exv10w84



 





Exhibit 10.84









 









 








General Terms and Conditions

Base Contract for Sale and Purchase of Natural Gas




SECTION 1. PURPOSE AND PROCEDURES



1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions
of Gas on a Firm or Interruptible basis. “Buyer” refers to the party receiving Gas and “Seller”
refers to the party delivering Gas. The entire agreement between the parties shall be the Contract
as defined in Section 2.7.



The parties have selected either the “Oral Transaction Procedure” or the
“Written Transaction Procedure” as indicated on the Base Contract.



Oral Transaction Procedure:



1.2. The parties will use the following Transaction Confirmation procedure.
Any Gas purchase and sale transaction may be effectuated in an EDI transmission
or telephone conversation with the offer and acceptance constituting the
agreement of the parties. The parties shall be legally bound from the time
they so agree to transaction terms and may each rely thereon. Any such
transaction shall be considered a “writing” and to have been “signed”.
Notwithstanding the foregoing sentence, the parties agree that Confirming Party
shall, and the other party may, confirm a telephonic transaction by sending the
other party a Transaction Confirmation by facsimile, EDI or mutually agreeable
electronic means within three Business Days of a transaction covered by this
Section 1.2 (Oral Transaction Procedure) provided that the failure to send a
Transaction Confirmation shall not invalidate the oral agreement of the
parties. Confirming Party adopts its confirming letterhead, or the like, as
its signature on any Transaction Confirmation as the identification and
authentication of Confirming Party. If the Transaction Confirmation contains
any provisions other than those relating to the commercial terms of the
transaction (i.e., price, quantity, performance obligation, delivery point,
period of delivery and/or transportation conditions), which modify or
supplement the Base Contract or General Terms and Conditions of this Contract
(e.g., arbitration or additional representations and warranties), such
provisions shall not be deemed to be accepted pursuant to Section 1.3 but must
be expressly agreed to by both parties; provided that the foregoing shall not
invalidate any transaction agreed to by the parties.



Written Transaction Procedure:



1.2. The parties will use the following Transaction Confirmation procedure.
Should the parties come to an agreement regarding a Gas purchase and sale
transaction for a particular Delivery Period, the Confirming Party shall, and
the other party may, record that agreement on a Transaction Confirmation and
communicate such Transaction Confirmation by facsimile, EDI or mutually
agreeable electronic means, to the other party by the close of the Business Day
following the date of agreement. The parties acknowledge that their agreement
will not be binding until the exchange of nonconflicting Transaction
Confirmations or the passage of the Confirm Deadline without objection from the
receiving party, as provided in Section 1.3.



1.3. If a sending party’s Transaction Confirmation is materially different from the receiving
party’s understanding of the agreement referred to in Section 1.2, such receiving party shall
notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm
Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending
party. The failure of the receiving party to so notify the sending party in writing by the Confirm
Deadline constitutes the receiving party’s agreement to the terms of the transaction described in
the sending party’s Transaction Confirmation. If there are any material differences between timely
sent Transaction Confirmations governing the same transaction, then neither Transaction
Confirmation shall be binding until or unless such differences are resolved including the use of
any evidence that clearly resolves the differences in the Transaction Confirmations. In the event
of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2,
(ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the
parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract,
and (iv) these General Terms and Conditions, the terms of the documents shall govern in the
priority listed in this sentence.



1.4. The parties agree that each party may electronically record all telephone conversations with
respect to this Contract between their respective employees, without any special or further notice
to the other party. Each party shall obtain any necessary consent of its agents and employees to
such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of
the Base Contract, the parties agree not to contest the validity or enforceability of telephonic
recordings entered into in accordance with the requirements of this Base Contract. However,
nothing herein shall be construed as a waiver of any objection to the admissibility of such
evidence.



SECTION 2. DEFINITIONS



The terms set forth below shall have the meaning ascribed to them below. Other terms are also
defined elsewhere in the Contract and shall have the meanings ascribed to them herein.



