EXHIBIT 10.66
GAS SALES AGREEMENT
between
COGEN DEVELOPMENT COMPANY
as Seller
and
PANDA- BRANDYWINE, L.P.
as Buyer
Any person receiving a copy of this
Agreement, is subject to and agrees to be
bound by the provisions of Section 19.5
hereof regarding the confidentiality of the
provisions of this Agreement.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS OF TERMS 1
Section 1.1 Definitions 1
ARTICLE II CONDITIONS 9
Section 2.1 Seller's Conditions 9
Section 2.2 Buyer's Conditions 9
Section 2.3 Financial Closing 11
Section 2.4 Notifications 11
ARTICLE III QUANTITIES AND GAS CLASSIFICATIONS 12
Section 3.1 Purchase and Sale 12
Section 3.2 Gas Classifications 12
Section 3.3 Make-Up 13
Section 3.4 Gas Allocation 14
Section 3.5 Regularly Scheduled Outages 14
Section 3.6 Buyer's Right to Resell Gas 15
Section 3.7 Testing Service 15
Section 3.8 Processing 15
ARTICLE IV SCHEDULING OF DELIVERIES 16
Section 4.1 Quantity 16
Section 4.2 Delivery Rates 18
Section 4.3 Gas Imbalances 18
Section 4.4 Transportation 18
ARTICLE V SELLER'S WARRANTY 19
Section 5.1 Seller's Warranty 19
ARTICLE VI TERM 19
Section 6.1 Term 19
ARTICLE VII PRICE 19
Section 7.1 Gas Prices 19
Section 7.2 Taxes and Royalties 22
Section 7.3 Gas Market Price Ceiling 23
Section 7.4 Change in Index 24
ARTICLE VIII ▇▇▇▇▇▇▇▇ AND PAYMENTS 24
Section 8.1 Seller's ▇▇▇▇▇▇▇▇ 24
Section 8.2 Buyer's Payment 24
Section 8.3 Buyer's ▇▇▇▇▇▇▇▇ and Seller's Payments 24
Section 8.4 Verification 25
Section 8.5 Failure to Pay 25
Section 8.6 Corrections of Errors 26
ARTICLE IX SPECIFICATIONS 26
Section 9.1 Specifications 26
Section 9.2 Non-Conforming Gas 27
ARTICLE X POSSESSION AND TITLE 27
Section 10.1 Warranty of Title 27
Section 10.2 Possession 27
ARTICLE XI BUYER'S REPRESENTATIONS AND WARRANTIES 28
Section 11.1 Representations and Warranties 28
Section 11.2 Buyer's Covenants 29
ARTICLE XII SELLER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS 29
Section 12.1 Representations and Warranties 29
Section 12.2 Covenants 30
ARTICLE XIII FORCE MAJEURE 36
Section 13.1 Definition 36
Section 13.2 Burden of Proof 38
Section 13.3 Effect of Event of Force Majeure 38
Section 13.4 Settlement of Strikes, Lockouts, or Other
Labor Disputes 38
Section 13.5 Force Majeure Curtailment 39
Section 13.6 Termination Due to Extended Event of
Force Majeure 39
ARTICLE XIV GOVERNMENTAL ACTION 40
Section 14.1 Governmental Action 40
ARTICLE XV TRANSFER AND ASSIGNMENT 40
Section 15.1 Assignments 40
ARTICLE XVI NOTICE 41
Section 16.1 Notice 41
ARTICLE XVII SUSPENSION, MITIGATION, DEFAULT AND REMEDIES 42
Section 17.1 Seller's Failure To Deliver 42
Section 17.2 Event of Default 44
Section 17.3 Remedies for Breach 46
Section 17.4 Special Termination Event 49
ARTICLE XVIII ARBITRATION 51
Section 18.1 Arbitration of Disputes 51
Section 18.2 Appointment of Board 52
Section 18.3 Hearing and Decision 52
Section 18.4 Effect of Decision 52
ARTICLE XIX MISCELLANEOUS PROVISIONS 53
Section 19.1 Captions 53
Section 19.2 Choice Of Law 53
Section 19.3 Other Agreements 53
Section 19.4 Binding Effect 53
Section 19.5 Confidentiality 53
Section 19.6 NonWaiver of Defaults 54
Section 19.7 Written Amendments 55
Section 19.8 Severability and Renegotiation 55
Section 19.9 Survival 55
Section 19.10 Further Assurances 55
Section 19.11 Limitation of Liability 55
Section 19.12 Waiver of UCC Warranties 56
Section 19.13 Counterpart 56
Section 19.14 Winding Up 56
Section 19.15 Preparation 56
Section 19.16 Seller's Reservation 56
APPENDIX I
Adjustment to Agreement Resulting From First Amendment of
Power Contract Not Becoming Effective
EXHIBIT A
Form of Consent and Agreement
EXHIBIT B
Form of Opinion of Counsel
EXHIBIT C
Governmental Approvals
EXHIBIT D
Form of Guaranty
GAS SALES AGREEMENT
This GAS SALES AGREEMENT ("Agreement") dated as of the 30th day
of March, 1995, by and between Cogen Development Company, a
Michigan corporation ("Seller"), and Panda-Brandywine, L.P., a
Delaware limited partnership ("Buyer"), acting by and through its
general partner, Panda Brandywine Corporation, a Delaware
corporation. Seller and Buyer are sometimes referred to herein
individually as a "Party" and collectively as "Parties".
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of selling natural
gas; and
WHEREAS, Buyer proposes to construct and operate a natural gas
and oil-fired cogeneration facility having a net electrical
capability of up to approximately 230 megawatts, to be located
near Brandywine, Maryland and which is expected to commence
commercial operation after June 1, 1996; and
WHEREAS, Seller owns, controls or has or will obtain rights to
quantities of Gas to sell to Buyer and has entered into or will
enter into gas transportation agreements necessary to effect
delivery of Gas hereunder at the Delivery Points; and
WHEREAS, subject to the terms and conditions of this Agreement,
Seller desires to sell and deliver Gas to Buyer and Buyer desires
to purchase and receive Gas from Seller;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and intending to be legally bound,
Seller and Buyer agree as follows:
ARTICLE I
DEFINITIONS OF TERMS
Section 1.1 Definitions. For purposes of this Agreement, the
following capitalized terms and phrases shall have the meanings
set forth below or given them in the provisions hereof cited:
"Additional Proposed Reserves" shall have the meaning set
forth in Section 12.2(d).
"Agreement" means this Gas Sales Agreement between Cogen
Development Company and Panda-Brandywine, L.P., as it may be
amended from time to time.
"Agreement Year" means the twelve- (12) month period
beginning on the Initial Delivery Date, and the twelve- (12)
month period beginning on each succeeding anniversary of the
Initial Delivery Date.
"ANR Charge" shall have the meaning set forth in Section
7.1(a)(iii).
"Best Efforts" means every reasonable effort that can be
taken in good faith under the circumstances in pursuit of
the objective described, consistent with applicable and
customary commercial standards and the affected Party's
total capability to perform.
"Business Day" means each Day, Monday through Friday, except
holidays, from 8:00 a.m. to 5:00 p.m. Eastern Time.
"Buyer's Cover Standard" shall have the meaning set forth in
Section 17.1.
"Buyer's Credit" shall have the meaning set forth in Section
7.1(d).
"Buyer's Delivery Point" means the "primary delivery point"
specified from time to time in the Columbia FT Agreement.
"British Thermal Unit" (or "Btu") shall have the meaning
ascribed in the FERC Gas Tariff of Columbia Gas Transmission
or such other Pipeline(s) that may operate a Delivery
Point(s).
"Columbia FT Agreement" means the Amended and Restated FTS
Service Agreement, dated March 23, 1995, between Buyer and
Columbia Gas Transmission, as such agreement may be amended
from time to time. A copy of the Columbia FT Agreement is
appended to the Precedent Agreement.
"Columbia Gas Transmission'' means Columbia Gas Transmission
Corporation, its successors and permitted assigns.
"Consent and Agreement" means the Financing Document
substantially in the form of Exhibit A attached hereto, by
which Seller consents to the assignment of this Agreement by
Buyer to the Financing Parties to secure Buyer's
indebtedness under the Financing Documents, as such
Financing Document may be amended from time to time.
"Cove Point Agreement" means the FTS Service Agreement,
dated as of March 30, 1995, between Buyer and Cove Point
LNG, as such agreement may be amended from time to time.
"Cove Point LNG" means Cove Point LNG Limited Partnership,
its successors and permitted assigns.
"Day" means the twenty-four- (24) hour period commencing at
8:00 a.m. Eastern Time.
"Dedicated Reserves" shall have the meaning set forth in
Section 12.2(d).
"Delivery Point" or "Delivery Point(s)" mean(s):
(a) (i)with respect to Gas Scheduled for delivery within the MDFQ,
the primary point(s) of receipt set forth in the Columbia FT
Agreement or an appendix or attachment thereto; and
(ii) with respect to Gas Scheduled for delivery within
the MDIQ, the point(s) of receipt set forth in the
Columbia IT Agreement, or an appendix or attachment
thereto; and
(b) such other primary or secondary points as the Parties
may agree from time to time subject to the prior written
consent of the Financing Parties.
"Dispatchable Gas" shall have the meaning set forth in
Section 3.2(c).
"Dth" means one (1) dekatherm, which shall equal one (1)
MMBtu.
"Event of Default" shall have the meaning set forth in
Section 17.2.
"Event of Force Majeure" shall have the meaning set forth in
Section 13.1.
"Extended Term" shall have the meaning set forth in Section 6.1.
"Facility" means the electric and steam cogeneration
facility to be constructed and operated by Buyer and located
near Brandywine, Maryland.
"FERC" means the Federal Energy Regulatory Commission or any
successor agency, department or instrumentality of the
United States government.
"FERC Regulated Facilities" means those interstate gas
transmission facilities owned and operated by a FERC-
regulated interstate pipeline company, which are located on
the discharge side of any field compression units, are
subject to the jurisdiction of FERC and are currently
classified as transmission facilities by FERC for rate-
making purposes.
"FERC Tariff" means the tariff of a FERC regulated pipeline
that is effective and on file with the FERC.
"Financial Closing" means the initial funding of the
construction financing of the Facility upon terms and
conditions acceptable to Buyer in its sole discretion.
"Financing Documents" mean any and all loan agreements,
notes, indentures, security agreements, subordination
agreements, mortgages, partnership agreements, subscription
agreements, participation agreements and other documents
relating to the construction, interim and long-term
financing (both debt and any third party equity) of the
Facility and any refinancing thereof (including a lease or a
leveraged lease pursuant to which Buyer is the lessee of the
Facility) provided by the Financing Parties, including any
and all modifications, extensions, renewals, and
replacements of any such agreements and documents.
"Financing Parties" mean General Electric Capital
Corporation and, in accordance with the terms and conditions
of the Consent and Agreement, (i) any and all successor
lenders providing the construction, interim or long-term
financing or refinancing of the Facility (including a lease
or a leveraged lease), and any trustee(s) or agent(s) acting
on their behalf, and (ii) any and all successor equity
investors providing any such financing or refinancing of the
Facility, and any trustee(s) or agent(s) acting on their
behalf.
"Firm Basis" means the obligation of Seller to deliver and
Buyer to receive Gas within the MDFQ at the Delivery
Point(s), as Scheduled by Buyer or Fuel Manager, without
interruption for any reason, except to the extent permitted
hereunder.
"Firm Transportation Agreements" means the Columbia FT
Agreement, the Cove Point Agreement, and the Washington Gas
Agreement, and such other firm transportation agreement
between the Buyer and a Pipeline.
"Fuel Manager" means Cogen Development Company, or any
person, company or entity that succeeds to the rights and
obligations of Cogen Development Company as Buyer's fuel
manager for the Facility pursuant to the Fuel Supply
Management Agreement.
"Fuel Supply Management Agreement" means the Fuel Supply
Management Agreement, dated as of March 30, 1995, between
Buyer and Cogen Development Company, dated March 30, 1995,
as amended from time to time.
"Fuel Use" means the quantity of Gas Buyer must provide
Columbia Gas under the Columbia FT Agreement and the
Columbia IT Agreement, or which Buyer must provide to
another of the Pipeline(s) at a Delivery Point, for company
use, lost and unaccounted-for quantities as required under
the effective FERC Gas Tariff of Columbia Gas Transmission
or another of the Pipeline(s), as the case may be.
"Gas" means natural gas meeting the quality specifications
set forth in Article IX.
"Gas Imbalance" means the quantity of Gas equal to the
difference between (i) the quantity of Gas Scheduled at a
Delivery Point during any period, and (ii) the quantity of
Gas delivered or caused to be delivered by Seller or
received by Buyer, or for Buyer's account, as the case may
be, at such Delivery Point during such period.
"Gas Market Price Ceiling" (or "GMPC") shall have the
meaning set forth in Section 7.3.
"Governmental Approval(s)" mean(s) all permits,
authorizations, registrations, consents, approvals, waivers,
exceptions, variances, claims, orders, judgments and
decrees, licenses, exemptions, publications (to the extent
legally binding upon a Party), filings (other than filings
of a purely ministerial nature), notices to and declarations
of or with any Governmental Authority.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Index Price" shall have the meaning set forth in Section
7.1(b).
"Initial Delivery Date" means the "Actual Commercial
Operation Date," as defined in the Power Contract; provided,
such Day shall not be earlier than June 1, 1996.
"Interest Rate" means the annual rate of interest, computed
monthly and prorated daily, equal to the Prime Rate plus one
percent (1%). For purposes hereof, the "Prime Rate" means
the rate of interest publicly announced from time to time by
The Chase Manhattan Bank, N.A. (or its successor) as its
prime commercial lending rate or, if lower, the maximum non-
usurious rate of interest allowed by the laws of the State
of Maryland.
"Interruptible Basis" means the obligation of Seller to
deliver Gas to the Delivery Point(s), as Scheduled by Buyer
or Fuel Manager, except when despite Seller's Best Efforts,
Seller is unable to deliver Gas to the Delivery Point(s) as
Scheduled by Buyer or Fuel Manager.
"Interruptible Gas" shall have the meaning set forth in
Section 3.2(d).
"Last Cure Date" shall have the meaning set forth in Section
17.4.
"Leap Year" means any calendar year in which there are 366
calendar days.
"Limited Dispatch Commodity Charge" shall have the meaning
set forth in Section 7.1(a).
"Limited Dispatch Demand Charge" shall have the meaning set
forth in Section 7.1(a).
"Limited Dispatch Gas" shall have the meaning set forth in
Section 3.2(a).
"Limited Dispatch Make-Up Gas" shall have the meaning set
forth in Section 3.3(a).
"Market Cost Basis Charge" means, with respect to
Dispatchable Gas or Interruptible Gas, the market price of
Gas, as determined by Seller, for the Day on which Buyer has
requested Seller to sell and deliver Dispatchable Gas or
Interruptible Gas to Buyer hereunder.
"Maximum Daily Firm Quantity" (or "MDFQ") means a quantity
of Gas, up to 24,240 MMBtu per Day (plus Fuel Use), as
Scheduled by Buyer or Fuel Manager and which Seller shall
sell and deliver to the Delivery Point(s), and Buyer shall
purchase from Seller, during a Day on a Firm Basis.
"Maximum Daily Interruptible Quantity" (or "MDIQ") means a
quantity of Gas, up to 24,240 MMBtu per Day (plus Fuel Use),
as Scheduled by Buyer or Fuel Manager and which Seller shall
sell and deliver to the Delivery Point(s), and Buyer shall
purchase from Seller, during a Day on an Interruptible
Basis.
"Minimum Dedicated Quantity" shall have the meaning set
forth in Section 12.2(d).
"Minimum Limited Dispatch Quantity" means, with respect to
an Agreement Year, a quantity of Limited Dispatch Gas equal
to 2,299,500 MMBtu (or 2,305,800 MMBtu if the Agreement Year
is a Leap Year), which quantity is subject to adjustment as
provided in Appendix I hereof, less any quantities of
Limited Dispatch Gas during an Agreement Year that Seller is
unable to deliver to the Delivery Point(s) for any reason or
Buyer is unable to receive due to an Event of Force Majeure
or a Regularly Scheduled Outage (which quantities during any
Day of a Regularly Scheduled Outage shall be equal to 7,000
MMBtu, which quantity is subject to adjustment as provided
in Appendix I).
"Minimum Scheduled Dispatch Quantity" means a quantity of
Scheduled Dispatch Gas for a Month equal to the product of
(i) .80, multiplied by (ii) the quantity of Scheduled
Dispatch Gas Buyer or Fuel Manager has Scheduled for
delivery during such Month, less any quantities of Scheduled
Dispatch Gas that Seller is unable to deliver to the
Delivery Point(s) for any reason or Buyer is unable to
receive due to an Event of Force Majeure during such Month.
"MMBtu" means one million (1,000,000) Btu's.
"Month" means the period beginning at 8:00 a.m. Eastern Time
on the first Day of a given calendar month and ending at
8:00 a.m. Eastern Time on the first day of the next
succeeding calendar month.
"Notice" means a written communication between the Parties
given in accordance with the provisions of this Agreement.
"Owner" means any affiliate of Seller that owns gas reserves
that are the subject of any provision of Section 12.2(d).
"Parent Guaranty" means the Guaranty provided by MCN
Corporation in the form attached as Exhibit D hereto.
"Pipeline(s)" means Columbia Gas Transmission, Cove Point
LNG, and Washington Gas Light, and any other transporter of
Gas purchased by Buyer under this Agreement that is
downstream of one of the Delivery Point(s) and with which
Buyer has a firm (in the case of the MDFQ) or interruptible
(in the case of the MDIQ) transportation agreement.
"Power Contract" means the Power Purchase Agreement, dated
August 9, 1991, between Buyer and the Power Purchaser, as it
may be amended from time to time.
"Power Purchaser" means Potomac Electric Power Company
("PEPCO"), its successors and permitted assigns.
"Power Purchaser Consent" means the Consent and Agreement
dated as of March 30, 1995, among the Power Purchaser,
Buyer, General Electric Capital Corporation and Shawmut Bank
Connecticut, National Association, as Security Agent and
Owner Trustee, as the same may from time to time be amended,
modified or supplemented.
"Precedent Agreement" means the Precedent Agreement, dated
February 25, 1994, between Columbia Gas Transmission and
Buyer.
"Principal Term" shall have the meaning set forth in Section
6.1.
"Proposed Reserves" shall have the meaning set forth in
Section 12.2(d).
"Qualified Supplier" shall have the meaning set forth in
Section 17.3(c).
"Regularly Scheduled Outage" shall have the meaning set
forth in Section 3.5.
"Remaining Contract Obligations" shall have the meaning set
forth in Section 7.3(c).
"Replacement Cost" shall have the meaning set forth in
Section 17.3(c).
"Replacement Gas Supply" shall have the meaning set forth in
Section 17.3(c).
"Reserve Report" shall have the meaning set forth in
Section 12.2(d).
"Schedule" or "Scheduled" means when used in reference to
Buyer or Fuel Manager, to nominate the quantities that Buyer
will receive at the Delivery Point(s) for shipment to the
Facility or for resale or release, including making all
necessary and timely nominations with the Pipelines).
"Scheduled Dispatch Gas" shall have the meaning set forth in
Section 3.2(b).
"Scheduled Dispatch Charge" shall have the meaning set forth
in Section 7.1(b).
"Scheduled Dispatch Make-Up Gas" shall have the meaning set
forth in Section .3(b).
"Seller Fuel Default" shall have the meaning set forth in
Section 17.4.
"Seller's Gas Reserves" means proved gas reserves owned by
Seller or Owner.
"Swap Average Price" shall have the meaning set forth in
Section 17.4.
"Swap Margin" shall have the meaning set forth in Section
17.4.
"Swap Price" shall have the meaning in Section 17.4.
"Taxes" mean all ad valorem, property, occupation,
severance, production, gathering, pipeline, gross
production, gross receipts, use, consumption, sales, excise
and any other similar taxes, governmental charges, fees and
assessments, other than income taxes.
"Treasury Rate" shall have the meaning set forth in Section
17.3(c).
"Washington Gas Agreement" means the Gas Transportation and
Supply Agreement, dated November 10, 1994, between Buyer and
Washington Gas Light, as such agreement may be amended from
time to time.
"Washington Gas Light" means Washington Gas Light Company,
its successors and permitted assigns.
ARTICLE II
CONDITIONS
Section 2.1 Seller's Conditions. Seller in its sole discretion
but acting in good faith may terminate this Agreement, without
further obligation or liability, by Notice given to Buyer if, by
the dates set forth below, any or all of the following conditions
have not been satisfied or waived:
(a) As of Financial Closing, all representations and
warranties of Buyer contained in Section 11.1 of this
Agreement shall be true in all material respects as if such
representations and warranties were made at and as of the
Financial Closing.
