Exhibit 10(b)

BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS

THIS Base Contract for Sale and Purchase of Natural Gas ("Base Contract"), made
and entered into on this 2nd day of October, 2002 by and between North Jersey
Energy Associates, A Limited Partnership, a New Jersey limited partnership
("Buyer") and FPL Energy Power Marketing, Inc. ("Seller").

ARTICLE I
PURPOSE AND PROCEDURES

1.1 This Base Contract establishes the terms and conditions governing the
purchases and sale of Gas between the Seller and Buyer (each a "Party" and
collectively, the "Parties") during the Term of this Base Contract. Gas
purchased hereunder is intended solely for a portion the operational needs of
the Facility or to satisfy Buyer's obligations on PSE&G Peak Demand Days under
the PSE&G Contract and is not intended for resale.

1.2 This Base Contract provides for the delivery of Gas by Seller to Buyer under
a Firm Performance Obligation for the entire term of the Contract. The Parties
may by mutual agreement, through Confirmations described hereunder, modify the
delivery obligations, including (without limitation) changes in the Delivery
Point(s), for all or part of the Gas to be delivered hereunder.

1.3.1 The Parties will use the following transaction procedure. The Parties may
periodically agree to transactions that modify deliveries under this Base
Contract (i) by written document ("Confirmation"), or (ii) a recorded telephone
conversation between authorized representatives. When the Parties come to an
oral agreement regarding a modification of the deliveries under this Base
Contract for a particular delivery period, they shall be legally bound from the
time they so agree to transaction terms and each may rely thereon. Any such
transaction shall be considered to be in "writing" and to have been "signed."
Notwithstanding the foregoing, Seller shall, and Buyer may, confirm a telephonic
transaction by sending a Confirmation via facsimile, E-mail or other mutually
agreeable electronic means to the other Party by the close of the Business Day
following the date of the oral agreement; provided that the failure to send a
Confirmation shall not invalidate the oral agreement of the Parties.

1.3.2 If a sending Party's Confirmation is contrary to the receiving Party's
understanding of the oral agreement, the receiving Party shall notify the
sending Party via facsimile, E-mail or other mutually agreeable electronic means
before the close of the second Business Day following receipt if the receiving
Party has not previously sent a Confirmation to the sending Party. The receiving
Party's failure to so notify the sending Party via facsimile, E-mail or other
mutually agreeable electronic means within the aforementioned time period
constitutes the receiving Party's agreement to the terms of the transaction
modification described in the sending Party's Confirmation.

1.3.3 If both Parties send a Confirmation regarding a single transaction and
there are any differences in a material term between Seller's and Buyer's
Confirmations, then neither Confirmation shall be binding until or unless such
differences are resolved and agreed to in writing.

1.3.4 The Parties may electronically record any telephone conversations between
their employees with respect to this Base Contract, without any special or
further notice to the other Party. Each Party will obtain any necessary consent
of its agents and employees for such recordings. Such recordings may be
introduced as evidence of any oral transaction hereunder and the Parties agree
not to contest the validity or enforceability of any oral agreement, which is
recorded in accordance herewith.

1.4 The entire agreement between the Parties shall be those provisions contained
in this Base Contract, any effective Confirmation, and any oral agreement of the
Parties pursuant to Section 1.3.1 (collectively, the "Contract"). In the event
of a conflict between the terms of (i) an effective Confirmation, (ii) the oral
agreement of the Parties pursuant to Section 1.3.1, and (iii) the Base Contract,
the terms of the agreement shall govern in the priority listed in this sentence.

ARTICLE II
DEFINITIONS

2.1 "Alternate Delivery Point" shall have the meaning set forth in Section 6.1.

2.2 "BTU" shall mean British Thermal Unit.

2.3 "Business Day" shall mean any day except Saturday, Sunday or bank holidays.

2.4 "Confirmation" shall have the meaning set forth in Article I; provided that
a written Confirmation shall be substantially in the form attached in Exhibit A.

2.5 "Contract" shall have the meaning set forth in Section 1.4.

2.6 "Contract Price" shall have the meaning set forth in Section 11.1.

2.7 "Contract Quantity" shall mean 11,010 MMBtu per Day for each Gas Day, unless
otherwise modified pursuant to Sections 1.3.1 through 1.3.3.

2.8 "Cover Costs" shall have the meaning set forth in Section 16.1.

2.9 "Cover Standard" shall mean that if there is an unexcused failure to take or
deliver any quantity of Gas pursuant to this Contract, then the non-defaulting
Party shall use commercially reasonable efforts to obtain or sell Gas at a
reasonable price for the delivery point; provided that in addition the Seller
recognizes that Buyer has obligations to provide Gas to PSE&G under the PSE&G
Contract on PSE&G Peak-Demand Days and agrees that in order to fulfill such
obligations Buyer may procure Gas that is very expensive due to the demand for
Gas or transportation on such Gas Days and Seller agrees that Cover Costs shall
include the cost of such replacement gas and Buyer's unitized cost of
transportation for each day of non-delivery even though Buyer is not procuring
such Gas to generate electricity.

2.10 "Delivery Point" for any Gas delivery to Buyer shall be the Primary
Delivery Point, Alternate Delivery Point(s), or other point(s) as established by
Section 6.1.

2.11 "Facility" means the Gas-fired electrical and steam generating plant
located in the borough of Sayreville, New Jersey and owned by the Buyer.

2.12 "Firm Performance Obligation" has the meaning given in Section 3.1.