2.1. “Alternative Damages” shall mean such damages, expressed in dollars or dollars per MMBtu, as
the parties shall agree upon in the Transaction Confirmation, in the event either Seller or Buyer
fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the
case of Buyer.



2.2. “Base Contract” shall mean a contract executed by the parties that incorporates these General
Terms and Conditions by reference; that specifies the agreed selections of provisions contained
herein; and that sets forth other information required herein and any Special Provisions and
addendum(s) as identified on page one.



2.3. “British thermal unit” or “Btu” shall mean the International BTU, which is also called the Btu
(IT).



2.4. “Business Day” shall mean any day except Saturday, Sunday or Federal Reserve Bank holidays.




			
	 	 	 
	Copyright © 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002






 









 




2.5. “Confirm Deadline” shall mean 5:00 p.m. in the receiving party’s time zone on the second
Business Day following the Day a Transaction Confirmation is received or, if applicable, on the
Business Day agreed to by the parties in the Base Contract; provided, if the Transaction
Confirmation is time stamped after 5:00 p.m. in the receiving party’s time zone, it shall be deemed
received at the opening of the next Business Day.



2.6. “Confirming Party” shall mean the party designated in the Base Contract to prepare and forward
Transaction Confirmations to the other party.



2.7. “Contract” shall mean the legally-binding relationship established by (i) the Base Contract,
(ii) any and all binding Transaction Confirmations and (iii) where the parties have selected the
Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the
parties have entered into through an EDI transmission or by telephone, but that have not been
confirmed in a binding Transaction Confirmation.



2.8. “Contract Price” shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer
to Seller for the purchase of Gas as agreed to by the parties in a transaction.



2.9. “Contract Quantity” shall mean the quantity of Gas to be delivered and taken as agreed to by
the parties in a transaction.



2.10. “Cover Standard”, as referred to in Section 3.2, shall mean that if there is an unexcused
failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing party
shall use commercially reasonable efforts to (i) if Buyer is the performing party, obtain Gas, (or
an alternate fuel if elected by Buyer and replacement Gas is not available), or (ii) if Seller is
the performing party, sell Gas, in either case, at a price reasonable for the delivery or
production area, as applicable, consistent with: the amount of notice provided by the
nonperforming party; the immediacy of the Buyer’s Gas consumption needs or Seller’s Gas sales
requirements, as applicable; the quantities involved; and the anticipated length of failure by the
nonperforming party.



2.11. “Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish credit
support for, or on behalf of, a party to this Contract such as an irrevocable standby letter of
credit, a margin agreement, a prepayment, a security interest in an asset, a performance bond,
guaranty, or other good and sufficient security of a continuing nature.



2.12. “Day” shall mean a period of 24 consecutive hours, coextensive with a “day” as defined by the
Receiving Transporter in a particular transaction.



2.13. “Delivery Period” shall be the period during which deliveries are to be made as agreed to by
the parties in a transaction.



2.14. “Delivery Point(s)” shall mean such point(s) as are agreed to by the parties in a
transaction.



2.15. “EDI” shall mean an electronic data interchange pursuant to an agreement entered into by the
parties, specifically relating to the communication of Transaction Confirmations under this
Contract.



2.16. “EFP” shall mean the purchase, sale or exchange of natural Gas as the “physical” side of an
exchange for physical transaction involving gas futures contracts. EFP shall incorporate the
meaning and remedies of “Firm”, provided that a party’s excuse for nonperformance of its
obligations to deliver or receive Gas will be governed by the rules of the relevant futures
exchange regulated under the Commodity Exchange Act.



2.17. “Firm” shall mean that either party may interrupt its performance without liability only to
the extent that such performance is prevented for reasons of Force Majeure; provided, however, that
during Force Majeure interruptions, the party invoking Force Majeure may be responsible for any
Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is
made to the Transporter and until the change in deliveries and/or receipts is confirmed by the
Transporter.