(b) As of Financial Closing, no Event of Default, or event
which with notice or passage of time, or both, would become
an Event of Default of the type described in Section 17.2,
shall have occurred and be continuing.
(c) As of December 1, 1997, Buyer shall have commenced
commercial operation of the Facility.
If Seller does not terminate this Agreement pursuant to this
Section 2.1, at the Financial Closing Seller shall deliver
to Buyer and the Financing Parties a Notice stating that the
conditions set forth in this Section 2.1 (except pursuant to
Section 2.1(c)), have been satisfied or waived. The dates
by which the conditions in this Section 2.1 must be
satisfied shall be extended by an Event of Force Majeure,
but in no event shall such dates be extended by more than
one (1) year.
Section 2.2 Buyer's Conditions. Buyer in its sole discretion
but acting in good faith may terminate this Agreement (provided,
that it receives the prior written consent of the Financing
Parties), without further obligation or liability by Notice given
to Seller if at any time Buyer determines that it is reasonably
likely that, by the dates set forth below, any or all of the
following conditions will not have been satisfied or waived:
(a) As of Financial Closing, all representations and
warranties of Seller contained in this Agreement shall be
true in all material respects as if such representations and
warranties were made at and as of the Financial Closing.
(b) As of Financial Closing, no Event of Default, or event
which with notice or passage of time, or both, would become
an Event of Default of the type described in Section 17.2,
shall have occurred and be continuing.
(c) As of Financial Closing, Seller shall have performed
under and shall have fulfilled in all material respects all
of Seller's Covenants set forth in Section 12.2 that are
required to be performed and fulfilled at or prior to the
date of Financial Closing.
(d) As of Financial Closing, Seller shall have duly
authorized, executed and delivered the Consent and
Agreement, opinions of counsel, including an opinion of
counsel reasonably satisfactory to Buyer and Financing
Parties in substantially the form of Exhibit B hereto, and
other documents reasonably requested by the Financing
Parties.
(e) On or before June 1, 1997, the following conditions
shall be completed to the reasonable satisfaction of Buyer:
(i) Columbia Gas Transmission shall have been granted
and accepted all approvals from the FERC for the
construction and operation of the facilities necessary
to provide service to Buyer under the Columbia FT
Agreement; such approvals shall be final and non-
appealable; and such facilities shall be operational.
(ii) Buyer shall have executed agreements with Cove
Point LNG obligating Cove Point LNG to provide for
Buyer up to 24,000 MMBtu per Day of firm transportation
service and up to 24,000 MMBtu per Day of interruptible
transportation service.
(iii) Cove Point LNG shall have been granted and
accepted all approvals from the FERC necessary to
provide firm and interruptible transportation service
to Buyer and such approvals shall be final and non-
appealable.
(iv) Buyer and Washington Gas Light shall have executed
an agreement for the transportation of Gas from the
facilities of Cove Point LNG to the Facility, and
Washington Gas Light shall have completed construction
and made operational the facilities necessary to
provide service under such agreement.
(v) Washington Gas Light shall have been granted and
accepted all approvals from the Maryland Public Service
Commission necessary to provide service to Buyer under
the Washington Gas Agreement, and such approvals shall
be final and non-appealable.
(vi) Buyer shall have commenced commercial operation of
the Facility.
(f) On or before the Financial Closing, Power Purchaser and
Financing Parties shall have reviewed and approved the
provisions of all of Buyer's gas supply and transportation
contracts, including this Agreement.
(g) On or before Financial Closing, Seller shall have
delivered the Parent Guaranty. If Buyer does not cancel this
Agreement pursuant to this Section 2.2, at the Financial
Closing Buyer shall deliver to Seller and the Financing
Parties a Notice stating that the conditions set forth in
this Section 2.2 (except pursuant to Section 2.2(e)) have
been satisfied or waived. The dates by which the conditions
in this Section 2.2 must be satisfied shall be extended by
an Event of Force Majeure, but in no event shall such dates
be extended by more than one (1) year.
Section 2.3 Financial Closing.
(a) Either Party, in its sole discretion, may cancel this
Agreement, without further obligation or liability, by
Notice given to the other Party at any time after October 1,
1995, which date may be extended to January 1, 1996 at the
option of Buyer, or at another date mutually agreed to by
the Parties, if the Financial Closing has not yet occurred.
If neither Party has elected to cancel this Agreement
pursuant to this Section 2.3, at the Financial Closing each
Party shall deliver to the other Party and the Financing
Parties a written Notice stating that such Party permanently
waives any right it may have to cancel the Agreement
pursuant to this Section 2.3, but without prejudice to any
other rights and remedies such Party may have arising out of
this Agreement.
(b) Seller agrees to deliver the Consent and Agreement and
opinion of counsel contemplated by Section 2.2(d) at the
Financial Closing.
(c) The outside date for Financial Closing set forth in
paragraph (a) of this Section 2.3 is not intended to imply
that the Parties have until such date to try to satisfy the
conditions in Section 2.1 and 2.2 which must be satisfied
by Financial Closing. Such conditions should be fulfilled by
the time Buyer expects Financial Closing to occur.
Section 2.4 Notifications. The Parties shall promptly notify
one another when and as the conditions that pertain to them under
Sections 2.1, 2.2 and 2.3, respectively, are satisfied or waived.
ARTICLE III
QUANTITIES AND GAS CLASSIFICATIONS
Section 3.1 Purchase and Sale. Subject to the terms and
conditions of this Agreement, commencing on the Initial Delivery
Date and on each subsequent Day during the term of this
Agreement, Seller shall sell and deliver and Buyer shall purchase
and receive a quantity of Gas at the Delivery Point(s) (i) up to
the MDFQ on a Firm Basis, and (ii) up to the MDIQ on an
Interruptible Basis. For purposes of determining the quantities
of Gas constituting the MDFQ and MDIQ on any Day, the first
24,240 MMBtu of Gas per Day (plus Fuel Use) Scheduled by Buyer or
Fuel Manager for delivery during a Day, regardless of the
classification of such Gas pursuant to Sections 3.2(a), (b), (c)
or 3.3, shall be considered part of the MDFQ, and the remaining
quantities of Gas (plus Fuel Use) Scheduled by Buyer or Fuel
Manager for delivery during a Day shall be considered part of the
MDIQ.
Section 3.2 Gas Classifications. Gas shall be classified under
this Agreement as follows:
(a) Limited Dispatch Gas. (i) Seller shall sell and
deliver to, and Buyer shall purchase and receive at, the
Delivery Point(s), on a Firm Basis, a quantity of Gas
Scheduled by Buyer or Fuel Manager for delivery during a Day
pursuant to Section 4.1 that is not less than 6,000 MMBtu of
Gas per Day or more than 8,000 MMBtu of Gas per Day (such
quantity of Gas, "Limited Dispatch Gas"). The Limited
Dispatch Gas shall constitute a portion of the MDFQ.
Subject to Section 3.3(a), during each Agreement Year Buyer
shall take or pay for a quantity of Limited Dispatch Gas at
least equal to the Minimum Limited Dispatch Quantity, unless
Seller waives such minimum take requirement. Buyer's
obligation to Schedule a quantity of Limited Dispatch Gas
for delivery during a Day shall be relieved due to an Event
of Force Majeure or Seller's failure to deliver such
quantity of Gas during a Day for any reason.
(b) Scheduled Dispatch Gas. Seller shall sell and deliver
to, and Buyer shall purchase and receive at, the Delivery
Point(s), on a Firm Basis, a quantity of Gas Scheduled by
Buyer or Fuel Manager for delivery during a Day pursuant to
Section 4.1, up to the difference between (i) 24,240 MMBtu
of Gas (plus Fuel Use) per Day, and (ii) the quantity of
Limited Dispatch Gas Scheduled for delivery during such Day
(such quantity of Gas, "Scheduled Dispatch Gas". The
quantity of Scheduled Dispatch Gas Scheduled for delivery
during a Day shall constitute a portion of the MDFQ.
Subject to Section 3.3(b), during each Month Buyer shall
take or pay for a quantity of Scheduled Dispatch Gas at
least equal to the Minimum Scheduled Dispatch Quantity,
unless Seller waives such minimum take requirement.
(c) Dispatchable Gas. Seller shall sell and deliver on a
Firm Basis, and Buyer shall purchase and receive, at the
Delivery Point(s) a quantity of Gas Scheduled by Buyer or
Fuel Manager for delivery during a Day pursuant to Section
4.1, up to the difference between (i) 24,240 MMBtu of Gas
(plus Fuel Use), and (ii) the sum of (A) the Limited
Dispatch Gas Scheduled for delivery during such Day, and (B)
the Scheduled Dispatch Gas Scheduled for delivery during
such Day (such quantity of Gas, "Dispatchable Gas". The
quantity of Dispatchable Gas Scheduled for delivery during a
Day shall constitute a portion of the MDFQ.
(d) Interruptible Gas. Seller shall use its Best Efforts
to sell and deliver to, and Buyer shall purchase and receive
at, the Delivery Point(s), on an Interruptible Basis, a
quantity of Gas Scheduled by Buyer or Fuel Manager for
delivery during a Day pursuant to Section 4.1, up to 24,240
MMBtu of Gas (plus Fuel Use) per Day (such quantity of Gas,
" Interruptible Gas". The quantity of Interruptible Gas
Scheduled for delivery during a Day shall constitute all or
a portion of the MDIQ. Seller shall be obligated to sell
and deliver Interruptible Gas only if Seller and Buyer agree
to a Market Cost Basis Charge pursuant to Section 7.1(c).
Section 3.3 Make-Up. If Buyer pays for but fails to take the
Minimum Limited Dispatch Quantity during any Agreement Year
or the Minimum Scheduled Dispatch Quantity during any Month,
then Buyer shall have the right to receive the quantities of
Limited Dispatch Gas or Scheduled Dispatch Gas Buyer has
paid for but not received as follows:
(a) With respect to Limited Dispatch Gas that Buyer has
paid for but not received (the "Limited Dispatch Make-Up
Gas"), Buyer may exercise its right to take and receive the
Limited Dispatch Make-Up Gas during the next ensuing
Agreement Year. To the extent Buyer has deficient receipts
of Limited Dispatch Gas during the last Agreement Year, the
term of this Agreement shall be extended up to one (1)
calendar year to permit receipts of Limited Dispatch Make-Up
Gas by Buyer. Buyer shall Schedule the delivery of Limited
Dispatch Make-Up Gas at the Delivery Points) in accordance
with Section 4.1. If the sum of the Limited Dispatch
Commodity Charge and the ANR Charge under Section 7.1a) in
effect for the Month in which such Limited Dispatch Make-Up
Gas is delivered by Seller exceeds the sum of the Limited
Dispatch Commodity Charge and the ANR Charge Buyer
previously paid for such Limited Dispatch Make-Up Gas,
Seller's invoice for the Month in which such Limited
Dispatch Make-Up Gas is delivered shall reflect the
difference between the two prices, and Buyer shall pay such
difference in accordance with Article VIII. The period
during which Buyer may request delivery of Limited Dispatch
Make-Up Gas shall be extended by any period(s) during which
performance of this Agreement may be suspended due to an
Event of Force Majeure or any period(s) during which Seller
fails to deliver the quantities of Limited Dispatch Make-Up
Gas requested by Buyer.
(b) With respect to Scheduled Dispatch Gas Buyer has paid
for but not received (the "Scheduled Dispatch Make-Up Gas"),
Buyer may exercise its right to take and receive the
Scheduled Dispatch Make-Up Gas in any Month during the next
ensuing six (6) Months. Buyer shall pay Seller each Month
that any Scheduled Dispatch Make-Up Gas is outstanding an
amount equal to the product of (i) $0.05, multiplied by (ii)
the total amount of Scheduled Dispatch Make-Up Gas
outstanding on the first Day of each Month. To the extent
Buyer has deficient receipts of Scheduled Dispatch Gas
during the last Month of the last Agreement Year, the term
of this Agreement shall be extended up to six (6) Months to
permit receipts of Scheduled Dispatch Make-Up Gas by Buyer.
Buyer shall Schedule the delivery of Scheduled Dispatch Make-
Up Gas at the Delivery Point(s) in accordance with Section
4.1. If the Scheduled Dispatch Charge under Section 7.1(b)
in effect for the Month in which such Scheduled Dispatch
Make-Up Gas is delivered by Seller exceeds the Scheduled
Dispatch Charge Buyer previously paid for such Scheduled
Dispatch Make-Up Gas, Seller's invoice for the Month in
which such Scheduled Dispatch Make-Up Gas is delivered shall
reflect the difference between the two prices, and Buyer
shall pay such difference in accordance with Article VIII.
If the Scheduled Dispatch Charge under Section 7.1(b) in
effect for the Month in which Buyer fails to take the
Minimum Scheduled Dispatch Quantity exceeds the Scheduled
Dispatch Charge in effect for the Month when such Scheduled
Dispatch Make-Up Gas is delivered, Seller shall credit the
invoice sent to Buyer following the Month in which such
Scheduled Dispatch Make-Up Gas is delivered to reflect the
difference in the two prices. The period during which Buyer
may request delivery of Scheduled Dispatch Make-Up Gas shall
be extended by any period(s) during which performance of
this Agreement may be suspended due to an Event of Force
Majeure or any period(s) during which Seller fails to
deliver the quantities of Scheduled Dispatch Make-Up Gas
requested by Buyer.
Section 3.4 Gas Allocation. Gas delivered for the account of
Buyer at the Delivery Point(s) under this Agreement shall be
allocated to each classification of Gas set forth in Section 3.2
based on the quantity of each classification of Gas Scheduled by
Buyer or Fuel Manager pursuant to Section 4.1 and in the
following sequence: first, Limited Dispatch Gas; second,
Scheduled Dispatch Gas; third, Dispatchable Gas; fourth, Limited
Dispatch Make-Up Gas; fifth, Scheduled Dispatch Make-Up Gas; and
sixth, Interruptible Gas. The quantities of Limited Dispatch
Gas, Scheduled Dispatch Gas, Dispatchable Gas, Limited Dispatch
Make-Up Gas and Scheduled Dispatch Make-Up Gas Scheduled by Buyer
or Fuel Manager for delivery during a Day must fall within the
MDFQ.
Section 3.5 Regularly Scheduled Outages. Buyer shall be
entitled in each Agreement Year during the term of this Agreement
to declare Regularly Scheduled Outages, which are understood by
the Parties to include, but not be limited to, instances when the
Facility is not operating as a result of normal and routine
maintenance or repair. Regularly Scheduled Outages shall not
include instances when the Facility is not operating due to an
Event of Force Majeure. Not later than thirty (30) Days prior to
the beginning of a calendar year, Buyer shall submit to Seller an
estimate of the time and duration of Buyer's Regularly Scheduled
Outages during such calendar year. Buyer shall provide Seller
Notice of any Regularly Scheduled Outage planned for a Month no
later than four (4) Days prior to the earliest of the applicable
nomination deadlines on the Pipeline(s) for the Month in which
the Regularly Scheduled Outage is to occur. Regularly Scheduled
Outages shall not exceed a total of thirty (30) Days in any
Agreement Year; provided, however, in any Agreement Year during
which Buyer must perform a major turbine overhaul at the
Facility, which shall occur no more frequently than once during
any five (5) consecutive Agreement Years, Buyer's Regularly
Scheduled Outages shall not exceed a total of forty-five (45)
Days in any such Agreement Year. Seller shall be under no
obligation to deliver Gas to Buyer, nor shall Buyer be obligated
to Schedule, receive or pay for Gas delivered or deliverable by
Seller, during any Regularly Scheduled Outage of which Seller is
notified pursuant to this Section 3.5. Buyer shall remain
responsible for the payment of the Limited Dispatch Demand Charge
during a Regularly Scheduled Outage. If Buyer Schedules a
quantity of Gas in accordance with the provisions of Article IV
for delivery on any Day that would otherwise be a Day during a
Regularly Scheduled Outage, such Day shall not be considered a
Regularly Scheduled Outage Day.
Section 3.6 Buyer's Right to Resell Gas. Buyer or, at Buyer's
request, Fuel Manager may, without restriction under this
Agreement, resell or release Gas sold to Buyer under this
Agreement to any third party, including but not limited to
Washington Gas Light pursuant to the Washington Gas Agreement.
Section 3.7 Testing Service. Prior to the Initial Delivery
Date, Buyer may request Seller to sell and deliver quantities of
Gas to Buyer at the Delivery Point(s) for purposes of testing the
Facility. Buyer shall provide Seller with thirty (30) Days prior
written Notice of Buyer's intent to commence testing of the
Facility. Seller shall use its Best Efforts to sell and deliver
quantities of Gas to the Delivery Point(s) for testing on an
Interruptible Basis. Quantities of Gas used for testing the
Facility shall be priced as Interruptible Gas pursuant to Article
VII.
Section 3.8 Processing. Seller shall have the right to process
or permit the processing of Gas prior to delivery to Buyer at the
Delivery Point(s) in such a manner and to such extent as Seller
may consider necessary or expedient, so long as such processing
does not cause the Gas to fail to meet the quality specifications
set forth in Article IX. In the event Seller elects to process
the Gas, as between Seller and Buyer, any hydrocarbons removed
shall be the sole responsibility of Seller and all costs, claims
or damages related thereto shall be paid by Seller and Seller
shall indemnify and hold Buyer harmless therefrom.
ARTICLE IV
SCHEDULING OF DELIVERIES
Section 4.1 Quantity. Commencing with the Initial Delivery Date
and continuing throughout the term of this Agreement, Buyer or
Fuel Manager shall provide Seller with nominations showing the
Limited Dispatch Gas quantity, the Scheduled Dispatch Gas
quantity, the Dispatchable Gas quantity, the Limited Dispatch
Make-Up Gas quantity, the Scheduled Dispatch Make-Up Gas
quantity, and the Interruptible Gas quantity, that Buyer or Fuel
Manager Schedules to be delivered or caused to be delivered by
Seller on each Day to the Delivery Points), in accordance with
the following procedures:
(a) (i) Buyer or Fuel Manager shall advise Seller by
preliminary Notice at least forty-five (45) days in
advance of the date which Buyer expects will be the
Initial Delivery Date. Buyer or Fuel Manager shall
advise Seller by subsequent Notice at least ten (10)
days prior to the date that will be the Initial
Delivery Date. Buyer or Fuel Manager shall set forth
in the preliminary Notice and the subsequent Notice the
quantities of Limited Dispatch Gas and Scheduled
Dispatch Gas to be delivered by Seller to Buyer or for
Buyer's account at the Delivery Point(s) for each Day,
commencing with the Initial Delivery Date, for the
Month in which the Initial Delivery Date occurs. The
quantities of Limited Dispatch Gas and Scheduled
Dispatch Gas that Buyer specifies in the preliminary
Notice shall be considered an estimate of the
quantities of Gas Buyer intends to purchase and receive
during the Month in which the Initial Delivery Date
occurs, and Buyer shall not be obligated to purchase
and receive such quantities of Gas. The quantities of
Limited Dispatch Gas and Scheduled Dispatch Gas that
Buyer specifies in the subsequent Notice shall be
considered Scheduled in accordance with the terms set
forth in this Article IV, and Seller shall be obligated
to sell and deliver and Buyer shall be obligated to
purchase and receive such Scheduled quantities
commencing on the Initial Delivery Date in accordance
with the terms of this Agreement.
(ii) If the Initial Delivery Date does not occur
on the first Day of a calendar Month, Seller shall be
obligated to use Best Efforts to sell and deliver
Limited Dispatch Gas and Scheduled Dispatch Gas during
the Month in which the Initial Delivery Date occurs and
if, despite its Best Efforts, Seller is unable to sell
and deliver Limited Dispatch Gas or Scheduled Dispatch
Gas to Buyer during such Month, to such extent Buyer
shall instead purchase Dispatchable Gas or
Interruptible Gas hereunder during such Month. To the
extent Seller is unable to sell and deliver Limited
Dispatch Gas on any Day during such Month, the Minimum
Limited Dispatch Quantity for the first Agreement Year
shall be reduced to reflect Seller's inability to
deliver Limited Dispatch Gas during any such Day.
(b) Commencing with the Month in which the Initial Delivery
Date occurs, not later than two Days prior to the earliest
first-of-the-Month nomination deadline of the Pipeline(s),
Buyer or Fuel Manager shall, subject to Section 4.1(d),
provide a Notice to Seller specifying the amount of Limited
Dispatch Make-Up Gas, Scheduled Dispatch Make-Up Gas,
Limited Dispatch Gas and Scheduled Dispatch Gas that Buyer
desires to purchase and receive on each Day during the
following Month. Such Notice shall include necessary Fuel
Use. During the following Month, Buyer or Fuel Manager may,
upon twenty-four (24) hours Notice to Seller (or such
shorter time as Seller may permit), change the quantity of
Limited Dispatch Gas, Scheduled Dispatch Gas, Limited
Dispatch Make-Up Gas or Scheduled Dispatch Make-Up Gas
Scheduled for delivery at the Delivery Point(s) during a
Day.
