreement; and that there are no impediments of any sort to
NCNG's entering into this Agreement with the exception of
regulatory approval, if required.
Section 13.02: PANDA ENERGY CORPORATION and PANDA-XXXXXXXX
CORPORATION represent and warrant the following to NCNG: That
PANDA ENERGY CORPORATION is a duly incorporated and validly
existing Texas Corporation and PANDA-XXXXXXXX CORPORATION is
a duly incorporated and validly existing Delaware corporation
qualified to do business in the State of North Carolina; that
it is solvent and has not sought protection from its
creditors in Bankruptcy; that it has the power to enter into
this Agreement; that all corporate action required to enter
andto perform this Agreement have been taken or will be taken
when required; that the parties executing this Agreement on
behalf of PANDA are duly authorized and empowered to bind
PANDA under the terms of this Agreement; and that there are
no impediments of any sort to PANDA's entering into this
Agreement.
Section 13.03: PANDA represents and warrants to NCNG that at
the time of delivery of Gas to the Receipt Point it will have
title to the Gas free and clear of all liens, encumbrances
and claims whatsoever and that it shall pay its suppliers for
the same and indemnify NCNG and save NCNG harmless for any
and all suits, actions, debts, accounts, damages, costs,
losses and expenses arising from or out of PANDA's failure to
pay for said Gas and/or all royalties, taxes, license fees or
charges on or with respect.
Section 13.04: NCNG represents and warrants to PANDA that at
the time of any delivery of NCNG owned Gas from NCNG's system
to the Delivery Point it will have title to the Gas free and
clear of all liens, encumbrances and claims whatsoever and that it
shall pay its suppliers for the same and indemnify PANDA and
save PANDA harmless for any and all suits, actions, debts,
accounts, damages, costs, losses and expenses arising from or
out of NCNG's failure to pay for said Gas and/or all
royalties, taxes, license fees or charges on or with respect
to said Gas.
ARTICLE XIV.
DEFAULT AND FORCE MAJEURE
Section 14.01: It is covenanted and agreed that if any party
hereto shall fail to perform any of the material covenants or
obligations imposed upon it under and by virtue of this
Agreement, then unless such failure to perform is due to an
event of Force Majeure as provided in Section 14.03 below or
is otherwise excused by a provision of this Agreement, the
non-defaulting party may at its option, and in addition to
any other remedies available to such party, elect to
terminate this Agreement by giving written notice to the
party in default stating specifically the cause or causes for
terminating this Agreement and declaring it to be the
intention of the party giving the notice to terminate same;
whereupon the party in default shall have sixty (60) Days
after receipt of the aforesaid notice in which to remedy or
remove the cause or causes stated in the notice for
terminating this ' agreement, and if within said period of
sixty (60) Days the party in default does so remedy or remove
said cause or causes and fully indemnifies the party not in
default for any and all direct damages of such breach, then
such notice shall be withdrawn and this Agreement shall
continue in full force and effect. In case the party in
default does not so remedy or remove the cause or causes and
indemnify the party giving the notice for any and all direct
damages of such breach, within said period of sixty (60)
Days, then at the option of the non-defaulting party, this
Agreement shall become null and void from and after the
expiration of said period. However, if the parties disagree
as to whether a default occurred and/or as to the amount of
damages resulting from an alleged default, the matter shall
be submitted to Arbitration as provided in Article XVI of
this Agreement.
Section 14.02: Notwithstanding Section 14.01, above,
throughout the Term of this Agreement, PANDA shall provide
NCNG in writing the name and address of each Financier on a
current basis. For so long as PANDA shall have outstanding
and unpaid any financing liabilities, NCNG agrees to promptly
furnish to all Financiers, then known to NCNG, a copy of any
notice of default, breach, failure to pay xxxxxxxx, demand
for arbitration, or notice of termination given to PANDA.
Additionally, NCNG shall not terminate this Agreement unless
any written notice of such termination or breach, as the case
may be, and the reasons therefor have been sent certified
mail, return receipt requested, postage prepaid and addressed
to each Financier then known to NCNG at the addressees)
furnished by PANDA or such Financier until sixty (60) Days
prior to the effective date of the termination. NCNG shall
not terminate this Agreement if, after sending notice as set
forth above and prior to any effective date of termination,
Financier has either: (a) caused the condition precipitating
the notice of breach or termination to be cured; or (b)
assumed all obligations of PANDA under this Agreement to
NCNG's satisfaction.
