Exhibit
10.1


 


Base
Contract for Sale and Purchase of Natural Gas


 


This Base Contract is
entered into as of the following date: May 1, 2006. The parties to this Base Contract
are the following:


 




	
  BP Canada Energy Marketing
  Corp.                                            and
  

  c/o BP Canada Energy Company

  1100, 240 - 4 Avenue SW, P.O. Box 200 Calgary, Alberta T2P 2H8

  Duns Number: 24-879-9413

  Contract Number:

  U.S. Federal Tax ID
  Number: 36-3697994

  	
   

  	
  Otter Tail Ag
  Enterprises, LLC

   

  1220 North Tower Road,
  Suite 201 Fergus Falls, MN 56537

  Duns Number: 614853609

  Contract Number:

  U.S. Federal Tax ID
  Number: 41-2171784

  
	
   

  	
   

  	
   

  
	
  Notices:

  	
   

  	
  Notices:

  
	
  1100, 240 - 4 Avenue
  P.O. Box 200, Calgary, Alberta T2P 2H8

  	
   

  	
  Otter Tail Ag
  Enterprises

  
	
  Attn: Natural Gas
  Marketing – Contract Administration

  	
   

  	
  Attn: Jerry Larson / Kelly
  Longtin

  
	
  Phone: 403-231-6832

  	
  Fax: 403-233-5611

  	
   

  	
  Phone: 218-998-4301

  	
  Fax: 218-998-4302

  
	
  For Force Majeure Notices: send copy of notice to originating office For After Hours Nominations:

  	
   

  	
   

  
	
  Calgary
  pager: 403-619-9188

  	
  Omaha: 402-505-8800

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Confirmations:

  	
   

  	
  Confirmations:

  
	
  1100, 240 - 4 Avenue
  SW, P.O. Box 200, Calgary, Alberta T2P 2H8

  	
   

  	
  Otter Tail Ag
  Enterprises

  
	
  Attn: Verifications
  Department

  	
   

  	
  Attn: Jerry Larson / Kelly
  Longtin

  
	
  Phone: N/A 

  	
  Fax: 403-233-5611

  	
   

  	
  Phone: 218-998-4301 

  	
  Fax: 218-498-4302

  
	
   

  	
   

  	
   

  
	
  Invoices and Payments:

  	
   

  	
  Invoices and Payments

  
	
  1200, 240 - 4 Avenue
  SW, P.O. Box 200 Calgary Alberta T2P 2H8

  	
   

  	
  Otter Tail Ag
  Enterprises

  
	
  Attn: Natural Gas
  Marketing, Accounting

  	
   

  	
  Attn: Jerry Larson / Hans
  Ronnevik

  
	
  Phone: 403-233-1459 

  	
  Fax: 403-237-8476

  	
   

  	
  Phone: 218-998-4301 

  	
  Fax: 218-498-4302

  
	
  If Invoicing the Omaha office
  ONLY:

  	
   

  	
   

  
	
  4211 South 143 Circle Omaha
  NE 68137

  	
   

  	
   

  
	
  Attn: Natural Gas
  Accounting

  	
   

  	
   

  
	
  Phone: 402-505-8800 

  	
  Fax: 402-505-4500

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Wire Transfer of ACH Numbers
  (if applicable):

  	
   

  	
   

  
	
  BANK: J.P. Morgan Chase
  Bank, Chicago IL, Branch 100

  	
   

  	
  BANK: American National
  Bank of Minnesota

  
	
  WIRE Transit: 021000021
  

  	
  ACCT: 1122183

  	
   

  	
   

  
	
  ACH Transit: 071000013 

  	
  ACCT: 1122183

  	
   

  	
  Transit:                ACCT:

  
	
  Other Details: Credit:
  BP Canada Energy Marketing Corp. – Gas & Power

  	
   

  	
  Other Details: See attached,

  
						






 


This Base Contract incorporates
by reference for all purposes the General Terms and Conditions for Sale and Purchase
of Natural Gas published by the North American Energy Standards Board. The parties
hereby agree to the following provisions offered in said General Terms and Conditions.
In the event the parties fail to check a box, the specified default provision
shall apply. Select only one box from each section:


 




	
  Section 1.2      x   Oral (default)

  Transaction      o   Written

  Procedure

  	
   

  	
  Section
  7.2          
  x   20th Day of
  Month following Month of Payment Date       delivery (default) if
  paying by check, payment                             
   must be received by Seller no later than the                              
  Payment Date.