(c) Commencing with the Month in which the Initial Delivery
Date occurs, Buyer or Fuel Manager may provide Notice to
Setter specifying the quantity of Dispatchable Gas and
Interruptible Gas that Buyer desires to purchase and receive
at the Delivery Point(s) during each Day of the Month.
Buyer or Fuel Manager shall provide Seller with such Notice
at least twenty-four (24) hours prior to the Day for
delivery of such Dispatchable Gas or Interruptible Gas, or
upon such shorter time as Seller may permit. Such Notice
shall include necessary Fuel Use.
(d) Seller shall notify Buyer or Fuel Manager, not later
than twenty-four (24) hours after Seller's receipt of
Buyer's nomination under Section 4.1(a) or (b) or one (1)
hour after Seller's receipt of Buyer's nomination under
Section 4.1(c) or the last sentence of Section 4.1(b), by
telephone, confirmed by facsimile, of the quantities of
Limited Dispatch Make-Up Gas, Scheduled Dispatch Make-Up
Gas, Limited Dispatch Gas, Scheduled Dispatch Gas,
Dispatchable Gas or Interruptible Gas, as the case may be,
to be delivered by Seller to each Delivery Point. The
aforesaid notification by Seller shall be consistent with
Buyer's or Fuel Manager's nominations with Columbia Gas
Transmission or such other Pipeline(s), as applicable, for
Buyer's use of the Delivery Point(s).
(e) During each Day, Buyer or Fuel Manager may submit to
Seller a request to change the quantities of Limited
Dispatch Make-Up Gas, Scheduled Dispatch Make-Up Gas,
Limited Dispatch Gas, Dispatchable Gas and Interruptible Gas
that Buyer or Fuel Manager has Scheduled for delivery at the
Delivery Point(s) during such Day. Seller shall use its
reasonable efforts to satisfy such requests.
(f) The procedures set forth in Section 4.1 shall not alter
Seller's obligations to deliver or cause to be delivered, or
Buyer's obligations to Schedule, receive or cause to be
received, any quantity of Gas pursuant to Article III.
(g) Seller shall cause personnel to be available twenty-
four (24) hours each Day to accept nominations submitted by
Buyer to Seller pursuant to this Section 4.1.
(h) Provided that Seller or an affiliate of Seller is
acting as Fuel Manager, Seller hereby agrees that any Notice
given to the Fuel Manager with respect to Scheduling the
delivery of Gas under this Agreement shall be considered
received by Seller within two (2) hours after the Fuel
Manager received such Notice from Buyer.
Section 4.2 Delivery Rates. Seller shall endeavor to deliver
and Buyer shall endeavor to receive Gas hereunder at uniform
hourly and daily rates of flow. Because of the inability of
Seller and Buyer to maintain precise control over Gas flow, the
quantity of Gas delivered or received hereunder on any Day or
during any Month may vary within the tolerances set forth in the
effective FERC Tariff of Columbia Gas Transmission. Deliveries
and receipts of Gas under this Agreement by Seller and Buyer that
vary from the quantities of Gas Scheduled by Buyer or Fuel
Manager, but that are within the tolerances set forth in the
effective FERC Tariff of Columbia Gas Transmission, shall not be
considered by either Party to be an Event of Default under this
Agreement.
Section 4.3 Gas Imbalances. Seller and Buyer agree to cooperate
with each other to minimize Gas Imbalances and to deliver and
receive quantities of Gas to each of the Delivery Point(s) equal
to the quantities of Gas Scheduled for delivery and receipt at
each of such points for the Day. If, notwithstanding their
cooperative efforts, a Gas Imbalance shall occur, and such
imbalance is not timely corrected, the Parties shall determine as
soon as possible whether the Gas Imbalance was caused by the
action or inaction of Seller or Buyer. If it is determined that
Seller caused the Gas Imbalance, as between Seller and Buyer,
Seller shall be responsible for payment of all costs, charges,
and penalties assessed by a gas transporter for the Gas
Imbalance. If it is determined that Buyer caused the Gas
Imbalance, as between Seller and Buyer, Buyer shall be
responsible for payment of all costs, charges, and penalties
assessed by a gas transporter for the Gas Imbalance.
Section 4.4 Transportation. Seller shall be responsible for
transportation of Gas sold and delivered hereunder to the
Delivery Point(s), including the cost of such transportation.
Buyer shall be responsible for transportation of the Gas
purchased and received hereunder from the Delivery Point(s) to
the Facility, including the cost of such transportation.
ARTICLE V
SELLER' S WARRANTY
Section 5.1 Seller's Warranty. Throughout the term of this
Agreement, Seller represents and warrants to Buyer that Seller
(i) shall beneficially own and produce or otherwise control
sufficient reserves of Gas or deliverable Gas supplies, and has
or will have entered into firm gas gathering, firm transportation
agreements or other firm upstream gas transportation arrangements
adequate and sufficient to satisfy Seller's firm obligations
under this Agreement, and (ii) possesses or will possess the
financial ability and the right to sell and deliver Gas from such
reserves or deliverable Gas supplies to Buyer in fulfillment of
Seller's firm obligations.
ARTICLE VI
TERM
Section 6.1 Term. Subject to the other provisions of this
Agreement, including Appendix I, this Agreement shall become
effective as of the date first above written and shall continue
in full force and effect through the end of the fifteenth (15th)
Agreement Year ("Principal Term"). The Agreement shall be
extended for an additional term of two (2) Agreement Years (the
"Extended Term"), unless either Party provides at least nine (9)
Month's prior Notice to the other Party of its intent to
terminate this Agreement at the conclusion of the Principal Term.
Subject to Section 3.3, the term of this Agreement shall not be
extended as a result of any suspension of Buyer's or Seller's
obligations or performance hereunder due to an Event of Force
Majeure.
ARTICLE VII
PRICE
Section 7.1 Gas Prices. Subject to the other terms and
conditions of this Agreement, the price for Gas sold and
purchased hereunder shall be as follows:
(a) Limited Dispatch Gas: The price of Limited Dispatch
Gas received by Buyer each Month shall be equal to the sum
of the Limited Dispatch Demand Charge, the total Limited
Dispatch Commodity Charges and the total ANR Charges for the
Month, less Buyer's Credit.
(i) The Limited Dispatch Demand Charge for a Month
shall equal $21,292 for Agreement Years one through
five. For each Agreement Year thereafter, the Limited
Dispatch Demand Charge shall be determined by adding
$1,064 to the Limited Dispatch Demand Charge in effect
on the last Day of the previous Agreement Year.
(ii) (A) The Limited Dispatch Commodity Charge,
effective as of June 1, 1996 shall equal $2.33 per
MMBtu. The total Limited Dispatch Commodity
Charges that Buyer shall pay to Seller during any
Month shall equal the product of (1) the Limited
Dispatch Commodity Charge in effect during the
Month, multiplied by (2) the total quantity of
Limited Dispatch Gas Seller delivers to the
Delivery Point(s) during the Month. If the
Initial Delivery Date occurs after June 1, 1996,
the Limited Dispatch Commodity Charge shall
escalate at a rate of 4% annually, prorated
Monthly, until the Initial Delivery Date.
(B) At the end of each Agreement Year (the
"Escalation Date"), the Limited Dispatch Commodity
Charge shall escalate. Effective each Escalation
Date, the Limited Dispatch Commodity Charge shall
be determined by multiplying (1) the Limited
Dispatch Commodity Charge in effect on the Day
before the Escalation Date, times (2) 1.04.
(iii) (A) The initial ANR Charge for a Month
shall equal $0.10 per MMBtu. The total ANR Charges
that Buyer shall pay to Seller during any Month
shall equal the product of (1) the ANR Charge in
effect during the Month, multiplied by (2) the
total quantity of Limited Dispatch Gas Seller
delivers to the Delivery Point(s) during such
Month.
(B) The initial ANR Charge shall remain in effect
for Agreement Years one (1) through five (5~. For
each Agreement Year thereafter, the ANR Charge
shall be determined by adding $0.005 per MMBtu to
the ANR Charge in effect on the last Day of the
previous Agreement Year.
(iv) Fuel Use quantities for Limited Dispatch Gas shall
be priced as Scheduled Dispatch Gas.
(v) If at the end of an Agreement Year, Buyer fails to
take during such Agreement Year a quantity of Limited
Dispatch Gas greater than or equal to the Minimum
Limited Dispatch Quantity, Buyer shall pay Seller an
amount equal to the product of (A) the sum of Limited
Dispatch Commodity Charge and the ANR Charge in effect
for such Agreement Year, multiplied by (B) the positive
difference, if any, between (1) the Minimum Limited
Dispatch Quantity, and (2) the total quantity of
Limited Dispatch Gas Buyer received from Seller during
such Agreement Year. Seller shall include any amounts
due under this Section 7.1(a)(v) in the first invoice
following the end of such Agreement Year and Buyer
shall make payment of such amount in accordance with
Article VIII.
(b) Scheduled Dispatch Gas
(i) The price of Scheduled Dispatch Gas received by
Buyer each Month shall be equal to the total Scheduled
Dispatch Charge for the Month.
(A) The Scheduled Dispatch Charge shall equal the
sum of (1) the NYMEX settlement price for the
delivery Month contract averaged over the last
three (3) trading Days of the Month, and (2) a
margin of $0.50 per MMBtu (as adjusted pursuant to
Section 7.1(b)(i)(C) below) (such sum, the "Index
Price"); provided, however, in no event shall the
Index Price exceed the Gas Market Price Ceiling
(as defined in Section 7.3).
(B) The total Scheduled Dispatch Charges that
Buyer shall pay to Seller during any Month shall
equal the product of (1) the Scheduled Dispatch
Charge in effect for such Month, multiplied by (2)
the greater of (x) the total quantity of Scheduled
Dispatch Gas Buyer receives at the Delivery
Point(s) during such Month, and (y) the Minimum
Scheduled Dispatch Quantity in effect for such
Month.
(C) The margin set forth in Section
7.1(b)(i)(A)(2) shall remain in effect for
Agreement Years one (1) through five (5). For
each Agreement Year thereafter, the margin shall
be determined by adding $0.005 per MMBtu to the
margin in effect on the last Day of the previous
Agreement Year.
(ii) Buyer may, by written Notice, request that the
pricing methodology set forth in paragraph (i) of this
Section 7.1(b) and/or the GMPC be reviewed and revised
in the event that the "Commodity Index" under the Power
Contract is revised. The Parties shall undertake any
such review in good faith. If the Parties are unable
to agree on an appropriate revision to such pricing
methodology within thirty (30) Days after such revision
in the Power Contract is effective, then the review of
the pricing methodology set forth in paragraph (i) of
this Section 7.1(b) or the GMPC shall be submitted to
arbitration pursuant to Article XVIII.
(c) Dispatchable Gas and Interruptible Gas: The price for
Dispatchable Gas or Interruptible Gas delivered by Seller
during a Day shall be the total Market Cost Basis Charges
for the Month.
(i) Seller shall notify Buyer of the Market Cost Basis
Charge for Dispatchable Gas or Interruptible Gas (as
the case may be) no later than two hours after
receiving Buyer's or Fuel Manager's notice specifying
the quantity of Dispatchable Gas or Interruptible Gas
that Buyer desires to purchase. If Buyer, in its
reasonable discretion, determines that the Market Cost
Basis Charge Seller is offering for Dispatchable Gas or
Interruptible Gas (as the case may be) is not
economical in relation to existing market conditions,
then Buyer may (A) purchase Dispatchable Gas from
Seller at the average of the high and low prices as
reported in Gas Daily "Daily Price Survey" for
"Appalachia, Columbia" for the Day such quantities of
Gas are delivered by Seller, or (B) obtain supplies
from a third party supplier in lieu of purchasing
Dispatchable Gas or Interruptible Gas from Seller
during the remainder of the Month in which Buyer made
its determination.
(ii) The total Market Cost Basis Charges that Buyer
shall pay to Seller during any Month shall equal the
product of (1) the Market Cost Basis Charge in effect,
multiplied by (2) the total quantity of Dispatchable
Gas or Interruptible Gas (as the case may be) Seller
delivers to the Delivery Point(s) during the Month at
the effective Market Cost Basis Charge.
(d) Price Credit. For each MMBtu of Gas received by Buyer
at the Delivery Point(s) during a Month, Seller shall pay a
credit to Buyer of $0.10 per MMBtu for Agreement Years one
through five ("Buyer's Credit"). For each Agreement year
thereafter, the Buyer's Credit shall be determined by adding
$0.005 per MMBtu to the Buyer's Credit in effect on the last
Day of the previous Agreement Year. In no event shall the
Price Credit due in any Month exceed the Limited Dispatch
Demand Charge then in effect.
Section 7.2 Taxes and Royalties.
(a) Seller agrees to pay or cause to be paid to the persons
or entities entitled thereto all Taxes, royalties and other
like charges applicable to the Gas sold and delivered under
this Agreement prior to its delivery to Buyer or for Buyer's
account at the Delivery Point(s), and Buyer agrees to pay or
cause to be paid all Taxes or other charges applicable to
the Gas at and after its sale and delivery to Buyer or for
Buyer's account at the Delivery Point(s) (including, without
limitation, all Taxes applicable as a result of the transfer
of title to the Gas sold hereunder). If Buyer is entitled
to purchase Gas free from any Taxes, Buyer shall furnish
Seller the necessary exemption or resale certificate
covering the Gas delivered hereunder. Should either Party
be required to pay any Taxes that are the responsibility of
the other Party hereunder, the Party paying such Taxes shall
invoice the amount of such Taxes to the other Party. If
Buyer is responsible for Taxes paid by Seller, Seller shall
invoice the amount of such Taxes, in addition to the amount
that Seller shall otherwise invoice and Buyer shall pay such
additional amounts invoiced. If Seller is responsible for
Taxes paid by Buyer, Buyer shall offset the amount of such
Taxes against any invoice Seller sends to Buyer. Buyer and
Seller shall seek to pass through the expense of all Taxes
to the Power Purchaser to the extent permitted by the Power
Contract or applicable law, so long as such action shall not
have any adverse effect on Buyer not compensated for by
Seller.
(b) Seller shall indemnify Buyer and its officers,
directors, employees, agents, and partners and save each of
them harmless from all suits, actions, debts, accounts,
damages, costs, losses, and expenses (including reasonable
attorneys' fees and court costs) arising from or out of or
relating to the existence of adverse claims of any or all
persons to Gas delivered by Seller to Buyer under this
Agreement, or royalties, license fees, or charges thereon
that are applicable to such Gas before its delivery to Buyer
at the Delivery Point(s), and all Taxes applicable to Gas
before its delivery to Buyer at the Delivery Point(s) and
payable by Seller under Section 7.2(a). Buyer shall
indemnify Seller and its officers, directors, employees,
agents and shareholders and save each of them harmless from
all suits, actions, debts, accounts, damages, costs, losses
and expenses (including reasonable attorneys' fees and court
costs) arising from or out of or relating to Taxes or other
charges applicable to Gas after its delivery to Buyer at the
Delivery Point(s) or payable by Buyer under Section 7.2(a).
Section 7.3 Gas Market Price Ceiling. (a) The Gas Market Price
Ceiling ("GMPC") for each Month during the term of this Agreement
shall equal the sum of (i) $0.60, plus (ii) the product of (A)
1.02, multiplied by (B) the unweighted average of the following
three (3) gas market indices available for the Month in which the
GMPC is calculated:
(i) Natural Gas Clearinghouse, "Survey of Domestic
Spot Market Prices", For Markets Accessed By ANR
Pipeline, Eunice, Louisiana, for the Month of
deliveries under the column "This Month".
(ii) Natural Gas Intelligence Gas Price Index, "Spot
Gas Price", delivered to pipelines, 30-Day Supply
Transactions under the South Louisiana Region, ANR
Pipeline, Contract Index for the Month of deliveries.
(iii) Natural Gas Week, "Spot Prices On Interstate
Pipeline Systems", Delivered-to-Pipeline ($/MMBtu),
under ANR Pipeline, Southeast: ▇▇▇▇▇▇▇▇▇, Louisiana,
Bid Week, for the Month of deliveries.
Section 7.4 Change in Index. In the event any price index
relied on by the Parties in this Article VII to determine the
price for Gas sold and purchased under this Agreement is no
longer published or otherwise available, the Parties shall meet
and negotiate in good faith to replace such price index with
another price index that is similar in all material respects to
the index being replaced.
ARTICLE VIII
▇▇▇▇▇▇▇▇ AND PAYMENTS
Section 8.1 Seller's ▇▇▇▇▇▇▇▇. (a) On or before the fifteenth
(15th) Day of each Month after a Month in which Gas was delivered
to Buyer, Seller shall provide Buyer an invoice (i) for the
amount due Seller for the Gas delivered by Seller to Buyer or for
Buyer's account during such Month under this Agreement, and (ii)
for any amounts then due hereunder pursuant to Buyer's take or
pay and other obligations. Such invoice shall specify the
classification of Gas, the quantity of each classification of Gas
delivered, and (as applicable) the price of Gas delivered by
Seller on each Day of the Month. When necessary information is
available to Seller, Seller shall provide, in a succeeding
Month's invoice, an adjustment based on any difference between
the actual quantity of Gas delivered during a prior Month and the
quantity of Gas upon which such prior Month's invoice was based.
Section 8.2 Buyer's Payment. Subject to the other provisions of
this Article VIII, Buyer shall pay Seller the amounts invoiced
under this Article VIII by wire transfer in accordance with
Seller's instructions. Buyer shall make payment of the amounts
invoiced under this Article VIII by the thirtieth (30th) Day of
the Month in which the invoice was sent; provided, however, such
payment date may be extended until the fifth (5th) Day of the
following Month if Buyer does not receive a disbursement from the
Financing Parties pursuant to the Financing Documents enabling
Buyer to pay Seller's invoice by the twenty-fifth (25th) Day of
the Month. If presentation of an invoice to Buyer occurs after
the fifteenth (15th) Day of a Month, then the due date for
payment shall be extended by the number of Days such invoice was
delayed.
Section 8.3 Buyer's ▇▇▇▇▇▇▇▇ and Seller's Payments. With
respect to any amounts due and owing by Seller to Buyer
hereunder, other than those amounts due pursuant to Section 17.3
hereof, Buyer shall provide Seller an invoice for any such
amounts, together with reasonable supporting documentation
supporting such invoiced amount. Seller shall make payments to
Buyer of the invoiced amounts within twenty-five (25) Days from
the Day such invoice is received.
Section 8.4 Verification. Each Party shall have the right at
reasonable hours and upon reasonable Notice to examine on any
Business Day the books, records and charts of the other Party
relating to the delivery of Gas under this Agreement during the
previous twenty-four (24) Month period, to the extent necessary
to verify the accuracy of any invoice, chart or computation made
under or pursuant to the provisions of this Agreement. All
invoices shall be deemed final and binding on the Parties
hereunder unless a Party has notified the other Party of a
dispute of any invoiced amount on or before twenty-four (24)
Months after the date of the invoice. Subject to the foregoing,
any payment hereunder shall be without prejudice to the right of
a Party to dispute the accuracy or validity of an invoice. The
foregoing provisions shall not apply to Section 17.3 hereof or
any amounts payable thereunder, including, without limitation,
amounts calculated pursuant to Section 17.1 hereof.
Section 8.5 Failure to Pay; Disputed ▇▇▇▇▇▇▇▇.
(a) Subject to the invoice due date being extended pursuant
to Section 8.2, should Buyer fail to pay the full amount due
on any statement or invoice by the last Day of the Month in
which the invoice is issued by Seller, then interest on the
unpaid balance shall accrue at the Interest Rate from the
first Day of the next Month until the same is paid. Should
Seller fail to pay the full amount due on any statement or
invoice issued by Buyer pursuant to Section 8.3, then
interest on the unpaid balance shall accrue at the Interest
Rate from the Day next following the Day such payment is due
until the same is paid.
(b) Any provision of this Agreement to the contrary
notwithstanding, except for the last sentence of this
paragraph (b), upon reasonable cause Buyer or Seller may in
good faith dispute the accuracy of all or any portion of any
invoice submitted by the other Party pursuant to this
Agreement, and in such event:
(i) The Party disputing the invoice shall pay the
other Party the undisputed portion of an invoice by its
due date;
(ii) The Party disputing the invoice shall, on or
before the due date for payment of an invoice, notify
the other Party of the reasonable cause on which the
invoice is disputed; and
(iii) If (i) and (ii) above are complied with, the
Parties shall continue to perform their respective
obligations under this Agreement until such dispute is
resolved.