2.13 "Forced Outage" means a partial or full interruption in the generating
capability of the Facility due to an unplanned component failure (immediate,
delayed, postponed, or startup failure) or other condition that requires the
applicable unit to be removed from service, or prevents the unit from going back
into service, immediately, within six hours, or before the end of the then next
weekend.

2.13 "Fuel Manager" means the Buyer's fuel manager as designated from time to
time in a written notice from Buyer to Seller.

2.14 "Gas" shall mean pipeline quality natural gas.

2.15 "Gas Day" shall mean a period of twenty-four (24) consecutive hours,
coextensive with a "gas day" as defined in the tariff of the Transporter
delivering Gas to the Delivery Point in a particular transaction.

2.16 "Imbalance Charges" shall mean (i) any Scheduling penalties, imbalance
penalties, overpull or unauthorized overrun penalties, operational flow order
penalties, cash out charges, banking charges, or similar penalties, fees or
charges assessed by a Transporter for failure to satisfy the Transporter's
balancing and/or Scheduling requirements or (ii) any similar penalties, charges
or fees assessed by PSE&G against Buyer under the PSE&G Contract.

2.17 "Index Price" means the monthly posting (expressed in $/MMBtu) published in
Platts Gas Daily Price Guide under "Monthly Contract", "Index", "Market
Centers", "Northeast", "Transco zone 6 non-NY" (as such publication exists as of
the date hereof). If such monthly index or such publication ceases to be
published, the Parties shall in good faith determine a replacement monthly index
to be utilized from the date the foregoing index or publication ceases to be
published for the remainder of the term of this Contract (subject to further
replacement as provided herein in the event that the replacement index ceases to
be published), which replacement index shall reflect, to the maximum extent
possible, the market cost of natural gas delivered to the Project.

2.18 "Maintenance Outage" means a partial or full interruption in the generating
capability of the Facility due to the removal of a unit from service to perform
work on specific components that can be deferred beyond the end of the then next
weekend, but requires the unit to be removed from service before the next
Planned Outage.

2.19 "MMBtu" shall mean one million BTUs.

2.20 "Month" shall mean the period beginning on the first calendar day of the
calendar month and ending on the last calendar day of the same calendar month.

2.21 "Nomination" means Buyer's designation to Seller of the amount of Gas to be
delivered to a Delivery Point during the Gas Day or Gas Days specified in the
Nomination.

2.22 "Outage" shall mean Forced, Planned, or Maintenance Outage.

2.23 "Party" and "Parties" shall have the meanings set forth in Section 1.1.

2.24 "Planned Outage" means a planned partial or full interruption of the
operation of the Facility for any reason at Buyer's discretion.

2.25 "Primary Delivery Point" shall have the meaning set forth in Section 6.1.

2.26 "PSE&G" means Pubic Service Electric and Gas Company or any assignee of its
rights under the PSE&G Contract.

2.27 "PSE&G Contract" means the Gas Purchase and Sale Agreement between Buyer
and PSE&G dated as of May 4, 1989, as amended.

2.28 "PSE&G Peak Demand Days" means those days on which PSE&G is entitled to
retain Gas delivered by Buyer in accordance with the PSE&G Contract.

2.29 "Receiving Transporter" shall mean the Transporter receiving Gas at a
Delivery Point.

2.30 "Schedule," "Scheduling," or "Scheduled" shall refer to the act of Seller,
Buyer, and the Transporter(s) notifying, requesting, and confirming to each
other the quantity of Gas to be delivered hereunder on any given Gas day. Gas
shall be deemed to have been Scheduled when confirmed by Transporter(s).

2.31 "Transporter(s)" shall mean (i) PSE&G and (ii) all pipeline companies
transporting Gas for Seller or Buyer pursuant to a particular Confirmation.

ARTICLE III
FIRM PERFORMANCE OBLIGATION

3.1 "Firm Performance Obligation" means Seller shall be required to sell and
Buyer shall be required to purchase the Contract Quantity of Gas set forth
herein on each Gas Day. Either Party may interrupt its performance only to the
extent that such performance is prevented for reasons of Force Majeure without
liability to the other Party.

ARTICLE IV
TERM

4.1 This Contract shall remain in effect until 9:59 a.m. EST on September 1,
2011. Deliveries of Gas hereunder shall commence on January 1, 2003, unless
otherwise mutually agreed by the Parties in a Confirmation. The rights of both
Parties under Section 14.3, the obligations of both Parties to make payments
that have accrued prior to termination, the obligation of Seller to indemnify
Buyer, and Buyer to indemnify Seller, pursuant hereto and the rights and
obligations of the Parties under Section 13.3, Article IV and Article XX (to the
extent necessary to administer the foregoing provisions of this Contract
following such termination) shall survive the termination or cancellation of the
Contract.

4.2 This Contract shall be subject to termination by mutual agreement of the
Parties, such agreement not to be unreasonably withheld.

ARTICLE V
TRANSPORTATION

5.1 Seller shall have the sole responsibility for transportation of Gas to the
Delivery Point. Buyer shall have the sole responsibility for transportation of
Gas at and after the Delivery Point.

5.2 In the event that Buyer's Gas requirements for any Gas Day are decreased for
any reason, then upon Seller's request Buyer shall use reasonable commercial
efforts to implement a transaction to make any of Buyer's unused transportation
capacity available to Seller; provided, however, that (a) Seller shall pay
Buyer's variable costs including fuel retention for the use of such
transportation capacity, (b) the available transportation capacity shall be
provided on an "as is" basis and Seller shall hold Buyer harmless in connection
with any costs, penalties, liabilities or damages incurred by Seller in
connection with the implementation of the provisions of this Section (excluding
any demand or fixed costs payable by Buyer to its Transporter or any other
Person in connection with the transportation capacity). Seller shall advise
Buyer of its intent to use available excess transportation capacity pursuant to
this Section promptly after receipt of Buyer's notice of quantity reduction.

