Document:

exv10w3

 

EXHIBIT 10.3

SECOND AMENDED AND RESTATED NATURAL GAS PURCHASE

AGREEMENT

between

SELKIRK COGEN PARTNERS, L.P.

and

ENCANA CORPORATION

dated January 1, 2005

 

 

INDEX

	 	 	 	 	 	 	 
	 	 	 	 	PAGE NO.
	ARTICLE I
	 	INTERPRETATION	 	 	2	 
	ARTICLE II
	 	INTENTIONALLY LEFT BLANK	 	 	8	 
	ARTICLE III
	 	TERM	 	 	8	 
	ARTICLE IV
	 	QUANTITY	 	 	8	 
	ARTICLE V
	 	COMMENCEMENT AND NOMINATION OF DELIVERIES	 	 	10	 
	ARTICLE VI
	 	PRICE	 	 	11	 
	ARTICLE VII
	 	BILLINGS AND PAYMENTS	 	 	15	 
	ARTICLE VIII
	 	DELIVERY POINT	 	 	18	 
	ARTICLE IX
	 	DEILIVERY PRESSURE	 	 	19	 
	ARTICLE X
	 	QUALITY	 	 	19	 
	ARTICLE XI
	 	MEASUREMENT	 	 	19	 
	ARTICLE XII
	 	REPRESENTATIONS AND WARRANTIES	 	 	20	 
	ARTICLE XIII
	 	TAXES	 	 	23	 
	ARTICLE XIV
	 	SUPPLY SECURITY	 	 	24	 
	ARTICLE XV
	 	FORCE MAJEURE	 	 	24	 
	ARTICLE XVI
	 	GOVERNMENTAL RULES AND REGULATIONS	 	 	26	 
	ARTICLE XVII
	 	ASSIGNMENT	 	 	27	 
	ARTICLE XVIII
	 	CONFIDENTIALITY	 	 	29	 
	ARTICLE XIX
	 	NOTICES	 	 	29	 
	ARTICLE XX
	 	INDEMNIFICATION AND MITIGATION	 	 	30	 
	ARTICLE XXI
	 	CONVERSIONS	 	 	31	 
	ARTICLE XXII
	 	INTENTIONALLY LEFT BLANK	 	 	32	 
	ARTICLE XXIII
	 	GENERAL	 	 	32	 
	APPENDIX “A”
	 	BUYER'S POWER PURCHASE AGREEMENT	 	 	 	 
	APPENDIX “B”
	 	FIRM SERVICE RATE OF TRANSCONTINENTAL GAS PIPE LINE CORP.	 	 	 	 

 

 

SECOND AMENDED AND RESTATED NATURAL GAS PURCHASE

AGREEMENT

          THIS SECOND AMENDED AND RESTATED NATURAL GAS PURCHASE AGREEMENT
(“Agreement”), made as of the 1st day of January, 2005.

BETWEEN:

Selkirk Cogen Partners, L.P., a Delaware limited partnership with its principal
place of business in Selkirk, New York (“Buyer”)

OF THE FIRST PART

- and –

EnCana Corporation, a Canadian corporation, with its principal place of
business in Calgary, Alberta (“Seller”)

OF THE SECOND PART

          WHEREAS Buyer desires to purchase and receive a long-term, firm natural
gas supply from Seller and Seller desires to sell and deliver a long-term, firm
natural gas supply to Buyer.

          WHEREAS the parties entered into a long term Natural Gas Purchase
Agreement dated August 12, 1991, as amended by subsequent letter agreements
(the “Amended August 12, 1991 Agreement”);

          WHEREAS the parties amended and restated the Amended August 12, 1991
Agreement by an Amended and Restated Natural Gas Purchase Agreement dated
October 22, 1992 (the “1992 Amended Agreement”);

          AND WHEREAS the parties desire to amend and restate the 1992 Amended
Agreement upon the terms and conditions set forth in this Agreement, which
shall supersede and replace the 1992 Amended Agreement effective as of January
1, 2005.

          NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties agree as follows:

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ARTICLE I

INTERPRETATION

1.1 Definitions

          The following terms, when used in this Agreement, shall have the following
meanings:

	(a)	 	Intentionally Left Blank
	 
	(b)	 	Intentionally Left Blank
	 
	(c)	 	“Affiliate” shall have the meaning ascribed to that term in
the Business Corporation Act of Alberta;
	 
	(d)	 	“Base Gas” shall mean all gas under this Agreement;
	 
	(e)	 	“British thermal unit” or “Btu” shall mean the amount
of heat required to raise the temperature of one (1) pound of distilled
water one (1) degree Fahrenheit from sixty degrees Fahrenheit (60°F) to
sixty-one degrees Fahrenheit (61°F) at a constant pressure of fourteen
and seventy-three hundredths pounds per square inch absolute (14.73
PSIA);
	 
	(f)	 	“Business Day” shall mean any Day which is not a Saturday,
Sunday or legal or statutory holiday in either Calgary, Alberta or
Selkirk, New York;
	 
	(g)	 	“Buyer’s Pipeline Penalties” shall mean all penalties, charges
(other than Buyer’s Transporters’ Demand Rate and associated
transporter’s commodity charges) or levies imposed by Buyer’s
Transporters;
	 
	(h)	 	“Buyer’s Plant” shall mean a gas-fired cogeneration power
plant of approximately 260 MW constructed by Buyer in Selkirk, New York;
	 
	(i)	 	“Buyer’s Power Purchase Agreement” shall mean an agreement
between Consolidated Edison Company of New York, Inc. and JMC Selkirk,
Inc. executed April 14, 1989, as amended from time to time. Buyer’s
Power Purchase Agreement is attached as Appendix “A” hereto for
informational purposes only and was assigned to Makowski Selkirk, Inc.
on April 30, 1990 and subsequently assigned to Buyer;
	 
	(j)	 	“Buyer’s Regulatory Authorities” shall mean each federal,
state and local governmental agency or other authority in Canada and the
United States which has jurisdiction over the export from Canada, sale,
import into the United States, transportation on facilities of Buyer’s
Transporters, construction or operation of Buyer’s Plant or sale of
electricity therefrom, or other related matter in question, including,
without limitation, the National Energy Board of Canada, the federal
Governor-in-Council, the Office of Fossil Energy of the

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	 	 	United States Department of Energy, the Federal Energy Regulatory
Commission, and the New York Public Service Commission;
	 
	(k)	 	“Buyer’s Transporters” shall mean those pipeline companies
operating pipeline facilities on which Buyer is a shipper and which are
used to transport gas from the Delivery Point to the Buyer’s Plant;
	 
	(l)	 	“Buyer’s Transporters Demand Rate” shall mean the sum of the
monthly demand rates assessed by Buyer’s Transporters for the daily firm
transportation service necessary to receive the DCQ at the Delivery
Point and deliver the DCQ, to Buyer’s Plant (expressed in terms
consistent with the approved tariffs of the transporting pipelines and
converted to U.S. dollars/MMBtu per month);
	 
	(m)	 	“Commodity Charge” shall have the meaning ascribed to that
term in Section 6.4;
	 
	(n)	 	“Commodity Escalation Factor” shall mean the formula
RWAP1/RWAPB, as defined in accordance with Section 6.5;

	(o)	 	“Commencement of Firm Deliveries” shall mean that date
specified in a written notice made by Buyer pursuant to Article V which
is the later of: (i) the date upon which firm transportation is
available to Seller on NOVA and available to Buyer on Buyer’s
Transporters to receive Buyer’s requirements under this Agreement at the
Delivery Point and transport such Base Gas to Buyer’s Plant; or (ii) the
Date of Commercial Operation;
	 
	(p)	 	Intentionally Left Blank;
	 
	(q)	 	“Contract Year”, with respect to the first “Contract Year”,
shall mean the period commencing on the Commencement of Firm Deliveries
and ending on the first Day of November, following and with respect to
any succeeding “Contract Year” shall mean the period of twelve (12)
consecutive months from the first Day of November to the next succeeding
first Day of November;
	 
	(r)	 	“cubic foot” shall mean the volume of gas which occupies one
(1) cubic foot when such gas is at a pressure of fourteen and
seventy-three hundredths (14.73) psia, at a temperature of sixty degrees
Fahrenheit (60°F);
	 
	(s)	 	“cubic meter” or “m3” shall mean that volume of gas
which occupies one cubic meter when such gas is at a temperature of
fifteen degrees Celsius (15°C) and at a pressure of one hundred one and
three hundred and twenty-five thousandths (101.325) kiloPascals (“kPa”)
absolute;
	 
	(t)	 	“Date of Commercial Operation” shall mean the date specified
in a written notice to Consolidated Edison Company of New York, Inc.
from Buyer, pursuant to Buyer’s Power Purchase Agreement, that Buyer’s
Plant is ready to commence commercial operation;

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	(u)	 	“Day” shall mean a period of twenty-four (24) consecutive
hours, beginning and ending at 8:00 o’clock a.m. Mountain Standard Time.
The reference date for any Day shall be the calendar date upon which
the 24-hour period shall commence;
	 
	(v)	 	“Daily Nomination” shall mean the DCQ or the Reduced DCQ, as
applicable;
	 
	(w)	 	“Daily Contract Quantity” or “DCQ” shall mean 17,000
MMBtu per day (which shall be 17,936 GJ per day) at the Delivery Point;
	 
	(x)	 	“Delivery Point” shall mean the point into the TCPL system at
Burstall, Saskatchewan. If delivery cannot be made at Burstall for any
reason, the Delivery Point will be the interconnection of the facilities
of NOVA and TCPL located near Empress, Alberta or such other point as is
mutually agreed to by the parties pursuant to this Agreement;
	 
	(y)	 	“Exchange Rate” shall have the meaning ascribed to that term
in Section 21.2;
	 
	(z)	 	“Fixed Monthly Charge” or “FMC” shall have the meaning
ascribed to that term in Section 6.3;
	 
	(aa)	 	“force maieure” shall have the meaning ascribed to that term
in Section 15.1;
	 
	(bb)	 	Intentionally Left Blank
	 
	(cc)	 	Intentionally Left Blank
	 
	(dd)	 	Intentionally Left Blank
	 
	(ee)	 	Intentionally Left Blank
	 
	(ff)	 	“gas” shall mean gas of the quality specified in Article X hereof;
	 
	(gg)	 	“GJ” shall mean gigajoule or one billion (1,000,000,000) Joules;
	 
	(hh)	 	“GST” means the goods and service tax imposed pursuant to the
Excise Tax Act of Canada, as amended from time to time, and any similar
tax imposed by a province or territory of Canada which substantially
adopts or duplicates such legislation in the Excise Tax Act of Canada;
	 
	(ii)	 	Intentionally Left Blank
	 
	(jj)	 	“Indemnity Amount” shall have the meaning ascribed to that
term in Subsection 20.1(a);
	 
	(kk)	 	“Joule” or “J” shall mean the work done when the point
of application of a force of one (1) newton is displaced a distance of
one (1) meter in the direction of the force;

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	(ll)	 	Intentionally Left Blank
	 
	(mm)	 	“Mcf” shall mean one thousand (1,000) cubic feet of gas;
	 
	(nn)	 	“MMBtu” shall mean one million (1,000,000) Btu;
	 
	(oo)	 	“MMcf” shall mean one million (1,000,000) cubic feet of gas;
	 
	(pp)	 	Intentionally Left Blank
	 
	(qq)	 	Intentionally Left Blank
	 
	(rr)	 	Intentionally Left Blank
	 
	(ss)	 	Intentionally Left Blank
	 
	(tt)	 	“Month” shall mean a calendar Month except that the
commencement and termination thereof shall be consistent with the
definition of “Day” above;
	 
	(uu)	 	“Monthly Demand Rate” or “MDR” shall have the meaning ascribed
to that term in Section 6.2;
	 
	(vv)	 	Intentionally Left Blank
	 
	(ww)	 	“NOVA” shall mean NOVA Gas Transmission Ltd. or such successor
corporation which owns and operates all or substantially all of the
Alberta gas trunkline system;
	 
	(xx)	 	“Price” shall mean the amounts determined under Article VI;
	 
	(yy)	 	“Prime Rate” shall mean the floating nominal annual rate of
interest announced from time to time by the Chase Manhattan Bank NA,
Main Branch, New York, New York as its reference rate then in effect for
determining interest rates on commercial loans in U.S. dollars made in
the United States, in all cases adjusting automatically on the effective
date of any change to such rate without the necessity of any notice to
either party upon each announced change to such rate;
	 
	(zz)	 	“Project Lender” shall mean a lender or group of lenders which
has agreed to provide construction and/or permanent financing and/or
refinancing for the construction and/or operation of Buyer’s Plant;
	 
	(aaa)	 	“psia” shall mean pounds per square inch absolute;
	 
	(bbb)	 	“Reduced DCQ” shall have the meaning set forth in Section 4.1;

	(ccc)	 	Intentionally Left Blank

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	(ddd)	 	“Replacement Fuel” shall mean natural gas or other fuel which
may be readily used in substitution for volumes hereunder to operate
Buyer’s Plant in satisfaction of Buyer’s Power Purchase Agreement;
	 
	(eee)	 	“Seller’s Regulatory Authorities” means each provincial or
local governmental agency or other authority in the Province of Alberta,
which has jurisdiction over the sale and removal from Alberta of gas to
be sold and purchased hereunder, including without limitation the
Alberta Energy and Utilities Board and the provincial
Governor-in-Council and each federal authority in Canada which has
jurisdiction over the export from Canada of gas to be sold and purchased
hereunder, including without limitation the National Energy Board and
the federal Governor-in-Council;
	 
	(eee1)	 	“Seller’s Transporter” means NOVA, AltaGas Pipeline Partnership or such
other pipeline company whose facilities Seller uses to transport the Daily
Nomination to the Delivery Point;
	 
	(fff)	 	“103m3” shall mean 1,000 cubic meters of gas;
	 
	(ggg)	 	“TCPL” shall mean TransCanada PipeLines Limited;
	 
	(hhh)	 	Intentionally Left Blank
	 
	(iii)	 	“Unrecovered Transportation Demand Charges” shall mean the
difference between: (i) all transportation demand charges for which
Buyer is liable to Buyer’s Transporters for the delivery of gas to be
delivered under this Agreement and for the delivery of Replacement Fuel
purchased pursuant to Subsection 20.1(a); and, (ii) the amount paid to
Buyer pursuant to Buyer’s Power Purchase Agreement, in respect of the
Demand Component set forth in Section II.C of Appendix C of Buyer’s
Power Purchase Agreement as amended from time to time, except that if
the above section of Buyer’s Power Purchase Agreement is amended in a
manner that increases Seller’s liability for Unrecovered Transportation
Demand Charges under Section 20.1 hereof, Seller shall not be liable for
such increase unless it has consented to such amendment of Buyer’s Power
Purchase Agreement;
	 
	(jjj)	 	Intentionally Left Blank

1.2 Time

          Unless clearly stated otherwise, all references to time in this Agreement
shall refer to Mountain Standard Time (“MST”).