Section 14.03: No delay or failure in performance by either
party hereto shall constitute a default hereunder or give
rise to any claims for damages, and the same shall be
excused, if caused by an occurrence of Force Majeure,
provided that after the occurrence of the event of Force
Majeure, the party so affected gives prompt notice thereof to
the unaffected party along with a detailed account of the
facts concerning same. No failure to pay money due and owing
under the terms hereof will be excused by events of Force
Majeure.
Section 14.04: If any event of Force Majeure persists for
more than ninety (90) Days after the affected party gives
notice to the remaining party hereto, then the unaffected
party shall have the right to terminate this Agreement upon
giving the affected party thirty (30) Days prior written
notice to such effect and unless the affected party is able
to resolve the condition of force majeure and resume
performance of its duties hereunder within such thirty (30)
Day period, then this Agreement shall be terminated and of no
further effect.
ARTICLE: XV.
OPTION TO PURCHASE PIPELINE
Section 15.01: NCNG shall have an option to purchase the
PANDA Pipeline for its fair market value. Said option shall
be exercisable and operate subject to the following terms and
conditions:
(a) PANDA may sell or assign the Pipeline to a third
party or other entity at any time provided that the
third party or other entity that purchases or acquires
by assignment the Pipeline also purchases or acquires
by assignment the Facilities at the same time. NCNG's
option created by this Article XV shall survive any
such purchase or assignment. The requirements of
Section 5.01 of this Agreement shall similarly survive
any such sale or assignment and shall bind and obligate
any such third party purchaser, assignee or successor
of PANDA.
(b) NCNG's option shall not be assignable without the
prior written consent of PANDA.
(c) NCNG's option shall be exercisable (subject to all
other requirements herein) at the earlier of the
following:
(i) thirty-five (35) years after the Commercial
Operation Date;
(ii) such time, after the Commercial Operation
Date, as the Facilities cease to generate
electricity or steam for more than two years for
reasons other than force majeure;
(iii) upon the sale or assignment by PANDA or its
successors of the Facilities to a third party or
other entity without the Pipeline being sold or
assigned at that time to said third party or other
entity purchasing or acquiring by assignment the
Facilities; or
(iv) upon written notice from PANDA or its
successors that said option is available for
exercise.
NCNG must give PANDA written notice of NCNG's intent to
exercise its option within one year after said option
first becomes exercisable. Said option cannot be
exercised after said one year period if NCNG fails to
give PANDA such written notice.
(d) The fair market value ("FMV") of the Pipeline shall
be determined by mutual agreement of the parties within
60 days after PANDA receives written notice from NCNG
of its intent to exercise its option to purchase the
Pipeline or by appraisal as provided in Section I5.02
below. If mutual agreement as to FMV is not reached
within the 60 day period and NCNG does not initiate the
appraisal process within 120 days after it notified
PANDA of its intent to exercise its option, said option
shall expire.
(e) If the FMV of the Pipeline is determined by
appraisal as permitted in Section 15.02, NCNG shall not
be obligated to purchase the Pipeline but may revoke
its election to exercise said option if NCNG sends
PANDA written notice of NCNG's decision not to purchase
within 30 days after NCNG receives the Appraiser's
report as to the FMV of the Pipeline; however, if NCNG
decides not to purchase the Pipeline after it receives
the Appraiser's report, it shall be liable for all of
the reasonable and authorized expenses of the
Appraisers. Likewise, PANDA shall be liable for all the
reasonable and authorized expenses of the Appraisers if
VEPCO exercises its right of first refusal to buy the
Pipeline and Facilities after NCNG has notified PANDA
of its intent to exercise its option to purchase the
Pipeline. If NCNG does not revoke its election to
exercise the option as provided herein and VEPCO does
not exercise its rights to the Pipeline 60 days after
PANDA receives written notice from NCNG of its intent
to exercise its option to purchase the Pipeline or by
appraisal as provided in Section 15.02 below. If mutual
agreement as to FMV is not reached within the 60 day
period and NCNG does not initiate the appraisal process
within 120 days after it notified PANDA of its intent
to exercise its option, said option shall expire.
(f) PANDA will specially warrant title to the Pipeline
and its appurtenant equipment and rights-of-way and
easements, by, through and under PANDA.