  
	
  Section 2.5      o   2 Business Days after
  receipt (default)

  Confirm           x  5 Business Days after
  receipt

  Deadline

  	
   

  	
  Section 7.2          
  x    Wire transfer (default)

  Method of            
  o    Automated
  Clearinghouse Credit (ACH)

  Payment               
  o    Check

  
	
  Section 2.6      o   Seller (default)

  Confirming      o   Buyer

  Party                x   Either Party may

  	
   

  	
  Section
  7.7           x    Netting applies
  (default)

  Netting                 
  o    Netting does not
  apply

  
	
  Section 3.2      x   Cover Standard (default)

  Performance            Spot
  Price Standard

  Obligation

  Note:
  The following Spot Price Publication applies to both of the immediately preceding.

   

  Section 2.26    x   Gas Daily Midpoint (default)

  Spot Price        o

  Publication

  	
   

  	
  Section 10.3.1       x   Early Termination
  Damages Apply (default)

  Early Termination o  Early Termination Damages
  Do Not Apply

  Damages

  
	
   

  	
   

  	
  Section
  10.3.2      x   Other Agreement
  Setoffs Apply (default)

  Other Agreement  o   Other Agreement
  Setoffs Do Not Apply

  Setoffs

  
	
   

  	
   

  	
  Section 14.5 

  Choice Of Law            New
  York

  
	
  Section 6         x   Buyer Pays At and
  After Delivery Point (default) 

  Taxes               o    Seller Pays
  Before and At Delivery Point

  	
   

  	
  Section
  14.10       x   Confidentiality applies
  (default)

  Confidentiality      o   Confidentiality does
  not apply

  
	
  x Special Provisions Number of sheets
  attached: Two

  o Addendum(s):

  	
   

  	
   

  






 


IN WITNESS WHEREOF, the parties
hereto have executed this Base Contract in duplicate.


 




	
  BP Canada Energy Marketing
  Corp.

  	
   

  	
  Otter Tail Ag
  Enterprises, LLC

  
	
  By

  	
  /s/ Scott H. Smith

  	
   

  	
  By

  	
  /s/ Jerry Larson

  
	
  Name:

  	
  Scott H. Smith

  	
   

  	
  Name:

  	
  Jerry Larson

  
	
  Title:

  	
  Ass’t Secretary

  	
   

  	
  Title:

  	
  President

  
	
  Date:

  	
  August 16, 2006

  	
   

  	
  Date:

  	
  5-30-06

  






 

















 


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

















 


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


 


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


 


3

















 


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 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

















 


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 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 the 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 (i) 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.


 


5

















 


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).


 


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.


 


6

















 


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


 


7

















 


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.


 


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.


 


8

















 


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.


 


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.


 


9

















 


EXHIBIT A


 


TRANSACTION
CONFIRMATION 


FOR
IMMEDIATE DELIVERY


 




	
   

  	
   

  	
   

  
	
  

  	
   

  	
  Date:                                                      ,

  Transaction Confirmation #:

  
	
   

  	
   

  	
   

  






 


 


This Transaction Confirmation is subject to
the Base Contract between Seller and Buyer dated                              .
The terms of this Transaction Confirmation are binding unless disputed in
writing within 2 Business Days of receipt unless otherwise specified in the
Base Contract.


 


 




	
  SELLER:

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
   

  	
  Attn:

  
	
  Phone:

  	
   

  	
  Phone:

  
	
  Fax:

  	
   

  	
  Fax:

  
	
  Base
  Contract No.

  	
   

  	
  Base
  Contract No.

  
	
  Transporter:

  	
   

  	
  Transporter:

  
	
  Transporter
  Contract Number:

  	
   

  	
  Transporter
  Contract Number:

  
	
   

  	
   

  	
   

  
	
  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

  
	
    o EFP

  	
   

  	
               MMBtus/day
  Maximum

  	
   

  	
   

  
	
   

  	
   

  	
  subject
  to Section 4.2. at election of

  o  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:

  	
   

  
											






 


10

















 


INCOMING
WIRING INSTRUCTIONS:


 


Federal
Reserve Bank (FRB)


 




	
  Beneficiary Bank:

  	
   

  	
  American National Bank of Minnesota

  
	
  ABA Number:

  	
   

  	
  091971533

  
	
  Beneficiary Name:

  	
   

  	
  (Customer Name Receiving Wire)

  
	
  Account Number:

  	
   

  	
  (Customer Account Number)

  
	
  Other Specific Identifiers

  and/or Payment Instructions:

  	
   

  	
   

  (This is optional and can be used to provide
  additional information about how to apply the funds, or who to contact about
  the wire)

  






 

















 


SPECIAL
PROVISIONS ATTACHED TO AND FORMING PART OF

THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS


Dated May 1,
2006


by and
between


BP Canada
Energy Marketing Corp.


and


Otter Tail
Ag Enterprises, LLC


 