ARTICLE VI
DELIVERY POINT

6.1 The Delivery Point(s) for all Gas delivered hereunder shall be (i) the
Primary Delivery Point (and associated maximum daily quantity) as described in
Schedule 1 (the "Primary Delivery Point"), (ii) such other points (and
associated maximum daily quantities) (each an "Alternate Delivery Point") listed
in Schedule 1, or (iii) any other points as otherwise mutually agreed upon
between Seller and Buyer. Upon Buyer's request and agreement by Buyer and Seller
of the appropriate price pursuant to a Confirmation implemented in accordance
with the procedures set forth in Article I, Seller shall procure and deliver Gas
to a Delivery Point (other than the Primary Delivery Point or an Alternate
Delivery Point) designated by Buyer for the period specified in Buyer's request
and the associated Confirmation.

6.2 Upon Seller's request, Buyer shall accept Gas at an Alternate Delivery Point
or other delivery point(s) designated by Seller for the period specified in
Seller's request, if Seller agrees to pay any incremental cost to Buyer above
the Contract Price. However, during the calendar months of November, December,
January, February, and March, the requested delivery point must be an Alternate
Delivery Point listed on Schedule 1.

6.3 Deliveries of Gas at a Delivery Point requested by Seller or Buyer that is
not designated as a Primary Delivery Point or Alternate Delivery Point shall be
made on a firm basis including without limitation Force Majeure. During the term
of this Base Contract, Buyer may not modify receipt or delivery points described
in its transportation and storage agreements without the prior written consent
of Seller.

ARTICLE VII
SCHEDULING

7.1 The Parties shall coordinate their Scheduling requirements by telephone
(and, where applicable, by means of Transporter's electronic bulletin board or
other electronic data interchange method) with immediate confirmation in writing
by facsimile. Ample time must be given to meet the Scheduling deadlines of the
affected Transporter(s). Each Party's gas scheduler shall give the other Party's
gas scheduler timely prior notice, and each Party's gas scheduler shall make
appropriate Scheduling to the Transporter(s) in a timely manner, in each case
sufficient to meet the requirements of all Transporter(s) involved in the
transportation and delivery of Gas each Gas Day. Notice shall be provided (i) at
least twenty-four hours prior to the earliest regularly scheduled Scheduling
deadline applicable for each of the Transporter(s) receiving or delivering Gas
to be Scheduled for flow on the first Gas Day of a month, and (ii) one hour
earlier than such Scheduling deadline(s) for subsequent Scheduling. Should
either Pa rty become aware that actual deliveries at the Delivery Point(s) are
greater or lesser than the amount of Gas Scheduled for delivery, such Party
shall notify immediately the other Party's gas scheduler by telephone.

ARTICLE VIII
IMBALANCES

8.1 If the supply or transportation necessary to deliver or receive the Contract
Quantity is unavailable for any reason, the Party responsible for or having
notice of such interruption shall immediately notify the other Party by
telephone. Seller and Buyer shall then cooperate in all reasonable actions to
avoid penalties imposed by the Transporter(s).

8.2 The Parties shall use all reasonable efforts to avoid imposition by any
Transporter of Imbalance Charges and to minimize such charges if unavoidable.
If, during any Month, Buyer or Seller receives an invoice from a Transporter,
which includes Imbalance Charges, the Parties shall use their best efforts to
promptly determine the validity as well as the cause of such Imbalance Charges.
The Party responsible for causing such imbalance(s) shall be liable to the other
Party for, if applicable, any associated Transporter penalties or cashout costs
and losses incurred as a result of imbalance(s).

ARTICLE IX
QUANTITY REDUCTIONS

9.1 In the event that Buyer's Gas requirements for any Gas Day are decreased due
to JCP&L curtailments, Outages, or other force majeure conditions described
herein, then Buyer shall reduce the amount of Gas it receives on such Gas Day in
accordance with the following order of reduction priority: (a) First, Gas to be
purchased under the PSE&G Contract, as and to the extent provided therein; (b)
Second, Gas to be delivered under any Gas storage agreements or arrangements
entered into after the date of this Base Contract; (c) Third, Gas to be
purchased under other contracts; and (d) Fourth, Gas to be purchased under this
Base Contract and the Base Contract dated as of the date hereof between Buyer
and Tractebel Energy Marketing, Inc., ratably on a 50/50 basis. For any Gas Day
that Buyer is reducing the Contract Quantity pursuant to this Section, Buyer
shall issue a Nomination to Seller designating the reduced Contract Quantity
immediately upon receiving information that a quantity reduction is necessar y,
but in no event later than 9:30 a.m., Eastern Prevailing Time on the Business
Day prior to the Gas Day on which deliveries are to be so reduced. Buyer shall
not reduce the amount of Gas it receives for any Gas Day for economic or any
other non-operational reasons, except that Buyer shall be entitled to a
reduction as a result of a curtailment of the Facility for up to two hundred
(200) hours per year pursuant to Section 6.5 (d) of the Power Purchase Agreement
between Jersey Central Power & Light and Buyer relating to the Facility.

9.2 In the event of a Forced Outage, Buyer may request that Seller remarket any
Gas that Buyer is required to accept hereunder and Seller shall use commercially
reasonable efforts to do so and shall be entitled to Seller's Cover Costs for
any such amount. Such requests shall be made pursuant to the Confirmation
procedures set forth in Article I above.

