Document:

exv10w1

 

EXHIBIT 10.1

	 	 	 	 	 
	Imperial Oil Resources

	 	D.C. Griffiths
	 	Tel: (403) 237-3552
	237 - 4th Avenue SW

	 	Gas, Power & NGL Marketing Manager
	 	Fax: (403) 232-5870
	Calgary, Alberta T2P 0H6
	 	 	 	 
	Canada
	 	 	 	 

December 15, 2004

Selkirk Cogen Partners, L.P.

24 Power Park Drive

Selkirk, NY 12158-2299

Attention: Mr. Steve Kamppila

Dear Mr. Kamppila:

	 	 	 
	Subject:

	 	Amended and Restated Natural Gas Purchase Agreement dated October 22, 1992 between
Selkirk Cogen Partners, L.P. (“Selkirk) (as successor in interest to Makowski
Selkirk Inc.) and Imperial Oil Resources (“Imperial”) herein referred to as the
“Agreement”

This letter sets forth the agreement of Selkirk and Imperial to amend the
Agreement as follows, with such amendment to become effective on the first day
of the month following date that the National Energy Board of Canada approves
the amendment:

1. Delete Section 1.1.c and replace with new Section 1.1.c “ “Base Gas” shall
mean all gas under this Agreement.”

2. Delete Section 1.1.nn and replace with new Section 1.1.nn “ “Maximum Daily
Quantity” or “MDQ” shall mean 20,660 MMBtu/Day of Base Gas.”

3. Delete the second, third and fourth sentences from Section 3.1(a).

4. In Sections 4.1, 5.2, 8.1 and 14.1(c), delete in each place where they
appear the phrases “except as provided in Article XXIV,”;“and the Fuel Gas
Nomination”; and, “and the Fuel Gas MDQ”.

5. Delete the phrase “ and the Fuel Gas MDQ (to the extent the Fuel Gas MDQ has
also been reduced)” from the first sentence in Section 4.8.

6. In Section 4.9, delete (a) the fourth sentence, (b) the term “, 4.14” in the
fifth sentence, and (c) the phrase “, except as specifically provided for in
Section 4.14” from the last sentence.

7. Delete section 6.1 and replace with following new Section 6.1:

“6.1 Contract Price

During the term of this Agreement, Buyer shall pay Seller each Month the
contract price for all Base Gas volumes nominated by Buyer and delivered to
Buyer at the Delivery Point for such Month, which shall be equal to 90% of the
AMI plus 100% of the NDC, where AMI and NDC are defined as follows:

AMI = Alberta Monthly Index, equal to the AECO “C” & N.I.T. One Month Spot as
reported in the Canadian Gas Price Reporter ,“Avg” column in units of $/GJ, for
the applicable Month.

 

 

Imperial Oil Resources

NDC = Nova Delivery Charges at Empress, equal to the sum of, as applicable from
time to time, the delivery demand charges, the delivery variable commodity
charges, and the delivery fuel charges, all for the applicable Month and
subject to a cap of 0.30 US$/MMBtu.

No other charges, surcharges, reservation fees or other fees shall apply.
Responsibility for taxes will remain as specified in Article XIII of the
Agreement.

The contract price shall be converted to units of US$/MMBTU using the
conversion factors contained in Sections 21.2 and 21.3 of the Agreement.”

8. Delete the text and/or headings in sections 1.1(b), 1.1(m), 1.1(w), 1.1(x),
1.1(y), 1.1(z), 1.1(aa), 1.1(bb), 1.1(cc), 1.1(qq), 1.1(yy), 1.1(zz), 1.1(ddd),
1.1(iii), 1.1(jjj), 1.1(lll), 1.3, 4.2, 4.3, 4.4, 4.5, 4.10, 4.11, 4.14, 6.2,
6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10 in their entirety and replace with
“Intentionally Left Blank”.

9. Delete the last sentence in Section 13.2(c).

10. In the first sentence of Section 15.1, delete the phrase “notwithstanding
Section 6.2,” and delete the phrase “any Montly Charge” and replace with “the
monthly contract price”.