(g) PANDA will not warrant the merchantability or
fitness of the PANDA Pipeline for any use whatsoever
(NCNG will accept it in an "as is, where is" condition).
(h) Said option shall not terminate as a result of the
parties failure to agree on any extension of the term of
this Agreement providing for the operation of the
Pipeline by NCNG beyond the initial 15-year term or as a
result of NCNG ceasing to be the operator of said
Pipeline; but the option shall only remain in effect for
one year beyond the date said option is available for
exercise as provided in Section l5.Ol(c) above.
(i) The parties agree that this Agreement shall survive any
exercise by VEPCO of its rights of first refusal or the
sale or assignment of the Pipeline to a third party or
other entity and those exercising said rights, making
said purchase or acquiring the Pipeline by assignment
shall take subject to this Agreement.
Section 15.02: If PANDA and NCNG cannot agree on the option
price (pursuant to Section 15.01 above), NCNG may, by written
notice to PANDA, elect to have the FMV of the Pipeline
determined by appraisal, as provided in this Section 15.02.
Within 45 days of such election by NCNG, PANDA and NCNG shall
each appoint an MAI certified appraiser (qualified to
appraise pipelines) and the two appointed Appraisers shall
select a third MAI certified appraiser (qualified to
appraise pipelines). The three Appraisers shall determine the
FMV of the Pipeline and report their determination to the
parties within 45 days of their appointment. The value
determined to be the FMV by the three Appraisers shall be the
option price and shall be binding upon NCNG and PANDA subject
to NCNG's right to revoke its election to exercise said
option and cancel the purchase as described in Section
15.01(e) above.
ARTICLE XVI.
ARBITRATION
Section 16.01: At the request of either party hereto, any
controversy or dispute between the parties arising under and
relating solely to the terms of this Agreement (except as to
the option price in Article XV above) shall be referred to
three (3) arbitrators, one to be selected by each party and
the third to be selected by the American Arbitration
Association ("AAA"). The selections to be made by the parties
hereto shall be made from the list of the National Panel of
Arbitrators maintained by the AAA. The arbitrator to be
selected by the AAA shall be an attorney-at-law admitted to
practice in the State of North Carolina. All decisions and
awards shall be binding on the parties when made by a
majority of the arbitrators, except for decisions relating to
discovery as set forth herein. In the event any arbitrator
dies, or refuses to act, or becomes incapable, incompetent or
unfit to act before hearings have been completed and/or
before an award has been rendered, a successor arbitrator may
be selected by the party who originally made the selection.
The selection of the successor arbitrator shall be made
consistent with the selection procedure set forth in the
preceding paragraph. The arbitrators selected pursuant to
this Agreement shall be governed by and apply the laws of the
State of North Carolina and federal law, if applicable, in
conducting any arbitration proceeding and/or in making any
award. The arbitration shall be conducted in Raleigh, North
Carolina in accordance with the Commercial Arbitration Rules
of the AAA then in effect.
Section 16.02: Any party hereto shall have the right to give
a notice of demand for arbitration (hereinafter referred to
as "Demand for Arbitration") of any controversy or dispute
which is subject to arbitration under the terms of this
Agreement and such notice shall be filed in writing with the
AAA by the party seeking arbitration and a copy of same shall
be served contemporaneously with such filing on the other
party. The notice shall state, with specificity, the nature
of the dispute and the remedy sought. After such notice has
been filed, the parties hereto may make discovery of any
matter relevant to such dispute before the hearing, to the
extent and in the manner provided by rules of civil procedure
of the State of North Carolina. Any question that may arise
with respect to the obligations of the parties hereto
relative to discovery and/or relative to the protection of
the discovery materials shall be referred solely to the
arbitrator selected by the AAA. Discovery shall be completed
not later than ninety (90) Days after filing of the notice of
arbitration unless such period for discovery is extended by
the arbitrator selected by the AAA, upon a showing of good
cause by either party to the arbitration. The arbitrators may
consider any material which is relevant to the subject matter
of any such controversy even if such material might also be
relevant to an issue or issues not subject to arbitration
hereunder. A stenographic record shall be made of the
arbitration hearing. Any costs associated with any
arbitration hereunder shall be paid by the party against whom
an award is entered unless the arbitrators by their award
otherwise provide. Arbitration may not be utilized, and the
arbitrators selected in accordance with this Article XVI
shall not possess the authority or power, to alter, amend or
modify any of the terms or conditions or charges set forth in
this Agreement, and further, the arbitrators may not enter
any award which alters, amends or modifies such terms,
conditions in any form or manner.