9.3 Notwithstanding anything to the contrary in this Contract, in the event that
the simple average of the daily quantities of Gas purchased by Buyer hereunder
each Day during any 12 Month period is less than 75% of the original Contract
Quantity of 11,010 MMBtu per day, then upon Seller's request, the Parties shall
negotiate in good faith to appropriately modify the terms of this Contract
(including but not limited to the terms related to the Contract Price). If the
Parties do not agree on such modifications within 30 Days after Seller's
request, then Seller shall have the right to terminate this Contract upon giving
30 Days prior written notice to Buyer.

ARTICLE X
QUALITY AND MEASUREMENTS

10.1 All Gas delivered hereunder shall meet the pressure, quality, heat content
and other standards and specifications of the Receiving Transporter.

10.2 The unit of quantity measurement for purposes of this Contract shall be on
an MMBtu dry basis. Measurement of Gas quantities hereunder shall be in
accordance with the tariff of the Receiving Transporter.

ARTICLE XI
PRICE

11.1 The "Contract Price" for all Gas delivered hereunder shall be an amount
(expressed in $/MMBtu) equal to the Index Price, minus the applicable amount for
the applicable time period as set forth on Schedule 2. In the event Buyer and
Seller mutually agree, the Contract Price may be adjusted pursuant to a
Confirmation implemented in accordance with the procedures set forth in Article
I; provided, however, neither Party is obligated to agree to any other pricing
and either Party may withhold agreement for any reason.

ARTICLE XII
TAXES

12.1 Seller shall pay or cause to be paid, all taxes, fees, levies, penalties,
licenses or charges imposed by any government authority ("Taxes") on or with
respect to the Gas prior to its delivery at the Delivery Points(s). Buyer shall
pay or cause to be paid, all Taxes on or with respect to the Gas at or after its
delivery at the Delivery Point(s). If a Party is required to remit or pay Taxes
which are the other Party's responsibility hereunder, such Party shall promptly
reimburse the other Party for such Taxes. If either Party is entitled to an
exemption from any such Taxes or charges, such Party shall furnish the other
Party with a copy of the appropriate exemption or resale certificate. The
Parties agree to cooperate to mitigate taxes payable by either Party hereunder.

ARTICLE XIII
BILLING, PAYMENT AND AUDIT

13.1 On or before the tenth calendar day following the Month of deliveries of
Gas hereunder, Seller shall deliver to Buyer an invoice for the preceding Month
properly identified as per the Contract (or applicable Confirmation) showing the
total quantity of Gas delivered, the amount due, and other pertinent
information. If the actual quantity delivered is not available by the
contractual billing date, billing will be prepared based on the Scheduled
quantities. The Scheduled quantity will then be corrected to the actual quantity
on the following Month's billing or as soon thereafter as actual delivery
information is available.

13.2 Buyer shall remit by wire transfer the amount due by the later of (i) the
25th calendar day of the Month in which the statement was rendered or (ii) ten
days after receipt of the invoice by Buyer; provided that if such due date is
not a Business Day, payment is due on the next Business Day following such date.
If Buyer fails to remit the full amount payable by it when due, interest on the
unpaid portion shall accrue at a rate equal to the lower of (i) the
then-effective prime rate of interest published under "Money Rates" by The Wall
Street Journal, plus two percent per annum from the date due until the date of
payment, or (ii) the maximum applicable lawful interest rate. If Buyer, in good
faith, disputes the amount of any such statement or any part thereof, Buyer will
pay to Seller such amount as it concedes to be correct, provided, however, if
Buyer disputes the amount due, Buyer must, at the earliest available
opportunity, provide Seller supporting documentation acceptable in indus try
practice from Buyer's Transporter (or other appropriate source of
documentation). If it is ultimately determined that Buyer owes the disputed
amount, Buyer will pay Seller that amount with interest as determined above
immediately upon such determination.

13.3 The Parties shall have the right, upon reasonable notice and at reasonable
times, to examine the books and records of the other Party to the extent
reasonably necessary to verify (i) the accuracy of any statement, charge,
payment, computation made under the Contract or (ii) any curtailment of service
under Section 13.4. Any such audit and any claim based upon errors in any
statement or unauthorized curtailment must be made within two years of (i) the
date of such statement or any revision thereof or (ii) the last calendar day of
the Month during which any such alleged unauthorized curtailment occurs.
Following such two-year period, a billing statement as adjusted shall be final.
Errors in a Party's favor shall be rectified in full, with interest as
calculated above, by such Party within 30 days of notice and substantiation of
such inaccuracy.

13.4 When reasonable grounds for insecurity of payment by Seller arise, Buyer
may demand adequate assurance of performance from Seller. Adequate assurance
shall mean sufficient security in the form and for the term reasonably specified
by Buyer, including, but not limited to, a standby irrevocable letter of credit,
a prepayment, a security in an asset acceptable to the Buyer or a guarantee by a
credit worthy entity.

ARTICLE XIV
TITLE, WARRANTY AND INDEMNITY

14.1 Title to the Gas shall pass from Seller to Buyer at the Delivery Points(s).
Seller shall have responsibility for and assume any liability with respect to
the Gas prior to its delivery to Buyer at the specified Delivery Point(s). Buyer
shall have responsibility for and any liability with respect to said Gas at and
after its delivery to Buyer at the Delivery Point(s).

14.2 Seller warrants that it will have good and merchantable title to or will
have the right to deliver all Gas sold hereunder and delivered by it to Buyer,
free and clear of all liens, encumbrances, and claims.