11. Section 20.1(b), Article XXIV, and Appendix A are deleted in their
entirety.

17. The following phrases are deleted from Section 20.2 in each place in which
they appear: “and any Fuel Indemnity Amount”; and, “and/or Fuel Indemnity
Amount”.

18. In the last sentence of Section 23.6, (a) delete the “s” at the end of the
word “Sections” in each place the word appears; (b) delete the phrase “and
4.14”; and (c) delete “4.10, 4.11”.

	 	 	 
	Yours truly,
	 	 
	 
	 	 
	/s/ ADOLPH COKES
	 	 
	 
	 	 
	Adolph Cokes, Marketing Specialist Eastern Region
	 	 
	 
	 	 
	AGREED
to this 23rd day of December, 2004

	 	AGREED to this
17th  day of December, 2004
	 
	 	 
	BUYER: Selkirk Cogen Partners, L.P.

	 	SELLER: Imperial Oil Resources
	 
	 	 
	By: JMC Selkirk, Inc., Managing

	 	per: Manager Gas, Power & NGT Marketing
	          General Partner
	 	 
	 
	 	 
	/s/ P. CHRISMAN IRIBE 

	 	/s/ D.C. GRIFFITHS 
	(Signature)

	 	(Signature)exv10w2

 

EXHIBIT 10.2

Base Contract for Sale and Purchase of Natural Gas

This Base Contract is entered into as of the following date: December 15, 2004.
The parties to this Base Contract are the following:

	 	 	 	 	 
	Imperial Oil Resources, an Alberta limited partnership

	 	and
	 	Selkirk Cogen Partners, L.P.
	237- 4th Avenue S.W.

	 	 	 	24 Power Park Drive
	P.O. Box 2480, Station M, Calgary, Alberta, Canada T2P 3M9

	 	 	 	Selkirk, NY 12158
	Duns Number:

	 	 	 	Duns Number: 78-732-7881
	U.S. Federal Tax ID Number:

	 	 	 	U.S. Federal Tax ID Number: 04-3126542
	 
	 	 	 	 
	Notices:
	 	 	 	 
	See Attachment 3

	 	 	 	See Attachment 3
	Confirmations:
	 	 	 	 
	Attn: See Attachment 3

	 	 	 	See Attachment 3
	Invoices and Payments:
	 	 	 	 
	See Attachment 3

	 	 	 	See Attachment 3
	 
	 	 	 	 
	Canadian GST #: R121491815

	 	 	 	Canadian GST 
	 
	Wire Transfer or ACH Numbers (if applicable):
	 	 	 	 
	BANK: See Attachment 3                                                   

	 	 	 	BANK: See Attachment 3                                                  
	ABA: See Attachment 3                                                     

	 	 	 	ABA: See Attachment 3                                                    
	ACCT: See Attachment 3                                                   

	 	 	 	ACCT: See Attachment 3                                                  

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
	 	X
	 	25th Day of Month following Month of
	Transaction

	 	X
	 	Written
	 	Payment Date
	 	delivery (default)
	Procedure

	 	 	 	 	 	 	 	o
	 	                      Day of Month following Month 
	 
	 	 	 	 	 	 	 	of delivery
	 
	 	 	 	 	 	 	 	 	 	 
	Section 2.5

	 	X
	 	2 Business Days after receipt (default)
	 	Section 7.2
	 	X
	 	Wire transfer (default)
	Confirm

	 	o
	 	                     Business Days after

	 	Method of
	 	o
	 	Automated Clearinghouse Credit (ACH)
	Deadline

	 		 	receipt	 	Payment
	 	o
	 	Check
	 
	 	 	 	 	 	 	 	 	 	 
	Section 2.6

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

	 	o
	 	Buyer
	 	Netting
	 	o
	 	Netting does not apply
	Party

	 	X
	 	Imperial Oil Resources	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Section 3.2

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

	 	X
	 	Spot Price Standard
	 	Early
	 	 	 	Early Termination Damages Do Not Apply
	Obligation

	 	 	 	 	 	Termination
Damages	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Note: The following Spot Price Publication applies to both of 	 	Section 10.3.2	 	X	 	Other Agreement Setoffs Apply (default)
	the immediately preceding.