The Parties shall endeavor in good faith to resolve any and all
disputes (including disputes arising under Section 8.6)
concerning an invoice by mutual agreement within thirty (30) Days
after the due date of such invoice. Should the Parties be unable
to resolve a dispute concerning an invoice within such thirty-
(30) Day period, either Party may request that officers of the
Parties at the level of Vice President or above shall meet to
resolve the dispute in good faith within thirty (30) Days of the
request. If the officers of the Parties are unable to resolve
the dispute within such thirty- (30) Day period, then either
Party may submit the dispute to binding arbitration pursuant to
Article XVIII. Notwithstanding the above, if the amount in
dispute under an invoice equals or exceeds $100,000, then either
Party may request that officers of the Parties at the level of
Vice President or above meet within ten (10) Days after the
request to resolve the dispute in good faith. If the officers of
the Parties are unable to resolve the dispute within ten (10)
Days of their first meeting, then either Party may submit the
dispute to binding arbitration pursuant to Article XVIII. The
foregoing provisions of this paragraph (b) shall not apply to
Section 17.3 hereof or any amounts payable thereunder including,
without limitation, amounts calculated pursuant to Section 17.1
hereof.
Section 8.6 Corrections of Errors. In the event either Party
determines that there is an error in the amount previously billed
and/or paid pursuant to any invoice rendered by Seller or Buyer,
the error shall be adjusted within thirty (30) Days of a final
determination by the Parties that an error has occurred;
provided, however, any claim for such error shall be made within
twenty-four (24) Months from the date of the invoice. If the
error resulted in an overcharge and the invoice has been paid,
the billing Party shall refund the amount of the overcharge to
the other Party. If the error resulted in an undercharge and the
invoice has been paid, the receiving Party shall pay the amount
of the undercharge to the billing Party. In the case of any
payment due as a result of an error, such payment shall be made
on or before the next due date for payment of Seller's regular
monthly invoices under Section 8.3, following the final
determination of the amount of the payment. The foregoing
provisions shall not apply to Section 17.3 hereof or any amount
payable thereunder including, without limitation, amounts
calculated pursuant to Section 17.1 hereof.
ARTICLE IX
SPECIFICATIONS
Section 9.1 Specifications. Seller shall deliver Gas of a
quality and at a pressure necessary to effect delivery of such
Gas into the facilities of the Pipeline(s) operating a Delivery
Point(s). The specifications for Gas measurement, quality,
delivery pressure and heating value determination shall be in
accordance with the effective FERC Tariff of the Pipeline(s)
operating the Delivery Point(s) where Gas is delivered under this
Agreement. Measurement of Gas delivered by Seller to Buyer
hereunder shall be based on the meters owned and operated by the
Pipeline(s) operating the Delivery Point(s) where Gas is
delivered under this Agreement.
Section 9.2 Non-Conforming Gas. All Gas delivered to Buyer at a
Delivery Point(s) shall satisfy the quality specifications set
forth in the effective FERC Tariff of the Pipeline(s) operating
the Delivery Point(s). If at any time the quality of Gas
delivered by Seller at a Delivery Point(s) fails to conform to
the specifications set forth in the effective FERC Tariff of the
Pipeline(s) operating the Delivery Point(s), Buyer shall notify
Seller of such deficiency and may, at Buyer's option, refuse to
accept delivery of such Gas pending correction of the deficiency
by Seller. Upon Seller's failure promptly to remedy any
deficiency in quality, Seller shall be deemed to have an
unexcused failure to deliver such Gas hereunder, and, Buyer may,
pursuant to Section 17.1(d) hereof, procure an equivalent
quantity of Gas or other fuel from sources other than Seller and
seek the appropriate remedies set forth in Article XVII hereof.
ARTICLE X
POSSESSION AND TITLE
Section 10.1 Warranty of Title. Seller warrants that at the
time of delivery of Gas at the Delivery Point(s), Seller shall
have good and valid title to all Gas sold and delivered to Buyer
under this Agreement free and clear of all liens, encumbrances
and claims whatsoever. Seller shall indemnify Buyer and save it
harmless from all suits, actions, debts, accounts, damages,
costs, losses and expenses (including reasonable attorneys' fees)
arising from or out of adverse claims of any or all persons to
the Gas.
Section 10.2 Possession. Possession of and title to Gas sold by
Seller to Buyer hereunder shall pass from Seller to Buyer at the
Delivery Point(s). As between Seller and Buyer, Seller shall be
deemed to be in exclusive control and possession and have title
to and be responsible for such Gas until delivery of the Gas at
the Delivery Point(s), at and after which Buyer shall be deemed
to be in exclusive control and possession of and have title to
and be responsible for such Gas. As between them, Seller and
Buyer each assumes full responsibility and liability for and
shall indemnify, defend and save harmless the other Party and its
officers, directors, employees, agents, shareholders and partners
from all liability and expense (including, without limitation,
reasonable attorneys' fees) on account of any and all damages,
claims or actions, including damage to property or injury to or
death of persons, arising from any act or accident occurring
while title to the Gas is vested in the indemnifying Party as
provided herein, except to the extent caused by the gross
negligence or willful misconduct of any indemnified Party.
ARTICLE XI
BUYER'S REPRESENTATIONS AND WARRANTIES
Section 11.1 Representations and Warranties. Buyer represents
and warrants to Seller as follows:
(a) Buyer is a limited partnership validly existing, and in
good standing under the laws of the State of Delaware and is
duly qualified and in good standing as a limited partnership
in the State of Maryland. Buyer has all requisite
partnership power and authority to enter into and perform
this Agreement. The general partner of Buyer is Panda
Brandywine Corporation, a corporation validly existing and
in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance of this
Agreement, and the transactions contemplated hereby, have
been duly authorized by Buyer and the general partner acting
on behalf of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, subject, however, to applicable
bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditor's rights generally and
except as the enforceability thereof may be limited by
general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(c) The execution, delivery and performance by Buyer of
this Agreement do not and will not (i) materially violate,
constitute a material default under or materially conflict
with any provision of Buyer's limited partnership agreement,
(ii) violate, constitute a default under or conflict with
any other agreement or instrument to which Buyer is a party
or by which Buyer is bound, (iii) violate any existing
statute or law or any judgment, decree, order, regulation or
rule of any court or governmental authority applicable to
Buyer, or (iv) under existing law or under any other
agreement to which Buyer is a party or by which it is bound
require Buyer to obtain any consent, approval or
authorization of, or make designation, declaration or filing
with, any Governmental Authority.
(d) There are no suits, judicial or administrative actions,
proceedings or investigations (including, without
limitation, bankruptcy, reorganization or insolvency
actions, proceedings or investigations) that is pending or,
to the best knowledge of Buyer, threatened against Buyer
that (i) challenge the validity of this Agreement or the
transactions contemplated hereby, (ii) seek to restrain or
prevent any action taken or to be taken by Buyer in
connection with this Agreement, or (iii) if such were
adversely determined, would reasonably be expected to have a
material adverse effect upon Buyer's ability to perform its
obligations hereunder, except, in the case of this clause
(iii), for proceedings relating to the application and
issuance of Governmental Approval(s) for or related to the
Facility.
Section 11.2 Buyer's Covenants
(a) As of Financial Closing, the Financing Document
providing for the disbursement of Buyer's revenues arising
from the operation of the Facility shall provide for the
payment of amounts due under Section 3.3 and Section 7.1 of
this Agreement prior to payment of "Basic Rent" (as defined
in the Financing Documents) for the Facility due to
Financing Parties (except following and during the
continuance of an Event of Default under this Agreement or a
default by Buyer under the Financing Documents).
(b) Buyer shall provide Seller, as they become available,
annual-audited and quarterly-unaudited financial statements
for the Buyer, and annual operating reports, for the
Facility (to the extent such reports are available). Buyer
shall not be obligated to develop such statements or reports
solely for purposes of this Agreement. To the extent such
statements or reports are available, Buyer shall provide
them within sixty (60) Days of their availability.
ARTICLE XII
SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 12.1 Representations and Warranties. Seller represents
and warrants to Buyer as follows:
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Michigan, and is duly qualified and in good standing as a
corporation in all jurisdictions in which performance
hereunder by Seller is required. Seller has all requisite
power and authority to enter into and perform this
Agreement.
(b) The execution, delivery and performance of this
Agreement and the other documents and instruments to be
delivered by Seller pursuant hereto, and the transactions
contemplated hereby and thereby, have been duly authorized
by Seller. This Agreement has been, and each such other
document or instrument will be, duly executed and delivered
by Seller and constitutes, or upon such execution and
delivery will constitute, a legal, valid and binding
obligation of Seller, enforceable against Seller in
accordance with its respective terms, subject, however, to
applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights
generally and except as the enforceability thereof may be
limited by general principles of equity (regardless of
whether considered in a proceeding in equity or at law)
(c) The execution, delivery and performance by Seller of
this Agreement and the other documents and instruments to be
delivered by Seller pursuant hereto, and the transactions
contemplated hereby and thereby, do not and will not (i)
violate or conflict with any provision of Seller's
certificate of incorporation or by-laws, (ii) violate,
constitute a default under or conflict with any agreement or
instrument to which Seller is a party or by which Seller is
bound, or (iii) violate any existing statute or law or any
judgment, decree, order, regulation or rule of any court or
governmental authority applicable to Seller.
(d) There are no suits, judicial or administrative actions,
proceedings, or investigations (including, without
limitation, bankruptcy, reorganization or insolvency
actions, proceedings or investigations) pending or, to
Seller's best knowledge, threatened that (i) challenge the
validity of this Agreement or the other documents and
instruments to be delivered by Seller pursuant to this
Agreement, or the transactions contemplated hereby or
thereby, (ii) seek to restrain or prevent any action taken
or to be taken by Seller in connection with this Agreement,
or under the other documents and instruments to be delivered
by Seller pursuant to this Agreement, or (iii) if adversely
determined, could have a material adverse effect upon
Seller's ability to perform its obligations hereunder or
under the other documents and instruments to be delivered by
Seller pursuant to this Agreement.
(e) No Governmental Approvals are required for the Seller
to execute, deliver and perform this Agreement, except for
(i) those Governmental Approvals listed in Exhibit C hereto,
each of which has been obtained, is in full force and
effect, and is final and not subject to appeal, and (ii)
routine state or local Governmental Approvals not related to
the regulation of public utilities which may be required to
be obtained after the Initial Delivery Date in order to
obtain and deliver Gas under the Agreement, and Seller has
no reason to believe such future Governmental Approvals will
not be obtained in a timely manner in the ordinary course of
business.
Section 12.2 Covenants. From the date hereof throughout the
term of this Agreement, Seller shall, unless otherwise consented
to by Buyer in writing:
(a) Obtain and maintain, in full force and effect, all
Governmental Approval(s), if any, necessary for Seller's
execution, delivery and performance of this Agreement.
(b) Cooperate in good faith with and provide all reasonable
assistance to Buyer in providing reasonably requested
information to Power Purchaser, Washington Gas Light or any
prospective Financing Party in connection with Buyer's
negotiation of financing for the Facility, and cooperate in
good faith with Buyer in its effort to achieve Financial
Closing by entering into such agreements and executing such
instruments and documents as may be reasonably requested by
Power Purchaser or Financing Parties to achieve Financial
Closing and as are in good faith mutually agreeable to the
Parties. Buyer agrees to allow Seller to delete any price
information Seller reasonably believes to be commercially
sensitive from any copy of this Agreement provided to
Washington Gas Light.
(c) At the request of Buyer, meet with Buyer and Financing
Parties to discuss any necessary amendment or modification
of this Agreement to effectuate the delivery of Gas under
this Agreement in the event that Columbia Gas Transmission
does not receive a certificate of public convenience and
necessity from FERC authorizing Columbia Gas Transmission to
construct the facilities necessary to provide Buyer with
24,240 Dth per Day of firm transportation service.
(d) (I) (A) Subject to the confidentiality
restrictions of Section 19.5, during the term of
this Agreement, Seller agrees to provide Buyer and
Financing Parties within ninety (90) Days of the
end of each calendar year a copy of a letter
("Letter") from an officer of Seller or Owner
certifying that the Seller's Gas Reserves have
been estimated in accordance with generally
accepted petroleum engineering and evaluation
principals, which estimates are set forth in a
reports) prepared by independent petroleum
engineers ("Reserve Report"). Such Letter, which
shall be based on the Reserve Report, shall set
forth a summary of Seller's Gas Reserves and shall
represent whether, to Seller's best knowledge
after due inquiry, expected future production from
Seller's Gas Reserves in the aggregate ▇▇▇▇ be
greater than the quantity of gas committed by
Seller or Owner during the term of this Agreement
for delivery on a firm basis and at a fixed price,
fixed escalation rate or pre-determined price
stream under contracts having a term that ends
more than five (5) years after the close of the
calendar year (the "Reserve Year") covered by the
Letter ("Total Firm Commitments"). The Reserve
Report shall be based upon the same studies used
in connection with Seller's or Owner's audited
financial statements. If Seller's Gas Reserves
exceed Total Firm Commitments no action need be
taken. If Total Firm Commitments exceed Seller's
Gas Reserves then Seller shall have six (6) Months
from the close of the Reserve Year to take such
action necessary so that Seller's Gas Reserves
equal or exceed Total Firm Commitments. If Seller
fails to do so within the six (6) Months provided
above, then within nine (9) Months of the close of
the Reserve Year, Seller shall provide Buyer and
Financing Parties a list identifying the specific
Seller's Gas Reserves ("Proposed Reserves") which
Seller proposes to dedicate or cause Owner to
dedicate to the Agreement that are in Seller's
opinion reasonably sufficient to fulfill Seller's
obligation to sell and deliver the quantity of
Limited Dispatch Gas for the remaining term of
this Agreement ("Minimum Dedicated Quantity").
(B) With such list identifying the Proposed
Reserves, Seller shall provide Buyer and Financing
Parties a Reserve Report reasonably acceptable to
Buyer and Financing Parties that sufficiently
demonstrates that the Proposed Reserves will be
reasonably sufficient to meet the Minimum
Dedicated Quantity. If after reviewing the
Reserve Report, Buyer and Financing Parties
reasonably agree that the Proposed Reserves will
provide Seller's Gas Reserves reasonably
sufficient to meet the Minimum Dedicated Quantity,
Seller shall, within thirty (30) Days, dedicate or
cause Owner to dedicate to this Agreement the
Proposed Reserves (such Gas reserves, the
"Dedicated Reserves"). If after reviewing the
Reserve Report, Buyer and Financing Parties
reasonably determine that the Proposed Reserves
will not be reasonably sufficient to satisfy the
Minimum Dedicated Quantity, Buyer's and Financing
Parties' objection shall be resolved in accordance
with the procedures described in Section
12.2(d)(v).
(ii) If Seller is required to provide or cause Owner to
provide Dedicated Reserves pursuant to Section
12.2(d)(i), within ninety (90) Days after the beginning
of each calendar year, Seller shall provide Buyer and
Financing Parties with a Reserve Report for the
Dedicated Reserves. If after reviewing such Reserve
Report, Buyer and Financing Parties reasonably
determine within said ninety (90) Day period that the
Dedicated Reserves are no longer sufficient to meet the
Minimum Dedicated Quantity, Buyer and Financing Parties
shall promptly notify Seller of their determination.
Upon receiving such Notice from Buyer, if in agreement,
Seller shall within thirty (30) Days thereof provide
Buyer and Financing Parties a list of proposed
additional Seller's Gas Reserves to dedicate or cause
Owner to dedicate to the Agreement ("Additional
Proposed Reserves") along with a Reserve Report for
such reserves. If (x) Seller disagrees with Buyer's
Notice, or if (y) within thirty (30) Days after
receiving such list of Additional Proposed Reserves and
Reserve Report from Seller, Buyer and Financing Parties
reasonably believe that such Additional Proposed
Reserves will not, when added to the Dedicated
Reserves, meet the Minimum Dedicated Quantity, the
matter shall be resolved in accordance with the
procedures described in Section 12.2(d)(v). If Buyer
and Financing Parties fail to respond to the Reserve
Report or list submitted by Seller within said thirty-
(30) Day period, Buyer and Financing Parties shall be
deemed to have accepted such report or list and such
Additional Proposed Reserves shall become Dedicated
Reserves.
(iii) (A) Seller shall have the right from
time to time to make substitutions to the
Dedicated Reserves ("Substitute Reserves"). If
Seller elects to make such a substitution, Seller
shall provide Buyer and Financing Parties written
Notice of the election accompanied by a list of
the proposed Substitute Reserves for the Dedicated
Reserves Seller proposes to release or cause Owner
to release from dedication to the Agreement, a
Reserve Report for Seller's proposed Substitute
Reserves, and a written certification that to
Seller's best knowledge after due inquiry the
proposed substitution of reserves will not reduce
the level of Dedicated Reserves below the Minimum
Dedicated Quantity.
(B) No substitution of reserves shall be
effective until Seller has provided Buyer and
Financing Parties with the information set forth
above and Buyer and Financing Parties have
provided Seller with a written consent of the
substitution, which consent shall not be
unreasonably withheld. Should Buyer and Financing
Parties fail to state objections to the proposed
substitution within thirty (30) Days after receipt
of Seller's proposal, Buyer and Financing Parties
shall be deemed to have consented to the
substitution. Upon the effectiveness of the
substitution, Substitute Reserves shall be
considered Dedicated Reserves. If the Buyer and
Financing Parties state any objections, they shall
be resolved in accordance with the procedures
described in Section 12.2(d)(v).
(iv) (A) Seller shall have the right from time to
time to release or cause Owner to release reserves
from dedication to the Agreement. If Seller
proposes to release or cause Owner to release
reserves from dedication to the Agreement, Seller
shall provide written Notice to Buyer and
Financing Parties of its proposed release
accompanied by a list of the proposed Dedicated
Reserves Seller proposes to release or cause Owner
to release and a written certification that to
Seller's best knowledge after due inquiry the
release of such reserves will not reduce the level
of Dedicated Reserves below the Minimum Dedicated
Quantity.
(B) No release of Dedicated Reserves shall be
effective until Seller has provided Buyer and
Financing Parties with the information set forth
above and Buyer and Financing Parties have
provided Seller with a written consent of the
release, which shall not be unreasonably withheld.
Should Buyer and Financing Parties fait to state
objections to the proposed release within thirty
(30) Days after receipt of Seller's proposal,
Buyer and Financing Parties shall be deemed to
have consented to the release. If the Buyer and
Financing Parties shall have any objections, they
shall be resolved in accordance with the
procedures described in Section 12.2(d)(v).
(v) If there is a disagreement or objection over the
reserves Seller proposes to dedicate or cause Owner to
dedicate to this Agreement, the following procedures
shall apply: Within thirty (30) Days of a Party's
objection, Buyer, Seller and Financing Parties shall
meet and shall attempt to mutually agree to the
reserves to be dedicated to this Agreement within
fifteen (15) Days of the Parties' first meeting. If
the Parties cannot mutually agree to the reserves to be
dedicated to this Agreement within such fifteen- (15)
Day period, either of the Parties may request that
officers of the Parties at the level of Vice President
or above shall meet and attempt to resolve the dispute.
If the dispute cannot be resolved within fifteen (15)
Days of their first meeting, the Parties may submit the
dispute to binding arbitration under Article XVIII of
the Agreement. The board of arbitration shall consist
of experts in the field of Gas reserve analysis.
(vi) To the extent that Seller is required to dedicate
or cause Owner to dedicate Seller's Gas Reserves to
this Agreement, Seller may release or cause to be
released such reserves from the dedication to this
Agreement if (A) Seller submits Reserve Reports to
Buyer and Financing Parties for three (3) consecutive
years after initial dedication demonstrating that
Seller's Gas Reserves are greater than the Total Firm
Commitments or (B) Seller submits to Buyer and
Financing Parties a Reserve Report demonstrating that
Seller's Gas Reserves are greater than or equal to 125%
of Total Firm Commitments.
(vii) Upon request, Seller shall afford Buyer and
Financing Parties the reasonable opportunity to review
such well production records, engineering reserve data,
and other information as Buyer and Financing Parties
may reasonably require in regard to Seller's
representation that Seller's Gas Reserves are at least
equal to the Total Firm Commitments, or in regard to
the quantity of Dedicated Reserves, subject to the
aforesaid confidentiality requirements.
(viii) The Parties agree to execute and file (or
cause to be executed and filed) of record a mutually
agreed memorandum and such other documents, which
reasonably relate to the dedication, release or
substitution of Dedicated Reserves, and are consistent
with the Parties' respective rights and obligations
under this Agreement, in the appropriate office(s)
where real estate property records are kept.