14.3 Seller and Buyer each warrants that it is engaged in the direct commercial
use of natural Gas in the ordinary course of its business, as producer,
processor, merchant, or consumer or otherwise has knowledge of the practices
associated with the purchase or sale of natural Gas. Each further warrants that
it has and will maintain all the regulatory authorizations, certificates, and
documentation as may be necessary and legally required to transport, buy, or
make sales for resale of Gas sold or purchased hereunder.

14.4 Seller agrees to indemnify Buyer and save it harmless from all suits,
actions, debts, accounts, damages, costs, losses, liabilities and expenses
arising from or out of claims of title, personal injury or property damage from
any or all persons to said Gas or other charges thereon which attach before
title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless
from all suits, actions, debts, accounts, damages, costs losses, liabilities and
expenses arising from or out of claims regarding payment, personal injury or
property damage from said Gas or other charges thereon which attach at and after
title passes to Buyer.

ARTICLE XV
NOTICES

15.1 All Confirmations, Nominations, notices, invoices, and other communications
("Notices") made pursuant to the Contract shall be made as follows:

If to Buyer:

North Jersey Energy Associates, A Limited Partnership
c/o Northeast Energy, LP
c/o FPL Energy, LLC
700 Universe Blvd.
P.O. Box 14000
Juno Beach, FL 33408
Attention: Nathan E. Hanson, Business Manager
Phone (561) 625-7421
Facsimile: (561) 691-7309

If to Seller:

(for Billing and Inquiries)

 

FPL Energy Power Marketing, Inc.
11770 US Hwy 1
North Palm Beach, FL 33408
Attention: Joanne Fontaine, Senior Gas Accountant
Phone: (561) 625-7557
Facsimile: (561) 625-7651
and

 

Dana Kirk, Manager Fuels Accounting
Phone: (561) 625-7649
Facsimile: (561) 625-7651

 

(for Legal Notices)

 

FPL Energy Power Marketing, Inc.
11770 U.S. Highway One
East Tower, 5th Floor
North Palm Beach, FL 33408
Attention: Director of Legal/Regulatory Affairs
Telephone: (561) 625-7752
Facsimile: (561) 625-7504

(for Gas Scheduling & Nominations)

 

FPL Energy Power Marketing, Inc.
11770 US Hwy 1
North Palm Beach, FL 33408
Attention: Manager - Gas Trading
Phone: (561) 625-7081
Facsimile: (561) 625-7635

15.2 All payments shall be made, in immediately available funds, as follows:

 

FPLE Power Marketing, Inc.
Bank of America
Acct: # 3751227650
ABA: # 111000012

15.3 Either Party may modify any information specified above by written notice
to the other Party.

15.4 All Notices required hereunder may be sent by facsimile, a nationally
recognized overnight courier service, first class mail or hand delivered.

15.5 Notices sent by facsimile shall be deemed to have been received upon the
sending Party's receipt of its facsimile's confirmation hereof. Notice by
overnight mail or courier shall be deemed to have been received on the next
Business Day after it was sent or such earlier time as is confirmed by the
receiving Party. Notice delivered by hand shall be deemed to be received at the
time it is delivered to an officer or to a responsible employee of the receiving
Party. Notice via First Class Mail shall be considered delivered two Business
Days after mailing.

ARTICLE XVI
DEFAULTS AND REMEDIES

16.1 Subject to Sections 9.2, 16.3, and the Cover Standard the exclusive and
sole remedy of the Parties in the event of a breach of the Firm Performance
Obligation shall be recovery of the following Cover Costs: (a) in the event of a
breach by Seller, payment by Seller to Buyer in an amount equal to (i) the
difference, if positive, between the purchase price paid by Buyer for
replacement Gas and the Contract Price, multiplied by the quantity of Gas agreed
upon but not delivered by Seller to Buyer, plus (ii) Buyer's incremental
transportation costs, plus (iii) any applicable Imbalance Charges and (iv) to
the extent not duplicative of amounts included in clause (iii), if Buyer is
unable to purchase replacement Gas that it is required to make available to
PSE&G on a PSE&G Peak Demand Day, any damages or costs payable to PSE&G pursuant
to the PSE&G Contract in respect of Buyer's failure to make available Gas to
PSE&G ("Buyer's Cover Costs"); (b) in the event of a breach by Buyer, paym ent
by Buyer to Seller in an amount equal to (i) the difference, if positive,
between the Contract Price and the price received by Seller from the resale of
such Gas, multiplied by the quantity of Gas not taken by Buyer, plus (ii)
reasonable incremental transportation costs required for the resale of such gas,
plus (iii) any applicable Imbalance Charges ("Seller's Cover Costs"); (c) in the
event that Buyer has used commercially reasonable efforts to replace the Gas or
Seller has used commercially reasonable efforts to sell the Gas to a third
Party, and no such replacement or sale is available, then the exclusive remedy
of the non-breaching Party shall be the difference between the Contract Price
and the highest price in the range of the daily postings for the higher of (i)
the Gas Day of non-delivery of Gas or (ii) the Gas Day after the Gas Day of
non-delivery of Gas, such postings as published by Gas Daily under the heading
Daily Price Survey under Citygates for Transco zone 6 non-N.Y. multiplied by the
quantity of Gas agreed upon but not delivered by Seller or taken by Buyer, as
the case may be; plus any applicable Imbalance Charges.