	 	Other Agreement Setoffs
	 	o
	 	Other Agreement Setoffs Do Not Apply
	 
	 	 	 	 	 	 	 	 	 	 
	Section 2.26

	 	
	 	Gas Daily Midpoint (default) OR
	 	Section 14.5	 	 	 	 
	Spot Price

	 	X
	 	Canadian Gas Price
	 	Choice Of Law
	 	 	 	Alberta
	Publication
	 	 	 	Reporter                    	 	 	 	 	 	 
	 
	 	                    	 	 	 	 	 	 
	Section 6

	 	X
	 	Buyer Pays At and After Delivery Point	 	 	 	 	 	 
	Taxes	 	(default)	 	 	 	 	 	 
	

	 	o
	 	Seller Pays Before and At
	 	Section 14.10
	 	 	 	Confidentiality applies (default)
	

	 	 	 	Delivery Point	 	Confidentiality
	 	X
	 	Confidentiality does not apply
	X Special Conditions number of sheets attached: 2. THIS CONTRACT IS SUBJECT TO THE CONDITIONS OF ATTACHMENT 1.
	X Special Provisions Number of sheets attached: 3. THIS CONTRACT IS SUBJECT TO THE PROVISIONS OF ATTACHMENT 2.
	X Addendum(s): CANADIAN ADDENDUM: THIS CONTRACT IS SUBJECT TO THE PROVISIONS OF THE CANADIAN ADDENDUM DATED APRIL 19,2002 (UNAMENDED), AS AMENDED BY SPECIAL
PROVISIONS ATTACHED.

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

	 	 	 
	Imperial Oil Resources, an Alberta limited partnership

	 	Selkirk Cogen Partners, L.P.
	

	 	By: JMC Selkirk, Inc., Managing General Partner
	 
	 	 
	By /s/ DAVE GRIFFITHS                                         

	 	By /s/ P. CHRISMAN IRIBE                                  
	Name: Dave Griffiths

	 	Name: P. Chrisman Iribe
	 
	 	 
	Title: Manager Gas, NGL, Power Marketing

	 	Title: President

 

 

General Terms and Conditions

Base Contract for Sale and Purchase of Natural Gas

SECTION 1. PURPOSE AND PROCEDURES

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

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

Oral Transaction Procedure:

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

Written Transaction Procedure:

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

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

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

SECTION 2. DEFINITIONS

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

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

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

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

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

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 2 of 21
	 	April 19, 2002

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 3 of 21
	 	April 19, 2002

 

 

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

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

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

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

SECTION 3. PERFORMANCE OBLIGATION

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

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

Cover Standard:

3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or
receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by
Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer
utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in
transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity
and the quantity actually delivered by Seller for such Day(s); or (ii) in the event of a breach by Buyer on any
Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract
Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for
commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the
difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s); or (iii) in the
event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially
reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available, then the sole and
exclusive remedy of the performing party shall be any unfavorable difference between the Contract Price and the Spot
Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the difference between the
Contract Quantity and the quantity actually delivered by Seller and received by Buyer for such Day(s). Imbalance
Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance
Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five
Business Days after presentation of the performing party’s invoice, which shall set forth the basis upon which such
amount was calculated.

Spot Price Standard:

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

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

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

SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES

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

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

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

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 4 of 21
	 	April 19, 2002

 

 

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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	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

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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.

	 	 	 	 	 
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	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

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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 © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

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Base Contract for Sale and Purchase of Natural Gas

Canadian Addendum

This Canadian Addendum (“Canadian Addendum”) is entered into as of the
following dated December 15, 2004

	 	 	 	 	 
	The parties to this Canadian Addendum are the following:
	 	 	 	 
	 
	Imperial Oil Resources, an Alberta limited partnership

	 	and
	 	Selkirk Cogen Partners, L.P.
	237- 4th Avenue S.W.

	 	 	 	24 Power Park Drive
	P.O. Box 2480, Station M, Calgary, Alberta, Canada T2P 3M9

	 	 	 	Selkirk, NY 12158
	Duns Number:

	 	 	 	Duns Number: 78-732-7881
	U.S. Federal Tax ID Number:

	 	 	 	U.S. Federal Tax ID Number: 04-3126542
	Notices:
	 	 	 	 
	Attn: See Attachment 3

	 	 	 	Attn: See Attachment 3
	Phone:                                Fax:

	 	 	 	Phone:                                Fax:

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

	 	 	 
	Imperial Oil Resources, an Alberta limited partnership

	 	Selkirk Cogen Partners, L.P.
	