1.3 Changes in Legislation

          All references to legislation in this Agreement are intended to apply to
amendments thereto, any re-enactment thereof, and any successor legislation
which substantially adopts or duplicates such legislation.

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1.4 Appendices

          Appendix “B” appended hereto is incorporated into and is part of this
Agreement, by this reference, as fully as though contained in the body of this
Agreement.

1.5 References

          Whenever any provision of any appendix to this Agreement conflicts with
any provision in the body of this Agreement, the provisions of the body of this
Agreement shall prevail. References herein to an appendix shall mean a
reference to an appendix of this Agreement. Reference in any appendix to this
Agreement to an agreement shall mean a reference to this Agreement.

1.6 Headings

          The division of this Agreement into table of contents, articles, sections,
subsections, paragraphs and sub-paragraphs and the provision of headings for
all or any of them is for convenience of reference only and shall not affect
the interpretation of this Agreement.

1.7 Currency

          All references to currency, unless otherwise specified, are to lawful
money of United States of America and all payments contemplated hereby shall be
in the currency of the United States of America.

1.8 Usage

          In this Agreement, unless there is something in the subject matter or
context inconsistent therewith:

	(a)	 	words importing the singular shall include the plural and vice versa;
	 
	(b)	 	words importing gender shall include the masculine, feminine and
neuter genders; and
	 
	(c)	 	references to any statute shall extend to any orders-in-council or
regulations passed under and pursuant thereto, or any amendment or
re-enactment of such
statute, orders-in-council or regulations, or any statute,
orders-in-council or regulations substantially in replacement thereof.

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1.9 Units of Measurement

          All quantities and volumes expressed in this Agreement will be interpreted
in accordance with the International System of Units (SI). Imperial units, if
shown in brackets, are for convenience purposes only. Conversions of units
are set forth in Article XXI.

ARTICLE II

Intentionally Left Blank

ARTICLE III

TERM

3.1 Term

	(a)	 	The term of the Agreement commenced on January 1, 2005, and will
continue in full force and effect through October 31, 2009.
	 
	(b)	 	Notwithstanding subsection (a), this Agreement shall terminate upon:

	(i)	 	such earlier date as may be required to conform with any
applicable authorization of Seller’s Regulatory Authorities or
Buyer’s Regulatory Authorities, including extensions thereof, which
authorizations are necessary for either of the parties hereto to
remove gas from Alberta, export gas from Canada or import gas into
the United States; or
	 
	(ii)	 	such earlier date as determined in accordance with the
provisions of this Agreement.

3.2 Other Events

          Notwithstanding anything in this Agreement to the contrary, if Buyer is no
longer a party to the Buyer’s Power Purchase Agreement for any reason, Buyer
may, at its sole option, terminate this Agreement upon providing at least
ninety (90) Days prior written notice to Seller of such termination and neither
party shall have any liability to the other for such early termination. This
Agreement may not be terminated except as otherwise expressly provided in this
Agreement.

ARTICLE IV

QUANTITY

4.1 Daily Quantity

          On each Day during the term of this Agreement, Seller shall sell and
deliver, and Buyer shall receive and purchase, the Daily Contract Quantity or
Reduced DCQ, on

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a firm basis. Buyer may reduce the DCQ for any Day(s) by any
amount (including to 0 MMbtu/day) as determined by Buyer in its sole discretion
to be necessary to accommodate outages or other restrictions on the operation
of Buyer’s Plant upon providing Seller twenty (20) Days prior written notice of
the DCQ reduction for such Day(s) (“Reduced DCQ”).

4.2 Intentionally deleted.

4.3 Intentionally Left Blank

4.4 Intentionally Left Blank

4.5 Intentionally Left Blank

4.6 Intentionally Left Blank

4.7 Intentionally Left Blank

4.8 Intentionally Left Blank

4.9 Intentionally Left Blank

4.10 Intentionally Left Blank

4.11 Intentionally Left Blank

4.12 Transportation Letter of Credit

	 	(a)	 	In order to support Buyer’s fulfillment of TCPL’s requirements in
respect of financial assurances relating to the Firm Service
Transportation Agreement to be entered into by Buyer and TCPL (the “TCPL
Agreement”) in respect of the transportation of volumes purchased under
the 1992 Amended Agreement as of the Commencement of Firm Deliveries
(20,236 GJ/day), Seller agrees to provide financial assurances
acceptable to TCPL on behalf of Buyer. If a letter of credit is
selected by Seller, Seller agrees to post such letter of credit on
behalf of Buyer in an amount up to a maximum of one (1) year’s demand
charges under the TCPL Agreement, or provide other financial assurances
acceptable to TCPL. Unless otherwise requested by Seller, Buyer shall
assist Seller in making arrangements for such letter of credit for the
amount which must be provided to TCPL and
Seller shall post such letter of credit. Buyer shall reimburse Seller
for its actual cost of obtaining and maintaining such a letter of credit;
provided that if Seller has arranged for such letter of credit, Buyer
shall not reimburse Seller for an amount greater than what the cost would
have been in the event that Buyer had arranged for such letter of credit
	 
	 	(b)	 	In the event that Buyer incurs an event of default under TCPL’s
approved tariff which permits TCPL to draw upon the letter of credit
posted by Seller, Seller may at its option, request Buyer to permit
Seller full use of Buyer’s rights, as

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	 	 	 	permitted under TCPL’s tariff and
under the TCPL Agreement, and Buyer shall do so as soon as practical,
but in no event later than thirty (30) Days after such request. Buyer
or its designee shall have ninety (90) Days to cure such default
provided Buyer or its designee reimburses Seller for amounts so drawn
down, plus interest thereon at the Prime Rate plus two hundred (200)
basis points. If Buyer or its designee does not cure such default,
Buyer agrees, upon Seller’s request to assign its rights under the TCPL
Agreement effective (subject to TCPL and regulatory approval) ninety
(90) Days from such request.
	 
	 	(c)	 	Such default by Buyer under TCPL’s approved tariff shall also
constitute an event of default under this Agreement, and Seller shall
have the right to terminate this Agreement upon ninety (90) Days written
notice following such an event of default, subject to the right of the
Buyer, or its designee, to cure such default and; provided that, if
within such ninety (90) Day notice period Buyer reimburses Seller for
its actual costs incurred due to such default by Buyer (plus interest at
the Prime Rate plus two hundred (200) basis points), the assignment of
Buyer’s rights under the TCPL Agreement to Seller shall immediately
terminate. Buyer shall provide no less than twenty-four (24) hours
notice before it recalls its TCPL transportation rights following such
termination of the assignment.
	 
	 	(d)	 	Provided that Buyer has complied with the Seller’s request to assign
pursuant to Subsection 4.12(b), Buyers total liability to Seller under
this Section 4.12 shall be the lesser of: (i) The amount of the letter
of credit drawn down prior to the permanent assignment of the
transportation rights to Seller, plus interest thereon at the Prime Rate
plus two hundred (200) basis points or (ii) an amount equal to ninety
(90) Days Transportation Demand Charges, plus interest at the Prime Rate
plus two hundred (200) basis points; provided that, if Buyer’s Plant is
still operating, Buyer shall be liable for all demand charges drawn down
by TCPL on the letter of credit posted by Seller during the twelve (12)
month period commencing on the date of the first draw down by TCPL, plus
interest thereon at the Prime Rate plus two hundred (200) basis points.

ARTICLE V

COMMENCEMENT AND NOMINATION OF DELIVERIES

5.1 Intentionally Left Blank

5.2 Nomination

          The parties shall coordinate their nomination activities giving sufficient
time to meet the deadlines of Seller’s Transporter and TCPL (the
“Transporters”). Each party shall give the other party timely prior written
notice, sufficient to meet the requirements of the Transporters of the Daily
Nomination each Day to be delivered at the Delivery

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Point. Should either
party become aware that actual deliveries at the Delivery Point are greater or
less than the Daily Nomination for such Day, such party shall promptly notify
the other party. The parties shall use commercially reasonable efforts to
avoid imposition of any Imbalance Charges. “Imbalance Charges” shall mean any
fees, penalties, costs or charges (in cash or in kind) assessed by a
Transporter for failure to satisfy its balance and/or nomination requirements.
If Buyer or Seller receives an invoice from the Transporter that includes
Imbalance Charges, the parties shall determine the validity as well as the
cause of such Imbalance Charges. If the Imbalance Charges are incurred as a
result of Buyer’s receipt of quantities of gas greater than or less than the
Daily Nomination, then Buyer shall pay for such Imbalance Charges or reimburse
Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges are
incurred as a result of Seller’s delivery of quantities of gas greater than or
less than the Daily Nomination, then Seller shall pay for such Imbalance
Charges or reimburse Buyer for such Imbalance Charges paid by Buyer.

ARTICLE VI

PRICE

6.1 Monthly Contract Price

          Upon the Commencement of Firm Deliveries and thereafter for the term of
this Agreement, Buyer shall pay to Seller for Base Gas to be provided hereunder
an amount to be comprised of the sum of: (i) a Monthly Charge determined in
accordance with Section 6.2; and (ii) a Commodity Charge determined in
accordance with Section 6.4.

6.2 Monthly Charge

	 	(a)	 	The Monthly Charge for each Month shall be the sum of:

	 	(i)	 	the NOVA FTD Demand Rate multiplied by 1058.2
103m3 , where
	 
	 	 	 	NOVA FTD Demand Rate is the FT-D Demand Rate per month as quoted in the
NOVA Tariff for Rate Schedule FT-D (Currently
$188.41/103m3). In the
event Rate Schedule FT-D is no longer in effect, any replacement Nova
Rate Schedule for delivery of gas at Empress, Alberta will be used in its
place, and
	 
	 	(ii)	 	the Fixed Monthly Charge calculated pursuant to Section 6.3.

	 	(b)	 	Intentionally Left Blank
	 
	 	(c)	 	(c) Buyer’s obligations to pay the Monthly Charge shall be reduced pursuant
to this Section 6.2(c) if Seller fails for any reason (other than force
majeure) to tender to TCPL, wholly or in part, the Daily Nomination. The
Monthly Charge for any Month in which deliveries are impaired shall be
calculated as the Monthly Charge calculated

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pursuant to Section 6.2(a)
multiplied by a fraction, the numerator of which shall be the total quantity
of Base Gas delivered hereunder to TCPL for Buyer’s account during such
Month, and the denominator of which shall be the total of the Daily
Nominations on each Day of the Month. Any failure by Seller to perform its
obligations under the terms of the Agreement when and to the extent such
failure is due to force majeure shall be subject to the provisions of Article
15.

6.3 Fixed Monthly Charge

          The Fixed Monthly Charge (“FMC”) shall, in respect of the particular
Month, be equal to the product of $ (U.S.) 0.30/MMBtu and the sum of the DCQ,
expressed in MMBtu’s in effect for each Day in the particular Month.

6.4 Commodity Charge

          The “Commodity Charge” for each Month shall be an amount equal to the
product of all volumes of Base Gas nominated and delivered at the Delivery
Point, and the Commodity Rate. The Commodity Rate shall be an amount
determined in accordance with the following formula:

          CR
= ABP - $(U.S.) 0.30/MMBtu

Where:

“CR” is the Commodity Rate in $(U.S.)/MMBtu;

“ABP” is the Adjusted Base Price for such Month as determined in accordance with Section 6.5.

6.5 Adjusted Base Price

(a) The Adjusted Base Price (“ABP”) is subject to monthly adjustment to reflect
changes in the Regional Weighted Average Price, as defined in Subsection
6.5(c), for certain fuels, if there is a variance between the Regional Weighted
Average Price for the period ending the 21st Day of the most recent preceding
Month for which data is available and beginning on the 22nd Day of the next
preceding Month (“Period”) and the Regional Weighted Average Price for the
twelve (12) Month period ending December 31, 1990 (the “Base Period”).

(b) Buyer will notify Seller of an adjustment on or before the first Day of the
delivery Month during which such adjustment shall be in effect and provide
Seller with the basis for the adjustment; provided however that Seller may
contact Buyer to correct
calculation errors apparent on the face of the adjustment, and Seller may audit
such adjustment pursuant to Section 7.3.

(c) The ABP shall be determined monthly and computed in accordance with the
following formula before the last Day of the Month preceding the Month for
which the adjustment is being determined:

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	ABP

	 	=
	 	IBP
	 	x
	 	RWAP1
	

	 	 	 	 	 	 	 	RWAPB

Where:

“ABP” is the Adjusted Base Price;

“IBP” is U.S. $1.70 per MMBtu;

“RWAP1” is the Regional Weighted Average Price expressed in $U.S./MMBtu for the
most recent Period preceding the Month for which the adjustment is being
determined; and

“RWAPB” is the Regional Weighted Average Price for the Base Period of U.S.
$3.7062 per MMBtu.

(d) For the purpose of this Section 6.5, No. 2 fuel oil, No. 6 fuel oil, and
natural gas shall be the “Regional Fuels”. The weightings of each Regional
Fuel in any contract year shall be 26% for No. 2 fuel oil, 9% for No. 6 fuel
oil and 65% for natural gas (“Regional Fuel Weights”).

(e) The price for each of the fuel oil Regional Fuels for any Period will be
multiplied by the applicable Regional Fuel Weight for such fuel oil Regional
Fuel and the sum of such calculations will be the weighted average wholesale
price of the fuel oil Regional Fuels for the Region for such Period (“Regional
Weighted Average Fuel Oil Price”).

(f) The Regional Gas Price expressed in $U.S./MMBtu for each Period will be the
arithmetic average of the FERC CD-5 rate of Tennessee Gas Pipeline Company, the
FERC DCQ-D rate of Texas Eastern Gas Transmission Corp. and the firm service
rate of Transcontinental Gas Pipe Line Corp. for New York City citygate
deliveries, (in the manner calculated in Appendix “B” to this Agreement) each
as in effect as of the last Day of such Period (without regard to any
subsequent changes in the effective rate for such Day), all at 100% load
factor. For any Period, the product of the Regional Gas Price and the
applicable Regional Fuel Weight for gas for such Period will be the Regional
Weighted Average Gas Price.

(g) For each Period, the sum of the Regional Weighted Average Fuel Oil Price
and Regional Weighted Average Gas Price will be the Regional Weighted Average
Price for such Period.