2.18. “Gas” shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state
consisting primarily of methane.



2.19. “Imbalance Charges” shall mean any fees, penalties, costs or charges (in cash or in kind)
assessed by a Transporter for failure to satisfy the Transporter’s balance and/or nomination
requirements.



2.20. “Interruptible” shall mean that either party may interrupt its performance at any time for
any reason, whether or not caused by an event of Force Majeure, with no liability, except such
interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related
to its interruption after the nomination is made to the Transporter and until the change in
deliveries and/or receipts is confirmed by Transporter.



2.21. “MMBtu” shall mean one million British thermal units, which is equivalent to one dekatherm.



2.22. “Month” shall mean the period beginning on the first Day of the calendar month and ending
immediately prior to the commencement of the first Day of the next calendar month.



2.23. “Payment Date” shall mean a date, as indicated on the Base Contract, on or before which
payment is due Seller for Gas received by Buyer in the previous Month.



2.24. “Receiving Transporter” shall mean the Transporter receiving Gas at a Delivery Point, or
absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point.



2.25. “Scheduled Gas” shall mean the quantity of Gas confirmed by Transporter(s) for movement,
transportation or management.



2.26. “Spot Price “ as referred to in Section 3.2 shall mean the price listed in the publication
indicated on the Base Contract, under the listing applicable to the geographic location closest in
proximity to the Delivery Point(s) for the relevant Day; provided, if there is no single price
published for such location for such Day, but there is published a range of prices, then the Spot
Price shall be the average of such high and low prices. If no price or range of prices is
published for such Day, then the Spot Price shall be the average of the following: (i) the price
(determined as stated above) for the first Day for which a price or range of prices is published
that next precedes 



			
	 	 	 
	Copyright© 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002






 









 





the relevant Day; and (ii) the price (determined as stated above) for the first
Day for which a price or range of prices is published that next follows the relevant Day.



2.27. “Transaction Confirmation” shall mean a document, similar to the form of Exhibit A, setting
forth the terms of a transaction formed pursuant to Section 1 for a particular Delivery Period.



2.28. “Termination Option” shall mean the option of either party to terminate a transaction in the
event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller
or to receive Gas in the case of Buyer for a designated number of days during a period as specified
on the applicable Transaction Confirmation.



2.29. “Transporter(s)” shall mean all Gas gathering or pipeline companies, or local distribution
companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream
or downstream, respectively, of the Delivery Point pursuant to a particular transaction.



SECTION 3. PERFORMANCE OBLIGATION



3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract
Quantity for a particular transaction in accordance with the terms of the Contract. Sales and
purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction.



The parties have selected either the “Cover Standard” or the “Spot Price Standard” as indicated on the Base Contract.



Cover Standard:



3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or
receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by
Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer
utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in
transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity
and the quantity actually delivered by Seller for such Day(s); or (ii) in the event of a breach by Buyer on any
Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract
Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for
commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the
difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s); or (iii) 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 sole and
exclusive remedy of the performing party shall be any unfavorable difference between the Contract Price and the Spot
Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the difference between the
Contract Quantity and the quantity actually delivered by Seller and received by Buyer for such Day(s). Imbalance
Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance
Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five
Business Days after presentation of the performing party’s invoice, which shall set forth the basis upon which such
amount was calculated.



Spot Price Standard:



3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or
receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by
Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered
by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by
subtracting the Contract Price from the Spot Price; or (ii) in the event of a breach by Buyer on any Day(s), payment
by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual quantity
delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained
by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under
this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section
4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the
performing party’s invoice, which shall set forth the basis upon which such amount was calculated.



3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction
Confirmation executed in writing by both parties.



3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a
Transaction Confirmation executed in writing by both parties. The Transaction Confirmation
containing the Termination Option will designate the length of nonperformance triggering the
Termination Option and the procedures for exercise thereof, how damages for nonperformance will be
compensated, and how liquidation costs will be calculated.



SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES



4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s).
Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s).



4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the
deadlines of the affected Transporter(s). Each party shall give the other party timely prior
Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of
the quantities of Gas to be delivered and purchased each Day. Should either party become aware that
actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party
shall promptly notify the other party.



4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance
Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance
Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges.
If the Imbalance Charges were incurred as a result of Buyer’s receipt of quantities of Gas greater
than or less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or reimburse
Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were




			
	 	 	 
	Copyright© 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002






 









 





incurred as a
result of Seller’s delivery of quantities of Gas greater than or less than the Scheduled Gas, then
Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by
Buyer.



SECTION 5. QUALITY AND MEASUREMENT



All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the
Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one
MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established
procedures of the Receiving Transporter.



SECTION 6. TAXES



The parties have selected either “Buyer Pays At and After Delivery Point” or
“Seller Pays Before and At Delivery Point” as indicated on the Base Contract.



Buyer Pays At and After Delivery Point:



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 the Delivery Point(s). Buyer shall pay or cause to
be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and
all Taxes after the Delivery Point(s). If a party is required to remit or pay
Taxes that are the other party’s responsibility hereunder, the party
responsible for such Taxes shall promptly reimburse the other party for such
Taxes. Any party entitled to an exemption from any such Taxes or charges shall
furnish the other party any necessary documentation thereof.



Seller Pays Before and At Delivery Point:



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 the Delivery Point(s) and all Taxes at the Delivery
Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to
the Gas after the Delivery Point(s). If a party is required to remit or pay
Taxes that are the other party’s responsibility hereunder, the party
responsible for such Taxes shall promptly reimburse the other party for such
Taxes. Any party entitled to an exemption from any such Taxes or charges shall
furnish the other party any necessary documentation thereof.



SECTION 7. BILLING, PAYMENT, AND AUDIT



7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any
other applicable charges, providing supporting documentation acceptable in industry practice to
support the amount charged. If the actual quantity delivered is not known by the billing date,
billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then
be adjusted to the actual quantity on the following Month’s billing or as soon thereafter as actual
delivery information is available.



7.2. Buyer shall remit the amount due under Section 7.1 in the manner specified in the Base
Contract, in immediately available funds, on or before the later of the Payment Date or 10 Days
after receipt of the invoice by Buyer; provided that if the Payment Date is not a Business Day,
payment is due on the next Business Day following that date. In the event any payments are due
Buyer hereunder, payment to Buyer shall be made in accordance with this Section 7.2.



7.3. In the event payments become due pursuant to Sections 3.2 or 3.3, the performing party may
submit an invoice to the nonperforming party for an accelerated payment setting forth the basis
upon which the invoiced amount was calculated. Payment from the nonperforming party will be due
five Business Days after receipt of invoice.



7.4. If the invoiced party, in good faith, disputes the amount of any such invoice or any part
thereof, such invoiced party will pay such amount as it concedes to be correct; provided, however,
if the invoiced party disputes the amount due, it must provide supporting documentation acceptable
in industry practice to support the amount paid or disputed. In the event the parties are unable
to resolve such dispute, either party may pursue any remedy available at law or in equity to
enforce its rights pursuant to this Section.



7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid
portion shall accrue from the date due until the date of payment 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; or (ii) the maximum applicable lawful interest rate.



7.6. A party shall have the right, at its own expense, upon reasonable Notice and at reasonable
times, to examine and audit and to obtain copies of the relevant portion of the books, records, and
telephone recordings of the other party only to the extent reasonably necessary to verify the
accuracy of any statement, charge, payment, or computation made under the Contract. This right to
examine, audit, and to obtain copies shall not be available with respect to proprietary information
not directly relevant to transactions under this Contract. All invoices and billings shall be
conclusively presumed final and accurate and all associated claims for under- or overpayments shall
be deemed waived unless such invoices or billings are objected to in writing, with adequate
explanation and/or documentation, within two years after the Month of Gas delivery. All
retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30
Days of Notice and substantiation of such inaccuracy.