(ix) Seller's or Owner's commitment of Seller's Gas
Reserves to the Agreement shall at all times be subject
to Seller's reservations stated herein; and provided,
further, that Seller reserves the right on a daily
basis to sell to other parties any and all production
from the Dedicated Reserves which is not purchased by
Buyer on such Day. Seller agrees that Seller or Owner
shall not dedicate or cause a dedication of any of
Seller's Gas Reserves comprising the Dedicated Reserves
to any other Gas supply agreement unless the same has
been released from dedication hereunder.
(x) Seller's or Owner's commitment of the Dedicated
Reserves is from Seller's or Owner's interests as a
whole in the Seller's Gas Reserves of the then existing
▇▇▇▇▇ and any new ▇▇▇▇▇ Seller or Owner may thereafter
drill or cause to be drilled in connection with the
Dedicated Reserves. The Buyer and Financing Parties
acknowledge that Seller can make no representations
beyond its best knowledge after due inquiry and no
guarantees concerning the estimated future levels of
production available for delivery from the Dedicated
Reserves. As to the acceptability of the Dedicated
Reserves, Buyer and Financing Parties shall rely on
their own independent estimates, their own evaluation
of the Reserve Reports provided by Seller, other
evaluation, studies, inspections, and review of the
▇▇▇▇▇, acreage, and the Gas available for delivery
therefrom. It is expressly understood that the
determination whether conditions permit or justify the
drilling of any new ▇▇▇▇▇ shall be made by Seller or
Owner in its sole discretion, and that nothing in this
Agreement shall be interpreted as a requirement or
obligation on Seller's or Owner's part to conduct any
new drilling at any time.
(xi) Seller reserves the right in its sole discretion
to utilize additional production available from sources
other than the Dedicated Reserves to supply Buyer with
Gas under this Agreement.
(xii) In all instances, the control, management and
operation of Seller's or Owner's properties comprising
Seller's Gas Reserves shall be and remain reserved as
the exclusive right of Seller or Owner, free from any
and all control by Buyer and Financing Parties. Seller
or Owner may, in its sole judgment, repair, rework or
abandon any ▇▇▇▇▇; pool or unitize leases with any
other leases; or surrender or permit the lapse of its
leases or mineral rights. Seller reserves the right
for itself and Owner to use Gas produced from Seller's
Gas Reserves or the Dedicated Reserves for field
operations, to fulfill lessor obligations, and to
process any Gas before delivery for extraction of
liquid hydrocarbons so long as the Gas after processing
still meets the applicable quality specifications under
the Agreement. Seller shall not be held liable for
loss of lease or mineral rights through clerical error
or administrative oversight not materially affecting
the Dedicated Reserves.
(xiii) (A) Upon not less than thirty (30) Days
prior Notice being given to Buyer and Financing
Parties, Seller or Owner may sell, assign or
transfer all or any portion of the Dedicated
Reserves without the prior written consent of
Buyer and Financing Parties unless any such sale,
assignment, or transfer would reasonably be likely
to have a material adverse effect on Seller's
ability to perform its obligations hereunder to
Buyer; provided, no such consent of Buyer and
Financing Parties shall be required in the event
of a merger, reorganization, consolidation, or
sale of all or substantially all of Seller's or
Owner's, as the case may be, assets to an
affiliated subsidiary or parent company under
common control with Seller or Owner so long as
such successor remains or agrees to be fully bound
by and assume Seller's or Owner's, as the case may
be, obligations under this Agreement. To the
extent any sale, transfer or assignment of
Dedicated Reserves reduces the Dedicated Reserves
below the Minimum Dedicated Quantity, Seller shall
propose Substitute Reserves in place of the
Dedicated Reserves being sold, transferred or
assigned by Seller or Owner in accordance with
Section 12.2(d)(iii).
(B) Nothing herein shall prevent Seller or Owner
from pledging, mortgaging, or otherwise
encumbering all or any portion of Seller's Gas
Reserves and properties as security for
indebtedness; provided, however, with respect
solely to the Dedicated Reserves, should Seller or
Owner at any time receive a notice of default in
respect of such pledge, mortgage, or other
encumbrance which would reasonably be likely to
have a material adverse effect on Seller's ability
to perform its obligations regarding such
reserves, Seller shall promptly give Buyer and
Financing Parties Notice thereof and if said
default continues and is not cured for a period of
thirty (30) Days after the Notice, upon Buyer's
and Financing Parties' request, Seller shall
promptly propose Additional Proposed Reserves or
Substitute Reserves sufficient to satisfy the
Minimum Dedicated Quantity in accordance with
Subsections 12.2(d)(ii) or 12.2(d)(iii).
(xiv) Seller represents and warrants that the
Dedicated Reserves shall not, at the time of their
dedication to the Agreement, be dedicated to the
performance of Seller's or Owner's obligations under
other Gas supply agreements of Seller or Owner and that
Seller or Owner shall not in the future dedicate all or
any portion of the Dedicated Reserves to the
performance of Seller's or Owner's obligations under
other Gas supply agreements of Seller or Owner unless
and until released from dedication hereunder.
(xv) If Owner fails to take action consistent with the
requirements of this Section 12.2(d) for any reason,
such failure shall be deemed to be a material breach of
this Agreement by Seller.
(xvi) For purposes of this Section 12.2(d),
Financing Parties shall designate one agent to receive
Notices, the Letter and Reserve Reports and to exercise
the rights of Financing Parties herein.
ARTICLE XIII
FORCE MAJEURE
Section 13.1 Definition.
(a) An "Event of Force Majeure" with respect to Buyer's
obligations means an act of God; strikes, lockouts, or other
industrial disturbances; acts of the public enemy; wars;
blockades; insurrections; riots; epidemics; landslides;
lightning; earthquakes; fires; storms; hurricanes; floods;
washouts; arrests and restraints of governments and people;
civil disturbances; explosions; breakage or accident to
machinery including the Facility; failure or inability of
any person to obtain any Governmental Approval(s); a binding
present or future governmental law, regulation or order or
court order or orders of any regulatory body having
jurisdiction that materially adversely affects Buyer's
physical ability to perform under this Agreement; breakage
or freezing of lines of pipe or ▇▇▇▇▇; curtailment of firm
pipeline transportation service on a Pipeline; the necessity
for making repairs or alterations to machinery (including
the Facility) or lines of pipe; inability to obtain
necessary materials, supplies, licenses, pelts (or
unavoidable delays, after the exercise of due diligence, in
acquiring materials, supplies, licenses or permits); as to
any Pipeline, an event of force majeure as defined in an
applicable tariff or service agreement; an event of force
majeure as defined in the Power Contract; or any other
causes, whether of the kind herein enumerated or otherwise,
that is not within the control of Buyer and that by the
exercise of due diligence Buyer could not have prevented or
is unable to overcome; provided, however, that (i) changes
in market conditions for gas or for electricity or thermal
energy produced from the Facility, (ii) failure of Buyer to
pay and perform its obligations under the Firm
Transportation Agreements, or an increase in the cost of
transportation service provided under such Agreements, and
(iii) failure of the Power Purchaser, or any other purchaser
of electricity from the Facility, to accept and pay for
electricity, or failure of Buyer's steam purchaser to
purchase and accept steam (other than as a result of an
event of force majeure relating solely to the failure of the
Power Purchaser's or steam purchaser's ability to perform
under the Power Contract or any other power purchase
contract entered into by Buyer or the contract for the
purchase of steam produced at the Facility), shall not
constitute an Event of Force Majeure.
(b) Any "Event of Force Majeure" with respect to Seller's
obligations with respect to the MDFQ means:
(i) Failure or refusal by Columbia Gas Transmission to
accept Gas tendered by Seller at the Delivery Point(s)
in accordance with this Agreement and such failure or
refusal is not caused by or due to a failure by Seller
to comply with any contracts, laws or regulations;
(ii) Failure of Seller to deliver Gas to the Delivery
Point(s) by reason of a binding future governmental
law, order, or decree; court order; order of a
regulatory body having jurisdiction; arrests and
restraints of governments and peoples; and acts of the
public enemy or wars (such enumerated events shall be
collectively referred to as "Limited Force Majeure
Events") provided that:
(A) such Limited Force Majeure Events apply
generally and not just to Seller and/or its
affiliates; and
(B) such interruption is not caused by Seller,
for whatever reason, choosing not to comply with
such laws, orders or decree or failing to obtain
any Governmental Approval; and
(C) such Limited Force Majeure Event prevents
other Gas suppliers from delivering Gas to Buyer's
Delivery Point and Buyer is also not able to
obtain supplies of Gas at Buyer's Delivery Point;
or
(iii) With respect to any FERC Regulated Facilities
upon which Seller is shipping Gas to the Delivery
Point(s) pursuant to a firm transportation contract
with the pipeline company owning and operating such
Facilities, an event of "force majeure" as declared
under and in accordance with the FERC Tariff covering
such Facilities.
(c) Any "Event of Force Majeure" with respect to Seller's
obligations with respect to the Interruptible Gas means the
"Events of Force Majeure" as defined in Section 13.1(a).
Section 13.2 Burden of Proof. The burden of proof as to whether
an Event of Force Majeure has occurred shall be upon the Party
claiming an Event of Force Majeure.
Section 13.3 Effect of Event of Force Majeure. If either Party
is rendered wholly or partially unable to perform its obligations
(other than accrued obligations to make payments) under this
Agreement because of an Event of Force Majeure, that Party's
obligations that are affected by the Event of Force Majeure shall
be suspended to the extent so affected during the continuation of
such inability to perform; provided, however:
(a) The non-performing Party, as soon as reasonably
practicable after learning of its inability to perform due
to an Event of Force Majeure, shall provide Notice to the
other Party giving the particulars of the occurrence,
including an estimate of its expected duration and probable
impact on the performance of its obligations under this
Agreement, and shall continue to furnish timely regular
reports with respect thereto during the Event of Force
Majeure;
(b) The non-performing Party shall use its Best Efforts to
continue to perform its obligations under this Agreement,
notwithstanding the Event of Force Majeure, and to use due
diligence to remedy the Event of Force Majeure;
(c) The non-performing Party shall provide the other Party
with prompt Notice of the cessation of the Event of Force
Majeure giving rise to the suspension of performance; and
(d) No obligation of either Party that was to be performed
prior to the occurrence of the Event of Force Majeure shall
be suspended as a result of that occurrence, unless such
Event of Force Majeure prevents the performance of such
obligation.
Section 13.4 Settlement of Strikes, Lockouts or Other Labor
Disputes. Nothing in this Article XIII shall require the
settlement of any strike, walkout, lockout or other labor dispute
on terms that, in the sole judgment of the Party involved in the
dispute, are contrary to that Party's interest. It is understood
and agreed that the settlement of strikes, walkouts, lockouts, or
other labor disputes shall be entirely within the discretion of
the Party having the difficulty.
Section 13.5 Force Majeure Curtailment.
(a) In the event that, as a result of an Event of Force
Majeure, Seller is rendered unable on any Day, wholly or in
part, to sell and deliver at any specific Delivery Point the
quantity of Gas that Seller has obligated itself to deliver
to its customers (including Buyer) at that specific Delivery
Point, then Seller shall curtail deliveries at each such
Delivery Point affected by said Event of Force Majeure to
all such customers (including Buyer) in the following order
of priority:
(i) first, under natural gas sales contracts on an
interruptible basis;
(ii) second, deliveries of Gas to the Delivery Point(s)
under this Agreement within the MDFQ and other firm gas
supply agreements Seller has entered into with third
parties, pro rata based on the quantities of Gas
nominated for delivery under the affected agreements on
the Day on which the Event of Force Majeure occurs.
(b) To the extent and for as long as Seller is unable to
deliver to the Delivery Point(s) the quantity of Gas
nominated by Buyer or Fuel Manager due to an Event of Force
Majeure, Buyer may purchase replacement supplies of Gas from
a third party supplier.
(c) In the event that, as a result of an Event of Force
Majeure, Buyer is rendered unable on any Day, wholly or in
part, to buy and receive at any specific Delivery Point the
quantity of Gas that Buyer or Fuel Manager has Scheduled for
delivery during such Day at that specific Delivery Point,
then Buyer shall curtail deliveries at that specific
Delivery Point made by third party suppliers prior to
deliveries at that specific Delivery Point made by Seller
under this Agreement to the extent Buyer's curtailment of
such third party deliveries will not result in Buyer's
breach of a Gas supply agreement Buyer has with such third
party supplier.
Section 13.6 Termination Due to Extended Event of Force Manure.
In the event that an Event of Force Majeure prevents Seller from
delivering or Buyer from receiving Gas under this Agreement and
such Event of Force Majeure or the effect thereof shall continue
for more than twelve (12) consecutive Months, then the Party that
has not claimed suspension of its obligations because of the
Event of Force Majeure may terminate this Agreement without
continuing liability by either Party to the other Party, except
for obligations previously accrued hereunder, upon sixty (60)
Days' prior Notice to the Party that has claimed suspension of
its obligations; provided, however, such termination shall not be
effective if the cause of the Event of Force Majeure is remedied
within such sixty- (60) Day notice period. Any Party that is
prevented by any Event of Force Majeure from performing hereunder
shall use due diligence to remedy such condition at the earliest
practicable date.
ARTICLE XIV
GOVERNMENTAL ACTION
Section 14.1 Governmental Action. If an order issued by any
court, regulatory or other governmental authority materially
affects Buyer's ability to perform under the Power Contract,
Buyer may request that Buyer, Seller and other necessary parties
meet to discuss mutually agreeable modifications or supplements
to this Agreement as may be necessary to enable Buyer to perform
under the Power Contract in light of such governmental action.
Nothing in this Section 14.1 shall obligate either Party to agree
or enter into any such modification or supplement to this
Agreement, and any such modification or supplement shall be
entered into at the sole discretion of each of the Parties.
ARTICLE XV
TRANSFER AND ASSIGNMENT
Section 15.1 Assignments.
(a) Except as specified in Section 15.1(b), the rights and
obligations of the Parties to this Agreement may not be
assigned by either Party, except upon the express written
consent of the other Party. In the event an assignment is
made and consented to, the assigning Party shall (unless
such consent states otherwise) be released and discharged
from all obligations to the other Party hereunder thereafter
arising, and such assignee shall be substituted in place of
the assigning Party herein.
(b) Any party which shall succeed by purchase, merger, or
consolidation to the properties, substantially or in their
entirety, of Buyer or of Seller, as the case may be, shall
be entitled to the rights and shall be subject to the
obligations of its predecessor in title under this
Agreement. To the extent acknowledged by Seller in the
Consent and Agreement, Buyer shall have the right, without
the consent of Seller but upon Notice to Seller, to assign
all of its rights and interests (but not its obligations)
under this Agreement to the Financing Parties as security
for Buyer's obligations under the Financing Documents.
Subject to the Consent and Agreement, Seller acknowledges
that upon an event of default by Buyer under the terms of
such Financing Documents, any of the Financing Parties may
(but shall not be obligated to) assume or cause its designee
or a new lessee or purchaser of the Facility to assume all
of the interests, rights, and obligations of Buyer
thereafter arising under this Agreement. Seller may,
without the consent of Buyer but upon Notice to Buyer, and
with the prior written consent of the Financing Parties,
which consent will not be unreasonably withheld, assign its
rights and obligations to a wholly-owned subsidiary of MCN
Corporation, provided that such wholly-owned subsidiary is
not subject to regulation as a public utility under state or
federal law and the Parent Guaranty continues to guaranty
the performance and payment obligations of Seller under this
Agreement. Such assignee shall supply documentation similar
to that supplied by Seller in connection with this
Agreement.
ARTICLE XVI
NOTICE
Section 16.1 Notice. Except as otherwise provided in Section
4.1, every Notice, communication, invoice or nomination
provided for in this Agreement shall be in writing directed
to the Party to whom given, made or delivered at such
Party's address as follows (or as otherwise directed in
writing by such Party):
SELLER: Cogen Development Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
BUYER: Panda-Brandywine, L. P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Fuel Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(Emergency Telecopy): (▇▇▇) ▇▇▇-▇▇▇▇
FINANCING PARTIES: General Electric Capital
Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Energy
Project Operations Global Project &
Structured Finance
Either Party may change its address by giving written Notice of
such change to the other Party. Any Notice, communication,
nomination, or invoice or other document given or delivered under
this Agreement by mail shall be deemed received by the addressee
at the end of the third (3rd) Business Day after the date of
mailing by prepaid, registered or certified U.S. mail. If any
such Notice, communication, nomination, invoice or other document
is delivered by hand, overnight courier or by confirmed
telecopier to the addressee, receipt shall be deemed to have
occurred as soon as such delivery or transmission has been
effected.
ARTICLE XVII
SUSPENSION, MITIGATION, DEFAULT AND REMEDIES
Section 17.1 Seller's Failure To Deliver; Buyer's and Seller's
Mitigation.
(a) If and to the extent, on any Day, there is a failure by
Seller to sell and deliver a quantity of Gas under the MDFQ
in accordance with the terms of this Agreement for any
reason, except to the extent prevented by an Event of Force
Majeure or permitted variations in the delivery of Gas
within firm transportation tolerances, Buyer may purchase
replacement fuel (either Gas or fuel oil) from a third party
supplier, and Seller shall promptly provide notice to Buyer
of such failure and shall pay to Buyer as liquidated damages
an amount equal to either of the following, as applicable :
(i) On any Day during which Buyer's use of fuel oil at
the Facility in lieu of the unexcused quantity of Gas
Seller fails to deliver under this Agreement would not
violate any of the Governmental Approval(s), including
the Governmental Approval relating to the Facility's
air emissions, and Buyer (or Washington Gas Light
solely to the extent permitted under the Washington Gas
Agreement) is able to obtain replacement fuel (either
Gas or fuel oil) Seller shall pay Buyer as liquidated
damages an amount equal to the positive difference, if
any, between (A) the costs Buyer (or Washington Gas
Light under the Washington Gas Agreement) incurs to
obtain replacement fuel (either Gas or fuel oil),
including the actual cost of the fuel, the cost of
transporting such fuel, any imbalance penalties or
charges a pipeline transporter assesses as a result of
Seller's failure to deliver, all other costs and
charges directly arising out of the procurement and
transportation of such fuel, and, without duplication
of any of the foregoing costs, any transportation cost
included in clause (B) below which Buyer is unable to
avoid, minus (B) the sum of the price Buyer would have
paid hereunder for the unexcused quantity of Gas Seller
failed to deliver, plus the cost of transporting such
quantity of Gas to the Facility; or
(ii) On any Day during which Buyer's use of fuel oil at
the Facility in lieu of the unexcused quantity of Gas
Seller fails to deliver would violate any of the
Governmental Approval(s), including the Governmental
Approval relating to the Facility's air emissions, or
Buyer is unable to obtain replacement fuel (either Gas
or fuel oil), and Buyer is therefore unable to operate
the Facility in whole or in part, Seller shall pay
Buyer as liquidated damages, the positive amount, if
any, equal to (A) the extent of the total reduction in
"Monthly Capacity Payments" (as defined in the Power
Contract) due to Buyer from the Power Purchaser as a
result of a reduction in the "Equivalent Availability
Factor" (as defined in the Power Contract) and the loss
of all or a portion of a "Monthly Energy Payment" (as
defined in the Power Contract) under the Power
Contract, which reduction or loss results directly from
Buyer's inability to deliver capacity or energy to the
Power Purchaser during the period of Seller's unexcused
failure to deliver a quantity of Gas, less (B) net
expenses saved or which Buyer did not incur to operate
the Facility during Seller's unexcused failure to
deliver, including without limitation the costs Buyer
would have otherwise incurred for Gas, water,
chemicals, supplemental power, and other significant
variable costs directly related to the production of
power.
(b) The Parties acknowledge that it would be difficult or
impossible at the time of Seller's unexcused failure to
deliver Gas under this Agreement to measure the actual
damages suffered by Buyer under the circumstances set forth
in Section 17.1(a). Accordingly, the Parties agree that the
amount of liquidated damages specified in Section 17.1(a) is
reasonable as of the date hereof, and Seller agrees not to
contest the validity or amount of such liquidated damages.
(c) Buyer's remedy under this Section 17.1 shall be in
addition to Buyer's right to seek specific performance of or
terminate this Agreement (if Seller's failure to sell and
deliver Gas to Buyer constitutes an Event of Default under
Section 17.2) and Buyer's right to recover Replacement Cost
under Section 17.3(c), but in lieu of other remedies
available to Buyer under Section 17.3(b).
(d) If there is an unexcused failure by Seller to deliver
any quantity of Gas pursuant to this Agreement with respect
to which Buyer shall exercise its rights under this Section
17.1, Buyer shall attempt to mitigate the effect of such
failure by using its commercially reasonable efforts,
consistent with the amount of Notice provided pursuant to
Section 17.1(a) hereof, the immediacy of Buyer's Gas
consumption needs, the quantities involved, and the
anticipated length of such failure by Seller, to obtain Gas
at a price reasonable for the area of delivery (i.e., the
Facility) ("Buyer's Cover Standard"); provided, Buyer shall
be entitled to obtain replacement fuel at any price if,
using Buyer's Cover Standard, Buyer reasonably determines
that fuel might not otherwise be immediately delivered to
the Facility. If the period of such failure to deliver Gas
extends beyond the period estimated by Seller in its Notice,
Buyer may continue to obtain replacement fuel for the period
that Buyer reasonably estimates that such failure will
continue and Buyer shall pay for the applicable costs in
accordance with this Section 17.1(d).