	 	By: JMC Selkirk, Inc., Managing General Partner
	 
	 	 
	By /s/ DAVE GRIFFITHS             

	 	By /s/ P. CHRISMAN IRIBE               
	Name: Dave Griffiths

	 	Name: P. Chrisman Iribe
	Title: Manager Gas, NGL, Power Marketing

	 	Title: President

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 (default if the Delivery Point is in
Canada)
	 
	 	 	o Gas Daily Midpoint (default if the Delivery Point is in the
United States)
	 
	 	 	o                                                          

Section 10.4: Termination Currency

	 	 	x U.S. Dollars (default)	 
	 	 
	 	 	o 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:

	 	 	o                                                          

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.

	 	 	 	 	 
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	All Rights Reserved

	 	Page 10 of 21
	 	April 19, 2002

 

 

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 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

	 	 	 	 	 
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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.

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.

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	All Rights Reserved

	 	Page 12 of 21
	 	April 19, 2002

 

 

TRANSACTION CONFIRMATION-EXHIBIT A

FOR IMMEDIATE DELIVERY

	 	 	 
	Letterhead/Logo

	 	Date: December 15, 2004
	

	 	Transaction Confirmation #:

This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated December 15, 2004.

This Transaction Confirmation is also subject to the Canadian
Addendum between Seller and Buyer dated December 15, 2004.

[x] Yes (default)    [  ] 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:
	Imperial Oil Resources, an Alberta limited partnership

	 	Selkirk Cogen Partners, L.P.
	237- 4th Avenue S.W.

	 	24 Power Park Drive
	P.O. Box 2480, Station M, Calgary, AB, Canada T2P 3M9

	 	Selkirk, NY 12158
	 
	Attn: See Attachment 3

	 	Attn: See Attachment 3
	Phone: See Attachment 3

	 	Phone: See Attachment 3
	Fax: See Attachment 3

	 	Fax: See Attachment 3
	Base Contract No.                                                                       

	 	Base Contract No.                                                              

	Transporter:                                                                            

	 	Transporter:                                                                    

	Transporter Contract Number:                                              

	 	 Transporter Contract Number:                                           

Contract Price:

Monthly Contract Price = [ (0.90 * AMI + 1.0 * NDC) * CR * ER ], where AMI, NDC, CR and ER are defined as follows:

AMI (Alberta Monthly Indext) = the “AECO “C” & N.I.T. One Month Spot as reported for the applicable month in the Canadian Gas Price Reporter ,“Avg”
column in units of $CA/GJ.

NDC (NOVA Delivery Charge)= the Nova Delivery Charges at Empress for the applicable month, equal to the sum of, as applicable, the delivery demand
charges, the delivery variable commodity charges, and the delivery fuel charges, subject to a cap of 0.30 US$/mmBTU.

CR (Conversion Rate) = 1.055056 GJ/MMBtu

ER (US$/CA$ Exchange Rate) = the “Canada/U.S. Exchange Rate” for the applicable month as reported in the Canadian Gas Price Reporter

Delivery Period: Begin: November 1 , 2009                                                             End: October 31, 2014

	 	 	 	 	 
	Performance
Obligation and Contract Quantity: (Select One)	 	 
	 
	Firm (Fixed Quantity):

	 	Firm (Variable Quantity):
	 	Interruptible:
	                   MMBtus/day

	 	0          MMBtus/day Minimum
	 	Up to                   MMBtus/day
	o EFP

	 	20,660 MMBtus/day Maximum	 	 
	

	 	subject to Section 4.2. at election of	 	 
	

	 	x Buyer or o Seller	 	 

Delivery Point(s): Empress, into TCPL mainline

(If a pooling point is used, list a specific geographic and pipeline location)

Canadian Export Zero
Rating (Section 6.3):       [  ] No (default) [x] Yes

Special Conditions:

See Attachment 1.

	 	 	 	 	 
	Seller: Imperial Oil Resources

	 	Buyer:
	 	Selkirk Cogen Partners, L.P.
	 
	By: /s/ D.C. GRIFFITHS                                        

	 	By:
	 	JMC Selkirk, Inc., Managing General Partner
	

	 	 	 	/s/ P. CHRISMAN IRIBE                                        
	Title: Manager Gas, NGL, and Power Marketing
	 	 	 	 
	 	 	Title: President
	Date: December 17, 2004        
	 	 	 	 
	 	 	Date: December 23, 2004         

	 	 	 	 	 
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	All Rights Reserved

	 	Page 13 of 21
	 	April 19, 2002

 

 

Attachment 1- Special Conditions

	(i)	 	Conditions Precedent: This Transaction Confirmation is subject to
the condition precedent of the execution of an amending agreement
concerning the pricing for all volumes delivered under the Gas Sale and
Purchase Contract between Buyer and Seller dated October 22, 1992, as
amended (“Existing Agreement”).
	 
	(ii)	 	Prior Period Agreement: To the extent that any National Energy Board
approval requirements, under the current long term export license, for
the amending agreement referred to in (i) above delays the effective
date such amending agreement past November 1, 2004, then Buyer agrees
to keep Seller financially whole as if the amending agreement took
effect November 1, 2004 by paying Seller the positive difference (zero
if negative) between the contract price under the Existing Agreement
and the contract price under the amending agreement for all volumes
delivered under the Existing Agreement.
	 
	(iii)	 	Annual Minimum Take Obligation of Buyer: The Buyer’s obligation to
take under this Transaction Confirmation is subject to a minimum annual
take obligation during each Contract Year, as defined below, of 69% of
the maximum daily quantity times 365 days, provided that Buyer provides
Seller with 2 Business Days notice whenever volume to be taken on any
day is less than the maximum contract quantity of 20,660 MMBTu/d.
“Contract Year” means November 1 through October 31.
	 
	(iv)	 	Liquidated Damages: Seller agrees to pay liquidated damages under
section 3.2 if Buyer is unable to export gas from Canada due to
suspension, if applicable, of Seller’s short or long term removal permit
by the Alberta Energy Resources Conservation Board or Buyer’s short or
long term export permit by the National Energy Board.
	 
	(v)	 	Replacement Oil Index: Buyer agrees to apply a replacement No. 2 fuel
oil index for October 2004 deliveries defined as follows: “the US
Wholesale Posted Price for PAD1, MetroNY (Eth) Diesel No.2 Fuel”.
	 
	(vi)	 	Settlement of Outstanding Accounts and Release and Discharge: Buyer
will pay Seller $US 500,000 to settle all outstanding billing and/or
other contractual issues under or relating to the Existing Agreement
(whether known or unknown, liquidated or unliquidated, actual or
contingent (“Disputes”). Buyer and Seller agree that such payment
resolves all Disputes, that the other party has satisfied its payment,
supply and all other obligations related to the Existing Agreement
outstanding as of October 31, 2004 and for the period November 1, 1994
through December 31, 2004 and each party releases and forever discharges
the other from any and all further payment, obligation, debt or
liability whatsoever with respect to the Disputes through December 31,
2004. Seller agrees to receive payment for these adjustments in
accordance with the following schedule: 100,000 US$ in December, 2004
and then 80,000 US$ in each month over period January 2005 to May 2005.
	 
	(vii)	 	No Restriction on Gas Use: Seller acknowledges that there is no
restriction on Buyer’s use or utilization of Contract Quantities under
this Agreement.
	 
	(viii)	 	Termination by Buyer: Should Seller be unable to secure the extension
of its existing Alberta Energy and Utilities Board (“AEUB”) removal
permit or obtain a new AEUB removal permits to allow deliveries of Gas
hereunder through October 31, 2014, Buyer may, at its sole option, waive
its right to liquidated damages as described in Section IV of these
Special Conditions and instead terminate this transaction.
Additionally, should Buyer no longer be a party to the power purchase
agreement defined in Section 1.1(h) of the Existing Agreement, Buyer
may, at its sole option, terminate this transaction upon 90 days advance
written notice to Seller. In the case of any termination by Buyer under
this Section X, neither party shall have any liability to the other for
the payment of any amounts pursuant to Section 10.3 of this Contract.
	 
	(ix)	 	For this transaction only, Section 14.6 is amended by adding at the end of the Section, the following:

     “For greater clarity, the parties agree:

	(a)	 	Seller covenants that:

	(i)	 	Seller has obtained or will obtain a removal permit
pursuant to the Alberta Gas Resources Preservation Act for Gas
delivered and sold under this transaction by the time deliveries
are to commence hereunder; and

	 	 	 	 	 
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	All Rights Reserved

	 	Page 14 of 21
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	(ii)	 	Seller shall commit such reserves and deliverability for
the term of this transaction as necessary for Seller to maintain
such removal permit, and if required, for Buyer to obtain and
maintain its export licence to export Gas to the United States
under this transaction.
	 
	(b)	 	Buyer covenants that
	 
	 	 	Buyer shall use all commercially reasonable efforts to obtain and
maintain consents and approvals required for the effectiveness of
this Transaction, including 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
Transporters, including, without limitation, the National Energy
Board of Canada, the federal Governor-in-Council, and the Office
of Fossil Energy of the United States Department of Energy.”

END OF SPECIAL CONDITIONS

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 15 of 21
	 	April 19, 2002

 

 

Attachment 2 - Special Provisions to

NAESB Base Contract with Canadian Addendum

	 	 	These Special Provisions amend and supplement the Base Contract for Sale and
Purchase of Natural Gas (“Base Contract”) and the Canadian Addendum. In the
event of a conflict among the terms of these Special Provisions, the Base
Contract and the Canadian Addendum, the terms of these Special Provisions
shall apply.
	 
	 	 	Amendments to Base Contract
	 
	1.	 	Section 2- Definitions

	(a)	 	Add the following at the end of Section 2.8:
	 
	 	 	“Contract Price does not include any sales, use, gross receipt,
value-added, production, severance or other such taxes imposed on the Gas
or Buyer (or Seller for the account of Buyer) at or after the Delivery
Point.”
	 
	(b)	 	Delete Section 2.14 in its entirety and replace with the following:
“Delivery Point(s)” shall mean such point(s) as agreed to by the parties
in a transaction, subject to the condition that such delivery point(s)
must be in Canada.”
	 
	(c)	 	Delete Section 2.26 in its entirety and replace with the following:
	 
	 	 	“2.26 “Spot Price” as referred to in Section 3.2 shall mean AMI plus NDC,
where AMI and NDC are defined as follows: AMI = the “AECO “C” & N.I.T.
One Month Spot as reported in the Canadian Gas Price Reporter ,“Avg”
column in units of $/GJ and NDC = Nova delivery charges at Empress,
including, as applicable, demand charges, variable commodity charges and
fuel charges, subject to a cap of 0.30 US$/mmBTU.”

	2.	 	Section 3- Performance Obligation
	 
	 	 	(a) Add the following at the end of Section 3.1:
	 
	 	 	“Seller shall have the right, but not the obligation, to deliver all, or any
part, of the Contract Quantity, as set forth under any Transaction
Confirmation, from alternate sources of production at no additional cost to
Buyer. Such Gas shall be delivered to Buyer at the Delivery Point(s) or at
“Alternate Delivery Point(s)”, where said term shall mean any mutually
agreeable point(s) of delivery, other than the Delivery Point(s) set forth
in the Transaction Confirmation(s).”
	 
	 	 	(b) Add the following paragraph as a new Section 3.5:
	 
	 	 	“3.5. Seller, at no additional cost to Buyer, reserves the right to process
Gas sold under any Transaction Confirmation either upstream or downstream of
the Delivery Point(s) and retain title to the gas liquids. In the event such
processing occurs downstream of the Delivery Point(s), the volume measured
at the Delivery Point(s) shall be increased to adjust for processing plant
fuel and shrinkage. Seller shall bear all the costs of transportation
attributable to plant fuel and shrinkage.”

	3.	 	Section 4. Transportation, Nominations, and Imbalances
	 
		 	(a) Add the following sentence to the end of Section 4.3:
	 
	 	 	“Under no circumstances shall a party be responsible for Imbalance Charges
related to excess or unauthorized takes, violations of Operational Flow
Orders, or similar penalties, related to the other party’s receipt or
delivery of quantities of Gas greater than or less than the Scheduled Gas,
as such Scheduled Gas may be adjusted from time to time.”
	 
	4.	 	Section 7. Billing, Payment, and Audit
	 
	 	 	(a) Insert the following at the end of the second sentence of Section 7.6:
	 
	 	 	“and to the extent that any proprietary information is made available,
Section 14.10 shall apply to such proprietary information, notwithstanding
the parties’ election that Section 14.10 shall not otherwise apply to this
Contract.”

	 	 	 	 	 
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	All Rights Reserved

	 	Page 16 of 21
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	5.	 	Section 10. Financial Responsibility
	 
	 	 	(a) Delete section 10.1 in its entirety and replace with:
	 
	 	 	“If either party (“X”) has its credit ratings for its long-term debt
obligations reduced below both BBB-(“triple B, minus”) as rated by Standard
and Poor’s Rating Group (a division of McGraw-Hill, Inc.), or its successor,
and Baa3 (“B, double-a, three”) as rated by Moody’s Investors Services,
Inc., or its successor, then the other party (“Y”) 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 party Y including, but not limited to, a standby irrevocable
letter of credit, a prepayment, or a performance bond or guaranty, subject
to a maximum aggregate amount of 3,500,000 US$.”
	 
	 	 	(b) In section 10.2 (vii), replace the words “48 hours but at least one
Business Day” with the words “7 Days”.
	 
	6.	 	Section 11. Force Majeure

	 	 	(a) 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 Gas delivered by Seller and received
by Buyer”.
	 
	 	 	(b) In Section 11.2 (ii), delete the words “an entire” and replace with
“a”.
	 
	 	 	(c) Section 11.3 is amended by adding subsection (vi) as follows:

	 	 	“(vi) 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).”

	 	 	(d) Also, in Section 11.3, add the following sentence at the end of Section
11.3:
	 
	 	 	“The party claiming Force Majeure shall not be required to buy Gas (if a
Seller) or sell Gas (if a Buyer) to avoid the adverse impacts of a Force
Majeure event. If a party’s performance is excused by a Force Majeure
event, the other party may sell Gas to a third party (if a Seller) or buy
Gas from a third party (if a Buyer) to the extent that the claiming party’s
performance has been excused. No Force Majeure event shall extend the term
of the Contract or the Delivery Period of any Transaction Confirmation.”
	 
	 	 	(e) Add the following at the end of Section 11.4, “and that the repair or
replacement of plants, equipment, wells or other facilities is only
required if commercially reasonable.”
	 
	 	 	(f) Add a new Section 11.7 as follows:
	 
	 	 	“If the Force Majeure is caused by a single event lasting a minimum of six
(6) consecutive Months, upon Notice, either party may terminate the
Transaction(s) affected by the Force Majeure; provided, however, that such
Notice is received prior to the cessation of the Force Majeure.”

	7.	 	Section 14. Miscellaneous.
	 
	 	 	(a) 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.”

	 	 	(b) 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 the
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

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 17 of 21
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	 	 	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.
	 
	(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; 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 in 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 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
already been obtained, (B) violate any provision of any
applicable law, (C) result in a breach or constitue 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 government
approvals required with respect to the execution and delivery
of this Contract and the performance of Seller’s obligations
under this Contract (other than National Energy Board permits
for which Buyer is responsible) have been obtained; provided
that the parties recognize that (a) Seller must advise the
Alberta Energy and Utilities Board of this Contract (under the
terms of its existing Removal Permit(s)), and (b) Seller will
eventually need to extend the term of its existing AEUB Removal
Permit or obtain a new AEUB Removal Permit(s) to allow
deliveries hereunder through October 31, 2014.
	 
	(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.”

	(c)	 	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, (d)
Seller
shall have no right to any claim in respect of Buyer not yet due and
owing except as specifically provided for in this Contract, and (e) this
representation is made expressly for the benefit of the partner(s) in
Buyer.”
	 