7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable
to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due,
arising under the Contract such that the party owing the greater amount shall make a single payment
of the net amount to the other party in accordance with Section 7; provided that no payment
required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section
7.3 shall be subject to netting under this Section. If
the parties have executed a separate netting agreement, the terms and conditions therein shall
prevail to the extent inconsistent herewith.



SECTION 8. TITLE, WARRANTY, AND INDEMNITY



8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the
Delivery Point(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 after its delivery to Buyer at the
Delivery Point(s).




			
	 	 	 
	Copyright© 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002






 









 




8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable
title to all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens,
encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN SECTION 14.8, ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE, ARE DISCLAIMED.



8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims
including reasonable attorneys’ fees and costs of court (“Claims”), from any and all persons,
arising from or out of claims of title, personal injury or property damage from said Gas or other
charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and
save it harmless from all Claims, from any and all persons, arising from or out of claims regarding
payment, personal injury or property damage from said Gas or other charges thereon which attach
after title passes to Buyer.



8.4. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller
will be liable for all Claims to the extent that such arise from the failure of Gas delivered by
Seller to meet the quality requirements of Section 5.



SECTION 9. NOTICES



9.1. All Transaction Confirmations, invoices, payments and other communications made pursuant to
the Base Contract (“Notices”) shall be made to the addresses specified in writing by the respective
parties from time to time.



9.2. All Notices required hereunder may be sent by facsimile or mutually acceptable electronic
means, a nationally recognized overnight courier service, first class mail or hand delivered.



9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of
proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile
shall be deemed to have been received upon the sending party’s receipt of its facsimile machine’s
confirmation of successful transmission. If the day on which such facsimile is received is not a
Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have
been received on the next following Business Day. 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 via first class mail shall be considered delivered five
Business Days after mailing.



SECTION 10. FINANCIAL RESPONSIBILITY



10.1. If either party (“X”) has reasonable grounds for insecurity regarding the performance of any
obligation under this Contract (whether or not then due) by the other party (“Y”) (including,
without limitation, the occurrence of a material change in the creditworthiness of Y), X may demand
Adequate Assurance of Performance. “Adequate Assurance of Performance” shall mean sufficient
security in the form, amount and for the term reasonably acceptable to X, including, but not
limited to, a standby irrevocable letter of credit, a prepayment, a security interest in an asset
or a performance bond or guaranty (including the issuer of any such security).



10.2. In the event (each an “Event of Default”) either party (the “Defaulting Party”) or its
guarantor shall: (i) make an assignment or any general arrangement for the benefit of creditors;
(ii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a
proceeding or case under any bankruptcy or similar law for the protection of creditors or have such
petition filed or proceeding commenced against it; (iii) otherwise become bankrupt or insolvent
(however evidenced); (iv) be unable to pay its debts as they fall due; (v) have a receiver,
provisional liquidator, conservator, custodian, trustee or other similar official appointed with
respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other
party with respect to any Credit Support Obligations relating to the Contract; (vii) fail to give
Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day
of a written request by the other party; or (viii) not have paid any amount due the other party
hereunder on or before the second Business Day following written Notice that such payment is due;
then the other party (the “Non-Defaulting Party”) shall have the right, at its sole election, to
immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and
liquidate the transactions under the Contract, in the manner provided in Section 10.3, in addition
to any and all other remedies available hereunder.



10.3. If an Event of Default has occurred and is continuing, the Non-Defaulting Party shall have
the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such
Notice is given and no later than 20 Days after such Notice is given, as an early termination date
(the “Early Termination Date”) for the liquidation and termination pursuant to Section 10.3.1 of
all transactions under the Contract, each a “Terminated Transaction”. On the Early Termination
Date, all transactions will terminate, other than those transactions, if any, that may not be
liquidated and terminated under applicable law or that are, in the reasonable opinion of the
Non-Defaulting Party, commercially impracticable to liquidate and terminate (“Excluded
Transactions”), which Excluded Transactions must be liquidated and terminated as soon thereafter as
is reasonably practicable, and upon termination shall be a Terminated Transaction and be valued
consistent with Section 10.3.1 below. With respect to each Excluded Transaction, its actual
termination date shall be the Early Termination Date for purposes of Section 10.3.1.




			
	 	 	 
	Copyright© 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002






 









 




The parties have selected either “Early Termination Damages Apply” or “Early
Termination Damages Do Not Apply” as indicated on the Base Contract.



Early Termination Damages Apply:




     10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall
determine, in good faith and in a commercially reasonable manner, (i) the
amount owed (whether or not then due) by each party with respect to all
Gas delivered and received between the parties under Terminated
Transactions and Excluded Transactions on and before the Early
Termination Date and all other applicable charges relating to such
deliveries and receipts (including without limitation any amounts owed
under Section 3.2), for which payment has not yet been made by the party
that owes such payment under this Contract and (ii) the Market Value, as
defined below, of each Terminated Transaction. The Non-Defaulting Party
shall (x) liquidate and accelerate each Terminated Transaction at its
Market Value, so that each amount equal to the difference between such
Market Value and the Contract Value, as defined below, of such Terminated
Transaction(s) shall be due to the Buyer under the Terminated
Transaction(s) if such Market Value exceeds the Contract Value and to the
Seller if the opposite is the case; and (y) where appropriate, discount
each amount then due under clause (x) above to present value in a
commercially reasonable manner as of the Early Termination Date (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 relevant
Terminated Transactions).


For purposes of this Section 10.3.1, “Contract Value” means the amount of Gas
remaining to be delivered or purchased under a transaction multiplied by the
Contract Price, and “Market Value” means the amount of Gas remaining to be
delivered or purchased under a transaction multiplied by the market price for a
similar transaction at the Delivery Point determined by the Non-Defaulting
Party in a commercially reasonable manner. To ascertain the Market Value, the
Non-Defaulting Party may consider, among other valuations, any or all of the
settlement prices of NYMEX Gas futures contracts, quotations from leading
dealers in energy swap contracts or physical gas trading markets, similar sales
or purchases and any other bona fide third-party offers, all adjusted for the
length of the term and differences in transportation costs. A party shall not
be required to enter into a replacement transaction(s) in order to determine
the Market Value. Any extension(s) of the term of a transaction to which
parties are not bound as of the Early Termination Date (including but not
limited to “evergreen provisions”) shall not be considered in determining
Contract Values and Market Values. For the avoidance of doubt, any option
pursuant to which one party has the right to extend the term of a transaction
shall be considered in determining Contract Values and Market Values. The rate
of interest used in calculating net present value shall be determined by the
Non-Defaulting Party in a commercially reasonable manner.



Early Termination Damages Do Not Apply:




     10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall
determine, in good faith and in a commercially reasonable manner, the
amount owed (whether or not then due) by each party with respect to all
Gas delivered and received between the parties under Terminated
Transactions and Excluded Transactions on and before the Early
Termination Date and all other applicable charges relating to such
deliveries and receipts (including without limitation any amounts owed
under Section 3.2), for which payment has not yet been made by the party
that owes such payment under this Contract.


The parties have selected either “Other Agreement Setoffs Apply” or “Other
Agreement Setoffs Do Not Apply” as indicated on the Base Contract.



Other Agreement Setoffs Apply:




     10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate,
any and all amounts owing between the parties under Section 10.3.1, so
that all such amounts are netted or aggregated to a single liquidated
amount payable by one party to the other (the “Net Settlement Amount”).
At its sole option and without prior Notice to the Defaulting Party, the
Non-Defaulting Party may setoff (i) any Net Settlement Amount owed to the
Non-Defaulting Party against any margin or other collateral held by it in
connection with any Credit Support Obligation relating to the Contract;
or (ii) any Net Settlement Amount payable to the Defaulting Party against
any amount(s) payable by the Defaulting Party to the Non-Defaulting Party
under any other agreement or arrangement between the parties.