16.2 In the event either Party shall (i) make an assignment or any general
arrangement for the benefit of creditors; (ii) default in the payment of any
undisputed amount due to the other Party hereunder, which is not cured within 30
days after receipt of notice thereof; (iii) file a petition or otherwise
commence, authorize, or acquiesce in the commencement of a proceeding or cause
under any bankruptcy or similar law for the protection of creditors or have such
petition filed or proceeding commenced against it, (iv) otherwise become
bankrupt or insolvent (however evidenced); (v) be unable to pay its debts as
they fall due; or (vi) in the case of Seller, fail to give adequate assurance of
its ability to perform its obligations under the Contract within forty-eight
(48) hours of a reasonable request by the other Party (each an "Event of
Default"), then the non-defaulting Party shall have the right to either withhold
and/or suspend deliveries until such Event of Default is cured. If any Event of
Default is not cured within 30 days after the non-defaulting Party has given a
default notice to the defaulting Party, the non-defaulting Party may terminate
the Contract, in addition to any and all other remedies available hereunder. The
default notice must be delivered to the defaulting Party after the applicable
Event of Default has arisen and state the grounds for the Event of Default in
reasonable detail.

16.3 In the event that the non-defaulting Party terminates the Contract under
Section 16.2, the non-defaulting Party shall have the right to designate, by
written termination notice, an early termination date ("Early Termination Date")
as any date on or after the date of its termination notice under Section 16.2.
Upon the Early Termination Date, the non-defaulting Party shall have the right
to liquidate this Contract (including any portion of required deliveries not yet
fully made) then outstanding by:

(i) Closing out the Contract at its Market Value, as defined below, so that the
Contract is canceled and a settlement payment in an amount equal to the
difference between such Market Value and the Contract Value, as defined below,
of such Contract shall be due to the Buyer if such Market Value exceeds the
Contract Value and to the Seller if the opposite is the case; and

(ii) Discounting each amount then due under clause (i) above to net present
value in a commercially reasonable manner as at the time of liquidation (to take
account of the period between the date of liquidation and the date on which such
amount would have otherwise been due pursuant to the Contract); and

(iii) Setting off or aggregating, as appropriate, any and all settlement
payments (discounted as appropriate) and (at the election of the non-defaulting
Party) any or all other amounts owing between the Parties under this Contract so
that all such amounts are aggregated and/or netted to a single liquidated amount
payable by one Party to the other. The net amount due any such liquidation shall
be paid by the close of business on the third Business Day following the Early
Termination Date.

For purposes of this Section, "Contract Value" means the amount of Gas remaining
to be delivered or purchased pursuant to the Contract multiplied by the Contract
Price per unit, and "Market Value" means the amount of Gas remaining to be
delivered or purchased pursuant to the Contract multiplied by the market price
per unit determined by the non-defaulting Party in a commercially reasonable
manner using the Cover Standard. The rate of interest used in calculating net
present value pursuant to (ii) of this Section shall be determined by the
non-defaulting Party in a commercially reasonable manner. The Parties agree that
the Contract shall constitute a "forward contract" within the meaning of the
United States Bankruptcy Code.

The non-defaulting Party's rights under this Section and to Cover Costs accrued
prior to the termination date are the sole and exclusive remedy of the
non-defaulting Party for an Event of Default. The non-defaulting Party shall
give notice that a liquidation pursuant to this Section has occurred to the
defaulting Party no later than the third Business Day following such
liquidation, provided that failure to give such notice shall not affect the
validity or enforceability of the liquidation or give rise to any claim by the
defaulting Party against the non-defaulting Party.

16.4 Seller may immediately suspend deliveries to Buyer hereunder in the event
Buyer has not paid any amount due Seller hereunder on or before the second
calendar day following the date such payment is due.

16.5 Each Party reserves to itself all rights, set-offs, counterclaim, and other
defenses which it is or may be entitled to arising from or out of the Contract.

16.6 EXCEPT AS EXPRESSLY PROVIDED HEREIN, IN NO EVENT WILL EITHER PARTY BE
RESPONSIBLE, EITHER UNDER THIS ARTICLE XVI OR UNDER ANY OTHER TERM OR PROVISION
OF THIS CONTRACT, FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES.

ARTICLE XVII
FORCE MAJEURE

17.1 Except with regard to a Party's obligation to make payments due under the
Contract, neither Party shall be liable to the other for a failure to perform
its obligations hereunder, if such failure was caused by Force Majeure. As used
herein, the term "Force Majeure" shall mean an unforeseen occurrence or event
beyond the control of the Party claiming excuse which partially or entirely
prevents that Party's performance of its obligations, except the obligation to
make payments due under any transaction.

17.2 Force Majeure shall include but not be limited to the following: (i)
physical events such as acts of God, landslides, lightning, earthquakes, fires,
storms or storm warnings which result in evacuation of the affected area,
floods, washouts, explosions, breakage, or accident, derate, or necessity of
repairs to machinery or equipment including Planned, Maintenance, or Forced
Outages ("Outages") of the Facility or lines of pipe, weather related events
such as hurricanes or freezing or failure of wells or lines of pipe which
affects a significant geographic area; (ii) acts of others such as strikes,
riots, sabotage, insurrections or wars; (iii) governmental actions such as
necessity for compliance with any court order, law, statute, ordinance, or
regulation promulgated by a governmental authority having jurisdiction; and (iv)
any other causes, whether of the kind herein enumerated or otherwise not
reasonably within the control of the affected Party. Seller and Buyer shall make
reasonable efforts to avoid F orce Majeure and to resolve the event or
occurrence once it has occurred in order to resume performance. Force Majeure
shall not be based on (i) the loss or change of natural Gas markets; (ii)
Buyer's inability economically to use or resell the natural Gas purchased
hereunder; (iii) the loss or failure of Seller's supply; or (iv) any economic
hardship leading to a breach of firm delivery by Seller, or (v) failure of
Seller's non-Firm transportation service unless such failure also excuses
performance by Buyer under the PSE&G Contract.