	(d)	 	In Section 14.10, add the word “affiliates” after the word
“employees” in the 3rd line, delete the word “or” before “(iv)” in the
6th line and add the following words after the words published index”
in the 7th line: “or, (v) as may be required in submissions to
regulatory agencies”
	 
	(e)	 	Delete Section 14.11 and replace it with the
following: “14.11 Any controversy or claim arising out of or
relating to the Contract shall be determined by arbitration
in accordance with the then current National Arbitration
Rules of the ADR Institute of Canada, Inc. The place of
arbitration shall be Toronto, Ontario, or another location

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 18 of 21
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	 	 	mutually agreed by the parties and the language of the arbitration
shall be English. [The parties also agree that the United Nations
Convention on Contracts for the International Sale of Goods is
hereby excluded and will not apply to the Contract.”]

	 	 	Amendments to Canadian Addendum
	 
	1.	 	Section 2. Definitions
	 
	 	 	(a) In Section 2.4, delete the definition of “Business Day” and replace it
with the following definition:
	 
	 	 	“Business Day” shall mean any day except Saturday, Sunday, or a statutory or
banking holiday observed in either party’s jurisdiction for its principal
place of business. 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 place of business. The
relevant party, in each instance unless otherwise specified, shall be the
party to whom the notice, payment or delivery is being sent and by whom the
notice or payment or delivery is to be received.”
	 
	2.	 	Section 6. Taxes
	 
	 	 	(a) In Section 6.2, in the first sentence, after the words “goods and
services tax (“GST”)”, add the words “or any combined or harmonized federal
and provincial goods and services tax or sales tax (“HST”), and after the
words “pursuant to the ETA”, add the words “or any provincial sales tax
legislation”.
	 
	 	 	(b) In Section 6.2, in each of the fourth, fifth, sixth and seventh lines,
after the word “GST”, add the words “or HST”.
	 
	 	 	(c) In the first line of Sections 6.3.1, 6.3.2, 6.3.3, in the third line of
Section 6.3.3 and in the second line of Section 6.4, after the word “GST”,
add the words “or HST”.

END OF SPECIAL PROVISIONS

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 19 of 21
	 	April 19, 2002

 

 

Attachment 3 - Notices and Payment Information

Imperial Oil Resources

Invoices:

Imperial Oil Resources

Attention: Gas Marketing Accounting

P.O. Box 2480, Station M

237-4th Avenue S.W.

Calgary, Alberta

Canada T2P 3M9

Phone: (403) 237-3814

Fax: (403) 232-5870

Notices/Transaction

Confirmations/Correspondence:

Imperial Oil Resources

Attn: Natural Gas Marketing Manager, 237-4th

Avenue S.W.

Calgary, Alberta

Canada T2P 0H6 

Phone: (403) 237-3994

Fax: (403) 232-5870

Payments/Wire Transfer/ACH:

Destination Bank (IBK):

CHASUS33

Chase Manhattan Bank

New York, New York

ABA 021000021

Pay to Bank (BBK):

ROYCCAT2

Royal Bank of Canada

255 5th Avenue S.W.

Calgary, Alberta

UID 055253

Beneficiary (BNF):

/023194084430 (US Funds)

/023190000489 (CDN Funds)

Gas Control:

Gas Control 

Phone: (403) 237-3897 or (403) 860-1939

Fax: (403) 232-5870

Invoices:

Selkirk Cogen Partners, L.P.

Attention: Accounting Manager

24 Power Park Drive

Selkirk, NY 12158

Phone: (518) 475-5773 x 143

Fax: (518) 475-5199

Notices/Transaction

Confirmations/Correspondence:

Selkirk Cogen Partners, L.P.

Attention: General Manager (Notices &
Correspondence)

Site Business Analyst (Transactions &
Confirmations)

24 Power Park Drive

Selkirk, NY 12159 

Phone: (518) 475-5773 x 102

Fax: (518) 475-5199

Payments/Wire Transfer/ACH:

Bankers Trust Company

ABA: 021-001-033

ACCT: 01-419-647

Other Details: Project Revenue Fund #12103

Gas Control:

	 	 	 	 	 
	Copyright © 2002 North American Energy Standards Board, Inc.

	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 20 of 21
	 	April 19, 2002

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