(e) If there is an unexcused failure by Buyer to perform
its obligations hereunder, then Seller shall use its due
diligence, acting in a commercially reasonable manner, to
mitigate the effect of such failure, including, attempting
to secure the highest alternative market for Seller's Gas,
consistent with the quantities involved, the length of such
failure by Buyer, and market conditions.
Section 17.2 Event of Default. An Event of Default under this
Agreement shall be deemed to exist upon the occurrence of any one
or more of the following events:
(a) Failure by either Party to make payment of any amounts
due to the other Party under this Agreement and such failure
continues for a period of fifteen (15) Days after receipt of
Notice of non-payment; provided, however, that if a Party is
stayed or otherwise prevented from giving such Notice by
court order or otherwise by operation of law, an Event of
Default shall be deemed to have automatically occurred after
the lapse of thirty (30) Days after such amount became
payable and regardless of any such Notice; or
(b) (i) An unexcused failure by Seller to deliver a
quantity of Gas Scheduled for delivery within the MDFQ
as follows:
(A) Seller delivers none of the Gas Scheduled for
delivery on any Day within the MDFQ for a total of
twenty (20) consecutive Days; or
(B) Seller delivers less than 50% of the quantity
of Gas Scheduled for delivery on any Day within
the MDFQ for a total of thirty (30) Days within a
rolling twelve (12) Month period; or
(C) Seller delivers less than 75% of the quantity
of Gas Scheduled for delivery on any Day within
the MDFQ for a total of sixty (60) Days within a
rolling twelve (12) Month period; or
(D) Seller delivers less than 90% of the quantity
of Gas Scheduled for delivery on any Day within
the MDFQ for a total of ninety (90) Days within a
rolling twelve (12) Month period.
(ii) An unexcused failure by Seller to deliver Gas
Scheduled for delivery within the MDFQ may fall within
each of the conditions set forth in Section 17.2(b)(i)
concurrently to the extent applicable. Nothing in this
Section 17.2 shall excuse Seller's obligation to pay
liquidated damages under Section 17.1(a) and the
payment of such liquidated damages shall not cure the
default arising on account of Seller's non-delivery.
(c) A material breach of any other covenant or other
obligation in this Agreement or the Consent and Agreement or
any representation or warranty made by a Party herein or in
the Consent and Agreement shall prove to have been incorrect
in any material respect as of the date made, and (i) such
breach or incorrect statement continues and is not cured for
a period of thirty (30) Days after Notice of such non-
performance from the other Party, or (ii) if within such
thirty- (30) Day period the non-performing Party commences
and proceeds with due diligence to cure the breach or
incorrect statement and the breach or incorrect statement is
not cured within ninety (90) Days or such longer period of
time agreed to by the Parties in writing as being necessary
for the Party to cure the breach or incorrect statement with
al] due diligence; provided, however, that if a Party is
stayed or otherwise prevented from giving such Notice by
court order or otherwise by operation of law, an Event of
Default shall be deemed to have automatically occurred if
such failure continues for a period of thirty (30) days
after the occurrence thereof; or
(d) The Parent Guaranty shall cease to be in full force and
effect or MCN Corporation shall materially breach any of its
obligations thereunder.
(e) If by order of a court of competent jurisdiction, a
receiver or liquidator or trustee of a Party or MCN
Corporation shall be appointed and such receiver, liquidator
or trustee shall not have been discharged within a period of
sixty (60) Days; or if by decree of such a court, either of
the Parties or MCN Corporation shall be adjudicated bankrupt
or insolvent under applicable law or any substantial part of
the property of such Party or MCN Corporation shall have
been sequestered, or such decree shall have continued
undischarged and unstayed for a period of sixty (60) Days
after the entry thereof; or if a petition to declare
bankruptcy or to reorganize either of the Parties or MCN
Corporation pursuant to any of the provisions of the
Bankruptcy Code, or pursuant to any other similar state
statute or law apply cable to such Party or MCN Corporation,
as now or hereafter in effect , shall be filed against such
Party or MCN Corporation and shall not be dismissed with
sixty (60) Days after such filing; or
(f) If either of the Parties or MCN Corporation shall file a
voluntary petition in bankruptcy under any provision of any
applicable bankruptcy or insolvency law or shall consent to
the filing of any bankruptcy or reorganization petition
against it under any similar law; or, without limitation of
the generality of the foregoing, if either of the Parties or
MCN Corporation shall file a petition or answer or consent
seeking relief or assisting in seeking relief in a
proceeding under any of the provisions of the Bankruptcy
Code, or pursuant to any other similar statute applicable to
such Party or MCN Corporation, as now or hereafter in
effect, or an answer admitting the material allegations of a
petition filed against it in such a proceeding; or if either
of the Parties or MCN Corporation shall make a general
assignment for the benefit of its creditors; or if either of
the Parties or MCN Corporation shall admit in writing its
inability to pay its debts generally as they become due; or
if either of the Parties or MCN Corporation shall consent to
the appointment of a receiver or receivers, or trustee or
trustees, or liquidator or liquidators of it or of all or of
any part of its property.
Section 17.3 Remedies for Breach. Should an Event of Default
occur and be continuing, the Party not in default shall
thereafter have the right:
(a) In the case of an Event of Default under Section
17.2(a) hereof, to immediately suspend its performance under
this Agreement, and to terminate this Agreement upon Notice
if after a suspension period of at least forty-five (45)
Days, the Event of Default is not cured, provided, that if a
party is stayed or otherwise prevented by operation of law
from giving such Notice, such termination shall
automatically occur at the end of such 45-Day period or, in
the case of any other Event of Default, to immediately
suspend its performance hereunder and at any time to
terminate this Agreement; provided, however, any such
termination shall occur within 180 Days of the Event of
Default or such longer period to the extent such termination
is stayed or otherwise prevented by operation of law; and
(b) To pursue any other remedy provided under this
Agreement or now or hereafter existing at law or in equity
(except to the extent such remedy is limited by Sections
17.1 and 19.11) or otherwise as expressly stated herein; and
(c) If an Event of Default by Seller has occurred (whether
or not this Agreement has been terminated in respect
thereof), Buyer may elect, in addition to any other remedy
available to Buyer under this Agreement, but without
duplication of amounts paid under Section 17.1(a), to
determine, as of a date chosen by Buyer occurring on or
after the date of such Event of Default (the "Determination
Date") the Replacement Cost (as hereinafter defined) for all
of the Remaining Contract Obligations (as hereinafter
defined), in which case Seller agrees to pay such
Replacement Cost to Buyer by wire transfer in accordance
with Buyer's instructions within twenty (20) Days after
Seller's receipt of Buyer's invoice, setting forth the basis
for deriving such Replacement Cost, provided, that if Buyer
is stayed or otherwise prevented by operation of law from
delivering such invoice, such Replacement Cost shall become
automatically due and payable on the Determination Date. On
the Determination Date, this Agreement shall automatically
terminate, unless such termination had already occurred. In
the same manner and on the same date that the Replacement
Cost becomes due and payable hereunder, Seller shall also
pay to Buyer (i) damages calculated pursuant to Section 17.1
for each Day up to the Determination Date that Seller would
have had to pay as damages to Buyer under said Section 17.1
on account of a failure by Seller to deliver a quantity of
Gas on such Day, (ii) any amounts that Buyer has previously
paid to Seller under Section 3.2 and Article VII which Buyer
has not made up pursuant to Section 3.3 and any amounts
which Seller owes under Section 8.6 hereof, and (iii) all
other amounts then due from Seller hereunder. Seller shall
pay to Buyer interest at the Interest Rate on all amounts
payable under this Section 17.3 from the date such amounts
become due to the date of payment thereof. For purposes of
this Section 17.3, the following terms shall have the
indicated meanings:
The "Replacement Cost" shall be a lump sum payment
amount equal to the present value of the sum of the
following amounts, discounted, in the case of periodic
payments, to the Determination Date on an annual basis
at the applicable "Treasury Rate":
(A) the amount by which (y) the cost of the
Replacement Gas Supply, based on terms and
conditions that are reasonable (giving
consideration to, among other things, Buyer's need
to obtain a replacement contract or contracts in a
timely manner that is satisfactory to Power
Purchaser in order to fulfill Buyer's obligations
under its project agreements) under conditions
existing on the Determination Date, exceeds (z)
the aggregate contract price hereunder that the
Buyer would have paid to Seller if Seller
delivered the Remaining Contract Obligations,
under conditions existing at the Determination
Date, to Buyer hereunder, which cost of the
Replacement Gas Supply shall be determined by
Buyer in a reasonable manner; provided, that for
purposes of determining such cost, Buyer may, at
its option, arrange for a replacement contract or
contracts from a Qualified Supplier or Suppliers
on terms and conditions reasonably acceptable to
Buyer and Financing Parties for the sale and
delivery to Buyer of quantities of Gas up to the
Remaining Contract Obligations, in which case the
cost of the Replacement Gas Supply shall be
conclusively determined based on the cost
established by such contract or contracts to the
extent of the portion of the Remaining Contract
Obligations covered thereby, and such cost
established by such contracts shall be deemed
irrebuttably to be the most reasonable cost
available for the Replacement Gas Supply; plus
(B) the amount of all transportation and other
costs and incidental charges and expenses,
including, without limitation, the cost of
obtaining a "firm" receipt point or points for Gas
other than the Delivery Point(s) (including any
contribution-in-aid of construction), that would
be incurred by Buyer in connection with obtaining
the Remaining Contract Obligations under a
Replacement Gas Supply, except for those
transportation costs for which Buyer is obligated
to pay under this Agreement as of the
Determination Date; plus
(C) the cost of any swap or option which Buyer
obtains or pays for in connection with the
Replacement Gas Supply.
"Replacement Gas Supply" shall mean the substitute
supply of Gas that Buyer must acquire to replace the
Remaining Contract Obligations.
"Qualified Supplier" shall mean a natural gas supplier
which is reasonably acceptable to Buyer and Financing
Parties; provided that the creditworthiness of such
supplier must be acceptable to the Financing Parties in
their sole discretion. To the extent that such natural
gas supplier is affiliated with Buyer, to be considered
a Qualified Supplier, the price offered by such
affiliate must be comparable to an offer submitted by
an unaffiliated supplier with similar credit and gas
supply characteristics as Buyer's affiliated gas
supplier.
"Remaining Contract Obligations" shall mean, at any
time in question, the sum of the Maximum Daily Firm
Quantities for each Day remaining in the Principal Term
(as adjusted pursuant to Appendix I hereto) or the
Extended Term, if applicable, of this Agreement.
"Treasury Rate" shall mean (i) if on the Determination
Date the last day of the remaining term of this
Agreement (assuming that it was not being terminated
early pursuant hereto) (the "Final Day") occurs less
than one year after the Determination Date, the average
yield to maturity on a government bond equivalent basis
of the applicable United States Treasury ▇▇▇▇ due the
week of the Final Day and (ii) if the Final Day occurs
one year or more after the Determination Date, the
average yield of the most actively traded United States
Treasury Note (as reported by Cantor ▇▇▇▇▇▇▇▇▇▇
Securities Corp. on Page 5 of Telerate Systems Inc., a
financial news service, or if such report is not
available, a source deemed comparable by an independent
investment banking institution of national standing
appointed by the Buyer (an "Independent Investment
Banker") corresponding in maturity to the Final Day (or
if there is no corresponding maturity, an interpolation
of the two nearest maturities determined by the
Independent Investment Banker), in each case under (i)
and (ii) above determined by the Independent Investment
Banker based on the bid prices as of 10:00 a.m., New
York time, on the second business day preceding the
Determination Date.
(d) The parties agree that any amounts payable under
Sections 17.1 and 17.3 are a reasonable estimate of the
measure of harm that Buyer would actually suffer under the
circumstances with respect to the time periods for which the
payments are made; that the actual harm that Buyer would
suffer with respect to such time periods would be difficult
or impossible to establish) and that the amounts determined
under Sections 17.1 and 17.3, as applicable, are reasonable
and do not constitute penalties and may not therefore be
challenged or avoided.
(e) Notwithstanding anything to the contrary herein, in the
case of an Event of Default by Buyer, Seller shall not be
entitled to suspend or terminate its performance hereunder
unless Seller shall have complied with the terms and
conditions of the Consent and Agreement.
(f) Notwithstanding any other provision of this Agreement
to the contrary, in the case of an Event of Default by
Seller, Buyer shall not be entitled to terminate this
Agreement or enter into a contract for Replacement Gas
Supply pursuant to the provisions of Section 17.3(c) without
the express prior written consent of the Financing Parties.
(g) Upon the occurrence of an Event of Default with respect
to either of the Parties hereunder, such defaulting Party
shall be obligated to pay to the other Party all costs and
expenses (including reasonable legal fees) incurred by such
other Party in exercising, enforcing or defending its rights
and remedies under this Agreement on account of such Event
of Default.
(h) Section 17.3 shall survive the termination of this
Agreement.
Section 17.4 Special Termination Event
(a) If the Power Purchaser shall give the Buyer notice of a
Fuel Default (as defined in Section 1.11 of the Power
Purchaser Consent) which notice describes as one of its
reasons any fact or circumstance relating to Seller, MCN
Corporation or any of their respective affiliates, or any of
the transactions contemplated by this Agreement or the Fuel
Supply Management Agreement or the performance or
nonperformance by Seller, MCN Corporation or any of their
respective affiliates of this Agreement, the Fuel Supply
Management Agreement, or any guaranty of any thereof (such
an alleged Fuel Default being herein called, a "Seller Fuel
Default"), then Buyer shall give Seller written notice of
such Seller Fuel Default, and Buyer and Seller, together
with the Financing Parties, shall promptly meet to discuss
such Seller Fuel Default. Seller shall in good faith use
its Best Efforts to promptly cure such Seller Fuel Default
to the satisfaction of Power Purchaser. Notwithstanding any
other provision of this Agreement, if a Fuel/Performance
Failure (as defined in Section 1. 11 of the Power Purchaser
Consent) shall occur before the Power Purchaser shall agree
that the Seller Fuel Default has been cured, then on the
date (the "Last Cure Date") which is the later of (a) thirty
(30) Days after Seller is notified of the Seller Fuel
Default or (b) the date on which the Power Purchaser alleges
that a Fuel/Performance Failure related to such Seller Fuel
Default has occurred, Buyer may, and at the direction of the
Financing Parties shall, immediately terminate this
Agreement by giving written notice to Seller unless on or
prior to the Last Cure Date Power Purchaser shall agree, in
writing, that both such Fuel/Performance Failure and Seller
Fuel Default have been cured. Upon such termination, Buyer
and Seller shall be relieved of all their obligations
hereunder, except that Buyer shall pay to Seller any unpaid
amounts owed to Seller under this Agreement as of the date
of such termination and Seller shall pay to Buyer any unpaid
amounts owed to Buyer under this Agreement as of the date of
such termination, including, without limitation, any amounts
payable to Buyer under Sections 3.3 or 8.6 hereof. The
Parties shall in good faith try to settle the respective
amounts, if any, owed to each other, within thirty (30) Days
after such termination. This Section 17.4 shall be without
derogation of the Parties' rights and remedies, including
the remedies of termination and damages under Section 17.3,
in the case of an Event of Default by either Party.
(b) (i) In the event of a termination by Buyer
pursuant to Section 17.4(a), for each Month following
the determination of the Swap Price (as determined
below) until the Month in which the Principal Term
would have ended, Buyer shall pay to Seller a portion
of "Distributable Cash" (as defined below) equal to the
positive difference between (A) the product of (x) the
Limited Dispatch Commodity Charge that would have been
in effect for such Month, multiplied by (y) the Minimum
Limited Dispatch Quantity that would have been in
effect for the Agreement Year in which such Month falls
divided by twelve (12), minus (B) the product of (x)
the Swap Price then in effect, multiplied by (y) the
Minimum Limited Dispatch Quantity in effect for the
Agreement Year in which such Month falls divided by
twelve (12) (such difference, the "Differential
Amount". The Swap Price shall be equal to the sum of
(A) the Swap Average Price, plus (B) the Swap Margin.
At the end of what would have been an Agreement Year
had this agreement not been terminated, the Swap Price
shall escalate. Effective on the date that would have
been an Escalation Date had this Agreement not been
terminated, the Swap Price shall be determined by
multiplying (A) the Swap Price in effect on the Day
before the Escalation Date, times (B) 1.04. The Swap
Average Price shall be determined as follows: Within
thirty (30) Days after the Day Buyer terminates this
Agreement pursuant to Section 17.4(a), the Parties
shall request that ▇▇▇▇▇▇▇ ▇▇▇▇▇, AIG and Phibro Energy
each quote an "ask" price and a "bid" price for 7,000
MMBtu per Day of Gas at the NYMEX ▇▇▇▇▇ Hub price
through the end of the Principal Term, assuming an
annual escalation rate of four percent (4%). The Swap
Average Price shall equal the arithmetic average of the
ask prices and bid prices received by the Parties for
the first year. If ▇▇▇▇▇▇▇ ▇▇▇▇▇, AIG or Phibro Energy
no longer provides ask or bid price quotes, the Parties
shall mutually agree to a substitute third party to
provide an ask price and a bid price quote. The Swap
Margin as of the Initial Delivery Date shall equal
$0.40 per MMBtu. Effective each Escalation Date, until
this Agreement is terminated pursuant to Section 17.4,
the Swap Margin shall be determined by multiplying (A)
the Swap Margin in effect on the Day before the
Escalation Date, times (B) 1.04.
(ii) The provisions of this Section 17.4(b) shall not
apply, and no amount shall be due and payable under
this Agreement, if this Agreement is terminated for any
reason other than pursuant to Section 17.4(a),
regardless of whether a Fuel Default or
Fuel/Performance Default has occurred or is existing on
or before the effective date of termination.
(iii) Notwithstanding anything to the contrary
contained herein, upon the occurrence of an
"Enforcement Act" (as defined below), any and all of
Seller's rights arising under this Section 17.4(b),
including but not limited to Seller's right to payment
of the Differential Amounts for periods prior to the
Enforcement Act, shall immediately cease and terminate
and be of no further force or effect.
(iv) Seller understands and agrees that distributions
of Distributable Cash may be restricted by the
Financing Documents now or in the future and that the
Security Deposit Agreement may be changed to provide
for the payment of additional amounts to other parties
(whether now or hereafter provided for in such Security
Deposit Agreement). The Seller agrees that its right
to receive Differential Amounts is not a debt of the
Buyer. Seller also agrees that any default, breach,
rejection or repudiation by Buyer of any obligation or
provision contained in this Section 17.4(b) shall not
be a default by Buyer under this Agreement, including,
without limitation, for purposes of Section 17.2
hereof; provided, however, that Seller shall have the
right to seek to compel specific performance of Buyer's
obligations set forth in this Section 17.4. In no
event shall Seller make any claim against or assert any
lien on the Facility or any other asset of Buyer by
reason of the matters set forth in this Section
17.4(b). Buyer's obligation to pay Differential
Amounts shall be non-recourse to Buyer except to the
extent Buyer receives Distributable Cash, and then
recourse shall be limited to such Distributable Cash.
Seller agrees that it shall have no right to institute
any action or proceeding or otherwise take any action
against any Financing Party or any security agent or
owner trustee with respect to this Section 17.4(b).
Seller further agrees that it shall have no right to
institute any action or proceeding or otherwise take
any action against Buyer to enforce payment or
performance of any obligation or agreement contained in
this Section 17.4(b) unless and until the Financing
Parties have been paid in full all amounts outstanding
under any of the Financing Documents and such Financing
Documents have terminated; provided, however, that
Seller shall have the right to seek to compel specific
performance of Buyer's obligations set forth in Section
17.4(b).
(v) For purposes of this Section 17.4(b), (A)
"Distributable Cash" shall mean, at any time in
question, all cash then distributable to Buyer pursuant
to Section 4.9(b) of the Security Deposit Agreement,
but only if the conditions in such Section to
distribution have been satisfied; (B) "Security Deposit
Agreement" shall mean that certain Security Deposit
Agreement, dated as of March 30, 1995, among the Buyer,
Panda Brandywine Corporation, General Electric Capital
Corporation and Shawmut Bank Connecticut, National
Association, as security agent, owner trustee and
lessor, as such agreement may be amended, supplemented
or modified from time to time; and (C) the term
"Enforcement Act" shall mean the sale or transfer of
the Facility or the partnership interests in the Buyer
or the stock of the general and/or limited partner of
Buyer to any of the Financing Parties or to any third
parties pursuant to (1) the request of the Financing
Parties on account of an Event of Default under the
Financing Documents, or (2) a foreclosure action or
proceeding in accordance with the Financing Documents,
or (3) the exercise of other rights and remedies by the
Financing Parties under the Financing Documents.