17.3 The Party whose performance is prevented by Force Majeure must provide
notice to the other Party. Initial notice may be given orally; however, written
notification with particulars of the event or occurrence is required within
twenty-four (24) hours. Upon providing written notification of Force Majeure to
the other Party, the affected Party will be relieved of its obligation to make
or accept, as the case may be, delivery of Gas to the extent and for the
duration of Force Majeure and neither Party shall be deemed to have failed in
such obligations to the other during such occurrence or event. Upon notification
by Buyer to Seller that such outage has been completed, Buyer's obligation to
purchase gas shall be restored.

17.4 Neither Party shall be entitled to the benefit of the provisions of Force
Majeure to the extent performance is affected from any or all of the following
circumstances: (i) the Party claiming excuse failed to remedy the condition and
to resume the performance of such covenants or obligations with reasonable
dispatch; or (ii) economic hardship.

17.5 Notwithstanding anything to the contrary herein, the Parties agree that the
settlement of strikes, lockouts, or other industrial disturbances shall be
entirely within the discretion of the Party experiencing such disturbance.

17.6 In no event shall the failure of firm or other transportation or delivery
rights of Seller constitute a Force Majeure hereunder unless such firm
transportation and delivery rights are curtailed due to reasons beyond the
control, and not the fault of, the Seller and such failure also excuses
performance by Buyer under the PSE&G Contract. In any such Force Majeure
circumstance, Seller shall use reasonable commercial efforts to find an
alternative means of transportation or delivery on the most advantageous terms
available and shall notify Buyer of such terms, including the price thereof. In
the event the use of such alternative means will result in a transportation cost
in excess of the transportation costs that would have been incurred by Seller in
the absence of such Force Majeure, then Buyer shall have the option to either
(i) decline the use of such means in which case Seller shall be relieved of its
delivery obligations hereunder so long as and to the extent that it cannot
perform its delivery o bligations hereunder due to such Force Majeure event or
(ii) accept such alternative means in which case Buyer shall pay the amount of
such increased costs. Upon Buyer's request, Seller shall provide Buyer with
documentation supporting its efforts to identify alternative means and any cost
increases related to the use of such means.

ARTICLE XVIII
GOVERNMENTAL REGULATIONS

18.1 This Contract and all provisions herein will be subject to all applicable
and valid statutes, rules, orders and regulations of any Federal, State, or
local governmental authority having jurisdiction over the Parties, their
facilities, or Gas supply, this Contract or any provisions thereof.

ARTICLE XIX
DISPUTE RESOLUTION

19.1 In the event a dispute arises between Buyer and Seller, or the successors
or assigns of either of the, regarding the application or interpretation of any
provision of this Contract, the aggrieved Party shall promptly notify the other
Party of its intent to invoke this dispute resolution procedure after such
dispute arises. If the Parties shall have failed to resolve the dispute within
ten Business Days after delivery of such notice, each Party shall, within five
Business Days thereafter nominate a senior officer of its management to meet at
a mutually agreed location to resolve the dispute.

19.2 Any controversy under this Contract that is not resolved pursuant to
Section 19.1 shall be resolved by a board of arbitration, consisting of three
(3) members, upon notice of submission given by either Party, which notice shall
also name one (1) arbitrator. The Party receiving such notice, shall, by notice
to the other Party within ten (10) days thereafter, name the second (2nd)
arbitrator, or failing to do so, the Party giving notice of submission shall
name the second (2nd) arbitrator. The two (2) arbitrators so appointed shall
name a third (3rd) arbitrator.

19.3 The arbitrators shall be qualified by education, experience and training in
the Gas industry to decide upon the particular question in dispute.

19.4 The arbitrators so appointed, after giving the Parties due notice of the
date of a hearing and reasonable opportunity to be heard, shall promptly hear
the controversy in New York, New York and shall thereafter render their decision
determining said controversy no later than ninety (90) Days after such board has
been appointed. Any decision requires the support of a majority of the
arbitrators. If the board of arbitration is unable to reach such decision, new
arbitrators will be named and shall act under this Contract, at the request of
either Party, in a like manner as if none had been previously named.

19.5 The decision of the arbitrators shall be rendered in writing and supported
by written reasons. The decision of the arbitrators shall be final and binding
upon the Parties and will be complied with by the Parties. Each Party shall bear
the expenses of its chosen arbitrator, and the expenses of the third (3rd)
arbitrator shall be borne equally by the Parties. Each Party shall bear the
compensation and expenses of its legal counsel, witnesses, and employees.

ARTICLE XX
MISCELLANEOUS

20.1 This Contract shall be binding upon and inure to the benefit of the
successors, assigns, personal representatives, and heirs of the respective
Parties hereto, and the covenants, conditions, and obligations of this Contract
shall run for the full term of this Contract. No assignment of this Contract, in
whole or in part, will be made without the prior written consent of the
non-assigning Party, which consent will not be unreasonably withheld. Buyer may
assign its interests herein to any lender of Buyer or of Buyer's partners or
affiliates.

20.2 No waiver of any breach of this Contract shall be held to be a waiver of
any other or subsequent breach. All remedies afforded in this Contract shall be
taken and construed as cumulative.