(h) The prices in each Period for the fuel oil Regional Fuels will be the
average of the high and the low of the daily prices (in U.S. dollars per MMBtu)
for such Period for
such fuel oil Regional Fuels as reported in “Platt’s Oilgram Price Report”
published by McGraw-Hill, Inc. for (i) the No. 2 fuel oil Regional Fuel for
“MetroNY (Eth) Diesel No. 2 Fuel”, and if the MetroNY (Eth) price is not
published for any Period, the reference price will be “N. New Jersey (Eth), and
(ii) the No. 6 fuel oil Regional Fuel for “New York/Boston; $/Bb/; No. 6 1%S
Max; Barge” under the heading “Product Price Assessments.”

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(i) In the event that any of the published data referenced in this Article VI
is no longer available, the parties shall use their best efforts to agree on
substitute data or a substitute index. If the parties are unable to agree upon
substitute data or substitute index, the Commodity Escalation Factor shall be
determined in the same manner that the escalation factor for Consolidated
Edison Company of New York Inc.’s purchases of gas from Boundary Gas, Inc. is
then determined. If the parties cannot agree on substitute data or substitute
index, and, Boundary Gas, Inc. has no subsisting long-term gas purchase
contract with Consolidated Edison Company of New York Inc., then at such time
the provisions of Section 6.8 shall apply.

6.6 Minimum Bill

          Upon the Commencement of Firm Deliveries, the minimum monthly bill shall
be the Monthly Charge.

6.7 Intentionally Left Blank

6.8 Replacement Indices

(a) If the parties cannot agree on substitute data or a substitute index
pursuant to Section 6.5(i) and if Boundary Gas, Inc. has no subsisting
long-term gas purchase contract with Consolidated Edison Company of New York
Inc., then the procedures set forth in Section 6.8(b) below shall apply
provided, however, to the extent the results of such proceedings
under Section 6.8(b) require regulatory approval, which may include short term
approvals, then the effectiveness of the alternate Reference Price calculated
in accordance with Section 6.8(b) shall be subject to the receipt of all
governmental and regulatory approvals required to make the Reference Price
effective without modifications (unless such modifications are acceptable to
both parties); the parties shall promptly apply for such approvals if required.
The purpose of any such proceeding with respect to the substitute data or
substitute index shall be to determine substitute data or a substitute index
that is comparable in all material respects to the formerly published data or
index for which a substitute is required.

(b) , If the publication reporting the price based upon a published index (the
“Reference Price”) prior to its unavailability has suggested an alternate index
or methodology for determining the Reference Price, then the alternate
Reference Price shall be that
suggested by such publication. If none is suggested, then the parties agree to
promptly and in good faith negotiate an alternate Reference Price.

If the parties do not agree on a substitute methodology or index by the end of
the first Month for which the Reference Price could not be determined, then
each party shall in good faith prepare a list of three (3) differing alternate
published reference postings or prices representative of spot prices for gas
delivered in the same geographic area as

-14-

 

Base Gas delivered hereunder. Each
list shall be set forth in that party’s priority order with the highest
priority index listed first.

Each party shall submit its list to the other within ten (10) Business Days
after the end of the first Month for which the price could not be determined as
set forth above. The first listed index appearing in Seller’s list that also
appears in Buyer’s list shall constitute the alternate Reference Price. If
either party fails to provide a list of that party’s alternate published
references as provided above, such party’s list shall not be considered, and
the first listed index appearing in the other party’s submitted list shall
constitute the alternate Reference Price.

If there is no index common to both Seller’s and Buyer’s list then the parties
shall continue to attempt to reach agreement on an index for an additional five
(5) Day period. If no selection can be agreed upon within the specified
timeframe, then the average of each party’s first listed index in its first
submitted list shall constitute the alternate Reference Price.

From and after the date the indices used to determine the Reference Price are
no longer available (“Renegotiation Date”), until the alternate Reference Price
is determined, the Reference Price shall be deemed to be the average of the
Reference Price(s) in effect during the twelve (12) Months preceding the Month
in which the Renegotiation Date occurred, which price shall be effective until
the effective date of the alternate Reference Price determined as set forth
above. Upon determination of a new alternate Reference Price, the Reference
Price will be adjusted retroactively to the Renegotiation Date

6.9 Intentionally Left Blank

6.10 Intentionally Left Blank

ARTICLE VII

BILLINGS AND PAYMENTS

7.1 Monthly Statements and Payments

          Subject to Seller’s receipt of TCPL’s metering statements pursuant to
Section 8.1 hereof, Seller shall prepare and send to Buyer on or before the
thirteenth (13) Day of each month after the first sale of gas hereunder a
statement for the preceding month in which the gas being billed for was sold
(the “Sale Month”) showing the daily and total quantity of gas sold hereunder,
the applicable Price and the total amount payable to Seller therefore stated in
United States dollars (the “Sum”) with any amounts billed Seller in Canadian
dollars converted to $ U.S./ MMBtu pursuant to Section 21.2. Buyer

-15-

 

shall pay
all amounts due on or before the 25th Day of the Month following the Month of
delivery by direct deposit to the Royal Bank of Canada, 339 –
8th Avenue S.W.,
Calgary, Alberta, T2P 1C9, Swift Address: ROYCATT2, Beneficiary US$ Acct. No.:
400-484-2, Duns No. 25-537-8655; Intermediary Information: Chase Manhattan
Bank, New York, ABA No.: 021000021, or such other bank account as Seller may
direct by notice given to Buyer pursuant to Article XIX. In the event that
Seller fails to so provide a statement to Buyer on or before the thirteenth
(13th) Day of a Month, the date by which Buyer must deposit the Sum in Seller’s
account shall be extended one Day for each Day Seller’s statement is late;
provided, however, that if Seller is unable to render a statement
on or before the thirteenth (13th) Day of a Month, Seller may at its option
provide an estimated statement to Buyer which statement shall contain Seller’s
best estimate of the daily and total quantity of gas sold hereunder during the
preceding month, and the total amount payable by Buyer therefore stated in
United States dollars. Buyer shall deposit in Seller’s account the Sum for
such estimated statement within fifteen (15) Days of its receipt but no later
than the 28th Day of the Month. For any Month in which Seller provides an
estimated statement to Buyer, Seller shall provide the final statement for such
Month with Seller’s statement for the next succeeding Month. Seller’s
statement for such next succeeding Month shall reflect an adjustment for any
difference between the estimated statement and the final statement for the
previous Month, which shall be added to or deducted from, as appropriate,
Seller’s statement for such next succeeding month. If Buyer fails to deposit
the Sum or any portion thereof, in Seller’s account when same is due, interest
thereon shall accrue both before and after judgment at the rate of interest
which is equal to the Prime Rate during the period of time such payment remains
outstanding, plus two hundred (200) basis points until the same is paid.

7.2 Failure to Pay

          If Buyer’s failure to pay continues for fifteen (15) Days after payment is
due, Seller, in addition to all other remedies, may thereafter suspend the sale
of gas hereunder and if such default continues for forty-five (45) additional
Days, Seller may thereafter, in addition to any other rights Seller may have,
terminate this Contract; provided, however, in order for Seller
to have the right to suspend sales or terminate this Agreement, Seller must
first have notified Buyer in writing fifteen (15) Days prior to exercising such
right of its intent to do so and give Buyer the right to pay the amount so due
to Seller within such fifteen (15) Day period; and provided further that if
Buyer in good faith shall dispute the amount of any such bill or any part
thereof and shall pay to Seller such amounts as it concedes to be correct and
at any time thereafter within twenty (20) Days of a demand made by Seller shall
furnish or cause to be furnished a good and sufficient surety bond acceptable
to Seller acting reasonably, guaranteeing

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payment to Seller of the amount
ultimately found due upon such bill after a final determination which may be
reached either by agreement or judgment of the courts, as may be the case, then
Seller shall not be entitled to suspend further sales of gas or terminate this
Agreement because of such non-payment. Interest on the final determination
amount shall accrue to the successful party in the dispute both before and
after judgment at the Prime Rate plus two hundred (200) basis points until the
same is paid from the date of dispute to the date of payment.

7.3 Audits

          Upon prior written notice, either party hereto shall have the right at all
times during normal business hours to audit those accounts, books, records and
charts of the other party which are necessary to verify the accuracy of any
statement, charge, computation or demand made under or pursuant to this
Agreement or related transportation agreements. Any error, audit exceptions or
discrepancy in charts or statements furnished pursuant hereto shall be promptly
reported to Seller or Buyer, as applicable, and proper adjustment thereof shall
be made within thirty (30) Days after final determination of the correct
volumes or amounts involved. If either party fails to make payment when due,
interest thereon shall accrue both before and after judgment at the rate of
interest which is equal to the Prime Rate plus two hundred (200) basis points
until the same is paid during the period of time such payment remains
outstanding.

7.4 Currency

          All statements and payments hereunder shall be expressed and made in U.S.
dollars and all Canadian dollar amounts shall be converted to $ U.S./MMBtu
pursuant to Section 21.2.

7.5 Indemnity Payments

          Seller shall pay to Buyer any amounts which Seller has agreed to indemnify
Buyer against under this Agreement within thirty (30) Days of Buyer rendering
an invoice. Unpaid amounts shall accrue interest both before and after
judgment at a rate and in the manner described in Section 7.1 and Buyer may
offset any amounts owing to it against amounts otherwise payable by it to
Seller. This Section 7.5 shall not apply to Indemnity Amounts subject to the
provisions of Section 20.2.

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ARTICLE VIII

DELIVERY POINT

8.1 Delivery Point

          Delivery of gas by Seller to Buyer shall be at the Delivery Point. It is
understood that Buyer’s request for the Daily Nomination shall be made by TCPL
for Buyer’s account and that gas sold hereunder by Seller shall be delivered by
Seller’s Transporter to TCPL for Buyer’s account and not for TCPL’s own
account. Volumes delivered at the Delivery Point for Buyer’s account shall be
determined by the meters of TCPL at the Delivery Point. Buyer shall forward to
Seller copies of TCPL’s metering statements within three (3) Business Days of
Buyer’s receipt thereof.

8.2 Title

          Title to gas delivered hereunder shall pass to Buyer when it is received
on behalf of Buyer at the Delivery Point. All risks, costs and expenses of
delivering the gas to the Delivery Point shall be borne by Seller except to the
extent herein otherwise specifically provided. Similarly, all risks, costs and
expenses of transporting the gas beyond the Delivery Point shall be borne by
Buyer except to the extent herein otherwise specifically provided.

8.3 Possession

          As between the parties hereto, Seller shall be, or shall be deemed to be,
in exclusive control and possession of the gas sold hereunder and responsible
for any loss, damage or injury caused thereby until such gas is delivered at
the Delivery Point, at which time Buyer shall be deemed to be in exclusive
control and possession of such gas
and responsible for any loss, damage or injury caused thereby. Seller
shall indemnify and save Buyer harmless from all suits, claims, liens, damages,
costs, losses, expenses and encumbrances of whatsoever nature arising from and
out of claims of any or all persons to said gas or title thereto, or to
royalties, taxes, license fees, TOPGAS charges, payments or other charges
thereon applicable before title passes to Buyer, and Buyer shall indemnify and
save Seller harmless from all suits, claims, liens, damages, costs, losses,
expenses and encumbrances of whatsoever nature arising from and out of claims
of any or all persons to said gas or title thereto, or to royalties, taxes,
license fees, payments or other charges thereon applicable after title passes
to Buyer.

8.4 Change of Delivery Point

     At any time and from time to time at the request of either party the
parties shall meet to discuss a possible change of delivery point in respect of
all or a portion of

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the gas to be delivered hereunder, and upon the mutual
agreement of the parties in writing, the Delivery Point shall be as so agreed
upon.

ARTICLE IX

  DELIVERY PRESSURE

9.1 Gas delivered by or on behalf of Seller to or for the account of Buyer
hereunder shall be at the pressure required from time to time to enter the
facilities of the transporter receiving the gas at the Delivery Point.

ARTICLE X

  QUALITY

10.1 Specifications

          The gas delivered by Seller shall be of a quality and pressure sufficient
to be acceptable to and enter the facilities of the transporter receiving the
gas at the Delivery Point.

10.2 Off Specification

          If the gas offered for delivery by Seller hereunder shall fail at any time
to conform to the quality requirements of the transporter receiving gas at the
Delivery Point, then Buyer shall notify Seller of such failure and, at Buyer’s
option, may refuse to purchase such gas pending correction by Seller in which
case Seller shall be deemed to have failed to deliver such gas.

ARTICLE XI

MEASUREMENT

11.1 Units

          The unit of measurement of gas for purposes of billing shall be MMBtu’s.

11.2 Quantity Determined by Transporter

          The quantity of gas delivered to transporter for Buyer’s account at the
Delivery Point shall be determined by transporter receiving gas at the Delivery
Point in accordance with the then current standard terms and conditions
applicable to such transporter’s transportation service.

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11.3 Conversions

          Where required, standards of measurement shall be converted to imperial
measurement in accordance with the provisions of Article XXI.

ARTICLE XII

REPRESENTATIONS AND WARRANTIES

12.1 Seller’s Representations and Warranties

     Seller represents and warrants to Buyer that:

	(a)	 	Seller has good title and the right to sell to Buyer the gas
delivered hereunder;
	 
	(b)	 	all such gas shall be free from any and all liens, encumbrances and
adverse claims of any nature;
	 
	(c)	 	no finding of producer support pursuant to the Natural Gas Marketing
Act (Alberta) or similar legislation of any Canadian jurisdiction is
required and no approval by a joint owner of gas reserves is required in
order for Seller to sell and deliver gas to Buyer hereunder;
	 
	(d)	 	the execution, delivery and performance by the Seller of this
Agreement have been duly authorized by all necessary corporate action on
the part of Seller and do not require any approval or consent of any
other person or entity, except approvals or consents which have
previously been obtained;
	 
	(e)	 	this Agreement is in full force and effect, has been duly executed
and delivered on behalf of Seller by the appropriate officers of Seller,
and constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms except as the
enforceability thereof may be limited by (a) bankruptcy, insolvency,
reorganization, or other similar laws affecting the
enforcement of creditors’ rights generally and (b) general equitable
principles (whether considered in a proceeding in equity or at law);
	 
	(f)	 	as of the date of execution of this Agreement, there is no
litigation, action, suit, proceeding or investigation pending or (to the
best of Seller’s knowledge after due inquiry) threatened against Seller
before or by any court, administrative agency, arbitrator or
governmental authority, body or agency, other than proceedings relating
to approvals issued or to be issued by Buyer’s Regulatory Authorities or
Seller’s Regulatory Authorities, which, if adversely determined,
individually or in the aggregate, (i) could adversely affect the
performance by Seller of its obligations hereunder, or which could
modify or otherwise adversely affect the approvals (as contemplated by
Section 12.3 (a)), (ii) could have a material adverse effect on the
condition (financial or otherwise), business or operations of Seller or
(iii) questions the validity, binding effect or enforceability hereof,
any action taken or to be taken pursuant hereto or any of the
transactions contemplated hereby; and

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	(g)	 	Seller is not in violation of its charter or by-laws, and the
execution, delivery and performance by Seller of this Agreement as of
the date of execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any violation of,
breach of or default under any term of its charter or by-laws, or of any
contract or agreement to which it is a party or by which it or its
property is bound, or of any license, permit, franchise, judgment, writ,
injunction, decree, order, charter, law, ordinance, rule or regulation
applicable to it, except for any such violations which, individually or
in the aggregate, would not adversely affect the performance by Seller
of its obligations under this Agreement.

12.2 Buyer’s Representations and Warranties

          Buyer represents and warrants to Seller that:

	(a)	 	execution, delivery and performance by Buyer of Buyer’s obligations
under this Agreement is not conditional upon or subject to the consent
or approval of any third party other than Project Lender, Consolidated
Edison Company of New York, Inc., and Buyer’s Regulatory Authorities;
	 
	(b)	 	subject to any assignment or security interest held by Project Lender
or any assignment or transfer to a permitted assignee pursuant to
Section 17.2, Buyer shall be the legal and beneficial owner of Buyer’s
Plant, unless Project Lender has exercised any remedies under Buyer’s
loan agreement or other loan documents;
	 
	(c)	 	this Agreement is in full force and effect, has been duly executed
and delivered on behalf of Buyer by the appropriate agents of Buyer, and
constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms except as the
enforceability thereof may be limited by (a) bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors’ rights generally and (b) general equitable principles
(whether considered in a proceeding in equity or at law);
	 
	(d)	 	as of the date of execution of this Agreement, there is no
litigation, action, suit, proceeding or investigation pending or (to the
best of Buyer’s knowledge after due inquiry) threatened against Buyer
before or by any court, administrative agency, arbitrator or
governmental authority, body or agency, other than proceedings related
to approvals issued or to be issued by Buyer’s Regulatory Authorities or
Seller’s Regulatory Authorities, which, if adversely determined,
individually or in the aggregate, (i) could adversely affect the
performance by Buyer of its obligations hereunder, or which could modify
or otherwise adversely affect the approvals (as contemplated by Section
12.4 (a)), (ii) could have a material adverse effect on the condition
(financial or otherwise), business or operations of Buyer or (iii)
questions the validity, binding effect or enforceability hereof, any
action taken or to be taken pursuant hereto or any of the transactions
contemplated hereby; and
	 
	(e)	 	Buyer is not in violation of its charter or by-laws, and the
execution, delivery and performance by Buyer of this Agreement as of the
date of execution of this

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	 	 	Agreement and the consummation of the
transactions contemplated hereby will not result in any violation of,
breach of or default under any term of its charter or by-laws, or of any
contract or agreement to which it is a party or by which it or its
property is bound, or of any license, permit, franchise, judgment, writ,
injunction, decree, order, charter, law, ordinance, rule or regulation
applicable to it, except for any such violations which, individually or
in the aggregate, would not adversely affect the performance by Buyer of
its obligations under this Agreement.

12.3 Seller’s Covenants

          Seller covenants with Buyer that:

	(a)	 	Seller has obtained or will obtain all approvals that may be required
by Seller’s Regulatory Authorities and Seller shall use reasonable
efforts to obtain and maintain all necessary approvals issued by
Seller’s Regulatory Authorities in good standing during the term of this
Agreement; and
	 
	(b)	 	Seller shall commit such reserves and deliverability as are necessary
for Seller to obtain a removal permit pursuant to the Gas Resources
Preservation Act authorizing the removal of the DCQ for the full term of
this Agreement and as are necessary for Buyer to obtain an export
license pursuant to the National Energy Board Act authorizing the export
of the DCQ for the full term of this Agreement, and Seller shall commit
such additional gas reserves and deliverability as are required to
obtain such removal permit and/or export license in the event that the
Energy Resources Conservation Board and/or National Energy Board
determines that reserves and/or deliverability committed by Seller are
insufficient to obtain such removal permit or export license.

12.4 Buyer’s Covenants

          Buyer covenants with Seller that:

	(a)	 	Buyer shall use all reasonable efforts to obtain and maintain
consents and approvals required for the effectiveness of this Agreement,
including Buyer’s Regulatory Authorities; and
	 
	(b)	 	Subject to any assignment or security interest held by Project Lender
or any assignment or transfer to a permitted assignee pursuant to
Section 17.2, Buyer shall not voluntarily cause Buyer’s Plant to be
transferred to any parties other than Project Lender or a permitted
assignee pursuant to Section 17.2, unless Project Lender exercises any
remedies under Buyer’s loan agreement or other loan documents.

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ARTICLE XIII

TAXES

13.1 Responsibility for Taxes

          Subject to Section 13.2, Seller shall pay or cause to be paid all taxes,
royalties and other assessments and levies imposed on Seller with respect to
the gas delivered hereunder prior to or on a concurrent basis with its delivery
to Buyer including, but without limitation, all severance and sales taxes and
Buyer shall pay or cause to be paid all taxes and assessments imposed upon
Buyer with respect to gas delivered hereunder after its receipt by Buyer.
Neither party shall be responsible or liable for any taxes or other statutory
charges levied or assessed against any of the facilities of the other party
used for the purpose of carrying out the provisions of this Agreement.

13.2 GST

	 	(a)	 	The parties intend that the Price does not include any amounts
payable under GST. The parties further intend that the transactions
contemplated in this Agreement relate solely to exports from Canada and
accordingly shall be zero rated for GST purposes and not subject to GST.
Each party agrees to provide to the other party, or to such third party
as may be directed by the other party, any declarations, certificates,
and documents evidencing transactions pursuant to this Agreement as may
be requested hereunder or may be required by law.
	 
	 	(b)	 	Notwithstanding Subsection 13.2(a), if the GST is imposed by law upon
Buyer in respect of its purchase of gas from Seller, or the
transportation of such gas in Canada, or the export of such gas from
Canada, and such law or regulations thereunder permit the refund of such
GST amounts paid to Buyer then Buyer shall pay such GST and Seller shall
use reasonable efforts to assist Buyer in recovering any such tax or
levy including assisting Buyer in applying for a refund of such amounts
provided that Buyer shall conduct and bear the costs of any application
for a refund.
	 
	 	(c)	 	In the event that GST is imposed on gas sold hereunder and to the
extent that such GST is paid by Buyer and not refunded, such GST amounts
paid, and not refunded, shall be reimbursed to Buyer by Seller each
Month to the extent only
that gas sold under this Agreement in the applicable Month has a
delivered price at Buyer’s Plant in excess of the “Ceiling Price” (as
such term is defined in paragraph II.D of Appendix C in Buyer’s Power
Purchase Contract) for the applicable Month, provided
however that Seller shall not be required to reimburse Buyer for
GST amounts paid by Buyer in respect of gas which Buyer has not exported
from Canada.
	 
	 	(d)	 	From time to time, Buyer shall provide the Seller with evidence of
export of the natural gas purchased under this Agreement acceptable to
the Seller.

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ARTICLE XIV

SUPPLY SECURITY

14.1 Seller’s Reserves and Deliverability

	 	(a)	 	Seller consents and permits Buyer to request from the Alberta Energy
and Utilities Board (the “AEUB”) the annual reserves assessment prepared
by the AEUB in connection with Seller’s removal permits (the “Annual
AEUB Report”). Buyer shall be responsible for the AEUB ‘s normal
charges for the release of Annual AEUB Report to Buyer. In the event
that the AEUB ceases to prepare an Annual AEUB Report, Seller shall
provide Buyer with an alternate report, at Buyer’s cost, which is
acceptable to Buyer acting reasonably. Buyer shall keep Annual AEUB
Reports and any other alternate reports confidential unless disclosure
is required for the purposes set out in Section 18.1.
	 
	 	(b)	 	In the event that the report provided pursuant to Section 14.1(a)
indicates material deficiencies in Seller’s ability to meet its firm gas
sales obligations, Seller shall provide Buyer with information setting
forth its plan to correct such deficiencies and the schedule for such
corrections.
	 
	 	(c)	 	Intentionally Left Blank
	 
	 	(d)	 	Seller shall not over contract its lands and reserves or otherwise
take action which jeopardizes Seller’s ability to perform its
obligations under this Agreement.

14.2 Undertaking to Sell and Deliver

          Seller shall beneficially own and produce sufficient gas reserves and
deliverability to meet substantially all of Seller’s obligations to sell and
deliver gas, and all Seller’s obligations under this Agreement.

14.3 No Limitation

          Seller acknowledges that this Article is included in order to provide
additional assurances to Buyer that gas will be provided by Seller to Buyer in
accordance with this Agreement and is not intended to limit the liability of
Seller to Buyer for damages or
under any indemnity arising from any failure by Seller to perform its
obligations under this Agreement.

ARTICLE XV

FORCE MAJEURE

15.1 Definition

          Seller shall not be liable for any failure to perform the terms of this
Agreement when and to the extent such failure is due to “force majeure” and,
notwithstanding Section 6.2, Buyer shall not be obligated to make any payments
under this Agreement in

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respect of any Monthly Charge, or the relevant portion
thereof, when Buyer has been unable to nominate or take at the Delivery Point
or transport to or consume gas and sell electricity from Buyer’s Plant due to
an event of force majeure. The term “force majeure”, as employed, herein and
for all purposes relating hereto, shall mean acts of God; strikes; lockouts or
other industrial disturbances; acts of public enemy; wars; blockades;
insurrections; riots; epidemics; landslides; lightning; earthquakes;
explosions; fires; civil disturbance; mechanical breakdowns; a failure of
Seller’s gas gathering or processing facilities for reasons clearly beyond the
control of Seller which materially impairs Seller’s ability to deliver gas to
its long term customers; intervention of federal, provincial, state or local
government or from any of their agencies or boards including Buyer’s Regulatory
Authorities and Seller’s Regulatory Authorities; the order or direction of any
court; or accidents affecting Buyer’s Plant or Buyer’s Transporters or Seller’s
Transporters used to transport gas to the Delivery Point or Buyer’s
Transporters’ facilities used to transport gas from the Delivery Point to the
Buyer’s Plant; force majeure events under Buyer’s Power Purchase Agreement; and
any other causes whether of the kind herein enumerated or otherwise, not within
the control of the party claiming suspension and which by the exercise of due
diligence such party is unable to prevent or overcome.

15.2 Exclusions

	(a)	 	Notwithstanding Section 15.1, the following shall not be events of force
majeure:

	(i)	 	insufficiency of Seller’s gas supplies or
deliverability to the NOVA system;
	 
	(ii)	 	if the failure was due to lack of funds or with respect
to the payment of any amount or amounts then due hereunder; and
	 
	(iii)	 	any event described in Section 16.3.

	(b)	 	Neither party shall be entitled to the benefit of the provisions of
Section 15.1 under any or all of the following circumstances, unless
otherwise specifically provided for in Section 15.2:

	(i)	 	to the extent that the failure was caused by the
contributory negligence of the party claiming suspension;
	 
	(ii)	 	to the extent that the failure was caused by the party
claiming suspension having failed to remedy the condition, and to
resume the performance of such covenants or obligations, with
reasonable dispatch; and
	 
	(iii)	 	unless as soon as reasonably possible after the
happening of the occurrence relied upon or as soon as possible
after determining that the occurrence was in the nature of force
majeure and would affect the claiming party’s ability to observe
or perform any of its covenants or obligations under this

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	 	 	Agreement, the party claiming suspension shall have given to the other party notice, to the effect that such
party is unable by reason of force majeure (the nature whereof shall be therein specified) to perform the
particular covenants or obligations. The party claiming suspension shall likewise give notice, as soon as possible
after the force majeure condition shall have been remedied, to the effect that the same has been remedied and that
such party has resumed, or is then in a position to resume, the performance of such covenants or obligations.

15.3 Notice

          The party claiming suspension of its obligations pursuant to this Article XV shall promptly give the other
party notice of the force majeure including reasonably full particulars in respect thereof. The party claiming
suspension of its obligations as aforesaid shall promptly remedy the cause of the force majeure insofar as it is
reasonably able to do so; provided that the terms of the settlement of any strike, lockout or other industrial
disturbance shall be wholly in the discretion of the party claiming suspension of its obligations hereunder by reason
thereof.

15.4 Termination

          In the event that a party does not substantially perform its obligations and such obligations are suspended
pursuant to this Article XV for a period of eighteen (18) Months or more as a result of any single event of force
majeure, the other party may, by notice within thirty (30) Days following the expiry of such eighteen (18)
Month period, terminate this Agreement.

15.5 Extension

          An event of force majeure shall only extend the term of this Agreement by mutual agreement of the parties.

ARTICLE XVI

GOVERNMENTAL RULES AND REGULATIONS

16.1 Valid Laws

          This Agreement and the rights and obligations of the parties hereunder shall be subject to all present and future
valid laws, orders, directives, rules and regulations of any governmental body or official having jurisdiction.

-26-

 

16.2 Maintenance

          Seller and Buyer shall, except as otherwise provided, endeavor to maintain
this Agreement and shall not unilaterally petition to amend it.

16.3 Regulatory Changes

          In the event that any regulatory authority with authority over one or both
parties to this Agreement, or with authority over any transportation of Base
Gas to be sold or purchased hereunder, or with authority over any sales or
other performance pursuant to the Agreement, takes any action which:

	(a)	 	affects gas exported from Canada in a manner which is materially
different from other indigenous gas produced and not exported from
Canada, or
	 
	(b)	 	affects gas imported into the United States in a manner which is
materially different from indigenous gas produced and sold in the United
States,

and which has the effect of fundamentally altering and undercutting the
economic position of the parties or either of them insofar only as it pertains
to Base Gas; then the party thereby injured may, by written notice to the other
party, require that this Agreement or other arrangements incidental to this
Agreement be amended as necessary to preserve the economic position insofar
only as it pertains to Base Gas held by the affected party immediately prior to
such event. Such notice shall describe the action taken by the regulatory
authority and shall include reasonable particulars as to the manner and extent
to which the economic position of the party giving the notice has been
adversely affected. The parties shall use their reasonable efforts during a
90-Day period following such notice to negotiate and effect such amendments
following which the injured party may, if such efforts are unsuccessful, by
further written notice within 60 Days after such 90-Day period to the other
party terminate this Agreement. Upon termination of this Agreement pursuant to
this Section, the provisions of Section 20.4 hereof shall apply.

ARTICLE XVII

ASSIGNMENT

17.1 Binding

          The terms, covenants and conditions hereof shall be binding on the parties
hereto and on their successors and assigns.

-27-

 

17.2 Assignment

(a) Neither party may assign any of its rights or obligations hereunder without
written consent of the other party, such consent not to be unreasonably
withheld, except as otherwise expressly provided in this Section 17.2.

(b) Seller agrees that:

	 	(i)	 	Buyer may assign this Agreement to JMC Fuel Services Inc.
without relieving Buyer’s liability for its obligations hereunder;
	 
	 	(ii)	 	Buyer may assign this Agreement in whole or in part to
Project Lender in conjunction with construction or permanent
financing of Buyer’s Plant, provided that Project Lender agrees in
writing that, upon the succession by it or its transferee to Buyer’s
interest in this Agreement, Project Lender or its transferee, as the
case may be, shall be bound by the terms of this Agreement; and
provided further, that Project Lender or its transferee shall have
no obligations under this Agreement prior to the time such party
succeeds to Buyer’s interest in this Agreement; and further provided
that Project Lender or its transferee shall have the same assignment
rights as Buyer upon such succession to Buyer’s interest in this
Agreement. Seller agrees to execute and deliver a consent to
assignment to Project Lender in form and substance as Buyer may
reasonably request;
	 
	 	(iii)	 	Buyer may assign this Agreement in whole or in part to a
purchaser of all or substantially all the assets of Buyer’s Plant,
or in consequence of a merger or amalgamation of Buyer with another
person. Such purchaser or person shall have the same assignment
rights as the Partnership; provided that if Buyer retains an
interest in Buyer’s Plant Buyer shall not be relieved of its
obligations hereunder;
	 
	 	(iv)	 	Buyer may assign this Agreement, in whole or in part, to
other parties with which Buyer enters into project leases or project
contracts relating to Buyer’s Plant or any other generating unit at
the sites of Buyer’s Plant to the extent such project leases or
project contracts are secured in whole or in part by a lien against
any asset of Buyer including, without limitation, this Agreement.

(c) Buyer agrees that:

	 	(i)	 	Seller may assign or dispose of this Agreement and its rights
and obligations hereunder, in consequence of a merger or
amalgamation of Seller with another person, provided that the merged
or amalgamated person agrees in writing to be bound by the terms of
this Agreement; and further provided that Seller has assigned or
transferred substantially all of its established gas reserves to
such merged or amalgamated person.
	 
	 	(ii)	 	Seller may assign this Agreement to an Affiliate of Seller,
without relieving its obligations hereunder.

-28-

 

(d) This Agreement shall be binding upon and shall enure to the benefit of the
respective successors and assigns of the parties hereto. Except for permitted
assignments pursuant to Subsection 17.2(b)(ii), no assignment shall relieve
Buyer or Seller of its obligations until an assignment and novation agreement
prepared by the party hereto proposing to assign and acceptable to the other
party hereto, acting reasonably, has been executed by Buyer and Seller and any
assignee(s).

17.3 Transfer of Seller’s Gas Reserves

          Seller shall not assign, transfer or otherwise dispose of all or
substantially all of its established gas reserves, unless: (i) such transfer
or disposition is to an Affiliate of Seller or a merged person within the
contemplation of Subsection 17.2(c)(i) as a result of a merger or amalgamation;
and (ii) this Agreement has been assigned to such Affiliate or such merged or
amalgamated person in accordance with Subsection 17.2(c).

ARTICLE XVIII

CONFIDENTIALITY

18.1 Except as required by law, the necessity to arrange for transportation, as
required by Project Lender, or due to regulatory reporting requirements
(including all disclosures by Buyer or Seller necessary for purposes of
engaging in proceedings before state, provincial or federal regulatory or
judicial authorities or arbitration), this Agreement and any contract entered
pursuant hereto shall remain confidential between Seller and Buyer.

ARTICLE XIX

NOTICES

19.1 Except as otherwise herein specifically provided, any notice, request,
demand or statement shall be given in writing. Written notice shall be deemed
given on the earlier of (i) the date received by the addressee when delivered
by hand, or (ii) the Day following the date sent by telecommunications means to
the numbers set forth below, or (iii) five (5) Days after mailing by prepaid
registered United States mail or Canadian mail, directed to the post office
address of the parties as follows (provided that, at any time when there is a
strike affecting delivery of either United States mail or Canadian mail, all
such deliveries shall be made by hand or by telecommunications):

		
	           To Seller: 	EnCana Corporation

1800, 855-2nd Street S.W

P.O Box 2850

Calgary, AB. T2P 2S5

Attention: Manager, Natural Gas Marketing.

Telecopy:  (403) 645-7660

-29-

 

		
	           To Buyer: 	Selkirk Cogen Partners, L.P.

24 Power Park Drive

Selkirk, New York

U.S.A. 12158

Attention: General Manager

Telecopy:  (518) 475-5199

or at such other address as either party may from time to time specify as its
address for such purposes by written notice given pursuant to this Section.

19.2 All notices provided by the Seller or Buyer under this Agreement, other
than an invoice from Seller to Buyer which does not assert that there are past
due amounts owing to Seller, shall also be provided to Deutsche Bank Trust
Company Americas, at the following address:

Deutsche Bank Trust Company Americas

60 Wall Street - 27th Floor

New York, NY 10005

Attention: Trust & Securities Services

Project Finance & Escrow

Telecopy: Fax:
212-797-8625

ARTICLE XX

INDEMNIFICATION AND MITIGATION

20.1 Indemnity for Delivery Failure

          If, on any Day, Seller fails to deliver Base Gas nominated by Buyer for
any reason other than force majeure or pursuant to Section 7.2, Seller shall
indemnify Buyer against all incremental costs and expenses reasonably incurred
by Buyer to obtain Replacement Fuel, all Unrecovered Transportation Demand
Charges, and all Buyer’s Pipeline Penalties imposed by Buyer’s Transporters as
a result of Seller’s failure to deliver, calculated at Buyer’s Plant, (the
“Indemnity Amount”). Except as provided for in this Subsection 20.1, Seller
shall not be responsible for any other indirect or consequential damages
suffered by Buyer. Buyer shall use reasonable efforts to mitigate costs for
which Seller is responsible, and without limitation, Buyer shall use reasonable
efforts to utilize Replacement Fuel which will minimize the Indemnity Amount.

-30-

 

20.2 Payment of Indemnity Amount

          The Seller shall pay to Buyer any Indemnity Amount within thirty (30) Days
of Buyer rendering a bill for any Indemnity Amount to Seller, and Buyer may
set-off the Indemnity Amount, in whole or in part against outstanding amounts
due from Buyer to Seller. Seller may set-off the Indemnity Amount in whole or
in part against any outstanding amounts due from Buyer to Seller. If Seller
fails to pay any Indemnity Amount, or any portion thereof interest thereon
shall accrue at the rate of interest which is equal to the Prime Rate plus one
hundred (100) basis points until the same is paid during the period or time
such payment remains outstanding.

20.3 Misrepresentation

          Buyer and Seller agree to indemnify, save and hold the other harmless from
and against any loss, damage, cost, claim, expense or liability whatsoever with
respect to or resulting from Buyer’s or Seller’s (as the case may be)
representations and warranties in this Agreement not being true.

20.4 Survival

          The liabilities of Buyer and Seller hereunder for breach of any covenants,
representations or warranties and the obligations of Buyer and Seller under any
indemnity herein contained shall survive termination of this Agreement except
as otherwise expressly provided.

ARTICLE XXI

CONVERSIONS

21.1 Intentionally Left Blank

21.2 Currency

          The conversion from Canadian dollars to United States dollars for a
particular period of time shall be at the Bank of Canada average noon Day spot
exchange rate applicable to that same period of time (the “Exchange Rate”).

21.3 Factors

          The conversion of any quantity or value referred to below shall be done
using the equivalent factor associated therewith.

	 	 	 	 	 
	MMBtu X 1.055056

	 	=
	 	GJ
	MMcf X 28.32784

	 	=
	 	103m3

-31-

 

	 	 	 	 	 
	psi X 6.894757

	 	=
	 	kPa
	(°F
- 32) x 5/9

	 	=
	 	°C

ARTICLE XXII

Intentionally Left Blank

ARTICLE XXIII

GENERAL

23.1 Prior Agreements

          This Agreement supersedes all prior agreements between Buyer and Seller as
well as all prior understandings or writings among the parties, whether written
or oral and whether legally enforceable or not, in connection with the subject
matter of this Agreement. This Agreement contains the entire understanding of
the parties with respect to the matters contained herein. There are no
promises, covenants or undertakings other than those expressly set forth
herein.

23.2 Enurement

          This Agreement shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors and assigns as provided for
herein.

23.3 Waiver

          No waiver by a party hereto of any provision, or the breach of any
provision, of this Agreement shall be effective unless it is contained in a
written instrument signed by authorized officers or representatives of the
party hereto. Such written waiver shall effect only the matter specifically
identified in the instrument granting the waiver and shall not extend to any
other matter, provision or breach.

23.4 Delay Not Waiver

          The failure of a party hereto to give notice to any other party hereto or
to take any other steps in exercising any right, or in respect of the breach or
nonfulfillment of any provision of this Agreement, shall not operate as a
waiver of that right, breach or provision nor shall any single or partial
exercise of any right preclude any other or future exercise of that right or
the exercise of any other right, whether in law or in equity or otherwise.

-32-

 

23.5 Further Assurances

          Each party shall at its own cost and expense, from time to time and
without further consideration, execute or cause to be executed all documents
and take or fail to take such regulatory or other actions which are necessary
or desirable to give effect to the provisions of this Agreement.

23.6 Cumulative Remedies

          The provisions of this Agreement, and the rights and remedies of the
parties under this Agreement are cumulative and are without prejudice and in
addition to any rights or remedies a party may have at law or equity; no
exercise by a party of any one right or remedy under this Agreement, or at law
or in equity, shall (save to the extent, if any, provided expressly in this
Agreement, or at law or in equity) operate so as to hinder or prevent the
exercise by it of any other such right or remedy.

23.7 Governing Law

          This Agreement shall be governed by and construed according to the laws of
the Province of Alberta.

23.8 Nonrecourse Obligation of Limited Partnership

          Seller acknowledges and agrees that: (a) Buyer is a limited partnership;
(b) Seller shall have no recourse against any partner(s) in Buyer with respect
to the obligations of Buyer and its sole recourse shall be against the Buyer’s
assets, irrespective of any failure to comply with applicable law or any
provisions of this Agreement; (c) no claim shall be made against any partner(s)
in Buyer in connection with the obligations of Buyer under this Agreement,
except that the partner(s) may be joined as nominal parties for the purpose of
enforcing Seller’s rights hereunder; (d) Seller shall have no right to any
claim in respect of Buyer not yet due and owing; and (e) this representation is
made expressly for the benefit of the partner(s) in Buyer.

23.9 Time is of the Essence

          Time is of the essence in this Agreement.

23.10 Resale

          Seller and Buyer agree that there are no restrictions under this Agreement
on Buyer’s resale or use of gas purchased under this Agreement.

-33-

 

23.11 Financial Assurances

          If either party (“X”) has its credit rating reduced below investment grade
by either the Standard & Poor’s Rating Group (a division of McGraw-Hill, Inc.)
or its successor (“S&P”), or Moody’s Investor Services, Inc., or its successor
(“Moody’s”) (such that S&P rate party X’s long-term debt obligations below
BBB-, or Moody’s rates party X’s long-term debt obligations below Baa3), then
the other party (“Y”) may demand Adequate Assurance of Performance, and party
X shall provide party Y with Adequate Assurance of Performance within 5
Business Days after a written request by party Y. “Adequate Assurance of
Performance” shall mean sufficient security in the form, in an amount, for the
term and from an entity reasonably acceptable to party Y, including, but not
limited to, a standby irrevocable letter of credit, a prepayment or a
performance bond or guaranty. Sufficient security shall be based upon Seller’s
exposure to Buyer which shall be calculated as the amount to be paid pursuant
to Section 6.1 for the DCQ as if delivered by Seller for a period of fifty-five
(55) Days, subject to a maximum aggregate amount of US$4,000,000, regardless of
whether Seller or Buyer is party X.

23.12 Execution in Counterpart Facsimile

          This agreement may be signed in counterpart by facsimile transmission and
each copy shall be deemed to be an original.

[Remainder of Page Intentionally Left Blank]

-34-

 

IN WITNESS WHEREOF this Agreement is executed in multiple originals
effective as of the Day and year first herein above written.