(vi) For so long as the Security Deposit Agreement is
in effect, Buyer agrees to cause the Security Agent
under such Security Deposit Agreement to promptly
distribute to Seller, on a quarterly basis, to the
extent funds are available therefor, the Distributable
Cash, if any, payable to Seller hereunder, as provided
in Section 17.4(b)(i) and pursuant to the terms of the
Security Deposit Agreement.
(vii) If the Security Deposit Agreement shall be
amended or terminated so that cash is no longer
distributed to Buyer thereunder, but is distributed to
Buyer free and clear of any lien of the Financing
Parties pursuant to some other agreement, then
"Distributable Cash" shall mean such cash being
distributed to Buyer pursuant to such other agreement.
If the Financing Parties are paid in full all amounts
outstanding under the Financing Documents and such
Financing Documents have been terminated, then
"Distributable Cash" shall mean all revenues of the
Buyer's Facility.
(c) Section 17.4(b) shall survive the termination of this
Agreement.
ARTICLE XVIII
ARBITRATION
Section 18.1 Arbitration of Disputes. Except as otherwise
provided in this Agreement, any disagreement, dispute,
controversy or claim arising out of or relating to this
Agreement, or the interpretation hereof, or any arrangements
relating hereto or contemplated herein or the breach, termination
or invalidity hereof, shall be settled exclusively and finally by
arbitration. It is specifically understood and agreed that any
disagreement, dispute or controversy which cannot be resolved
between the Parties, including without limitation any matter
relating to the interpretation of this Agreement, shall, upon
election by either Party' be submitted to arbitration
irrespective of the magnitude thereof, the amount in controversy
or whether such disagreement, dispute or controversy would
otherwise be considered justifiable or ripe for resolution by a
court or arbitral tribunal. Should either Party submit a request
for arbitration to determine whether an Event of Default has
occurred or whether and when a termination of the Agreement will
or had occurred prior to expiration of the Principal Term, or
Extended Term if applicable, the Party seeking to declare such
Event of Default and/or terminate this Agreement may do so and
may exercise its remedies as provided herein notwithstanding the
pending arbitration request or proceeding and such declaration
and/or termination shall be effective, provided, nothing shall
preclude the other Party from seeking and recovering damages
through the above procedure for a wrongful declaration of an
Event of Default or a wrongful termination; provided, however,
that a request for arbitration by Buyer shall prevent such a
declaration or termination by Seller if Seller is seeking to do
so for any reason other than nonpayment by Buyer for Gas
delivered by Seller. Except as otherwise provided in the
immediately preceding sentence, the Parties shall be obligated to
continue performance under this Agreement during the pendency of
dispute resolution provided for herein. Except as otherwise
provided in Article VIII hereof, any dispute or arbitration, or
request therefor, will not prevent any amount payable by either
Party hereunder from becoming due as provided herein nor suspend
the obligation of such Party to make such payment when due;
provided that nothing shall preclude the paying Party from
seeking to recover such payment through the arbitration procedure
to the extent such payment was not due and owing hereunder.
Section 18.2 Appointment of Board. Any dispute between Seller
and Buyer submitted to arbitration pursuant to this Article XVIII
shall be detained by a board of arbitration consisting of three
(3) arbitrators to be selected for each such dispute as follows:
either Party may, at the time a board of arbitration is desired,
notify the other that the dispute is to be resolved pursuant to
this Article XVIII. The notice of arbitration shall not be
effective or valid unless the notifying Party includes in such
notice the name of one arbitrator. The other Party shall, within
fifteen (15) Days thereafter, select an arbitrator and notify the
Party desiring arbitration of the name of such arbitrator. If
such other Party shall fail to name a second arbitrator within
such fifteen- (15) Day period, the notifying Party shall select
the second arbitrator and give written notice to the other Party
of the selection of the second arbitrator and the second
arbitrator's identity. The two (2) arbitrators chosen shall,
within ten (10) Days after notice is given of the appointment of
the second arbitrator, choose a third arbitrator. In the event
of their failure to do so within ten (10) Days, either Party to
this Agreement may in like manner, on reasonable notice to the
other Party, apply to the Chief Judge, or his designee, of the
United States District Court for the District of Maryland for the
appointment of a third arbitrator. The arbitrators selected to
act hereunder shall be qualified by education, experience and
training to pass upon the particular question in dispute and
shall have had no financial interest in or have been an officer,
director or employee of either Party. Washington, D.C. shall be
the site of the arbitration hearing. The arbitrators shall not
have jurisdiction or authority to add to, detract from, or alter
in any way the provisions of this Agreement.
Section 18.3 Hearing and Decision. Applying the commercial
rules of the American Arbitration Association, the board of
arbitration shall promptly hear and determine (after giving the
Parties due notice of hearing and reasonable opportunity to be
heard) the question(s) submitted and shall render their decision
in writing within ninety (90) Days after appointment of the third
arbitrator.
Section 18.4 Effect of Decision; Costs. The written decision of
a majority of the board of arbitration shall be final and binding
upon the Parties as to each question submitted, and the Parties
shall abide by and comply with such decision and a judgment may
be entered upon such decision or award in a court of competent
jurisdiction. Such written decision may be issued with or
without an opinion; provided, however, if any Party requests a
written opinion with regard to a decision, one shall be issued
expeditiously, but its issuance shall not delay compliance with
the implementation of such decision. Each Party shall bear the
cost of the services and the expenses of the arbitrator(s)
appointed by it. Buyer and Seller shall equally bear the cost of
the services and the expense of the third arbitrator. All other
costs of arbitration proceedings, including legal costs and costs
of witnesses and employees, shall be paid by the Party bearing
such cost, unless the board of arbitration determines that the
claim giving rise to the arbitration proceeding is without merit,
in which case all such costs shall be the responsibility of the
Party raising such claim.
ARTICLE XIX
MISCELLANEOUS PROVISIONS
Section 19.1 Captions. The headings used throughout this
Agreement are inserted for reference purposes only and are not to
be considered or taken into account in construing the terms or
provisions of any Article or Section hereof nor to be deemed in
any way to qualify, modify or explain the effect of any such
provisions or terms.
SECTION 19.2 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, CONSTRUED IN ACCORDANCE WITH AND ENFORCED PURSUANT TO THE
LAWS OF THE STATE OF MARYLAND, EXCLUDING ANY CONFLICT-OF-LAW
RULES WHICH WOULD DIRECT THE APPLICATION OF THE LAW OF MOTHER
JURISDICTION.
Section 19.3 Other Agreements. This Agreement constitutes the
entire Agreement between the Parties relating to the subject
matter hereof and supersedes any other agreements, written or
oral, between the Parties concerning the subject matter.
Section 19.4 Binding Effect. The terms and provisions of this
Agreement, and the respective rights and obligations hereunder of
Seller and Buyer, shall be binding upon, and inure to the benefit
of, their respective successors and permitted assigns. Nothing
expressed or implied in this Agreement is intended to confer any
rights on any Person other than Buyer, Seller, the Financing
Parties and their respective successors and permitted assigns
and, solely with respect to Section 17.1(a)(i), Washington Gas
Light.
Section 19.5 Confidentiality. Each Party agrees that it will
maintain this Agreement, and all parts and contents thereof, or
any information exchanged under Articles XI, XII, XV and XVIII
thereof, in strict confidence, and that it will not cause or
permit disclosure of same to any unaffiliated third party without
the express written consent of the other Party; provided,
however, that disclosure by a Party is permitted in the event and
to the extent that:
(a) Such Party is required by a court or governmental
agency exercising jurisdiction over the subject matter
hereof, by order or by regulation, to make such a disclosure
(provided, however, that in the event either Party becomes
aware of a judicial or administrative proceeding that has
resulted or may result in such an order requiring
disclosure, it shall (i) so notify the other Party
immediately, (ii) utilize with the other Party all
reasonably available means to limit the scope of the order
or regulation requiring disclosure, and (iii) take with the
other Party all actions reasonably necessary to prevent
disclosure to the public as a result of disclosure to the
court or administrative body);
(b) Disclosure is necessary to obtain any Government
Approval covered or contemplated by this Agreement; or
(c) Disclosure is required in the course of routine audit
procedures or pursuant to the rules or requirements of any
securities exchange on which a Party's securities are listed
or securities commission having jurisdiction over a Party.
Provided that it secures from such persons an agreement to
preserve the confidentiality hereof in accordance with this
Section 19.5 reasonably acceptable in form and substance to
Seller, Buyer also may disclose the contents hereof to Washington
Gas Light, Power Purchaser or Financing Parties (or their
attorneys, consultants and agents) to the extent required by
Buyer's contracts with such persons or as necessary for Buyer to
obtain financing from such Financing Parties as well as to
Buyer's attorneys, consultants and agents. Likewise, Seller may
disclose the contents hereof to its affiliates and to third
parties from which Seller seeks financing, and to Seller's or the
third party's attorneys, consultants or agents, provided that it
secures from such third parties an agreement to preserve the
confidentiality hereof in accordance with this Section 19.5
reasonably acceptable in form and substance to Buyer. Buyer
agrees to allow Seller to delete any pricing information Seller
reasonably believes to be commercially sensitive from any copy of
this Agreement provided to Washington Gas Light.
Section 19.6 NonWaiver of Defaults No waiver by either Party of
any default of the other Party under this Agreement shall operate
as a waiver of a future default, whether of a like or different
character.
Section 19.7 Written Amendments. No modification of the terms
and provisions of this Agreement shall be or become effective
except by written amendment executed by the Parties.
Section 19.8 Severability and Renegotiation. Should any
provision of this Agreement for any reason be declared or
rendered invalid or unenforceable by any law or final and non
appealable order of any court or regulatory body having
jurisdiction, such law or decision shall not affect the validity
of the remaining portions, and the remaining portions shall
remain in force and effect as if this Agreement had been executed
without the invalid or unenforceable portion. In the event any
provision(s) of this Agreement is declared invalid or
unenforceable and the invalidity or unenforceability of such
provision(s) materially alters the economic bargain of the
Parties, this Agreement shall remain in full force and effect if
the Parties are able to promptly negotiate in good faith a new
provision(s) to eliminate the invalid or unenforceable
provision(s) and to restore this Agreement as nearly as possible
to its original effect, consistent with the original intent of
the Parties.
Section 19.9 Survival. Any provision(s) of this Agreement that
expressly or by implication comes into or remains in force
following the termination or expiration of this Agreement shall
survive the termination or expiration of this Agreement.
Section 19.10 Further Assurances. The Parties shall execute or
provide such additional documents including, without limitation,
the Consent and Agreement, limited opinions of counsel,
certificates, or similar documents, and shall cause such
additional action to be taken as may be requested by a Party if
in the reasonable good faith judgment of both Parties, such
action is reasonably necessary or desirable, to effect or
evidence the provisions of this Agreement and the transactions
contemplated hereby.
Section 19.11 Limitation of Liability. Notwithstanding anything
to the contrary in this Agreement, neither Buyer nor Seller, nor
any of their directors, trustees, agents, shareholders, partners,
affiliates, officers or employees shall be liable to the other
Party, its directors, trustees, agents, shareholders, partners,
affiliates, officers or employees, whether as a result of breach
of contract, breach of warranty, tort liability (including both
negligence and strict liability), strict liability or otherwise,
for incidental, special, indirect, punitive or consequential
damages whatsoever, including without limitation, loss of profits
or revenue, of any nature connected with or resulting from non-
performance or breach of this Agreement, except to the extent
that Sections 17.1 and 17.3 may be deemed to contain such
damages.
Section 19.12 Waiver of UCC Warranties. BUYER ACKNOWLEDGES THAT
IT HAS ENTERED INTO THIS AGREEMENT AND IS CONTRACTING FOR THE
GOODS AND SERVICES TO BE SUPPLIED BY SELLER BASED SOLELY ON THE
EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN AND,
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH
HEREIN, ACCEPTS SUCH GOODS AND SERVICES " AS-IS " AND "WITH ALL
FAULTS." EXCEPT AS TO THE EXPRESS REPRESENTATIONS AND WARRANTIES
SET FORTH HEREIN, SELLER EXPRESSLY NEGATES ANY OTHER
REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED,
WITH RESPECT TO SUCH GOODS AND SERVICES, INCLUDING, WITHOUT
LIMITATION, ANY REPRESENTATION OR WARRANTY WITH RESPECT TO (A)
CONFORMITY TO MODELS OR SAMPLES, ( B ) MERCHANTABILITY, OR ( C )
FITNESS FOR ANY PARTICULAR PURPOSE.
Section 19.13 Counterpart. This Agreement may be executed in
multiple counterparts each of which shall constitute an original,
but all of which together shall constitute one and the same
instrument.
Section 19.14 Winding-Up. Upon the termination, expiration or
cancellation of this Agreement and the expiration of the Parties'
obligations hereunder, any amounts due and owing to either of the
Parties shall be paid pursuant to the terms hereof, and any
corrections or adjustments to payments previously made shall be
determined and any refunds or payments due either of the Parties
made at the earliest possible time, and any Gas Imbalances shall
be corrected within sixty (60) Days. The Parties' obligations,
as provided in this Agreement, shall remain in effect solely for
the purpose of complying under this section until the obligations
have been fulfilled.
Section 19.15 Preparation. This Agreement was negotiated by
both Parties hereto with advice of counsel to the extent deemed
necessary by each Party, and shall not be construed against
either Party by reason of its preparation.
Section 19.16 Seller's Reservation. Seller reserves unto itself
the sole and exclusive right to operate its Gas reserves and
supplies without interference by Buyer or any third party, except
as may be expressly provided by other provisions of this
Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Parties
hereto have caused this Agreement to be entered into by their
duly authorized officers or representatives as of the day and
year first above written.
SELLER: COGEN DEVELOPMENT COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________________
Title: Secretary
_____________________________________
BUYER: PANDA-BRANDYWINE, L.P.
By: Panda Brandywine Corporation , its
General Partner
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
Title: Vice President
_____________________________________
Exhibit A to
Gas Sales
Agreement
CONSENT AND AGREEMENT
CONSENT AND AGREEMENT (the "Consent"), dated as of March
30, 1995, among COGEN DEVELOPMENT COMPANY, a Michigan corporation
("Contract Party"), PANDA-BRANDYWINE, L.P., a Delaware limited
partnership (the "Partnership"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation ("GE Capital") and SHAWMUT BANK
CONNECTICUT, NATIONAL ASSOCIATION, in its capacity as Security Agent
(the "Security Agent") under the Security Deposit Agreement (as
defined in the Loan Agreement referred to below).
All capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in Appendix A to the
Loan Agreement, as defined below.
W I T N E S S E T H
WHEREAS, Contract Party and the Partnership have entered
into the Gas Sales Agreement, dated March 30, 1995 (the Gas Sales
Agreements"), providing for among other things, the sale of natural
gas, and the Fuel Supply Management Agreement, dated March 30, 1995
(the "Fuel Management Agreement), providing for, among other things,
the management of the Partnership's gas supply arrangements (the Gas
Sales Agreement and the Fuel Management Agreement, as amended,
supplemented or otherwise modified from time to timer the "Assigned
Agreements");
WHEREAS, in order to finance the construction of the
Project, the Partnership has entered into a Construction Loan
Agreement and Lease Commitment, dated as of March 30, 1995, with GE
Capital (as amended, supplemented or otherwise modified from time to
time, the "Loan Agreement") pursuant to which GE Capital would,
subject to the terms and conditions contained therein, among other
things, (i) make loans to the Partnership and issue certain letters
of credit for the account of the Partnership for the purpose of
providing construction financing for the Project (all extensions of
credit made pursuant to the Loan Agreement being referred to herein
as the Loans), (ii) (acting through the Owner Trustee established for
the benefit of GE Capital) lease the Site from the Partnership and
sublease the Site back to the Partnership and (iii) (acting through
the Owner Trustee established for the benefit of GE Capital) upon
completion of the Project, purchase the Facility from the Partnership
and lease the Facility back to the Partnership pursuant to the
Facility Lease;
WHEREAS, as security for the repayment of the Loans to GE
Capital and its obligations under the Site Sublease and the Facility
Lease to the Owner Trustee, the Partnership has assigned all of its
right, title and interest in, to and under, and granted a security
interest in, the Assigned Agreements to the Security Agent, for the
benefit of the Owner Trustee and GE Capital, pursuant to (i) the
Collateral Assignment of Gas Sales Contract, dated as of the date
hereof, and the Collateral Assignment of the Fuel Management
Contract, dated as of the date hereof (the "Assignments"), copies of
which are attached as Exhibit A), (ii) the Deed of Trust and Security
Agreement, dated as of the date hereof, between the Partnership and
Chicago Title Insurance Company, as trustee for the benefit of the
Security Agent, as the same may be amended, supplemented or otherwise
modified from time to time (the "Deed of Trust"), and (iii) the
Security Agreement, dated as of the date hereof, between the
Partnership and the Security Agent, as amended, supplemented or
otherwise modified from time to time (together with the Assignments
and the Deed of Trust, the "Security Agreements");
WHEREAS, it is a condition precedent to GE Capital's
obligation to make the Loans under the Loan Agreement that the
Contract Party and the Partnership execute and deliver this Consent;
NOW THEREFORE, in consideration of good and valuable
consideration, the receipt of which is hereby acknowledged, and
intending to be legally bound, Contract Party, the Partnership, GE
Capital and the Security Agent hereby agree as follows, anything in
the Assigned Agreements to the contrary notwithstanding.
SECTION 1. CONSENT TO ASSIGNMENT, SALE AND LEASE ETC.
1.1 Consent to Assignment. Contract Party (a) consents to the pledge
and assignment to the Security Agent, for the benefit of the Owner
Trustee and GE Capital, of all of the Partnership's right, title and
interest in, to and under the Assigned Agreements pursuant to the
Security Agreement (the "Assigned Interest"), and (b) acknowledges
the right of the Security Agent in the exercise of its rights and
remedies under the Security Agreement to make all demands, give all
notices, take all actions and exercise all rights of the Partnership
under the Assigned Agreements; provided that, insofar as the Security
Agent exercises any of its rights under the Assigned Agreements or
makes any claims with respect to payments or other obligations under
the Assigned Agreements, the terms and conditions of the Assigned
Agreements applicable to such exercise of rights or claims shall
apply to the Security Agent to the same extent as to the Partnership.
1.2 Substitute Owner. Contract Party agrees that, if GE Capital, the
Owner Trustee or the Security Agent shall notify Contract Party that
an Event of Default under the Loan Agreement or a Lease Event of
Default under the Facility Lease has occurred and is continuing and
that the Security Agent has elected to exercise its rights and
remedies pursuant to the Security Agreement, then the Security Agent,
or the Security Agent's transferee or any purchaser of the Assigned
Interest, in each case, which party has elected to assume the rights
and obligations of the Partnership under the Assigned Agreements (the
"Substitute Owner"), shall be substituted for the Partnership under
the Assigned Agreements.
l.3 Right to Cure. In the event of a default by the Partnership in
the performance of any of its obligations under the Assigned
Agreements, or upon the occurrence or non-occurrence of any event or
condition under the Assigned Agreements which would immediately or
with the passage of any applicable grace period or the giving of
notice, or both, enable Contract Party to terminate or suspend its
obligations under the Assigned Agreements (hereinafter a "default"),
Contract Party may suspend performance in accordance with the
Assigned Agreements but will not terminate the Assigned Agreements
until it first gives prompt written notice of such default to GE
Capital and the Security Agent and affords GE Capital and the
Security Agent a period of at least 60 days (or if such default is a
nonmonetary default, such longer period as is required so long as GE
Capital or the Security Agent has commenced and is diligently
pursuing appropriate action to cure such default) from receipt of
such notice to cure such default; provided, however, that if GE
Capital or the Security Agent is prohibited by any process, stay or
injunction issued by any governmental authority or by any bankruptcy
or insolvency proceeding involving the Partnership from curing any
such default, the time periods specified herein for curing a default
shall be extended for the period of such prohibition.
1.4 No Amendments. Contract Party will not, without the prior written
consent of the Security Agent or GE Capital, enter into any
amendment, supplement, assignment, transfer or other modification of
the Assigned Agreements, or enter into any consensual cancellation or
termination of the Assigned Agreements, or assign or otherwise
transfer (or consent to any such assignment or transfer by the
Partnership of) any of its right, title and interest thereunder.
l.5 Replacement Agreement. In the event that the Assigned Agreements
are terminated as a result of any bankruptcy or insolvency proceeding
affecting the Partnership, Contract Party will, at the option of the
Security Agent, enter into a new agreement with the Security Agent or
its transferee or nominee having terms substantially the same (except
for economic terms, which shall be exactly the same) as the terms of
such Assigned Agreements, provided, that the Security Agent, or its
transferee or nominee, shall have first made payment of unpaid
amounts due under Section 3.3 and Section 7.1 of the Gas Sales
Agreement and Article VI of the Fuel Management Agreement.