Section 1. Purpose &  Procedures


 


Delete
Section 1.3  and replace with
the following:


 


“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, or if the receiving party has timely objected to the
terms of the sending party’s Transaction Confirmation, such transaction remains
valid and the parties remain legally bound thereby, however, both parties shall
in good faith attempt to resolve such differences. Once such material
differences are resolved, the Confirming Party shall transmit a written
Transaction Confirmation to the other party, and such Transaction Confirmation
shall be accepted (or disputed) pursuant to the provisions of this Section 1.3.
The provisions of this Section 1.3 may be repeated as many times as necessary
to produce a written Transaction Confirmation that is accepted or deemed
accepted by the receiving party. 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 recording of such
transaction, oral testimony, data in a
computer system, trade tickets, and/or notes), 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 items shall
govern in the priority listed in this sentence.”


 


Section 3. Performance Obligation


 


Add
the following as Section 3.5:


 


“Notwithstanding
anything to the contrary in this Contract (including, without limitation,
anything in Section 11 of this Contract), in the event (i) a
transaction has a Firm performance obligation, and (ii) Seller is unable
to sell and deliver the Contract Quantity for such transaction as a result of
an event of Force Majeure or Buyer is unable to purchase and receive the
Contract Quantity for such transaction as a result of an event of Force
Majeure, and (iii) the Delivery Period for such transaction is at least
one calendar Month, and (iv) the Contract Price is a Fixed Price (as
defined below), then (a) if the FOM Price (as defined below) is above the
Fixed Price, Seller shall pay Buyer for each MMBtu of Gas not delivered and/or
received the difference between the FOM Price and the Fixed Price, or (b) if
the FOM Price is below the Fixed Price, Buyer shall pay Seller for each MMBtu
of Gas not delivered and/or received the difference between the Fixed Price and
the FOM Price. “Fixed Price” means, a Contract Price for a transaction that is
expressed as a flat dollar amount (Fixed Price includes prices that were
converted from an index-based price to a flat dollar amount upon the mutual
agreement of the parties or as a result of a party exercising a price option
that resulted in a maximum price or a minimum price). “FOM Price” means the
price per MMBtu, stated in the same currency as the transaction subject to such
Force Majeure event, for the first of the Month delivery, as published in the
first issue of a publication commonly-accepted by the natural gas industry
(selected by the Seller in a commercially reasonable manner) for the calendar
Month of such Force Majeure event for the geographic location closest in
proximity to the Delivery Point(s) for the relevant Day adjusted for the
basis differential between the Delivery Point(s) and such published
geographic location determined by the Seller in a commercially reasonable
manner.”


 


Section 7. Billing,
Payment and Audit


 


In
the first sentence of Section 7.2 delete the words “the later of”.


 


In
Section 7.7 add the following after the words “subject to netting under
this Section” at the end of the first sentence: “provided further, however,
that the party due payment under Section 7.3 may net all sums due
thereunder against any amounts payable by it when making payments under Section 7.”


 


Section 10. Financial Responsibility


 


Add
the following as the third paragraph of Section 10.3.1. “Early Termination
Damages Apply”:


 


“The
Non-Defaulting Party shall also aggregate the costs that the Non-Defaulting
Party incurs in liquidating and accelerating each Terminated Transaction, or
otherwise settling obligations arising from the cancellation and termination of
each Terminated Transaction. including brokerage fees, commissions, and other
similar transaction costs and expenses reasonably incurred by the
Non-Defaulting Party including costs associated with hedging its obligations,
transaction costs associated with obtaining replacement suppliers or markets
(e.g. brokerage fees, or other such payments), additional transmission costs,
ancillary services costs and like costs incurred in moving the replacement Gas
to or from the Delivery Point, and reasonable attorneys’ fees and other
reasonable litigation costs incurred in connection with enforcing its rights
under this Agreement (collectively “Costs”) and such Costs shall be due to the
Non-Defaulting Party.”


 


Delete
the words “and without prior Notice to the Defaulting Party” in the second
sentence of Section 10.3.2 “Other Agreements Setoffs Apply”.


 

















 


“Delete everything after the “(ii)” in the second
sentence of Section 10.3.2. “Other Agreements Setoffs Apply” and replace
with the following: “(ii) any Net Settlement Amount payable to the
Defaulting Party against any amount(s) payable in Dollars or any other
currency by the Defaulting Party to the Non-Defaulting Party and/or its
Affiliates under any other agreement or arrangement between the Defaulting
Party and the Non-Defaulting Party and/or its Affiliates. The obligations of
the Non-Defaulting Party, the Non-Defaulting Party’s Affiliates, and the Defaulting
Party under this Contract or otherwise in respect of such amounts shall be
deemed satisfied and discharged to the extent of any such set-off. For this
purpose, the amounts subject to the set-off may be converted at the applicable
prevailing exchange rate into U.S. Dollars by the Non-Defaulting Party. The
Non-Defaulting Party will give the Defaulting Party Notice of any set-off
effected under this section provided that failure to give such notice shall not
affect the validity of the set-off. Nothing in this paragraph shall be deemed
to create a charge or other security interest. The rights provided by this Section are
in addition to and not in limitation of any other right or remedy (including
any right to set-off, counterclaim, or otherwise withhold payment) to which a
party may be entitled (whether by operation of law, contract or otherwise). “Affiliate”
means, in relation to any party, any entity controlled, directly or indirectly,
by such party, any entity that controls, directly or indirectly, such party or
any entity directly or indirectly under common control with such party. For
this purpose, “control” of any entity or person means ownership of a majority
of the voting power of the entity or person. “Set-off’ as used herein means
set-off, offset, combination of accounts, right of retention or withholding or
similar right or requirement to which the Non-Defaulting Party is entitled or
subject to (whether arising under this Contract, another contract, applicable
law or otherwise) that is exercised by, or imposed on, the Non-Defaulting
Party.”


 


Delete Section 10.5 in its entirety and replace
with the following:


 


“The parties specifically agree that this Contract
and all transactions pursuant hereto are “forward contracts” as such term is
defined in the United States Bankruptcy Code and that each party is a “forward
contract merchant” as such term is defined in the United States Bankruptcy
Code. Each party further agrees that the other party is not a “utility” as such
term is used in 11 U.S.C. Section 366, and each party agrees to waive and
not to assert the applicability of the provisions of 11 U.S.C. Section 366
in any bankruptcy proceeding involving such party. In addition, each party
agrees that, for any Gas actually consumed (rather than resold) by such party,
if Gas is not delivered pursuant to this Contract, the local gas distribution
utility for such party is the provider of last resort and can supply such party’s
Gas consumption needs.”


 


Section 11. Force Majeure


 


Add as new Section 11.7, “Without restricting
the generality of Section 14.3, if an event of Force Majeure occurs, the
party affected may, in its sole discretion and without notice to the other
party, determine not to make a claim of Force Majeure and to waive its rights
hereunder as they would apply to such event. Such determination or waiver shall
not preclude the affected party from claiming Force Majeure in respect of any
subsequent event, including any event that is substantially similar to the
event in respect of which such determination or waiver is made.”


 


Section 14. Miscellaneous


 


Delete Section 14.3 in its entirety and replace
with the following: “No waiver of any breach of this Contract, or delay,
failure or refusal to exercise or enforce any rights under this Contract, shall
be held to be a waiver of any other or subsequent breach, or be construed as a
waiver of any such right then existing or arising in the future.”


 


Add the following as Section 14.12:


 


“This Contract shall be considered for all purposes
as prepared through the joint efforts of the parties and shall not be construed
against one party or the other as a result of the manner in which this Contract
was negotiated, prepared, drafted or executed.”


 


Add the following as Section 14.13:


 


“If any index used to determine the price under a
transaction ceases to be available, the parties agree to promptly negotiate on
a good faith basis a mutually satisfactory alternate price or reference
publication to take effect as of the date the prior index is unavailable. If
the parties cannot agree on an alternative price or reference publication
within thirty (30) days of the index ceasing to be available, then the parties
shall refer the matter to binding arbitration. Arbitration shall be governed by
the Federal Arbitration Act (9 U.S.C. Section 1, et seq.) and conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association.”


 


Add the following as Section 14.14:


 


“Each party will be deemed to represent to the other
party each time a transaction is entered into that: (a) it is acting for
its own account. and it has made its own independent decisions to enter that
transaction and as to whether that transaction is appropriate or proper for it
based upon its own judgment and upon advice from such advisors as it has deemed
necessary; (b) it is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter into that
transaction: it being understood that information and explanations related to
the terms and conditions of a transaction shall not be considered investment
advice or a recommendation to enter into that transaction; (c) no
communication (written or oral) received from the other party shall be deemed
to be an assurance or guarantee as to the expected results of that transaction;
(d) it is capable of assessing the merits and understanding (on its own
behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of that transaction; (e) it is
capable of assuming, and assumes, the risks of that transaction; and (f) the
other party is not acting as a fiduciary for, or an advisor to, it in respect
of that transaction.”


 


 




	
  BP Canada Energy Marketing Corp.

  	
   

  	
  Counterpart

  
	
   

  	
   

  	
   

  
	
  /s/

  	
  Eligible

  	
   

  	
   

  	
  /s/

  	
  Eligible