ARTICLE XVII.
INSURANCE
Section 17.01: PANDA shall at all times during the
continuance of this Agreement provide and maintain at its own
expense Comprehensive General Liability Insurance on the
PANDA Pipeline and Facilities with coverage of not less than
$1,000,000 per occurrence, $2,000,000 aggregate, and excess
liability coverage of not less than $5,000,000, as well as
All-Risk Property Insurance coverage in an amount satisfactory
to PANDA but in no event less than $1,000,000. PANDA will add
NCNG as an additional insured, as its interest may appear, to
PANDA's liability insurance policies at no cost to NCNG.
PANDA also shall maintain Worker's Compensation Insurance on
PANDA's employees in compliance with the laws of the State of
North Carolina and Comprehensive Automobile Liability
Insurance coverage on vehicles owned or operated by PANDA
with a limit of not less than $1,000,000 per occurrence.
Section 17.02: NCNG shall at all times during the
continuance of this Agreement maintain at its own expense
such Comprehensive General Liability Insurance,
Comprehensive Automobile Liability Insurance coverage on
vehicles owned or operated by NCNG and All-Risk Property
Insurance coverage on its property in an amount as it
determines to be appropriate for a natural gas utility
operating in Class 3 locations in the State of North
Carolina, but in no event less than the coverage set forth
for PANDA in Section 17.01 above. NCNG shall also maintain
Worker's Compensation Insurance on NCNG's employees in
compliance with the laws of the State of North Carolina.
Section 17.03: PANDA and NCNG shall each provide to the other
certificates of insurance upon request certifying that such
insurance is in full force and effect and shall each notify
the other immediately of any change in the status or coverage
of such insurance.
ARTICLE XVIII
COMPROMISE AND SETTLEMENT OF LITIGATION
Section 18.01: On May 2, 1989, the NCUC issued a Certificate
of Public Convenience and Necessity ("CCN") in Docket No. SP-
73, to PANDA. On October 2, 1989, in Docket No. SP-73, Sub 1,
the NCUC issued an Order Not To Reconsider the issuance of
the CCN. NCNG has subsequently filed its Exceptions and
Notice of Appeal to said Order Not to Reconsider. The Record
of Appeal has been settled and the Appeal is pending before
the North Carolina Court of Appeals.
Section 18.02: NCNG shall, within one (1) week after
execution of this Agreement, file all required Notices,
proposed Orders and Documents with the North Carolina Court
of Appeals to effect a dismissal with prejudice (to refiling
the same) of its said Appeal in Docket No. SP-73, Sub 1.
ARTICLE XIX.
MISCELLANEOUS PROVISIONS
Section 19.01: All terms defined in this Agreement shall have
the same defined meanings when used in any notice,
correspondence, report or other document made or delivered
pursuant to or in connection with this Agreement, unless the
context shall clearly otherwise require.
Section 19.02: Each party hereto agrees that in the event
that it receives any payment from the other party to which it
is not entitled, whether due to mistake or error on the part
of the other party, or due to the operation and effect of
laws and regulations promulgated from time to time during the
Term hereof, the party receiving such payment shall promptly
return all of such payment together with Interest from the
date such payment or payments were received until the date
repaid.
Section 19.03 No waiver by either party of one or more
defaults by the other party in the performance of any of the
provisions of this Agreement shall operate or be construed as
a waiver of any other or further default of defaults, whether
of a like or of a different character.
Section 19.04: This Agreement shall be binding upon and inure
to the benefit of the heirs, legal representatives,
successors and assigns of the respective parties hereto. No
assignment or sale of any interest shall be effective until
the remaining party hereto has received written notice to
such effect. No assignment or sale of interest shall relieve
the assigning party of its preexisting obligations hereunder
without the written consent of the remaining party hereto.
Section 19.05: Any part of this Agreement which is found to
be in violation of any valid rule, regulation or law
promulgated by a properly authorized state or federal agency,
Congress or State legislature shall be stricken from this
Agreement and the remainder of the Agreement shall be
construed without such part, provided that the surviving
provisions achieve the purpose and intent of the parties.