1.6 No Liability. Contract Party acknowledges and agrees that the
Security Agent, the Owner Trustee and GE Capital (and each transferee
of the Security Agent, the Owner Trustee and GE Capital) shall not
have any liability or obligation under the Assigned Agreements as a
result of this Consent, the Security Agreement or otherwise, nor
shall the Security Agent, the Owner Trustee nor GE Capital nor any
transferee of such person, except during any period in which such
person has elected to become a Substitute Owner pursuant to
subsection l.2, be obligated or required to perform any of the
Partnership is obligations under the Assigned Agreements or to take
any action to collect or enforce any claim for payment assigned under
the Security Agreement; provided that under no circumstances shall
the Security Agent, the Owner Trustee or GE Capital (or any
transferee) have any liability or obligation respecting events which
occurred prior to the date of its becoming a Substitute Owner.
Notwithstanding anything to the contrary contained in this Consent,
in the event that the Security Agent, the Owner Trustee, GE Capital,
any transferee, or another purchaser succeeds to the Partnership's
interest, then liability in respect of any and all obligations of
such successor under the Assigned Agreements shall be limited solely
to such successor's interest in the Project and the sole recourse of
Contract Party in seeking enforcement of such obligations shall be to
such successor's interest in the Project (and no officer, director,
employee, shareholder, agent or affiliate or subsidiary of such
successor shall have any liability with respect thereto).
l.7 Performance under Assigned Agreements. Contract Party shall
perform and comply with all terms and provisions of the Assigned
Agreements to be performed or complied with by it and shall maintain
the Assigned Agreements in full force and effect in accordance with
its terms.
l.8 Delivery of Notices. Contract Party shall deliver to GE Capital
and the Security Agent, concurrently with the delivery thereof to the
Partnership, a copy of each notice, request or demand given by
Contract Party pursuant to the Assigned Agreements.
1.9 Consent to Sale and Lease; Consent to Leveraged Lease. Contract
Party consents to (a) the assignment and sale by the Partnership to
the Owner Trustee of all of its right, title and interest in and to
the Facility, such sale and assignment to occur on the Lease Closing
Date and (b) the subsequent lease by the Owner Trustee to the
Partnership of the Facility for the Basic Term and any renewal terms,
as agreed upon by the parties to the Facility Lease, such lease to
occur on the Lease Closing Date. Contract Party further consents to
GE Capital exercising its option under the Loan Agreement to
"leverage" the Facility Lease by causing the Owner Trustee to enter
into a loan agreement, as borrower, to finance (or refinance) a
portion of the purchase price of the Facility payable to the
Partnership, and agrees that any lender under such loan agreement
shall, until such loan agreement is paid in full, enjoy jointly with,
or in certain cases to the exclusion of, GE Capital and the Security
Agent, all rights of "GE Capital" and the "Security Agent" hereunder.
SECTION 2. PAYMENTS
Contract Party will pay all moneys due and to become due to the
Partnership under the Assigned Agreements directly to Shawmut Bank
Connecticut, National Association, as Security Agent, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, for deposit in the Revenue Account (except for
payment under Section 17.3 of the Gas Sales Agreement, which shall be
directed to the Special Payments Account), or to such other person or
in such other manner as GE Capital or the Security Agent may from
time to time specify in writing to Contract Party, without offset,
abatement, withholding or reduction except as provided or permitted
by the Assigned Agreements.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CONTRACT PARTY
Contract Party makes the following representations and warranties for
the benefit of GE Capital and the Security Agent:
3.l The Contract Party is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan
and is duly qualified and authorized to do business and is in good
standing as a foreign corporation in every jurisdiction in which it
owns or leases real property or in which the nature of its business
requires it to be so qualified, and has all requisite power and
authority, corporate and otherwise, to enter into and to perform its
obligations hereunder and under the Assigned Agreements, and to carry
out the terms hereof and thereof and the transactions contemplated
hereby and thereby.
3.2 Approval. The execution, delivery and performance by Contract
Party of this Consent and the Assigned Agreements do not require any
approval or consent of any holder (or any trustee for any holder) of
any indebtedness or other obligation Contract Party or of any other
person or entity, except approvals or consents which have been
obtained or which are otherwise required as described in Section 3.7
hereof.
3.3 Execution, Delivery; Binding Agreements. Each of this Consent and
the Assigned Agreements is in full force and effect, has been duly
executed and delivered by Contract Party, and constitutes the legal,
valid and binding obligation of Contract Party, enforceable against
Contract Party in accordance with its terms except as the
enforceability thereof may be limited by (a) bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and (b) general equitable principles
(whether considered in a proceeding in equity or at law).
3.4 Litigation. There is no legislation, litigation, action, suit,
adverse proceeding or investigation pending or (to the best of
Contract Party's knowledge after due inquiry) threatened, against
Contract Party before or by any court, administrative agency,
arbitrator or governmental authority, body or agency which, if
adversely determined, individually or in the aggregate, (i) could
adversely affect the performance by Contract Party of its obligations
hereunder or under the Assigned Agreements or (ii) questions the
validity, binding effect or enforceability hereof or of the Assigned
Agreements, any action taken or to be taken pursuant hereto or
thereto or any of the transactions contemplated hereby or thereby.
3.5 Compliance with Other Instruments etc. The execution, delivery
and performance by Contract Party of this Consent and the Assigned
Agreements, and the consummation of the transactions contemplated
hereby and thereby, will not result in any violation of any term of
any contract or agreement to which it is a party or by which it or
its property is bound, or of any license, permit, franchise,
judgment, writ, injunction, decree, order, charter, law, ordinance,
rule or regulation applicable to it.
3.6 No Default or Amendment. Neither the Contract Party nor, to the
best of Contract Party's knowledge after due inquiry, any other party
to the Assigned Agreements is in default of any of its obligations
thereunder. Contract Party and, to best of Contract Party's knowledge
after due inquiry, each other party to the Assigned Agreements have
complied with all conditions and agreements contained in the Assigned
Agreements required to be performed or complied with by such party
prior to the date hereof. To the best of Contract Party's knowledge
after due inquiry, no event or condition exists which would, either
immediately or with the passage of any applicable grace period or
giving of notice, or both, enable either Contract Party or the
Partnership to terminate or suspend its obligations under the
Assigned Agreements. The Assigned Agreements have not been amended,
modified or supplemented in any manner.
3.7 Governmental Approval. No consent, order, authorization, waiver,
approval or any other action by, or registration, declaration or
filing with, any Governmental Authority (collectively the
"Approvals") is required to be obtained by the Contract Party in
connection with the execution, delivery or performance of the
Assigned Agreements or this Consent or the consummation of the
transactions contemplated hereunder or thereunder, except for routine
Governmental Approvals not related to the regulation of public
utilities which may be required to be obtained after the Initial
Delivery Date (as defined in the Assigned Agreement) in order to
obtain and deliver gas under the Assigned Agreement, and Contract
Party has no reason to believe such future Governmental Approvals
will be obtained in a timely manner in the ordinary course of
business.
3.8 No Previous Assignments. Contract Party has no notice of, and has
not consented to, any previous assignment by the Partnership of all
or any part of its rights under the Assigned Agreements.
3.9 Representations and Warranties. All representations, warranties
and other statements made by Contract Party to the Partnership in the
Assigned Agreements were true and correct as of the date when made
and are true and correct as of the date of this Consent.
SECTION 4. MISCELLANEOUS
4.1 Notices. All notices and other communications hereunder shall be
in writing, shall refer on their face to the Assigned Agreements
(although failure to so refer shall not render any such notice or
communication ineffective), shall be sent by first class mail, by
personal delivery or by a nationally recognized courier service, and
shall be directed (a) if to Contract Party, in accordance with the
Assigned Agreements, (b) if to GE Capital, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention Vice President, Energy Project
Operations, (c) if to the Partnership, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or (d) if to the Security Agent, at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, or {e) to such other address or addressee as any
party may designate by notice given pursuant hereto.
4.2 Governing Law. THIS CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
4.3 Counterparts. This Consent may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the
same instrument.
4.4 Headings Descriptive. The headings of the several Sections and
subsections of this Consent are inserted for convenience only and
shall not in any way affect the meaning or construction of any
provision of this Consent.
4.5 Severability. In case any provision in or obligation under this
Consent shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
4.6 Amendment, Waiver. Neither this Consent nor any of the terms
hereof may be terminated, amended, supplemented, waived or modified
except by an instrument in writing signed by Contract Party and GE
Capital.
4.7 Successors and Assigns; Leverage of Lease. This Consent shall be
binding upon Contract Party and its permitted successors and assigns
and shall inure to the benefit of the Security Agent, the Owner
Trustee, GE Capital and their respective successors and assigns,
including any lender referred to in subsection 1.9.
4.8 Further Assurances. Each of Contract Party and the Partnership
hereby agrees to execute and deliver all such instruments and take
all such action as may be necessary to effectuate fully the purposes
of this Consent, including to confirm the rights of any permitted
successor or assignee of GE Capital or the Owner Trustee (including
any lender referred to in subsection 1.9) under this Consent.
IN WITNESS WHEREOF, the parties have duly executed and
delivered this Consent, or have caused this Consent to be duly
executed and delivered by their Authorized Officers, as of the date
first above written.
COGEN DEVELOPMENT COMPANY
By:
Name:
Title:
PANDA-BRANDYWINE, L.P.
By: Panda Brandywine Corporation,
its general partner
By:
Name:
Title:
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, as Security Agent
By:
Nate:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
Name:
Title:
Exhibit D to
Gas Sales
Agreement
GUARANTY
GUARANTY, dated as of March 30, 1995, made by MCN CORPORATION, a
Michigan corporation ("Guarantor"), in favor of PANDA-BRANDYWINE, L.P.,
a Delaware limited partnership, and its successors and permitted
assigns as Buyer under the Agreement (as hereafter defined) ("Buyer").
W I T N E S S E T H :
WHEREAS, Buyer has entered into a Gas Sale Agreement dated as of
March 30, 1995, with Cogen Development Company, a Michigan corporation
("Seller") (said agreement, including all documents incorporated
therein by reference, as the same may hereafter by amended,
supplemented or otherwise modified from time to time, being herein
called the "Agreement"), pursuant to which Seller will sell and Buyer
will purchase natural gas for use in the production of steam and
electricity at a facility to be constructed and owned by Buyer in
Brandywine, Maryland; and
WHEREAS, Seller is a wholly-owned subsidiary of Guarantor and
Guarantor will obtain benefits as a result of the Agreement; and
WHEREAS, Buyer has entered into the Agreement on the condition
that Guarantor shall have executed and delivered to Buyer this
Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce Buyer to enter into and perform under the Agreement, Guarantor
hereby agrees as follows:
(1) Defined Terms. The following terms shall have the following
meanings:
"Contractual Obligations" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of its property is bound.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" shall mean any nation or government, any
state, or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Obligations" shall mean all payment and performance obligations
of Seller under the Agreement, including, but not limited to, Seller's
obligation to supply and transport gas and to indemnify the Buyer, in
accordance with the Agreement, and all payment and performance
obligations which may arise upon breach by Seller of, or failure to
timely perform, any of its obligations thereunder.
"Requirement of Law" shall mean, as to any Person, the Certificate
of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its properties or to which such Person or any of its properties
is subject.
"Person" shall mean an individual, corporation, voluntary
association, joint stock company, business trust, partnership or other
entity.
(2) Guaranty. Guarantor hereby unconditionally and irrevocably
guarantees to Buyer the prompt and complete performance and payment by
Seller when due of the Obligations. Guarantor further agrees to pay any
and all expenses (including, without limitation, all reasonable fees
and disbursements of counsel) which may be paid or incurred by the
Buyer in enforcing, or obtaining advice of counsel in respect of, any
of its rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting
against, the Guarantor under this Guaranty. This Guaranty shall remain
in full force and effect until the Agreement has expired in accordance
with its terms, and the Obligations have been satisfied.
(3) No Subrogation Contribution, Reimbursement or Indemnity. The
Guarantor agrees that notwithstanding any payment or payments made by
the Guarantor hereunder, the Guarantor will not have, and hereby waives
and disclaims, any claim or right against the Seller by way of
subrogation or otherwise in respect of any payment that the Guarantor
may be required to make hereunder, until the Obligations have been paid
and performed in full and the Agreement has been terminated. Guarantor
hereby further irrevocably waives all contractual, common law,
statutory or other rights of reimbursement, contribution or indemnity
(or any similar right) from or against Seller which may have arisen in
connection with this Guaranty until the Obligations have been paid and
performed in full and the Agreement has been terminated.
(4) Amendments. etc. with respect to the Obligations. Guarantor
shall remain obligated hereunder notwithstanding that, without any
reservation of rights against Guarantor, and without notice to or
further assent by Guarantor, any demand for payment or performance of
any of the Obligations made by Buyer may be rescinded by Buyer and any
of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral
security or guaranty therefor or right offset with respect thereto,
may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or
released by Buyer, and the Agreement and any other documents executed
and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as Buyer may deem
advisable from time to time, and any collateral security, guaranty or
right of offset at any time held by Buyer for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released.
Buyer shall not have any obligation to protect, secure, perfect or
insure any lien or security interest at any time held by it as security
for the Obligations or for this Guaranty or any property subject
thereto.
(5) Guaranty Absolute and Unconditional . Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by Buyer upon this
Guaranty or acceptance of this Guaranty; the Obligations, and any and
all of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guaranty; and all dealings
between Seller or Guarantor, on the one hand, and Buyer, on the other,
shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Guaranty. This Guaranty shall remain in full
force and effect notwithstanding any change in the corporate
relationship of Guarantor and Seller. Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or
nonpayment to or upon Seller or Guarantor with respect to the
Obligations. This Guaranty shall be construed as a continuing, absolute
and unconditional guaranty of payment and performance without regard to
(a) the validity or enforceability of the Agreement or any of the
Obligations or guaranty or right of offset with respect thereto at any
time or from time to time held by Buyer, (b) any defense (other than a
defense of payment or performance of the Obligations or any other
defense available to Seller as set forth in the Agreement) set-off or
counterclaim, which may at any time be available to or be asserted by
Seller against Buyer, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of Seller or Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of Seller for the Obligations, or of Guarantor under this
Guaranty, in bankruptcy or in any other instance. When Buyer is
pursuing its rights and remedies hereunder against Guarantor r Buyer
may, but shall be under no obligation to' pursue such rights and
remedies as it may have against Seller or any other Person or against
any collateral security or guaranty for the Obligations or any right of
offset with respect thereto, and any failure by Buyer to pursue such
other rights or remedies or to collect any payments from Seller or any
such other Person or to realize upon any such collateral security or
guaranty or to exercise any such right of offset, or any release of
Seller or any such other Person or of any such collateral security,
guaranty or right of offset, shall not relieve Guarantor of any
liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of
Buyer against Guarantor.
(6) Reinstatement. This Guaranty shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise
be restored or returned by Buyer on account of the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Seller or
upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for' Seller or any
substantial part of its property, or otherwise, all as though such
payments had not been made.
(7) Payments. Guarantor hereby agrees that the Obligations will be
paid to Buyer without set-off (except as may be available to Seller
under the Agreement) or counterclaim in U.S. Dollars at such office as
Buyer shall designate in written notice to Guarantor.
(8) Representations and Warranties. Guarantor represents and
warrants to Buyer:
(a) Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Michigan and has
the corporate power and authority and the legal right to own and
operate its property, and to conduct the business in which it is
currently engaged;
(b) Guarantor has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under,
this Guaranty, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Guaranty;
(c) this Guaranty has been duly executed by Guarantor and
constitutes a legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms;
(d) the execution, delivery and performance of this Guaranty will
not violate any provision of any requirement of law or contractual
obligation of Guarantor and will not result in or require the creation
or imposition of any lien, claim or encumbrance on any of the
properties or revenues of Guarantor pursuant to any Requirement of Law
or Contractual Obligation of Guarantor;
(e) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person tincturing, without limitation, any
stockholder or creditor of Guarantor) is required in connection with
the execution, delivery, performance, validity or enforceability of
this Guaranty;
(f) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
Guarantor, is threatened by or against Guarantor or against any of its
properties or revenues (i) with respect to this Guaranty or any of the
transactions contemplated hereby, (ii) which if adversely determined
would have a material adverse effect on the business, operations,
property or financial or other condition of Guarantor or its ability to
perform its obligations under this Guaranty;
(g) the audited financial statement of the Guarantor and its
consolidated subsidiaries as of December 31, 1994, and the related
consolidated statement of income and retained earnings for the fiscal
year then ended reported on by Deloitte & Touche (copies of which have
heretofore been furnished to the Financing Parties (as defined in the
Agreement)) have been prepared in accordance with GAAP applied
consistently throughout the period involved, are complete and correct
and present fairly the financial condition of Guarantor as at such date
and the results of its operations for such fiscal year; since such date
there has been no material adverse change in the business, operations,
property or financial or other condition of Guarantor. Guarantor has no
material contingent obligations, contingent liability or liability for
taxes, long-term lease or unusual forward or long term commitment which
is not reflected in the foregoing statements or in the notes thereto
other than any such obligations, liabilities or commitments which were
not required to be shown thereon or disclosed therein in accordance
with GAAP;
(h) Guarantor is not in default in any material respect in the
payment or performance of any agreement or undertaking to which it is a
party, or by which it or any of its material properties or assets may
be bound, which default would materials y adversely affect its business
or financial condition or its ability to perform its obligations under
this Guaranty, and no default in the payment or performance of any
agreement or undertaking hereunder has occurred and is continuing;
(9) Covenants. (a) Guarantor hereby covenants and agrees that
Guarantor will furnish to Buyer, promptly upon becoming aware of the
existence of any default under the Agreement, a written notice
specifying the nature and period of existence thereof and what action
Guarantor is taking or proposes to take with respect thereto.
(b) If at any time the Guarantor shall consolidate or merge with
any other person or entity or shall sell, lease or otherwise transfer
substantially of its assets to any other person or entity, and
Guarantor shall not be the successor or acquiring corporation, then the
Guarantor shall cause the successor or acquiring person or entity to
assume in writing all of the Guarantor's liabilities hereunder.
(10) Severability. Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
(11) Paragraph Headings. The paragraph headings used in this
Guaranty are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the
interpretation hereof.
(12) No Waiver; Cumulative Remedies. Buyer shall not, by any act
(except by a written instrument pursuant to paragraph 13 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any default under or
breach of the Agreement or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising,
on the part of Buyer, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. A waiver by Buyer of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy
which Buyer would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided
by law.
(13) Waivers and Amendments: Successors and Assigns. None of the
terms or provisions of this Guaranty may be waived, amended,
supplemented or otherwise modified except by a written instrument
executed by Guarantor and Buyer. This Guaranty shall be binding upon
the successors and assigns of Guarantor and shall inure to the benefit
of Buyer and its successors and assigns; provided that Guarantor may
not assign this Guaranty without the prior written consent of Buyer.
Buyer shall have the right, without the consent of Guarantor, but upon
not ice to Guarantor, to assign all its rights and interests under this
Guaranty to the Financing Parties, as security for its obligations
under the Financing Documents (as defined in the Agreement).
(14) Notices. All notices and communications under this Guaranty
shall be deemed given, (a) upon delivery, if delivered in writing
personally, (b) five (5) days after deposit in a U.S. Postal Office
mail box, (c) the day after it is received, if it is delivered by
overnight courier, or (d) upon the effective sending of electronic
transmission, facsimile, telex or telegram, to the addresses set forth
below or such other address as the receiving party has designated by a
notice :
MCN Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ 4822 6
Attn: ▇▇▇▇▇▇ ▇ . ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(5) GOVERNING LAW: CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF MAY BE BROUGHT AGAINST
IT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS GUARANTY, GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. GUARANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
GUARANTOR AT ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW . NOTHING
HEREIN SHALL AFFECT THE RIGHT OF BUYER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST GUARANTOR IN ANY OTHER JURISDICTION.
(16) VENUE. GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY ACTION DESCRIBED IN PARAGRAPH IS, OR THAT SUCH
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT, AND AGREES NOT
TO PLEAD OR CLAIM THE SAME.
(17) Further Documents . Guarantor agrees to execute such
additional documents as may be reasonably necessary or desirable to
effect or evidence the provisions of this Guaranty.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by its officer "hereunto duly authorized as of
the date first above written.
MCN CORPORATION
BY:
TITLE: