Document:

exv10w7

 

Exhibit 10.7

BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS

DATED NOVEMBER 13, 2002 BETWEEN UGI ENERGY SERVICES, INC.

AND VIKING RESOURCES CORP.

 

 

Exhibit 10(h)

ORIGINAL FILE COPY

Base Contract for Sale and Purchase of Natural Gas

This XXX
of the following date, November 13, 2002. The parties for this
this base contract are the following.

	 	 	 	 	 
	Viking Resources Corp.

	 	and
	 	UGI Energy Services, Inc. d/b/a GASMARK
	XXX 10500

	 	 	 	1188 XXX Blvd., Suite 385, XXX
	Duns Number

	 	 	 	Duns Number 88-350-4581
	Contract Number:

	 	 	 	Contract Number:
	U.S. Federal Tax ID Number:

	 	 	 	U.S. Federal Tax ID Number: 23-2800541
	Notices:
	 	 	 	 
	Viking Resources Corp.

	 	 	 	UGI Energy Services Inc. d/b/a GASMARK
	Attn: Michael Brecko

	 	 	 	Attn: Robert Meder
	Phone: (412) 262-2830 x126 Fax: (412) 262-3927

	 	 	 	Phone: (610) 373 7999 Fax: (610) 374 4288
	Confirmations:
	 	 	 	 
	Viking Resources Corp.

	 	 	 	UGI Energy Services Inc. d/b/a GASMARK
	Attn: Michael Brecko

	 	 	 	Attn: Robert Meder
	Phone: (412) 262-2830 x126 Fax: (412) 262-3927

	 	 	 	Phone: (610) 373 7999 Fax: (610) 374 4288
	Invoices and Payments
	 	 	 	 
	XXX

	 	 	 	XXX
	Attn:

	 	 	 	Attn: Joseph Hart
	Payments: Same

	 	 	 	Payments: Same
	Phone: Fax:

	 	 	 	Phone: (610) 373 7999 Fax: (610) 374 4288
	Wire Transfer or ACH Numbers (if applicable)
	 	 	 	 
	BANK: Koybank, Cleveland Ohio

	 	 	 	BANK: PNC Bank NA-Philadelphia
	ABA: D4100103XXX

	 	 	 	ABA: D3100003
	ACCT: 428190700

	 	 	 	ACCT: 8606074240
	Other details: Account is with Resource Energy

	 	 	 	Other Details:

This Base Contract incoporates 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. XXX General Terms and Conditions in the event the parties fail to check XXX
the specified default provision shall apply XXX only one XXX from each section.

 

 

	 	 	 	 	 	 	 	 	 	 	 
	Section 1.2

	 	[       ]
	 	Oral (default)
	 	Section 7.2
	 	 	 	25th Day of Month following
	 

	 	 	 	 	 	 	 	 	 	Month of delivery (default)
	Transaction

	 	[       ]
	 	Written
	 	Payment Date
	 	 	 	10 Days following receipt of
	Procedure

	 	 	 	 	 	 	 	[       ]
	 	meter statements
	Section

	 	 	 	 3 Business Days XXX
	 	Section XXX
	 	[       ]
	 	XXX
	XXX

	 	[       ]
	 	___Business Days after
	 	Method of
	 	[       ]
	 	Automated Clearinghouse
	 

	 	 	 	receipt
	 	 	 	 	 	Credit (ACH)
	XXX

	 	 	 	 	 	Payment
	 	[       ]
	 	Other
	Section 2.XXX

	 	[       ]
	 	Seller (default)
	 	Section 7.7
	 	[       ]
	 	 Nothing applies (default)
	Confirming

	 	[       ]
	 	Buyer
	 	Nothing
	 	[       ]
	 	 Nothing does not apply
	Party

	 	[       ]
	 	BOTH PARTIES	 	 	 	 	 	 
	Section 3.2

	 	[       ]
	 	Cover Standard (default)
	 	Section 10.3.1
	 	[       ]
	 	 Early Termination Damages
	 

	 	 	 	 	 	 	 	 	 	Apply (default)
	Performance

	 	[       ]
	 	Spot Price Standard
	 	Early Termination Damages
	 	 [       ]
	 	 Early Termination Damages Do
	Obligation

	 	 	 	 	 	 	 	 	 	Not Apply
	Note: The following Spot Price Publication applies to both
of the immediately preceding.	 	Section 10.3.2	 	[       ]	 	Other Agreement XXXX Apply

(default)
	 

	 	 	 	 	 	Other Agreements XXX
	 	[       ]
	 	Other Agreements XXX Do Not
	 

	 	 	 	 	 	 	 	 	 	Apply
	Section 2.28

	 	[       ]
	 	Gas Daily Midpoint
	 	Section 14.5	 	 	 	 
	 

	 	 	 	(default)	 	 	 	 	 	 
	Spot Price

	 	[       ]
	 	                                        
	 	Choice of Law
	 	 	 	Pennsylvania
	Publication
	 	 	 	 	 	 	 	 	 	 
	Section XXX

	 	[       ]
	 	Buyer Pays At and After
	 	Section 14.10
	 	[       ]
	 	 Confidentiality applies
	 

	 	 	 	Delivery Point
	 	 	 	 	 	(default)
	 

	 	 	 	(default)
	 	Confidentiality
	 	[       ]
	 	Confidentiality does not
	 

	 	 	 	 	 	 	 	 	 	apply
	Taxes

	 	[       ]
	 	Seller Pays Before and At	 	 	 	 	 	 
	 

	 	 	 	Delivery Point	 	 	 	 	 	 

[       ] Special Provisions Number of sheets attached: 2

[       ] Addendum(s): None

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

	 	 	 	 	 	 	 	 	 	 	 
	Viking Resources Corp.	 	 	 	UGI Energy Services Inc. d/b/a GASMARK	 	 
	Party Name	 	 	 	Party Name	 	 
	By:

	 	/s/ Jeffrey C. Simmons
	 	 	 	By:
	 	/s/ Robert Meder	 	 
	Name:

	 	 

Jeffrey C. Simmons
	 	 
	 	
Name:
	 	 

Robert Meder
	 	 
	Title:

	 	Vice President
	 	 	 	Title:
	 	Vice President, Gas Supply & Risk Management	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Copyright(C)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
non-conflicting, Transaction Confirmations of 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 XXX XXX the difference in the Transaction Confirmation. 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 recording 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 Btu
(IT).

Copyright(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 2 of 10 April 19, 2002

 

 

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 stand-by letter of
credit, a margin agreement, a prepayment, a security interest in an asset, a performance bond,
guaranty, or other bond 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 Points” shall mean such point(s) as are agreed to by the parties in a transaction.

 

 

2.15. “ED” 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. “Firms” 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 Copyright(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 3 of 10 April 19, 2002

 

 

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
Sport 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.

Copyright(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 4 of 10 April 19, 2002

 

 

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 preceeding 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 name 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 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 the 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.

Copyright(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 5 of 10 April 19, 2002

 

 

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 an liability with respect to the
Gas prior to its delivery to Buyer at the specified Delivery Points(s). Buyer shall have
responsibility for and any liability with respect to said Gas after its delivery to Buyer at the
Delivery Points(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 the 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 requirement of Section 5.

SECTION 9. NOTICES

9.1. At 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 or 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 if 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 XXX) 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) XXX 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 have such
petition filed or preceding 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, observator, 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 10.3 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 not 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 seen thereafter as
is reasonable 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 the purposes of Section 10.3.1.

Copyright(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 6 of 10 April 19, 2002

 

 

THE PARTIES HAVE SELECTED EITHER “EARLY TERMINATION DAMAGES APPLY” OR “EARLY TERMINATION
DAMAGES DO NOT APPLY” AS INDICATED ON THE BASE CONTRACT.

EARLY TERMINATION DAMAGES APPLY:

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

For purposes of this Section 10.3.1. “Contract Value” means the amount of Gas remaining to be
delivered or purchased under a transaction multiplied by the Contract Price, and “Market Value”
means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by
the market price for a similar transaction at the Delivery Point determined by the Non-Defaulting
Party in a commercially reasonable manner. To ascertain the Market Value, the Non-Defaulting Party
may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures
contracts, quotations from leading dealers in energy swap contracts or physical gas trading
markets, similar sales or purchases and any other bona fide third-party offers, all adjusted for
the length of the term and differences in transportation costs. A party shall not be required to
enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of
the term of a transaction to which parties are not bound as of the Early Termination Date
(including but not limited to “evergreen provisions”) shall not be considered in determining
Contract Values and Market Values. For the avoidance of doubt, any option pursuant to which one
party has the right to o the terms 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 amount owed under
Section 3.2), for which payment has not yet been made by the party that owes such payment under the
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.

OTHERS 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 reaonable 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 Copyright(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 7 of 10 April 19, 2002

 

 

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 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 of 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 necessary 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 occurrences: (i) the curtailment of
interruptible or secondary Firm transportation unless primarily 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 the Agreement, (iv) the loss of Buyer’s market(s) or Buyer’s inability to use
or resell Gas purchased hereunder, except, in the either case, as provided in Section 11.2; (v) the
loss or failure of Sellers 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 only, however, written Notices 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

The Contract may be terminated on 30 Days 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(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 8 of 10 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(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 9 of 10 April 19, 2002

 

 

EXHIBIT A

TRANSACTION CONFIRMATION

FOR IMMEDIATE DELIVERY

	 	 	 
	Viking Resources Corp

	 	Date: November 13, 2002
	 

	 	Transaction Confirmation #:                                         

This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated
November 13, 2002

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
	Viking Resources Corp.

	 	UGI Energy Services, inc. d/p/a GASMARK
	311 Rouser Corp.

	 	1100 Berkshire Blvd., Suite 305
	 

	 	Wyomissing PA 19810
	Moon Two, PA 15108

	 	Attn: Robert Meder
	Attn: Michael Brecko

	 	Phone: 610-373-7999
	Phone: 412-282-2830-126

	 	Fax: 610-374-4288
	Fax: 412-282-3927

	 	Base Contract No.
	Base Contract No.

	 	Transporter:
	Transporter:

	 	Transporter Contract Number:
	Transporter Contract Number:
	 	 

 

 

Contract Price: $                    /MMBtu or NYMEX LDS plus $.30 oer Dth

Delivery Period: Begin April 1, 2003 End: March 31, 2004

Performance Obligation and Contract Quantity: (Select One)

	 	 	 	 	 
	Firm (Fixed Quantity):

	 	Firm (Variable Quantity):
	 	Interruptible:
	                                         MMBtus/day

	 	9,000 MMBtus/day Minimum
	 	 Up to                                          MMBtus/day
	EFR

	 	9,000 MMBtus/day Maximum	 	 
	 

	 	subject to Section 4.2. at election of	 	 
	 

	 	[    ] Buyer or [    ] Seller	 	 

Delivery
Point(s): Texas Eastern Meter Number 73133 Station Name of Prah in
Market area
(If a pooling point is used, XXX M2

Special Conditions: Additional wells may be added upon mutual consent of the parties. All gas
produced under this agreement shall be produced from wells located within the Commonwealth of
Pennsylvania. Viking shall have trigger rights to lock its prices.

	 	 	 	 	 	 	 	 	 	 	 
	Seller:

	 	Viking Resources Corp.
	 	 	 	Buyer:
	 	UGI Energy Services Inc., d/b/s GASMARK	 	 
	By:

	 	/s/ Jeffrey C. Simmons	 	 	 	By:	 	/s/ Robert Meder	 	 
	Title:

	 	 

Vice President
	 	 
	 	Title:
	 	 

Vice President, Gas Supply & Risk Management
	 	 
	Date:

	 	1/21/03
	 	 	 	Date:
	 	12/17/02	 	 

Copyright(C)2002 North American Energy Standards Board, Inc.NAESB Standard 6.3.1 All Rights
Reserved Page 10 of 10 April 19, 2002

 

 

SPECIAL PROVISIONS

To Base Contract for Sale and Purchase of Natural Gas Between UGI Energy Services, Inc. and Viking
Resources Corp.

Dated November 13, 2002

THE FOLLOWING SENTENCE REPLACES SECTION 1.4 IN ITS ENTIRETY:

The parties hereby consent to the electronic recording of their Oral Transactions and related
telephone discussions. Each party waives any further notice of such recording, and agrees to notify
its officers and employees of such recording and to obtain any necessary consent of such officers
and employees. Failure by the Confirming Party to send, or the other party to return, an executed
Transaction Confirmation shall not invalidate any Gas purchase and sale transaction (each a
“Transaction” and collectively “Transactions”) agreed to by the parties in a recorded telephone
conversation. In the absence of a written Transaction Confirmation, any such recording will be
deemed a “writing” by the parties for purposes of Section 2-201(1) of the Uniform Commercial Code.
A true and complete copy of a recording made by either party will be provided to the other party
upon request, if it reasonably appears that such recording may be utilized to resolve a dispute
between the parities. Such recording may be submitted by either party as evidence of the existence
or terms of a Transaction, subject to any applicable statute, rule or judicial precedent which
limits the admissibility of parol or extrinsic evidence, and subject to any arguments which either
party may make regarding the interpretation or significance of such recording. In the event of
conflict between the terms and provisions of the written Transaction Confirmation and a recorded
telephone conversation, the terms and provisions of the written Transaction Confirmation shall
control to the extent of any such conflict.

THE FOLLOWING REPLACES PARAGRAPH (i) IN SECTION 2.7:

(i) the Base Contract, including the Special Provisions and any Addendums thereto,

THE FOLLOWING REPLACES SECTION 2.20 IN ITS ENTIRETY:

“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, or Section 4.4, related to the failure to
provide timely notice of interruption.

THE FOLLOWING PARAGRAPH IS ADDED AS SECTION 4.4:

In the event that performance is interrupted, the interrupting party shall provide no less than 24
hours notice of its intent to interrupt. In the event the interrupting party fails to provide
timely notice of its intent to interrupt its performance, the interrupting party shall be
responsible for damages calculated using the standards set forth in Section 3.2.

THE FOLLOWING IS ADDED AS THE FIRST SENTENCE IN SECTION 8.2:

Seller warrants that it is fully capable of assuming and willing to assume, financially and
otherwise, all of the duties and obligations of this Contract.

 

 

THE FOLLOWING REPLACES SECTION 8.3 IN ITS ENTIRETY:

Seller agrees to indemnify Buyer its successors and assigns, officers, directors and employees, and
save them harmless from all losses, liabilities for claims, including but not limited to claims of
title, personal injury, property damage, commercial damages and attorney’s fees and costs of court
(“Claims”) arising from or out of or caused by Seller’s possession or control of Gas sold
hereunder. Buyer agrees to indemnify Seller its successors and assigns, officers, directors and
employees, and save them harmless from all losses, liabilities for claims, including but not
limited to claims of title, personal injury, property damage, commercial damages and attorney’s
fees and cost of court (“Claims”) arising from or out of or caused by, Buyer’s possession or
control of Gas sold hereunder.

THE FOLLOWING IS ADDED AT THE END OF SECTION 10.2:

The Parties specifically agree that this Contract and all Transactions pursuant hereto are “Forward
Contracts” as such term is defined in the United States Bankruptcy Code, 11 U.S.C., Section
101(25). If either Party becomes subject to Bankruptcy Code proceedings, it is understood and
agreed that the other Party shall be entitled to exercise its right to liquidate this Contract as a
“Forward Contract Merchant” under Section 556 of the U.S. Bankruptcy Code.

THE FOLLOWING IS ADDED AT THE END OF THE SECOND PARAGRAPH IN SECTION 10.3.1

(EARLY TERMINATION DAMAGES APPLY):

In addition to the other Early Termination Damages defined in this Section, the Non-Defaulting
Party shall be entitled to recover the Costs resulting from the Event of Default. “Costs” shall
mean brokerage fees, commissions and other similar transaction costs and expenses reasonably
incurred by the Non- Defaulting Party either in terminating any arrangement by which it has hedged
its obligations pursuant to a terminated EFP or Firm transaction or in entering into new
arrangements which replace a terminated EFP or Firm transaction, and reasonable attorneys’ fees, if
any, incurred in connection with enforcing its rights hereunder.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Accepted and Approved:	 	 	 	Accepted and Approved:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	UGI Energy Services, Inc.	 	 	 	Viking Resources Corp.	 	 
	 	 	d/b/a GASMARK	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert Meder	 	 	 	By
	 	/s/ Jeffrey C. Simmons	 	 
	 

	 	 
	 	 

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title
	 	V P Supply	 	 	 	Title
	 	Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Date
	 	 12/17/02
	 	 	 	Date
	 	 1/21/03exv10w8

 

Exhibit 10.8

FIRST AMENDMENT TO BASE CONTRACT FOR SALE AND

PURCHASE OF NATURAL GAS

 

 

FIRST AMENDMENT TO

BASE CONTRACT FOR THE SALE AND PURCHASE OF NATURAL GAS

This First Amendment To Base Contract For The Sale And Purchase Of Natural Gas (this
“Amendment”) is made and entered into on November ___, 2005 (the “Effective Date”)
by and between Atlas America, Inc., a Pennsylvania corporation (“Atlas PA”), Atlas America,
Inc. a Delaware corporation (“Atlas DE”), and UGI Energy Services, Inc. d/b/a/ GASMARK, a
Pennsylvania corporation (“GASMARK”). This Amendment modifies, supplements, forms part of,
and amends that certain Base Contract for the Sale and Purchase of Natural Gas entered into as of
November 13, 2002 between GASMARK and Viking Resources Corporation and assigned by Viking Resources
Corporation to Atlas PA by Assignment and Assumption Agreement dated October 1, 2004 (the “Base
Contract”). Capitalized terms used in this Amendment that 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 Amendment and the Base Contract, the terms of this Amendment shall apply. Atlas PA, Atlas DE
and GASMARK are at times referred to herein individually as a “Party” and collectively as the
“Parties.”

WHEREAS, GASMARK has requested that Atlas PA assign its rights, duties and interests as seller
under the Base Contract, and Atlas DE has agreed to the assignment and assumption; and

WHEREAS, GASMARK and Atlas DE wish to amend the Base Contract prospectively in order to define
and limit the obligations that each Party shall have to provide collateral to the other in
conjunction with future gas purchase and sale transactions under the Base Contract

NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be bound hereby the Parties hereby agree as follows:

I.

ASSIGNMENT AND ASSUMPTION

1.1 Assignment. Effective as of the Effective Date, Atlas PA does hereby sell, grant,
convey, assign, transfer and set over to Atlas DE all of its right, title and interest in and to
the Base Contract and all transactions confirmed thereunder.

1.2 Consent to Assignment. GASMARK hereby consents to the assignment of the Base
Contract, and all transactions confirmed thereunder, from Atlas PA to Atlas DE effective as of the
Effective Date.

1.3 Assumption. Atlas DE hereby assumes and agrees to pay, discharge or perform, as
appropriate, the Base Contract and all transactions confirmed thereunder, and such Base Contract is
hereby declared to be the debts, liabilities and obligations of Atlas DE from and after the
Effective Date.

 

 

     1.4 Release and Discharge. Upon execution of this Amendment by Atlas DE, Atlas PA
will be released from any liability or obligation under this Base Contract and any transaction
confirmed thereunder, that arises or accrues after the Effective Date of assignment.

II.

CREDIT SUPPORT TERMS

     2.1 Integration; Amendment to Definition of Event of Default. This Article II
defines the terms of the Credit Support Obligation among the Parties, and supercedes and replaces
in their entirety Sections 10.1 and 10.2(vii) of the Base Contract. Section 10.2 is hereby amended
to add the following as an Event of Default thereunder: “material failure to receive or deliver the
Contract Quantity under a Transaction Confirmation.”

     2.2 Collateral Threshold. On any day during the term of the Base Contract that an
Event of Default has not occurred, the amount of Exposure that either Atlas DE or GASMARK will
accept in Transactions with the other without requiring the posting of additional collateral shall
be Ten Million Dollars ($10,000,000)(the “Collateral Threshold”). For purposes of this
Amendment, “Exposure” shall mean the Market Value of all Terminated Transactions, Excluded
Transactions and other applicable charges that either Party would owe to the other on the date of
calculation if an Early Termination Date had been designated, as provided for in Section 10.3.1 of
the Base Contract. The Parties acknowledge that the Exposure that each has to the other under the
Transactions in place as of the Effective Date exceeds the Collateral Threshold.

     2.3 Collateral for Obligations of GASMARK. GASMARK currently has collateral posted in
support of its obligations under the Base Contract in the form of a parent guaranty effective as of
January 1, 2005 from UGI Corporation in favor of Viking Resources Corp. in the amount of Seven
Million Dollars ($7,000,000) (the “Guaranty”). Within ten (10) Business Days after the
Effective Date, GASMARK will cause to be executed and delivered to Atlas DE a new parent guaranty
from UGI Corporation in favor of Atlas DE in the amount of Eight Million Dollars ($8,000,000)(the
“Revised Guaranty”) containing terms and conditions reasonably acceptable to Atlas DE and
substantially identical terms to the Guaranty. The Revised Guaranty will supercede and replace in
its entirety the Guaranty and will be effective as of the Effective Date. It shall be a condition
precedent to GASMARK’s performance under this section that Atlas DE perform its obligations under
Section 2.3.

     2.4 Collateral for Obligations of Atlas DE. Within ten (10) Business Days after the
Effective Date, Atlas DE will cause to be executed and delivered to GASMARK an irrevocable standby
letter of credit issued by Wachovia Bank, N.A. or other lender(s) reasonably acceptable to GASMARK,
containing terms and conditions that are reasonably acceptable to GASMARK, in the amount of Ten
Million Dollars ($10,000,000)(the “Atlas LC”), which shall be exercisable by GASMARK in the
event that Atlas DE is the Defaulting Party under the Base Contract. GASMARK will, upon invoice,
reimburse Atlas DE for the charges assessed by the issuing bank specifically for issuing the Atlas
LC, up to a maximum reimbursement amount of $187,500 for the first annual period. The Atlas LC will
be effective as of the Effective Date, and
will remain in effect until September 30, 2006; provided, however, that if

 

 

GASMARK’s Exposure as of September 30, 2006 exceeds the Collateral Threshold, Atlas DE will provide
GASMARK with a new letter of credit to replace the Atlas LC, in the amount of the then expiring
Atlas LC (the “Replacement LC”). The Replacement LC shall terminate on the earlier of one
year from the date of issuance or the expiration of the Base Contract. GASMARK will, upon invoice,
reimburse Atlas DE for the charges assessed by the issuing bank specifically for issuing the
Replacement LC, up to a maximum reimbursement amount of 1.875% of the face amount of the
Replacement LC. The Replacement LC shall be subject to decrease as set forth in Section 2.4. It
shall be a condition precedent to Atlas DE’s performance under this section that GASMARK perform
its obligations under Section 2.2.

2

 

2.5 Reduction of Posted Collateral. Commencing December 31, 2005 and on the last day
of each month thereafter, GASMARK and Atlas DE will jointly review the amount of GASMARK’s Exposure
under all prompt month and forward month Transactions entered into between the Parties under the
Base Contract. If GASMARK and Atlas reasonably determine that (i) GASMARK’s Exposure is below
Fifteen Million Dollars ($15,000,000), (ii) no Event of Default with respect to Atlas DE has
occurred and is continuing, and (iii) no Early Termination Date has occurred or been designated by
GASMARK for which there exists any unsatisfied payment obligations under the Base Contract, then
the Atlas LC shall be amended, and GASMARK shall consent to such amendment, to reduce the amount of
the Atlas LC to Five Million Dollars ($5,000,000). If GASMARK and Atlas DE reasonably determine
that (i) GASMARK’s Exposure is below the Collateral Threshold, (ii) no Event of Default with
respect to Atlas DE has occurred and is continuing, and (iii) no Early Termination Date has
occurred or been designated by GASMARK for which there exists any unsatisfied payment obligations
under the Base Contract, then Atlas DE will be permitted to terminate the Atlas LC. Any costs
incurred by Atlas DE in reducing or terminating the Atlas LC will be borne solely by Atlas DE.

III.

MISCELLANEOUS

3.1 Warranties. Each Party represents and warrants to the others that it has the
corporate authority to execute, deliver and perform this Amendment and has taken all actions
necessary to secure all necessary approvals required to be secured in connection therewith. The
execution, delivery and performance of this Amendment and the Base Contract have been duly
authorized by all necessary corporate action.

3.2. No Third Party Benefit. Nothing contained in this Amendment, express or implied,
is intended to or shall be construed to confer upon or give any person, firm, or corporation, other
than the Parties and their respective permitted successors and assigns, any remedy or claim under,
or by reason of, this Amendment, or any term, covenant or condition hereof. All conditions,
promises and agreements contained in this Amendment shall be for the sole and exclusive benefit of
the Parties and their respective permitted successors and assigns.

3.3 Entire Agreement. This Amendment and the Base Contract set forth the entire
understanding and agreement between the Parties as to matters covered herein and therein and
supersedes any other prior understanding, agreement or statement (written or oral) between the
Parties as to matters covered herein and therein.

3

 

3.4 Headings. The headings contained in this Amendment are for convenience of
reference only and shall not affect, in any way, the meaning or interpretation of this Amendment.

3.5 Amendments; Waivers. To be binding, any amendment of this Amendment must be
effected by an instrument in writing signed by all of the Parties. Rights hereunder shall not be
waived, except pursuant to a writing signed by the Party against which enforcement of the waiver is
sought.

3.6 Rights and Remedies. The rights and remedies granted under this Amendment
shall not be exclusive but shall be in addition to all other rights and remedies available under
the Base Contract, at law or in equity.

3.7 Expenses of Negotiation. Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Amendment are to be borne by the Party incurring such costs.

3.8 Severability. It is the intention of the Parties hereto that whenever
possible, each provision of the Base Contract and this Amendment will be interpreted in such manner
as to be effective and valid under applicable law, but that if any provision of the Base Contract
or this Amendment, as the case may be, is held to be invalid, illegal or unenforceable in any
respect under any applicable law, such invalidity, illegality or unenforceability will not affect
any other provision, and the Base Contract and this Amendment, as the case may be, will be
reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein and/or therein, as the case may be.

3.9 Counterparts; and Facsimile Signatures. This Amendment may be executed,
including by facsimile signature, in one or more counterparts, each of which when so executed shall
be deemed to be an original and all of which together shall constitute one and the same instrument.

3.10 Governing Law. The interpretation and performance of this Amendment shall be
governed by the laws of the jurisdiction indicated in the Base Contract.

4

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this instrument or have caused this
instrument to be duly executed on their behalf, on the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	UGI ENERGY SERVICES, INC.	 	 	 	ATLAS AMERICA, INC., a Pennsylvania

corporation
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 	By:	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name:Bradley C. Hall	 	 	 	Name:	 	 	 	 	 	 	 	 
	 	 	Title: President	 	 	 	Title:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ATLAS AMERICA, INC., a Delaware corporation	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

5

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