Section 19.06: This Agreement constitutes the entire
agreement between the parties and supersedes all previous
contracts, agreements and understandings both written and
oral. This Agreement may not be amended except in writing and
executed by both parties hereto.
Section 19.07: This Agreement may be executed in multiple
originals, each of which, when taken together, shall be
construed as a complete original.
Section 19.08: This Agreement shall remain confidential
during the Term hereof. Neither party hereto shall disclose
any of the terms, conditions, obligations, duties, promises,
benefits or liabilities set forth in this Agreement without
the express prior written permission of the remaining party
hereto; provided however, that each party hereto shall be
free to disclose such facts concerning this Agreement as may
be required by applicable statute, rule or regulation or by
Order of the NCUC or a Court of competent jurisdiction or by
loan agreements of either party's lenders or employees,
agents and independent contractors of either party without
need of securing the prior permission of the other party
hereto. The parties agree to obtain NCUC approval of this
Agreement to the extent required by the NCUC.
Section 19.09: This Agreement shall be interpreted, performed
and enforced in accordance with the laws of the State of
North Carolina.
Section 19.10: PANDA and NCNG each agree that they will
comply with all valid rules and regulations enforced by the
NCUC Office of Pipeline Safety. PANDA and NCNG each agree
that they will comply with all valid and applicable laws,
orders, rules and regulations of all governmental agencies
having jurisdiction over the Pipeline and of all courts of
competent jurisdiction and each will not interfere with the
other's compliance with said laws, orders, rules and
regulations. PANDA agrees to be bound by the rules and
regulations of NCNG as amended from time to time to the
extent that such rules do not conflict with the terms of this
Agreement, in which case the terms of this Agreement shall
control. PANDA acknowledges receipt of a current copy of
NCNG's rules and regulations.
Section 19.11: The parties agree that concurrent with the
execution of this Agreement they shall execute a memorandum
of this Agreement, in recordable form, specifying the
effective date, the maximum period of the Agreement including
extensions and renewals thereof, NCNG's option to purchase
the PANDA Pipeline a brief description of the Pipeline and
its location and the fact that NCNG shall have the right to
operate the Pipeline during the term of this Agreement and
any extensions thereof, and said memorandum shall be recorded
in the Office of Register of Deeds or other appropriate
office in each County of this State where the Pipeline is to
be located.
IN WITNESS WHEREOF, this instrument is executed in duplicate
originals as of the date first hereinabove written.
ATTEST: PANDA ENERGY CORPORATION
Xxxxx Xxxxxxxx ____________________________
Assistant Secretary Xxxxxx X. Xxxxxx
Chairman
(CORPORATE SEAL)
ATTEST: PANDA-XXXXXXXX CORPORATION
Xxxxx Xxxxxxxx _____________________________
Assistant Secretary Xxxxxx X. Xxxxxx
President
(CORPORATE SEAL)
ATTEST: NORTH CAROLINA NATURAL GAS
CORPORATION
Xxxxx Xxxxxx ______________________________
Assistant Secretary Xxxxxx X. Xxxxx
President
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day
personally appeared XXXXXX X . XXXXXX, the duly authorized
President of PANDA ENERGY CORPORATION, a Texas Corporation,
known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed
the same for the purposes and considerations therein
expressed, as the act of such corporation, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 5 day of
March, 1990.
Xxxxxxxx X. Bone
Notary Public
Seal My Commission Expires:
June 23, 1993
Xxxxxxxx X. Bone
Notary Public
State of Texas
Comm. Exp. 00-00-00
XXXXX XX XXXXX
XXXXXX XX XXXXXX
XXXXXX XX, the undersigned authority, on this day
personally appeared XXXXXX X. XXXXXX, the duly authorized
President of PANDA-XXXXXXXX CORPORATION, a Delaware
Corporation, known to me to be the person whose name is
subscribed to the foregoing instrument, and acknowledged to
me that he executed the same for the purposes and
considerations therein expressed, as the act of such
corporation, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 5th day of March,
1990.
Xxxxxxxx X. Bone
Notary Public
Seal
Xxxxxxxx X. Bone
Notary Public
State of Texas
Comm. Exp. 06-23-93
My Commission Expires:
June 23, 1993