	 	 	 	 	 	 	 
	 	 	SELKIRK COGEN PARTNERS, LP	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	JMC Selkirk, Inc., Managing	 	 
	

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ P.CHRISMAN IRIBE	 	 
	

	 	 	 	
	 	 
	 
	 	 	 	 	 	 
	

	 	Name:
	 	P. Chrisman Iribe	 	 
	 
	 	 	 	 	 	 
	

	 	Title:
	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	ENCANA CORPORATION
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ KIM JOSLIN	 	 
	

	 	 	 	
	 	 
	 
	 	 	 	 	 	 
	

	 	Name:
	 	Kim Joslin	 	 
	 
	 	 	 	 	 	 
	

	 	Title:
	 	Vice President	 	 
	

	 	 	 	Canadian Gas Marketing	 	 

-35-exv10w4

 

EXHIBIT 10.4

Base Contract for Sale and Purchase of Natural Gas

This Base Contract is entered into as of the following date: January 1, 2005.
The parties to this Base Contract are the following:

	 	 	 	 	 
	Selkirk Cogen Partners, L.P.

	 	and
	 	EnCana Gas Marketing, a business unit of EnCana Midstream & Marketing
	24 Power Park Drive, Selkirk, NY 12158

	 	 	 	#1800, 855 – 2nd Street S.W. Calgary, AB, Canada T2P 4Z5
	Duns Number: 78-732-7881

	 	 	 	Duns Number: 20-188-3654
	Contract Number: NAESB Standard 6.3.1 dated April 19, 2002

	 	 	 	Contract Number: NAESB Standard 6.3.1 dated April 19, 2002
	Canadian GST Number: BN877261214

	 	 	 	Canadian GST Number: 13334 3517
	 
	Notices:

	 	 	 	Notices:
	(same address as above)

	 	 	 	(same address as above)
	Attn: General Manager

	 	 	 	Attn: Gas Contract Administrator
	Phone: 518-475-5773 x102     Fax: 518-475-5199

	 	 	 	Phone: 403-645-6244     Fax: 403-645-6201
	 
	 	 	 	 
	Confirmations:

	 	 	 	Confirmations:
	(same address as above)

	 	 	 	(same address as above)
	Attn: Site Business Analyst

	 	 	 	Attn: Trade Administration
	Phone: 518-475-5773 x136     Fax: 518-475-5199

	 	 	 	Phone: 403-645-6225     Fax: 403-645-6201
	 
	 	 	 	 
	Invoices and Payments:

	 	 	 	Invoices and Payments:
	(same address as above)

	 	 	 	(same address as above)
	Attn: Accounting Manager

	 	 	 	Attn: Natural Gas Marketing Accounting
	Phone: 518-475-5773 x143     Fax: 518-475-5199

	 	 	 	Phone: 403-645-6236     Fax: 403-645-2617
	 
	 	 	 	 
	Wire Transfer or ACH Numbers (if applicable):

	 	 	 	Wire Transfer or ACH Numbers (if applicable):
	BANK: Bankers Trust Company

	 	 	 	BANK: Royal Bank of Canada, 339 – 8th Ave SW Calgary
	ABA: 021-001-033

	 	 	 	ABA: 021000021 – Interm: Chase Manhattan Bank, NY
	ACCT: 01-419-647

	 	 	 	ACCT: USD #400-484-2 / CND #117-461-4
	Other Details: Project Revenue Fund #12103

	 	 	 	Other Details: Canadian Bank #003, Transit #00009

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

	 	o
	 	Oral (default)
	 	Section 7.2
	 	n
	 	25th Day of Month following Month of
	Transaction

Procedure	 	n	 	Written	 	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)
	 	Section 7.2
	 	n
	 	Wire transfer (default)
	Confirm

	 	n
	 	3 Business Days after receipt
	 	Method of
	 	o
	 	Automated Clearinghouse Credit (ACH)

	Deadline

	 	 	 	 	 	Payment
	 	o
	 	Check
	 
	Section 2.6

	 	o
	 	Seller (default)
	 	Section 7.7
	 	n
	 	Netting applies (default)
	Confirming

	 	o
	 	Buyer
	 	Netting
	 	o
	 	Netting does not apply
	Party

	 	n
	 	EnCana Gas Marketing	 	 	 	 	 	 
	 
	Section 3.2

	 	o
	 	Cover Standard (default)
	 	Section 10.3.1
	 	n
	 	Early Termination Damages Apply (default)
	Performance

Obligation

	 	n
	 	Spot Price Standard
	 	Early Termination

Damages
	 	o
	 	Early Termination Damages Do Not Apply
	 
	 	 	 	 	 	 	 	 	 	 
	Note: The
following Spot Price Publication applies to both 
of the immediately
preceding.
	 

	

	 	 	 	 	 	Section 10.3.2
	 	n
	 	Other Agreement Setoffs Apply (default)
	

	 	 	 	 	 	Other Agreement

Setoffs
	 	o
	 	Other Agreement Setoffs Do Not Apply
	Section 2.26

	 	o
	 	Gas Daily Midpoint (default)
	 	Section 14.5	 	 	 	 
	Spot Price

Publication

	 	n
	 	Per Canadian Gas Price Reporter
	 	Choice Of Law
	 	 	 	Alberta
	 

	Section 6

	 	n
	 	Buyer Pays At and After Delivery Point
	 	Section 14.10
	 	n
	 	Confidentiality applies (default)
	Taxes

	 	o
	 	Seller Pays Before and At Delivery Point
	 	Confidentiality
	 	o
	 	Confidentiality does not apply

		
	n 	Special Provisions Number of sheets attached: Six (6)

		
	n 	Addendum(s): Canadian Addendum dated April 19, 2002 (unamended)

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

	 	 	 	 	 	 	 	 	 
	Selkirk Cogen Partners, L.P.,

By its Managing General Partner, JMC Selkirk, Inc.	 	 	 	EnCana Gas Marketing, a business unit of EnCana
Midstream & Marketing
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ P.CHRISMAN IRIBE
	 	 	 	By:
	 	/s/ KIM JOSLIN
	

	 	

	 	 	 	 	 	

	Name:

	 	P. Chrisman Iribe
	 	 	 	Name:
	 	J. Kim Joslin
	Title:

	 	President
	 	 	 	Title:
	 	Vice-President, Canadian Gas Marketing
	 
	 	 	 	 	 	 	 	 
	Date:

	 	December 23, 2004
	 	 	 	Date:
	 	December 20, 2004

	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	April 19, 2002

 

 

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).

	 	 	 
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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

	 	 	 
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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.

	 	 	 
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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 this Section.

7.5. If the invoiced party fails to remit the full amount payable when due,
interest on the unpaid portion shall accrue from the date due until the date of
payment at a rate equal to the lower of (i) the then-effective prime rate of
interest published under “Money Rates” by The Wall Street Journal, plus two
percent per annum; or (ii) the maximum applicable lawful interest rate.

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

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

	 	 	 
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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.

	 	 	 
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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

	 	 	 
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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.

	 	 	 
	Copyright © North American Energy Standards Bord, Inc.
All Right Reserved

	
Page 8 of 10	NAESB Standard 6.3.1
April 19, 2002

 

 

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.

	 	 	 
	Copyright © North American Energy Standards Bord, Inc.
All Right Reserved

	
Page 9 of 10	NAESB Standard 6.3.1
April 19, 2002

 

 

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 5 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: 

	 	 	 
	Copyright © North American Energy Standards Bord, Inc.
All Right Reserved

	
Page 10 of 10	NAESB Standard 6.3.1
April 19, 2002

 

Base Contract for Sale and Purchase of Natural Gas

Canadian Addendum

This Canadian Addendum (“Canadian Addendum”) is entered into as of the
following date: January 1, 2005

	 	 	 	 	 
	The parties to this Canadian Addendum are the following:
	 	 	 	 
	Selkirk Cogen Partners, L.P.

	 	and
	 	EnCana Gas Marketing, a business unit of
	

	 	 	 	EnCana Midstream & Marketing
	24 Power Park Drive, Selkirk, NY 12158

	 	 	 	#1800, 855 – 2nd Street SW, Calgary AB, T2P 4Z5
	Duns Number: 78-732-7881

	 	 	 	Duns Number: 20-188-3654
	Base Contract Number: NAESB Standard 6.3.1 dated April 19, 2002

	 	 	 	Base Contract Number: NAESB Standard 6.3.1 dated April 19, 2002
	Base Contract Date: January 1, 2005

	 	 	 	Base Contract Date: January 1, 2005
	U.S.
Federal Tax ID Number: N/A

	 	 	 	U.S. Federal Tax ID Number: N/A
	Canadian GST Number: BN877261214

	 	 	 	Canadian GST Number: 13334 3517

IN WITNESS WHEREOF, the parties hereto agree to the terms and conditions set
forth herein and have executed this Canadian Addendum in duplicate.

	 	 	 	 	 	 	 
	 Party:

	 	Selkirk Cogen Partners, L.P.
by its Managing 
General Partner, JMC Selkirk, Inc.
	 	Party:
	 	EnCana Gas Marketing, a business unit of EnCana
Midstream & Marketing

	 	 	 	 	 	 	 
	By:

	 	/s/ P. CHRISMAN IRIBE
	 	By:
	 	/s/ KIM JOSLIN
	

	 	
 
	 	 	 	
 
	Name:

	 	P. Chrisman Iribe
	 	Name:
	 	J. Kim Joslin
	Title:

	 	President
	 	Title:
	 	Vice-President, Canadian Gas Marketing

Addendum: This Canadian Addendum constitutes an Addendum to that certain Base
Contract for Sale and Purchase of Natural Gas, as identified above, between the
parties (“Base Contract”), and supplements and amends the Base Contract
affecting transactions thereunder. Unless amended herein, the Base Contract
continues to apply. Capitalized terms used in this Canadian Addendum which are
not herein defined will have the meanings ascribed to them in the Base
Contract. In the event of a conflict between the terms of this Canadian
Addendum and the Base Contract, the terms of this Canadian Addendum shall
apply.

Term: This Canadian Addendum shall be effective from and after the date on
which it is entered into and continue in effect until terminated by either
party upon 30 Days’ written Notice to the other party; provided, however, that
this Canadian Addendum may not be terminated prior to the expiration of the
latest Delivery Period of any transactions previously agreed to by the parties
which are subject to this Canadian Addendum. The obligation to make payment
hereunder, including any related adjustments, shall survive the termination of
this Canadian Addendum.

The parties hereby agree to the following provisions. In the event the parties
fail to check a box, the default provision for each section shall apply. Select
only 1 box from each section:

Section 2.26: Spot Price Publication: Delete the selection made on the cover
page of the Base Contract and replace it with the following:

	 	 	 	 	 
	 

	 	x
	 	Canadian Gas Price Reporter
	 
	 	 	 	 
	 

	 	o
	 	Gas Daily Midpoint

Section 10.4: Termination Currency

	 	 	 	 	 
	 

	 	o
	 	U. S. Dollars (default)
	 
	 	 	 	 
	 

	 	x
	 	Canadian Dollars
	 
	 	 	 	 
	 

	 	o
	 	

Section 14.5: Choice of Law: If a selection is made herein, delete the
selection made on the cover page of the Base Contract and replace it with the
following:

	 	 	 	 	 
	 

	 	x
	 	Alberta

Delete Section 2.1 and replace it with the following:

2.1 “Alternative Damages” shall mean such damages, expressed in United States
dollars or United States dollars per MMBtu, or Canadian dollars or Canadian
dollars per GJ, 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.

Delete Section 2.4 and replace it with the following:

2.4 "Business Day” shall mean any day except Saturday, Sunday, or a statutory
or banking holiday observed in the jurisdiction specified pursuant to Section
14.5. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time
for the relevant party’s principal

					
	Copyright © 2002 North American Energy Standards Board, Inc.
	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved
	 	Page 1 of 4
	 	April 19, 2002

 

 

place of business. The relevant party, in each instance unless otherwise
specified, shall be the party to whom the Notice is being sent and by whom the
Notice is to be received.

Delete Section 2.8 and replace it with the following:

2.8 “Contract Price” shall mean, if the Delivery Point is in the United States,
the amount expressed in U.S. Dollars per MMBtu or, if the Delivery Point is in
Canada, the amount expressed in Canadian Dollars per GJ, unless specified
otherwise in a transaction, to be paid by Buyer to Seller for the purchase of
Gas as agreed to by the parties in a transaction.

Add the following as Section 2.30:

2.30 “GJ” shall mean 1 gigajoule; 1 gigajoule = 1,000,000,000 Joules. The
standard conversion factor between Dekatherms and GJ’s is 1.055056 GJ’s per
Dekatherm.

Add the following as Section 2.31:

2.31 “Joule” shall mean the joule specified in the SI system of units.

Add the following as Section 2.32:

2.32 “Termination Currency Equivalent” shall mean, in respect of any amount
denominated in a currency other than the Termination Currency (the “Other
Currency”), the amount in the Termination Currency that the Non-Defaulting
Party would be required to pay, on the Early Termination Date, to purchase such
amount of Other Currency for spot delivery, as determined by the Non-Defaulting
Party in a commercially reasonable manner.

Delete Section 5 and replace it with the following:

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 or one GJ, as agreed to by
the parties in a transaction. Measurement of Gas quantities hereunder shall be
in accordance with the established procedures of the Receiving Transporter.

Add the following to Section 6:

Sections 6.2, 6.3 and 6.4 apply if the Delivery Point is in Canada.

6.2 The Contract Price does not include any amounts payable by Buyer for the goods and services tax
(“GST”) imposed pursuant to the Excise Tax Act (Canada) (“ETA”) or any similar or replacement value
added or sales or use tax enacted under successor legislation. Notwithstanding whether the parties
have selected “Buyer Pays At and After Delivery Point” or “Seller Pays Before and At Delivery
Point” as indicated on the Base Contract, Buyer will pay to Seller the amount of GST payable for
the purchase of Gas in addition to all other amounts payable under the Contract. Seller will hold
the GST paid by Buyer and will remit such GST as required by law. Buyer and Seller will provide
each other with the information required to make such GST remittance or claim any corresponding
input tax credits, including GST registration numbers.

6.3 Where Buyer indicates to Seller that Gas will be exported from Canada, the following shall
apply:

6.3.1 Where Buyer is not registered for GST under the ETA and Buyer indicates to Seller that Gas
will be exported from Canada, Buyer may request Seller treat such Gas as “zero-rated” Gas for
export within the meaning of the ETA for billing purposes. If Seller, in its sole discretion,
agrees to so treat such Gas, then Buyer hereby declares, represents and warrants to Seller that
Buyer will: (i) export such Gas as soon as is reasonably possible after Seller delivers such Gas to
Buyer (or after such Gas is delivered to Buyer after a zero-rated storage service under the ETA)
having regard to the circumstances surrounding the export and, where applicable, normal business
practice; (ii) not acquire such Gas for consumption or use in Canada (other than as fuel or
compressor gas to transport such Gas by pipeline) or for supply in Canada (other than to supply
natural gas liquids or ethane the consideration for which is deemed by the ETA to be nil) before
export of such Gas; (iii) ensure that, after such Gas is delivered and before export, such Gas is
not further processed, transformed or altered in Canada (except to the extent reasonably necessary
or incidental to its transportation and other than to recover natural gas liquids or ethane from
such Gas at a straddle plant); (iv) maintain on file, and provide to Seller, if required, or to the
Canada Customs and Revenue Agency, evidence satisfactory to the Minister of National Revenue of the
export of such Gas by Buyer; and/or (v) comply with all other requirements prescribed by the ETA
for a zero-rated export of such Gas.

6.3.2 Where Buyer is registered for GST under the ETA and Buyer indicates to Seller that Gas will
be exported from Canada, Buyer may request Seller treat such Gas as “zero-rated” Gas for export
within the meaning of the ETA for billing purposes, and Buyer hereby declares, represents and
warrants to Seller that Buyer intends to export such Gas by means of pipeline or other conduit in
circumstances described in Section 6.3.1 (i) to (iii).

6.3.3 Without limiting the generality of Section 8.3, Buyer indemnifies Seller for any GST,
penalties and interest and all other damages and costs of any nature arising from breach of the
declarations, representations and warranties contained in Section 6.3.1 or 6.3.2, or otherwise from
application of GST to Gas declared, represented and warranted by Buyer to be acquired for export
from Canada.

					
	Copyright © 2002 North American Energy Standards Board, Inc.
	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved
	 	Page 2 of 4
	 	April 19, 2002

 

 

6.4 In the event that any amount becomes payable pursuant to the Contract as a result of a breach,
modification or termination of the Contract, the amount payable shall be increased by any
applicable Taxes or GST remittable by the recipient in respect of that amount.

Delete Section 7.5 and replace it with the following:

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) if the amount payable is in United
States currency, the then-effective prime rate of interest published under
“Money Rates” by The Wall Street Journal, plus two percent per annum; or, if
the amount payable is in Canadian currency, the per annum rate of interest
identified from time to time as the prime lending rate charged to its most
credit worthy customers for Canadian currency commercial loans by The Toronto
Dominion Bank, Main Branch, Calgary, Alberta, Canada, plus two percent per
annum; or (ii) the maximum applicable lawful interest rate.

Delete Section 7.7 and replace it with the following:

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, in the same currency,
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.

Add the following as Section 7.8:

7.8 For each transaction, all associated payments shall be made in the currency
of the Contract Price for such transaction.

Add the following as Section 10.3.4:

10.3.4 The Non-Defaulting Party shall use the Termination Currency Equivalent
of any amount denominated in a currency other than the Termination Currency in
performing any netting, aggregation or setoff required or permitted by Section
10.3.1 or 10.3.2.

Delete Section 10.4 and replace it with the following:

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, in the Termination Currency, by
the close of business on the second Business Day following such Notice, which
date shall not be earlier than the Early Termination Date. Interest on any
unpaid portion of the Net Settlement Amount shall accrue from the date due
until the date of payment at a rate equal to the lower of: (i) if the amount
payable is in United States currency, the then-effective prime rate of interest
published under “Money Rates” by The Wall Street Journal, plus two percent per
annum; or, if the amount payable is in Canadian currency, the per annum rate of
interest identified from time to time as the prime lending rate charged to its
most credit worthy customers for Canadian currency commercial loans by The
Toronto Dominion Bank, Main Branch, Calgary, Alberta, Canada, plus two percent
per annum; or (ii) the maximum applicable lawful interest rate.

Delete Section 10.5 and replace it with the following:

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. The parties also agree that the transactions
hereunder constitute an “eligible financial contract” within the meaning of the
Bankruptcy and Insolvency Act (Canada) and the Companies Creditors Arrangements
Act (Canada), and similar Canadian legislation.

Delete Exhibit A (“Transaction Confirmation”) and replace it with the
following:

					
	Copyright © 2002 North American Energy Standards Board, Inc.
	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved
	 	Page 3 of 4
	 	April 19, 2002

 

 

EXHIBIT A

TRANSACTION CONFIRMATION

FOR IMMEDIATE DELIVERY

	 	 	 
	Letterhead/Logo 

	 	Date:                                       ,                   
	

	 	 Transaction Confirmation #:                   

This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated ______________________. 

This Transaction Confirmation is subject to the Canadian Addendum between Seller and Buyer dated ______________________:

o  Yes (default)      o  No

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: U.S. $                   /MMBtu or Canadian $                   /GJ or                    

	
	Delivery Period: Begin:                   ,                   

	 	End:                                      ,                   

Performance Obligation and Contract Quantity: (Select One)

Units  o   MMBtu or  o   GJ or  o   Other ________________________________________________

	 	 	 	 	 
	Firm (Fixed Quantity):

	 	Firm (Variable Quantity):
	 	Interruptible:
	                   Units/day

	 	                   Units/day Minimum
	 	Up to                   Units/day
	     o EFP

	 	                   Units/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):

	
 
	
Canadian Export Zero Rating (Section 6.3)     o No (default)     o Yes
	
 
	Special Conditions:

	 	 	 
	Seller: 

	 	Buyer: 

	 
	 	 
	By: 

	 	By: 

	 
	 	 
	Title: 

	 	Title: 

	 
	 	 
	Date: 

	 	Date: 

	 	 	 
	Copyright © North American Energy Standards Bord, Inc.
All Right Reserved

	
Page 4 of 4	NAESB Standard 6.3.1
April 19, 2002

 

SPECIAL PROVISIONS (“Special Provisions”) attached to and forming a part of that 
certain
NAESB Base Contract for Sale and Purchase of Natural Gas as amended by the

Canadian Addendum each dated January 1, 2005 (“the “Base Contract”) between EnCana

Gas Marketing, a business unit of EnCana Midstream & Marketing, and Selkirk Cogen

Partners, L.P.

Capitalized terms used in these Special Provisions shall have the meanings
ascribed to them in the Base Contract as modified by the Canadian Addendum.
Sections referenced in these Special Provisions refer to a Section of the
General Terms and Conditions of the Base Contract, unless specified otherwise.

Section 1 – Purpose and Procedures

	1.	 	In Section 1.3 the following is added as the last sentence:
	 
	 	 	“The parties agree that all transactions entered into shall form a
single, integrated agreement between the parties and each transaction
shall be merged into the Contract, and that, in the absence of the
foregoing agreement, the parties would not otherwise enter into any
transaction under this Contract.”

Section 2 – Definitions

	2.	 	Section 2.4 of the Canadian Addendum is deleted and replaced with the
following:
	 
	 	 	“Business Day” shall mean any day except Saturday, Sunday, or a
statutory, federal or banking holiday observed in Alberta, Canada or in
New York City, New York, United States. A Business Day shall open at
8:00 a.m. and close at 5:00 p.m. local time for the receiving party.

	3.	 	A new definition is added as follows:
	 
	 	 	“2.30 “Costs” shall mean all reasonable third party legal, accounting
and other professional fees incurred by the Non-Defaulting Party to
replace a transaction or in connection with a Terminated Transaction
pursuant to Section 10.3.1”.

	4.	 	A new definition is added as follows:

	 	 	 	2.31 “Present Value Discount Rate” shall mean with respect to any
transaction: (i) if the amount payable is in Canadian currency, the
yield of Canadian Government Treasury Bills with a term closest to the
time remaining in the Delivery Period, plus 100 basis points; or (ii) if
the amount payable is in United States currency, the “Ask Yield” interest
rate for United States Government Treasury notes as quoted in the
“Treasury Bonds, Notes, and Bills” section of the Wall Street Journal
most recently published with a term closest to the time remaining in the
Delivery Period, plus 100 basis points.”

Section 3 – Performance Obligations

	5.	 	In Section 3.1, the following words are added as the last sentence:
	 
	 	 	“Unless expressly agreed by the parties in the Transaction Confirmation
or otherwise in writing, Seller and Buyer shall nominate Gas with respect
to a transaction so that such Gas will flow at a reasonably consistent
rate (to the extent such rate of flow is within the control of the
applicable party) over the course of each Day during the Delivery Period.

Section 6 – Taxes

	6.	 	In Section 6 “Buyer Pays At and After Delivery Point”, the last sentence
is amended by replacing the words “shall furnish the other party” with the
words “shall furnish, upon request, to the other party”.

Section 10 – Financial Responsibility

	7.	 	Section 10.1 is deleted and replaced with the following: “If either
party (“X”) (or in the case of Seller, its general partner) has its credit
ratings reduced below investment grade by either the Standard & Poor’s
Rating Group (a division of McGraw-Hill, Inc.) or its successor (“S&P”),
or Moody’s Investor Services, Inc., or its successor (“Moody’s”), such
that S&P rates Party X’s (or in the case

Page 1 of 1

 

	 	 	 	 of Seller, its general partner’s) long-term debt obligations below BBB-,
or Moody’s rates Party X’s (or in the case of Seller, its general
partner’s) long-term debt obligations below Baa3, then the other party
(“Y”) may demand Adequate Assurance of Performance. “Adequate Assurance
of Performance” shall mean sufficient security from an issuer, in the
form, in an amount, for the term and from an entity reasonably acceptable
to Party Y, including but not limited to, a standby irrevocable letter of
credit, a prepayment or a performance bond or guaranty. Such security
requirement shall be based upon Party Y’s exposure to Party X by
calculating the sum of: (i) the amount that would be payable by Party X
to Party Y, as if an Early Termination Date had been declared pursuant to
Section 10.3 (notwithstanding whether or not an Event of Default has
occurred) and all transactions had been terminated; (ii) plus the value
of Gas to be delivered by Seller to a maximum of 30 days after the
effective Early Termination Date provided for in subparagraph (i) above;
(iii) plus the net amount of all other payments owed but not yet paid
between the parties, whether or not such amounts are then due, for the
performance already provided pursuant to any and all transactions
conducted under this Contract. The amounts specified in (i) and (ii)
above shall be subject to an aggregate limit equal to the value of Gas to
be delivered by Seller for a period of 55 days.

	8.	 	In Section 10.2, first line, the phrase “or its guarantor” is deleted;
and the following sentence is added at the end of the Section: “Each
Event of Default listed in Subsections (i) through (v) inclusive, shall
also be an Event of Default if applicable to a party’s guarantor, if any.”
	 
	9.	 	In Section 10.2, subsection (vii) the phrase, “48 hours but at least one
Business Day” is replaced with the phrase, “three
(3) Business Days”.
	 
	10.	 	In Section 10.2, subsection (viii) the phrase “before the second Business
Day” is replaced with the phrase “before the third (3rd) Business Day.”
	 
	11.	 	In Section 10.2, the following subsections (ix), (x) and (xi) are added
following the phrase, “such payment is due;” in the ninth line: “or (ix)
fail to perform any of its material obligations pursuant to this Contract
not otherwise listed in this Section 10.2, and such failure is not cured
on or before the third (3rd)Business Day following Notice of such failure;
(x) fail to deliver or take the Contract Quantity for a cumulative period
of twenty (20) days in a 12 month period and such failure is unexcused
under the provisions of this Contract; or (xi) make any representation or
warranty which is proven to have been false or misleading in any material
respect at the time when the representation or warranty was given, or
deemed repeated;”
	 
	12.	 	In Section 10.3.1 eighth line, after the words “such Terminated
Transaction(s)” insert “, adjusted for Costs,”.
	 
	13.	 	In two locations under Section 10.3.1 “Early Termination Damages Apply”:
a) in the 10th line of the first paragraph and b) in the last line of the
second paragraph, the words “in a commercially reasonable manner” are
replaced with “by applying the Present Value Discount Rate”.
	 
	14.	 	In the last sentence of Section 10.3.2 “Other Agreement Setoffs Apply”,
the phrase, “other agreement or arrangement” is deleted and replaced with
the following: “other physical gas or crude oil purchase and sale
agreement or arrangement”.
	 
	15.	 	At the end of Section 10.3.3 the last sentence is amended by replacing
the words “in a commercially reasonable manner determined by the
Non-Defaulting Party” with the words, “by applying the Present Value
Discount Rate”.

Page 2 of 2

 

Section 11 – Force Majeure

	16.	 	The first sentence of Section 11.1 is amended by adding after the phrase
“Except with regard to a party’s obligation to make payment(s) due under
Section 7” the following phrase, “for amounts owing with respect to prior
periods”.

	17.	 	Section 11.2 is further amended by adding after subsection (v) ending
“having jurisdiction”, the following:
	 
	 	 	 “, or (vi) where the Delivery Point is a field processing facility,
interruption of firm gathering, processing, treating, compression or
similar service; (vii) where the Delivery Point is a field processing
facility (or at the outlet thereof) and such Delivery Point has multiple
takeaway transporters, the failure, interruption or curtailment of all
firm transportation by all takeaway transporters; or (viii) where the
Delivery Point is a storage facility (or outlet thereof), the curtailment
of all or a portion of firm storage service; provided that and only to
the extent that, any Force Majeure event relied upon under this Section
11.2 prevents or restricts delivery by Seller or receipt by Buyer of Gas
at the Delivery Point.”
	 
	18.	 	Section 11.3 is amended by adding subsections (vi), (vii) and (viii) as
follows:
	 
	 	 	 “, (vi) increases or decreases in Gas supply due to allocation or
reallocation of production by well operators, pipelines, or other
parties; (vii) unless the parties specifically agree that Gas is to be
sourced from a specific individual well, lack of pressure or failure of
specific, individual wells or appurtenant facilities in the absence of a
Force Majeure event broadly affecting other wells in the same geographic
area; or (viii) such party’s failure to obtain or maintain any permit,
consent or approval of any governmental authority which such party is
obligated to obtain and maintain under this Contract (other than as a
result of a change of law or regulation that prevents such party from
obtaining or maintaining any such permit, consent or approval).”
	 
	19.	 	A new Section 11.7 is added as follows:
	 
	 	 	“11.7 If on any Day Force Majeure partially restrains a party’s ability
to perform its Firm obligations for any transaction at a Delivery Point
and a party’s ability to perform its Firm obligations to others under
transactions at the same Delivery Point, then all Firm obligations shall
be reduced pro rata without regard to the price paid or received for Gas,
prior to the affected party performing under any interruptible purchase
or sale arrangement.”
	 
	20.	 	A new Section 11.8 is added as follows:
	 
	 	 	“11.8 Force Majeure shall not (i) require the parties to extend the term
of any transaction; (ii) require parties to make up any quantity of Gas
they would otherwise have been obligated to sell or purchase during any
period that Force Majeure was validly claimed; or (iii) require Seller to
deliver, or Buyer to receive, the Gas at points other than the Delivery
Point.”

Section 14 – Miscellaneous

	21.	 	The second sentence of Section 14.1 is amended by adding a new subsection
(iii) as follows:
	 
	 	 	“(iii) assign this Contract to a purchaser of all or substantially all
of its assets, or in consequence of any merger or amalgamation of such
party with another person.”

	22.	 	Section 14.1 is further amended by the addition of the following language:

	 	 “(a) 	 	Seller specifically acknowledges that Buyer has assigned all
of its right, title and interest in and to this Contract and the
accounts, revenues and proceeds hereof to Deutsche Bank Trust
Company Americas, as Collateral Agent for the trustee under Buyer’s
Trust Indenture dated as of May 1, 1994 (the “Indenture”) and
certain other lenders and lenders’ agents or trustees (together with
its successors and assigns, the “Collateral Agent”), pursuant to the
Amended and Restated Security Agreement and Assignment of Contracts
dated as of May 1, 1994 made by Buyer in favor of the Collateral
Agent, and Seller consents to such assignment.

Page 3 of 3

 

	(b)	 	Seller agrees to execute and deliver, at Buyer’s request,
such documents (including, but not limited to, a consent and legal
opinion) as may be reasonably necessary to satisfy the requirements
of Section 6.20(c) of the Indenture with respect to such assignment,
	 
	 	 	(i) such consent to contain the following provisions, and other
provisions reasonably requested: (A) Seller’s agreement not to
terminate or suspend the performance of its obligations under this
Contract unless it gives the Collateral Agent notice of the default
under this Contract by Buyer and the opportunity to cure the
default in accordance with the terms of this Contract; and (B)
Seller’s agreement, if this Contract is terminated by any
bankruptcy or insolvency proceeding of Buyer and the Collateral
Agent or its proposed assignee certifies its intention to assume
the future liabilities and obligations of Buyer, to enter into any
new additional contract with the Collateral Agent or its assignee
for the remaining term of, and on the same terms and conditions as,
the terminated Contract; and
	 
	 	 	(ii) such legal opinion to be delivered, at Buyer’s expense, by
counsel reasonably acceptable to the Collateral Agent, in form and
substance reasonably acceptable to the Collateral Agent, and
covering the following matters: (1) Seller has the power,
authority and legal right to execute, deliver and perform this
Contract; (2) the execution and delivery of this Contract by Seller
and the performance of its obligations thereunder have been duly
authorized by all necessary corporate or partnership action and do
not (A) require any consent or approval of any shareholder or
partner, except those consents and approvals which have been
already obtained, (B) violate any provision of any applicable law,
(C) result in a breach or constitute a default under any indenture,
loans, credit agreement or any other agreement, lease or instrument
of Seller; (3) this Contract has been duly executed and delivered,
is in full force and effect and constitutes the legal, valid and
binding obligation of Seller, enforceable in accordance with its
terms, except for standard bankruptcy exclusions; and (4) all
governmental approvals required with respect to the execution and
delivery of this Contract and the performance of Seller’s
obligations under this Contract have been obtained.
	 
	(c)	 	Seller represents and warrants, for the benefit of Buyer and
the Collateral Agent, the following: (1) this Contract is in full
force and effect and there are no amendments, modifications or
supplements thereto or any substitute therefor; (2) Seller has not
assigned, transferred, pledged or hypothecated this Contract or any
interest therein; (3) Seller has no knowledge of any default by
Buyer under this Contract; (4) none of Buyer’s rights under this
Contract have been waived; and (5) the assignment of this Contract
to the Collateral Agent as security and the consent to such
assignment will not cause or constitute a default under this
Contract or an event or condition which would lead to a default
under this Contract.”

	23.	 	Section 14.5 is amended by adding the following as the last sentence:
	 
	 	 	“Each party hereby irrevocably waives any and all rights it has or may
acquire in the future to request a trial by jury in any action or
proceedings hereunder.”
	 
	24.	 	Section 14.8 is amended by adding at the end of the Section the following:
	 
	 	 	“Seller acknowledges and agrees that: (a) Buyer is a Limited
Partnership; (b) Seller shall have no recourse against any partner(s) in
Buyer with respect to the obligations of Buyer and its sole recourse
shall be against the Limited Partnership assets, irrespective of any
failure to comply with applicable law or any provisions of this Contract;
(c) no claim shall be made against any partner(s) in Buyer in connection
with the obligations of Buyer under this Contract, except that the
partner(s) may be joined as nominal parties for the purpose of enforcing
Seller’s rights hereunder; (d) Seller shall have no right to any claim in
respect of Buyer not yet due and owing; and (e) this representation is
made expressly

Page 4 of 4

 

	 	 	for the benefit of the partner(s) in Buyer. Seller also
acknowledges that there is no restriction on Buyer’s use or utilization
of any quantity of Gas purchased under this Contract.”
	 
	25.	 	A new Section 14.12 is added as follows:
	 
	 	 	“14.12 The language used in this Contract is the product of both
parties’ efforts and each party hereby irrevocably waives the benefit of
any rule of contract construction which disfavors the drafter of a
contract or the drafter of specific language in a contract.”

	26.	 	A new Section 14.13 is added as follows:
	 
	 	 	 “14.13 Any original executed Base Contract, Transaction Confirmation, or
other related document may be digitally copied and stored on computer
tapes and disks (the “Imaged Agreement”). The Imaged Agreement (once
digitally regenerated to paper form), an automated facsimile form, the
recordings of telephonic communications, and all computer records of the
foregoing, if introduced as evidence in any judicial, arbitration,
mediation or administrative proceedings, will be admissible as between the
parties to the same extent and under the same conditions as other business
records originated and maintained in documentary form and neither party
shall object on the basis that such business records were not originated
or maintained in documentary form under any rule of evidence.”
	 
	27.	 	A new Section 14.14 is added as follows:
	 
	 	 	“14.14 For the purpose of any amounts calculated hereunder where
the price is indicated as being based upon a published index (the
“Reference Price”), the following shall apply: (i) if at any time
the referenced publication or any successor publication selected
hereunder is no longer published; or (ii) if the specific postings
referenced in such referenced publication are no longer published or
updated; or (iii) if the relevant posting point ceases to exist for
whatever reason, then the parties will select a new publication or
Reference Price, or both, as individual circumstances require.
	 
	 	 	If any or all of the indices used to determine the Reference Price
are not available in the future, and if the publication reporting the
Reference Price prior to its unavailability has suggested an
alternate index or methodology for determining the Reference Price,
then the alternate Reference Price shall be that suggested by such
publication. If none is suggested, then the parties agree to
promptly and in good faith negotiate an alternate Reference Price.
	 
	 	 	If the parties do not agree on a substitute methodology or index by
the end of the first Month for which the Reference Price could not be
determined, then each party shall in good faith prepare a list of three
differing alternate published reference postings or prices representative
of spot prices for Gas delivered in the same geographic area. Each list
shall be set forth in that party’s priority order with the highest
priority index listed first.
	 
	 	 	Each party shall submit its list to the other within ten (10)
Business Days after the end of the first Month for which the price
could not be determined as set forth above. The first listed index
appearing in Seller’s list that also appears in Buyer’s list shall
constitute the alternate Reference Price. If either party fails to
provide a list of that party’s alternate published references as
provided above, such party’s list shall not be considered, and the
first listed index appearing in the other party’s submitted list
shall constitute the alternate Reference Price.
	 
	 	 	If there is no index common to both Seller’s and Buyer’s lists,
then the parties shall continue to attempt to reach agreement on an
alternate Reference Price for an additional five (5) Day period.
	 
	 	 	If no selection can be agreed upon within the specified timeframe,
then the average of each party’s first listed index in its first
submitted list shall constitute the alternate Reference Price.
	 
	 	 	From and after the date the indices used to determine the Reference
Price are no longer available (“Renegotiation Date”) until the
alternate Reference Price is determined, the Reference Price

Page 5 of 5

 

	 	 	shall be
deemed to be the average of the Reference Price(s) in effect during
the twelve (12) Months preceding the Month in which the Renegotiation
Date occurred, which price shall be effective until
the effective date of the alternate Reference Price determined as set
forth above. Upon determination of a new alternate Reference Price, the
Reference Price will be adjusted retroactively to the Renegotiation
Date”.
	 
	28.	 	A new Section 14.16 is added as follows:
	 
	 	 	“14.16 Notwithstanding the provisions of Section 14.4, the parties
agree that this Contract shall not supersede and replace the Second
Amended and Restated Natural Gas Purchase Agreement, as amended (the
“Stand-Alone Agreement”), dated January 1, 2005 between Selkirk Cogen
Partners, LP and EnCana Corporation . The Stand-Alone Agreement shall
continue to be in full force and effect in accordance with the terms
thereof.”

Page 6 of 6

 

	 	 	 
	

	 	EnCana Gas Marketing, a business unit of EnCana

Midstream & Marketing (“EnCana”)

1800, 855 – 2nd Street S.W.

Calgary, AB T2P 4Z5 Phone: (403) 645-2000

TERM TRANSACTION CONFIRMATION

	 	 	 	 	 
	Trade Date:

	 	Ticket #:
	 	Deal ID #: S-SELKIRK(N)-0002

This Transaction Confirmation confirms the verbal agreement of the essential
terms agreed to by Buyer and Seller regarding the sale and purchase of natural
gas pursuant to the NAESB + Special Provisions +Canadian Addendum dated
2005-01-01 between Buyer and Seller.

	 	 	 	 	 	 	 
	Buyer:

	 	Selkirk Cogen Partners, L.P.
	 	Seller:
	 	EnCana Gas Marketing, a business unit of EnCana Midstream & Marketing
	 
	 	 	 	 	 	 
	Address:

	 	24 Power Park Drive, Selkirk, NY 12158
	 	Address:
	 	#1800, 855 – 2nd Street SW, Calgary, AB T2P 4Z5

	 	 	 
	Transporter: TCPL

	 	Performance Obligation: Firm

	 	 	 	 	 	 	 	 	 
	 	 	Delivery Period	 	 	 	 
	 	 	
	 	Contract	 	 
	Delivery Point
	 	Start Day
	 	End Day*
	 	Quantity
	 	Contract Price

	Burstall, Sask

	 	2009-11-01
	 	2014-10-31
	 	17,936 GJ/d
	 	AECO/NIT Monthly + Nova FTD

* End Day shall mean the date of the last full day of gas flow, i.e. gas ceases
to flow at 9:00am CST on the next following day.

	 	 	 	 	 	 	 
	Fuel Gas to be supplied at Contract Price?

	 	    yes
	 	    no
	 	    other

Special Provisions: see two (2) pages Special Provisions attached

Please review this Transaction Confirmation and if you are in agreement, sign,
date and return it to EnCana by facsimile. If this Transaction Confirmation
does not reflect your understanding of the transaction, please notify our Trade
Administrator immediately at (403) 645-6225. Failure to provide such
notification within the greater of two (2) business days or the Confirm
Deadline specified in the underlying contract shall be deemed to be your
agreement with the terms and conditions of this Transaction Confirmation.

Agreed to and accepted by:

	 	 	 
	Selkirk Cogen Partners, L.P.
	 	 
	By its Managing General Partner, JMC Selkirk, Inc.

	 	EnCana Gas Marketing, a business unit of EnCana
	

	 	Midstream & Marketing

	 	 	 	 	 	 	 
	/s/ P. CHRISMAN IRIBE

	 	December 23, 2004
	 	/s/ KIM JOSLIN
	 	December 20, 2004
	

	 	

	 	

	 	

	Authorized Representative

	 	Date
	 	Authorized Representative
	 	Date

	 	 	 	 	 	 	 
	Title:

	 	President
	 	Title:
	 	Vice-President, Canadian Gas
Marketing

Please return the executed Transaction Confirmation to Trade Administration via Fax (403) 645-6201.

Please call (403) 645-6225 with any questions or concerns.

 

	 	 	 
	

	 	EnCana Gas Marketing, a business unit of

EnCana Midstream & Marketing

1800, 855 – 2nd Street S.W.

Calgary, Alberta T2P 4Z5

ATTACHMENT TO DEAL ID #: S-SELKIRK(N)-0002

Special Provisions

1. Commercial terms of this transaction:

	a)	 	Contract Price: AECO/NIT Monthly + Nova FTD where:

AECO/NIT Monthly is the Alberta Gas Price at AECO C in C$/GJ as
published monthly by Canadian Enerdata Ltd. in the “Canadian Gas Price
Reporter” in the table entitled “Canadian Natural Gas Supply Prices”
and described in the first column, under “Alberta” as “AECO C & N.I.T.
One-Month Spot**” under the heading “$/GJ” under the column “Avg” for
the delivery month, and

Nova FTD is the FT-D Demand Rate per month as quoted in the NOVA Gas
Transmission Ltd. Tariff for Rate Schedule FT-D (currently
$188.41/103m3) converted to C$/GJ using a standard conversion rate of
37.4 MJ/m3 and an average of 30.4 days/month. In the event Rate
Schedule FT-D is no longer in effect, any replacement NOVA Rate
Schedule for delivery of gas at Empress, Alberta will be used in its
place.

	b)	 	Contract Quantity: On each day during this transaction
Seller shall sell and deliver, and Buyer shall receive and purchase,
the Contract Quantity of 17,936 GJ/d or a Reduced CQ (as defined
below), on a firm basis. Buyer may reduce the Contract Quantity for
any day or days by any amount (including without limitation to 0
GJ/d) as determined by Buyer in its sole discretion to be necessary
to accommodate outages or other restrictions on the operation of
Buyer’s plant, upon providing Seller at least twenty (20) days prior
Notice of such Contract Quantity reduction (the “Reduced CQ”) and
the period for which such Reduced CQ will be in effect. During and
with respect to any period such Reduced CQ is in effect, the term
“Reduced CQ” shall replace the term “Contract Quantity” in this
Contract.
	 
	c)	 	Delivery Point shall mean the point into the TCPL system at
Burstall, Saskatchewan. If delivery can not be made or received at
Burstall for any reason, the Delivery Point will be the
interconnection of the facilities of NOVA and TCPL located near
Empress, Alberta.

	2.	 	For the purposes of this transaction only, Section 12 is amended to
read “Section 12.1” and a new Section 12.2 is added as follows:

“12.2 Notwithstanding any other provision in this Contract,

     (i) if, on or prior to June 26, 2012, Buyer is no longer a party to
its power purchase agreement with Consolidated Edison Company of New
York, Inc. for any reason, then Buyer may, in its sole discretion,
terminate this transaction upon at least ninety (90) days prior written
Notice to Seller of such termination,

     (ii) if, after June 26, 2012, Buyer is no longer a party to its
power purchase agreement with Consolidated Edison Company of New York,
Inc. for any reason, Buyer will promptly notify Seller thereof and either
party may, in its sole discretion, terminate this transaction upon at
least ninety (90) days prior written Notice to the other party of such
termination, or

			
	Buyer Initials /s/ PCI
	 	 
	Seller Initials /s/ KJ
	 	January 1, 2005

 

 

     (iii) if there is a change in the laws, regulations or other
governmental action that renders this transaction illegal or unenforceable
(excluding the failure of either party to obtain any governmental permit,
consent or approval specified in Section 14.6, or to maintain any such
permit, consent or approval other than as a result of a change in law or
regulation), then either party may request that the parties enter into
negotiations for appropriate amendments to this Contract and, if the
parties have not agreed on such appropriate amendments within ninety (90)
days of such request, either party may upon sixty (60) days prior written
Notice, terminate this transaction, and, in the case of a termination of
this transaction under any of subsections (i), (ii) or (iii), neither
party shall have any liability to the other for the payment of any amounts
pursuant to Section 10.3 of this Contract.

	3.	 	For this transaction only, Section 14.6 is amended by adding at the
end of the Section, the following: “Each party will comply with all
federal, state or provincial regulatory requirements necessary to meet
its obligations under this transaction, including provincial removal
permits and/or federal export/import licences, as required.”

	 	 	 	 
	Buyer Initials	 	/s/ PCI	
	 	 	
	
	 			
	Seller Initials	 	/s/ KJ	January 1, 2005

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