Other Agreement Setoffs Do Not Apply:




     10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate,
any and all amounts owing between the parties under Section 10.3.1, so
that all such amounts are netted or aggregated to a single liquidated
amount payable by one party to the other (the “Net Settlement Amount”).
At its sole option and without prior Notice to the Defaulting Party, the
Non-Defaulting Party may setoff any Net Settlement Amount owed to the
Non-Defaulting Party against any margin or other collateral held by it in
connection with any Credit Support Obligation relating to the Contract.



     10.3.3. If any obligation that is to be included in any netting, aggregation or setoff
pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may in good faith estimate
that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to
the Non-Defaulting Party accounting to the Defaulting Party when the obligation is ascertained.
Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section
10.3.2 shall be discounted to net present value in a commercially reasonable manner determined by
the Non-Defaulting Party.


10.4. As soon as practicable after a liquidation, Notice shall be given by the Non-Defaulting Party
to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due
to or due from the Non-Defaulting Party. The Notice shall include a written statement explaining
in reasonable detail the calculation of such amount, 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. The Net Settlement Amount shall be paid by the
close of business on the second Business Day following such Notice, which date shall not be earlier
than the Early Termination Date. Interest on any unpaid portion of the Net Settlement Amount shall
accrue from the date due until the date of payment 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; or (ii) the maximum applicable lawful interest rate.




			
	 	 	 
	Copyright© 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002






 









 




10.5. The parties agree that the transactions hereunder constitute a “forward contract” within the
meaning of the United States Bankruptcy Code and that Buyer and Seller are each “forward contract
merchants” within the meaning of the United States Bankruptcy Code.



10.6. The Non-Defaulting Party’s remedies under this Section 10 are the sole and exclusive remedies
of the Non-Defaulting Party with respect to the occurrence of any Early Termination Date. Each
party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or
may be entitled to arising from the Contract.



10.7. With respect to this Section 10, if the parties have executed a separate netting agreement
with close-out netting provisions, the terms and conditions therein shall prevail to the extent
inconsistent herewith.



SECTION 11. FORCE MAJEURE



11.1. Except with regard to a party’s obligation to make payment(s) due under Section 7, Section
10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure
to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term
“Force Majeure” as employed herein means any cause not reasonably within the control of the party
claiming suspension, as further defined in Section 11.2.



11.2. 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, such as
hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage
or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii) weather
related events affecting an entire geographic region, such as low temperatures which cause freezing
or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation
and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial
disturbances, riots, sabotage, insurrections or wars; and (v) governmental actions such as
necessity for compliance with any court order, law, statute, ordinance, regulation, or policy
having the effect of law promulgated by a governmental authority having jurisdiction. Seller and
Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve
the event or occurrence once it has occurred in order to resume performance.



11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the
extent performance is affected by any or all of the following circumstances: (i) the curtailment of
interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also
curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the
performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship,
to include, without limitation, Seller’s ability to sell Gas at a higher or more advantageous price
than the Contract Price, Buyer’s ability to purchase Gas at a lower or more advantageous price than
the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of
costs resulting from this Agreement; (iv) the loss of Buyer’s market(s) or Buyer’s inability to use
or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the
loss or failure of Seller’s gas supply or depletion of reserves, except, in either case, as
provided in Section 11.2. The party claiming Force Majeure shall not be excused from its
responsibility for Imbalance Charges.



11.4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of
strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party
experiencing such disturbance.



11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other
party. Initial Notice may be given orally; however, written Notice with reasonably full
particulars of the event or occurrence is required as soon as reasonably possible. Upon providing
written Notice of Force Majeure to the other party, the affected party will be relieved of its
obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as
applicable, 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.



11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure
provisions in a Transaction Confirmation executed in writing by both parties.



SECTION 12. TERM



This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until the
expiration of the latest Delivery Period of any transaction(s). The rights of either party
pursuant to Section 7.6 and Section 10, the obligations to make payment hereunder, and the
obligation of either party to indemnify the other, pursuant hereto shall survive the termination of
the Base Contract or any transaction.



SECTION 13. LIMITATIONS



FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH
EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY
HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW
OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A
TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT
ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR
IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE.
IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT
ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES
ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT
AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS.




			
	 	 	 
	Copyright© 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002






 









 





SECTION 14. MISCELLANEOUS



14.1. 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, rights 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 (and shall not relieve the assigning party from liability hereunder),
which consent will not be unreasonably withheld or delayed; provided, either party may (i)
transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds
hereof in connection with any financing or other financial arrangements, or (ii) transfer its
interest to any parent or affiliate by assignment, merger or otherwise without the prior approval
of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain
principally liable for and shall not be relieved of or discharged from any obligations hereunder.



14.2. If any provision in this Contract is determined to be invalid, void or unenforceable by any
court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any
other provision, agreement or covenant of this Contract.



14.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or
subsequent breach.



14.4. This Contract sets forth all understandings between the parties respecting each transaction
subject hereto, and any prior contracts, understandings and representations, whether oral or
written, relating to such transactions are merged into and superseded by this Contract and any
effective transaction(s). This Contract may be amended only by a writing executed by both parties.



14.5. The interpretation and performance of this Contract shall be governed by the laws of the
jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which
would apply the law of another jurisdiction.



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



14.7. There is no third party beneficiary to this Contract.



14.8. Each party to this Contract represents and warrants that it has full and complete authority
to enter into and perform this Contract. Each person who executes this Contract on behalf of
either party represents and warrants that it has full and complete authority to do so and that such
party will be bound thereby.



14.9. The headings and subheadings contained in this Contract are used solely for convenience and
do not constitute a part of this Contract between the parties and shall not be used to construe or
interpret the provisions of this Contract.



14.10. Unless the parties have elected on the Base Contract not to make this Section 14.10
applicable to this Contract, neither party shall disclose directly or indirectly without the prior
written consent of the other party the terms of any transaction to a third party (other than the
employees, lenders, royalty owners, counsel, accountants and other agents of the party, or
prospective purchasers of all or substantially all of a party’s assets or of any rights under this
Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in
order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent
necessary for the enforcement of this Contract , (iii) to the extent necessary to implement any
transaction, or (iv) to the extent such information is delivered to such third party for the sole
purpose of calculating a published index. Each party shall notify the other party of any
proceeding of which it is aware which may result in disclosure of the terms of any transaction
(other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure.
The existence of this Contract is not subject to this confidentiality obligation. Subject to
Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce,
or seek relief in connection with this confidentiality obligation. The terms of any transaction
hereunder shall be kept confidential by the parties hereto for one year from the expiration of the
transaction.



In the event that disclosure is required by a governmental body or applicable law, the party
subject to such requirement may disclose the material terms of this Contract to the extent so
required, but shall promptly notify the other party, prior to disclosure, and shall cooperate
(consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain
protective orders or similar restraints with respect to such disclosure at the expense of the other
party.



14.11 The parties may agree to dispute resolution procedures in Special Provisions attached to the
Base Contract or in a Transaction Confirmation executed in writing by both parties.







DISCLAIMER:  The purposes of this Contract are to facilitate trade, avoid misunderstandings and
make more definite the terms of contracts of purchase and sale of natural gas. Further, NAESB does
not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF
THIS CONTRACT ACKNOWLEDGES AND AGREES TO NAESB’S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS
OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART
THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT,
MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS,
HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER
ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH
USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT,
SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS
CONTRACT.







			
	 	 	 
	Copyright© 2002 North American Energy Standards Board 

All Rights Reserved
	 	NAESB Standard X.X.X

January 28, 2002