20.3 This Contract sets forth all understandings between the Parties respecting
the subject matter of each transaction and any prior contracts, understandings
and representations, whether oral or written, representing this subject matter
are merged into and superseded by the Base Contract and any effective
Confirmation(s). This Contract may only be amended in writing.

20.4 This Contract may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument. As used herein, the singular of any term shall include the
plural.

20.5 The interpretation and performance of this Contract shall be governed by
the laws of New York, excluding, however, any conflict of laws rule which would
apply the law of another jurisdiction.

20.6 Compliance with the confirmation procedures of Article I satisfies any
"writing" requirements imposed under the Uniform Commercial Code or any other
applicable contract law.

 

IN WITNESS WHEREOF, Parties hereto have caused their names to be signed and
executed in duplicate on this 2nd day of October, 2002.

 

NORTH JERSEY ENERGY ASSOCIATES,
A LIMITED PARTNERSHIP

 

By:

Northeast Energy, LP
Its General Partner

 

By:

ESI Northeast Energy GP, Inc.
Its Administrative General Partner

       

By:

MICHAEL LEIGHTON

   

Michael Leighton
Vice President

 

FPL ENERGY POWER MARKETING, INC.

       

By:

MARK MAISTO

   

Mark Maisto
President

     

 

SCHEDULE 1 - Primary Delivery Point and Alternate Delivery Points

Primary Delivery Point:

"Located at the U.S. side of the International Boundary in Niagara Falls, Erie
County, New York at the point known as the Niagara Import Point, at the
interconnection between the facilities of TransCanada Pipeline Ltd. (TCPL) and
Dominion Transmission Inc. (DTI)".

DTI via Tennessee Gas Pipeline (TGP)
Contract No.: TGP 3369
MDQ: 11,010
Delivery Point Name: Niagara River Purchase
Meter No. 010902
Niagara County, NY

Alternate Delivery Points:

Dominion Transmission Inc.
Contract No.: 200016
MDQ: 11,010
Delivery Point Name: Marilla
Meter No. 40113
Erie County, NY

Transcontinental Gas Pipeline Corporation
Contract No.: .5329
MDQ: 11,395
Delivery Point Name: Leidy - National Fuel
Meter No. 7126
Clinton County, PA

Texas Eastern Transmission Corporation
Contract No.: 330181
MDQ: 5,254
Delivery Point Name: Compressor Station 23 (Chambersburg)
Meter No. 79923
Franklin County, PA

Public Service Electric And Gas Company
Interconnect: Texas Eastern Transmission Corporation
Contract No.: N/A
MDQ: 5,254
Delivery Point Name: Public Service - Linden, NJ
Meter No. 70128
Union County, NJ

Contract No.: N/A
Interconnect: Transcontinental Gas Pipeline Corporation
MDQ: 11,395
Delivery Point Name: Public Service Electric & Gas (PSE&G)
Meter No. 6386
Essex County, NJ

 

 

 

SCHEDULE 2 - PRICE COMPONENT

 

Z6 NNY - Niagara Basis

Period

Start Date

End Date

Contract
$/MMBtu

1

1/1/2003

3/31/2003

$0.747

2

4/1/2003

10/31/2003

$0.260

3

11/1/2003

3/31/2004

$0.376

4

4/1/2004

10/31/2004

$0.069

5

11/1/2004

3/31/2005

$0.460

6

4/1/2005

10/31/2005

$0.162

7

11/1/2005

3/31/2006

$0.464

8

4/1/2006

10/31/2006

$0.165

9

11/1/2006

3/31/2007

$0.469

10

4/1/2007

10/31/2007

$0.168

11

11/1/2007

3/31/2008

$0.473

12

4/1/2008

10/31/2008

$0.168

13

11/1/2008

3/31/2009

$0.470

14

4/1/2009

10/31/2009

$0.168

15

11/1/2009

3/31/2010

$0.470

16

4/1/2010

10/31/2010

$0.168

17

11/1/2010

3/31/2011

$0.470

18

4/1/2011

8/31/2011

$0.168

 

 

EXHIBIT A
CONFIRMATION

 

NJEA Sayreville Facility

 

Date: ___________________________
Transaction Confirmation #: ________________

This Confirmation is subject to the Base Contract between Seller and Buyer dated
October 2, 2002. The terms of this Confirmation are binding as provided in the
Base Contract.

SELLER:
FPL Energy Power Marketing, Inc.
11770 US Hwy 1
North Palm Beach, FL 33408
Attn: Manager - Gas Trading
Phone: 561-625-7081
Fax: 561-625-7635
Transporter: __________________________________

BUYER:
North Jersey Energy Associates, A Limited Partnership
c/o Northeast Energy, LP
c/o FPL Energy, LLC
700 Universe Blvd.
P.O. Box 14000
Juno Beach, FL 33408
Attn: Nathan E. Hanson, Business Manager
Phone: 561-625-7421
Fax: 561-691-7309
Transporter: ___________________________________

Contract Price: $ ________/ MMBtu or
________________________________________________________

Delivery Period: Begin: _________________________, ________ End:
__________________________, ________

Performance Obligation and Contract Quantity: (Select One)

Firm (Fixed Quantity):

Firm (Variable Quantity):

Interruptible:

_____ MMBtus/day

_____ MMBtus/day Minimum

Up to _____ MMBtus/day

" EFP _____ MMBtus/day Maximum

     

subject to Section 4.2 at election of
"Buyer or o Seller

 

Delivery Point(s): _________________________________________
(If a pooling point is used, list a specific geographic and pipeline location):

Special Conditions:

Seller:

   

Buyer:

   

By:

   

By:

   

Title:

   

Title:

   

Date:

   

Date: