**1.7 “Maximum Daily Quantity”**or **“MDQ”**shall have the meaning set forth inSection 3.2 hereof.**1.8 “Maximum Hourly Quantity”**or **“MHQ”**shall have the meaning set forth in Section 3.3 hereof.**1.9 “Natural Gas”**shall mean any mixture of hydrocarbons and noncombustible gases in a gaseousstate, including vaporized LNG and propane air from the Facilities, which meet generally acceptedstandards for gas interchangeability required by Utility.**1.10 “Nomination”**shall mean a notice provided by the Utility to GASMARK setting forth itsdelivery requirements for a Delivery Day, or specified hours thereofpursuant to Section 4.1hereof. The Parties shall maintain 24-hour contacts, seven days per week, for the purposes ofproviding and receiving Nominations.**1.11 “Replacement Supply”**shall mean Natural Gas quantities obtained by Utility to replace theportion of a Scheduled Quantity that GASMARK fails to deliver in accordance with a DailyNomination.**1.12 “Scheduled Quantity”**shall mean, for a particular Delivery Day, the quantity of NaturalGas that Utility requests in a Nomination and GASMARK confirms.**1.13 “Total Winter Entitlement” or “TWE”**shall mean the maximum quantity of Natural Gas thatUtility is entitled to receive and GASMARK is obligated to deliver on a Firm basis, during a WinterSeason. The TWE for each Winter Season during the Primary Term shall be 640,000 Dth.**1.14 “Winter Season”**shall refer to the period beginning 10:00 a.m. ECT November 1 and ending9:59 a.m. ECT the following March 31.**SECTION 2.****Term**This Agreement shall be effective for a period commencing on and including November 1, 2007and expiring on and including March 31, 2012 (the “Primary Term”). Following expiration of thePrimary Term, this Agreement may continue on a year-to-year basis;provided, that Utilityand GASMARK shall agree on the appropriate amount of Reservation and Commodity Charges to applyduring any year-to-year continuation of this Agreement. Beginning April 1, 2011, by April 1 eachyear, GASMARK will provide Utility with either a one-year written notice of termination or awritten pricing offer for continuation of service under the Agreement. If a continuation isoffered, Utility will respond to GASMARK by June 1 with either a written notice of acceptance ofthe pricing offer for continuation of the Agreement or a writtennotice of termination. Termination by either Party shall become effective on the following March31.
 
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**SECTION 3.****Character of Service****3.1 Delivery Obligation.**GASMARK shall sell and deliver and Utility shall have the option topurchase and the right to receive Natural Gas on any day during the Winter Season. GASMARK’sobligation to deliver and Utility’s obligation to receive Natural Gas shall be Firm for anyNomination quantity, up to the applicable MDQ, MHQ and TWE. GASMARK shall not be obligated todeliver Natural Gas to Utility in excess of the applicable MDQ, MHQ,or TWE.**3.2Maximum Daily Quantity.**The Maximum Daily Quantity or MDQ shall mean the maximum quantityof Natural Gas that Utility may require GASMARK to deliver on any day during a Winter Season. TheMDQ for each Winter Season during the Primary Term shall be80,000 Dth/d.**3.3 Maximum Hourly Quantity.**The Maximum Hourly Quantity or MHQ shall mean the maximumquantity of Natural Gas that Utility may require GASMARK to deliver in any hour of a Delivery Dayduring a Winter Season. The MHQ for each Winter Season during the Primary Term shall be 4,375Dth/hr.**3.4 Authorized Overruns.**If Utility wishes to overrun its MDQ, MHQ or TWE on any Delivery Dayit must request authorization from GASMARK in advance. GASMARK will authorize and permit suchoverruns if it reasonably determines that it is operationally feasible to do so. The Partiesshall agree in advance on the Commodity Charge to apply for any Natural Gas delivered to Utility inexcess of its MDQ, MHQ or TWE.**3.5Waiver of Delivery Obligation.**On any day that Utility nominates service, Utility shallmaintain its distribution facilities downstream of the Delivery Point(s) in a way that permitsGASMARK to deliver the Scheduled Quantities. If Utility fails to maintain its distributionfacilities downstream of the Delivery Point(s) or has insufficient flow-by of Natural Gas at thepoint of interconnection with the Facilities, such that GASMARK is unable to deliver the ScheduledQuantities, then GASMARK shall be relieved of its obligation to deliver the Scheduled Quantitiesfor the period and to the extent that Utility’s distribution facilities or the absence of flow-bydo not permit such deliveries. Once the Utility’s distribution facilities or the absence of flow-bycondition has been corrected by Utility, GASMARK shall use commercially reasonable efforts tosupply the entire amount nominated by Utility for that gas day. Any waiver of delivery obligationspursuant to this Section 3.5 shall not affect Utility’s right to receive its TWE during any WinterSeason.
 
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**SECTION 4.****Nomination Procedure**Utility may provide GASMARK with a Nomination for service at any time either prior to orwithin the Delivery Day. Each such Nomination shall specify the Delivery Day, the hours of deliveryand the quantity of Natural Gas required for delivery during such hours, up to the MDQand MHQ set forth in Sections 3.2 and 3.3, above. The Delivery Points for all such Nominationsshall be mutually agreed by the Parties at the time such Nomination is made; provided that, unlessotherwise agreed, the Delivery Points for Nominations received shall be limited to those DeliveryPoints that interconnect with the Facilities such that resulting deliveries displace Texas Easternpipeline deliveries to the Utility distribution system by at least 48% and no more than 52%. IfUtility is nominating service within the Delivery Day, Utility will submit its Nomination asearly on the Delivery Day as is reasonably possible under the circumstances. GASMARK shall provideUtility with confirmation of the Scheduled Quantity within two-hours after the Nomination isreceived. GASMARK shall commence deliveries to Utility pursuant to such Nomination as quickly aspracticable after service is requested; provided, however, that GASMARK shall be permittedthree hours after receipt of Utility’s Nomination to commence such service. If no hourly deliveryquantity is specified in the Nomination, GASMARK will prorate the Scheduled Quantity based on thenumber of hours for which service is requested.**SECTION5.****Charges****5.1 Reservation Charge.**Utility shall pay GASMARK a total reservation charge of $13,650,000for each Winter Season during the Primary Term. The reservation charge shall be paid in three equalmonthly installments due on November 1, December 1 and January 2 of each contract year, providedthat if such due date is not a Business Day then the due date shall be the following Business Day,and shall be charged and collected in accordance with Section 6.**5.2 Commodity Charge.**Unless the Utility elects to lock a fixed price with GASMARK inaccordance with Section 5.2(b), Utility shall not be obligated to purchase or receive any NaturalGas from GASMARK under this Agreement. For all quantities of Natural Gas sold and delivered byGASMARK, Utility shall pay a commodity charge, which shall be determined pursuant to the followingalternatives: **(a)** For deliveries made pursuant to a Nomination, up to the MDQ, MHQ and TWE, thecommodity charge for the quantity delivered shall be equal to the sum of: (i) the NYMEXsettlement price for the month of delivery; plus (ii) a commodity adder equalto the NYMEX settlement price multiplied by .1628, which adder shall cover applicablefuel and commodity charges to the Delivery Points. **(b)** Utility shall have the right at any time to lock-in a fixed commodity chargefor all or a portion of the Total Winter Entitlement, for delivery during a futuremonth of the Winter Season. The commodity charges for locked-in quantities shall be asagreed to by the Parties based on prevailing market conditions at the time the lock-inis made. Utility’s right to lock in a quantity of Natural Gas shall be limited asfollows: (i) The maximum quantity of Natural Gas forwhich the Utility may lock in a fixed commodity charge shall equal theTWE less anyquantities already delivered during the Winter Season and anyquantities previously locked in for the Winter Season.
 
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 (ii) Unless otherwise agreed, Utility shallnotify GASMARK of its intention to lock-in the commodity chargeby no later than 10:00 a.m. on the last trading day for the NYMEXnatural gas contract to the month in which such lock-in willapply. Such notice shall identify the quantity of Natural Gas tobe locked in. GASMARK will promptly communicate to Utility anylimitations on the lock-in quantity identified in Utility’snotice, and the Parties will utilize commercially reasonableefforts to facilitate the lock in to the extent practicable. (iii) If Utility has locked in a fixed price,Utility shall be required to purchase and take delivery of thequantity of Natural Gas for which a locked-in price isestablished. **(c)** Utility may elect to purchase a call option from GASMARK, which shall giveUtility the right, but not the obligation to purchase Natural Gas supply from GASMARKduring a future month at a fixed price. The option quantity, option fee and strikeprice shall be agreed to by Utility and GASMARK **(d)** The charges determined in accordance with sub-paragraphs (a) through (c),above, shall be billed and paid on a monthly basis, in accordance with Section 6.**SECTION6.****Billing and Payment**GASMARK will invoice Utility for reservation charges in accordance with Section 5.1due dates. Separately each month, GASMARK will invoice Utility for all other chargesapplicable to service rendered during the prior month, plus any applicable taxes inaccordance with Section 11 hereto. Utility shall pay GASMARK the full amount due no laterthan the 20th of the month after receipt of such invoice. All payments shall bemade by Wire Transfer (EFT) to GASMARK’s banking instituition, designated as follows:Mellon Bank, N.A.Pittsburgh, PA AccountNo. 016-7425 ACH No.043000261
 
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**SECTION 7.****Force Majeure****7.1 Generally.**Except as otherwise set forth herein, deliveries under this Agreementshall be Firm, and shall not be subject to curtailment, interruption or proration except asthe result of Force Majeure. In the event either GASMARK or Utility is rendered unable,wholly orin part, by a Force Majeure Event to carry out its obligations under this Agreement, it is agreedthat upon such Party’s giving notice and full particulars of such Force Majeure Event, inaccordance with Section 7.3, then the obligations of the Party giving such notice insofar as theyare affected by such Force Majeure Event shall be suspended, from the inception, and during thecontinuance of any inability so caused but for no longer period. Notwithstanding the foregoing, aParty’s obligation to pay money when due for service rendered during a prior period shall not beexcused as a result of a Force Majeure Event for a period of longer than ten (10) days.**7.2 Included and Excluded Events.**A Force Majeure Event shall mean all causes, events oroccurrences beyond the reasonable control of the Parties and that could not have been prevented bythe claiming Party through the exercise of reasonable diligence, which causes, events oroccurrences directly and materially affect a Party’s ability to perform, in whole or in part, theobligations of this Agreement. A Force Majeure Event shall not include: (i) any wellfailures or freeze-offs; (ii) any interruption of interruptible service by an interstate pipeline;(iii) any restriction of secondary receipt or delivery points by an interstate pipeline; (iv) anyrecall of recallable capacity; or (v) any curtailment of firm transportation service by aninterstate pipeline for any reason other than the occurrence of a Force Majeure Event consistentwith the tariff of such interstate pipeline. For deliveries scheduled for Utility pursuant to aNomination received within a Delivery Day, a Force Majeure Event shall not include the declarationof an OFO, Action Alert, Critical Day Notice or other similar orderby an interstate pipeline.**7.3 Notice.**The Party asserting Force Majeure shall provide immediate written notice to theother Party of the occurrence of any Force Majeure Event. Notice shall include (i) a detailedexplanation of the event that has occurred, (ii) the known or expected impact on the Party’sability to perform, and (iii) the period of time during which the Party’s performance will beimpacted. The Party asserting Force Majeure will remedy the Force Majeure Event and resumeperformance of its obligations hereunder as soon as reasonably possible.**SECTION 8.****Liquidated Damages for Failure to Receive or Deliver****8.1Failure to Deliver.**Unless otherwise excused by the waiver of a delivery obligationunder Section 3.5 or a Force Majeure Event under Section 7.2, if GASMARK fails to deliver all or aportion of a Scheduled Quantity on any Delivery Day, GASMARK shall pay Utility an amount equal tothe difference between (i) the Nomination quantity for the Delivery Day and (ii) the quantity takenduring such Delivery Day (the “Deficiency Amount”) times the positive difference between(iii) the applicable commodity charge as determined under Section 5.2 hereof and (iv) the cost ofReplacement Supply as determined by Utility in a commercially reasonable manner within areasonable time after GASMARK fails to deliver the Deficiency Amount.**8.2 Failure to Receive.**Unless otherwise excused by the waiver of a delivery obligationunder Section 3.5 or a Force Majeure Event under Section 7.2, if Utility fails to take all or aportion of the Scheduled Quantity for the Delivery Day, Utility shall pay GASMARK an amount equalto the “Deficiency Amount” times the positive difference between (i) theapplicable commodity charge as determined under Section 5.2 hereof and (ii) the price received byGASMARK from the sale of the Deficiency Amount as determined by GASMARK in a commerciallyreasonable manner within a reasonable time after the Utility fails to take delivery of theDeficiency Amount.
 
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**8.3 Duty to Mitigate.**Each Party has an affirmative duty to mitigate in good faith the extentof damages that may arise from the other Party’s failure to discharge its receipt or deliveryobligations under this Agreement. In the event a Party fails to properly discharge its duty tomitigate, any amounts otherwise due under Sections 8.1 and 8.2 hereunder shall be reduced by anamount that would not have been incurred had such duty been properly discharged.**8.4 Exclusive Remedy.**The remedies set forth in Section 8.1 and 8.2 shall be the exclusiveremedies available to a party for the other party’s failure to discharge its firm receipt ordelivery obligation hereunder. To the extent that any damages required to be paid under Sections8.1 or 8.2 are liquidated, GASMARK and Utility acknowledge that the damages are difficult orimpossible to determine, otherwise obtaining an adequate remedy is inconvenient and the liquidateddamages constitute a reasonable approximation of the harm or loss.**SECTION 9.****Indemnification**Except as otherwise limited pursuant to other provisions of this Agreement, each Party shallindemnify, defend and hold harmless the other Party, the other Party’s officers, employees,shareholders, directors, and agents and their respective successors and assigns, from and againstany and all third party claims, demands, liabilities, losses, expenses, costs, obligations,recoveries or damages of any nature whatsoever, whether accrued, absolute, contingent orotherwise, including without limitation court costs and attorneys’ fees (whether or not suit isbrought), arising out of or resulting from or relating to (i) any breach of any of its obligationsunder this Agreement, (ii) any negligence, gross negligence, bad faith actions, or willfulmisconduct on its part in connection with this Agreement; and (iii) any Natural Gas while it is inthe Party’s control or possession; providedhowever, that a Party’s responsibilityfor such claims and damages under this section shall be limited to the extent that such claims ordamages result from the negligence, gross negligence, willful misconduct, or bad faith actions oromissions on the part of the other Party but only to the extent of such actions or omissions. ThisSection 9 shall survive termination of the Agreement.**SECTION 10.****Taxes****10.1 Responsibility.** Responsibility for payment of all kinds of taxes applicable to NaturalGas sold hereunder shall be allocated as follows: (a) GASMARK shall pay, or cause to be paid, andUtility shall be held harmless by GASMARK, for the payment of all taxes imposed on or with respectto the Natural Gas sold or delivered hereunder by GASMARK for which the taxable incident arises oroccurs prior to delivery of the Natural Gas to the Delivery Point(s); and (b) Utility shall pay orcause to be paid, and GASMARK shall be held harmless by Utility, for the payment of all taxesimposed on or with respect to the Natural Gas sold or delivered byGASMARK hereunder for which the taxable incident arises or occurs upon delivery or after theNatural Gas is delivered to the Delivery Point(s).
 
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**10.2 Reimbursement.**If a Party is required to remit or pay taxes that are the other Party’sresponsibility hereunder (including any tax, which would have been incurred by a Party absent thisAgreement), the Party responsible for such taxes shall promptly reimburse the other Partytherefore.**SECTION 11.****Title and Warranties****11.1 Warranty of Title.**GASMARK hereby warrants good and merchantable title to the Natural Gassold by it hereunder or the right to sell the same, and warrants that all Natural Gas shall bedelivered to Utility shall be free from all liens, encumbrances, and adverse claims. Upon deliveryto Utility, title shall be passed, and shall be deemed to remain with Utility at alltimes.**11.2 Warranty Disclaimers.**Except as expressly stated herein, neither Party providesany warranties to the other, expressed or implied, including the implied warranties ofmerchantability and fitness for a particular purpose.**SECTION 12.****Notices****12.1 Generally.**All invoices, payments and other communications made hereunder shall bedelivered to the addresses specified in writing by the Parties from time to time.**12.2 Means of Delivery.**Unless a specific means of notice is expressly stated herein, allnotices required hereunder may be sent by mutually acceptable means, provided, however, that (i)notices shall be deemed given when received on a Business Day by the addressee, (ii) notices sentvia facsimile shall be deemed received upon the sending Party’s receipt of its facsimile machine’sconfirmation of successful transmission, and (iii) any facsimile or other notice received on otherthan a Business Day or after five p.m. Eastern Clock Time on a Business Day shall be deemedreceived at the start of the next following Business Day.**12.3 Addresses.**Notices shall be provided to the Parties at the following addresses:If to UGI Energy Services, Inc., to:UGI Energy Services, Inc.1100 Berkshire Blvd. Suite 305Wyomissing, PA 19610Telephone:(610) 373-7999Facsimile: (610) 374-4288Attention: Joe Hartz
 
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If to UGI Utilities, Inc., to:UGI Utilities, Inc100 Kachel Blvd., Suite 400Reading, PA 19612Telephone: (610) 796-3667Facsimile: (610) 796-3595Attention: Vicki O. Ebner**SECTION 13.****Assignment**This Agreement shall be binding upon and inure to the benefit of the respective successorsand assigns of the Parties; provided, however, that this Agreement shall not betransferred or assigned, by operation of law or otherwise, by GASMARK or Utility without the otherParty’s prior written consent, which consent shall not be unreasonably withheld or delayed.Provided however, either Party may assign its rights and obligations hereunder to any parent,subsidiary or affiliate, upon prior written notice to the other Party.**SECTION 14.****Confidentiality**The existence, terms and conditions of this Agreement shall be and remain confidential to theextent permitted by law.**SECTION 15.****Laws and Regulatory Bodies****15.1. Generally.**This Agreement shall be subject to all valid applicable federal and statelaws and to the orders, rules and regulations of any duly constituted federal or state regulatorybody or authority having jurisdiction. The interpretation and enforceability of this Agreementshall be governed by the laws of the Commonwealth of Pennsylvania, without recourse to its conflictof law principles.**15.2 Regulatory Event.**In the event that any regulatory body directly or indirectly assertsjurisdiction over the Parties’ obligations and as a result performance under the Agreement becomescommercially impracticable by either Party (“Regulatory Event”), then the Parties shall negotiatein good faith in order to amend the Agreement (and the Parties’ obligations and rights thereunder)to cure the Regulatory Event. In the event the Regulatory Event cannot be reasonably cured to thesatisfaction of the affected Party, the Party so affected shall have the right to terminate theAgreement upon thirty (30) days written notice to the other. A regulatory agency disallowing, inwhole or in part, the pass through of costs resulting from this Agreement shall not constitute aRegulatory Event.
 
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**SECTION 16.****Limitation of Damages****UNLESS EXPRESSLY PROVIDED HEREIN, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGESONLY. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECTDAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT,UNDER ANY INDEMNITY PROVISION OR OTHERWISE. THIS PARAGRAPH SHALL SURVIVE EXPIRATION OR TERMINATIONOF THIS AGREEMENT.****SECTION 17.****Miscellaneous****17.1 Waiver.**No waiver of any breach hereof shall be held to be a waiver of any other orsubsequent breach.**17.2Recognition of Rights.** Each Party reserves to itself all rights, counterclaims, and otherdefenses to which it is or may be entitled under applicable law.**17.3 Documentation.**Each Party shall provide all documents necessary to effectuate thisAgreement and the transactions that underlie this Agreement.**17.4 Amendments.**This Agreement, including Appendices hereto, may be amended or modified onlyby a writing signed by duly authorized representatives of both Parties.**17.5 Authorizations.**Utility and GASMARK each represents to the other its respectivebelief that it has obtained all necessary corporation and regulatory authorizations to execute andperform its obligations under this Agreement.**IN WITNESS WHEREOF,**the Parties have executed this Agreement in duplicate by their respectiveduly authorized officers as of the day and year first written above.           **UGI UTILITIES, INC.**   **UGI ENERGY SERVICES,INC.**             By: /s/ David W. Trego   By: /s/ Bradley C. Hall     David W. Trego      Bradley C. Hall    President and Chief Executive Officer     President  
 
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