Document:

exv10w7

 

Base Contract for Sale and Purchase of Natural Gas

This Base Contract is entered into as of the following date: August 15, 2005.
The parties to
this Base Contract are the following:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	WILLIAMS POWER COMPANY, INC.	 	and	 	Williams Natural Gas Liquids, Inc
	 	 	 	 	 
	P.O. Box 2400	 	 	 	One Williams Center
	 	 	 	 	 
	Tulsa, Oklahoma 74102-2400	 	 	 	Tulsa, OK 74172
	 	 	 	 	 
	Duns Number:	 	82-467-8478 	 	 	 	Duns Number:	 	 
	 	 	 	 	 	 	 	 	 
	Contract Number:

	 	 	 	 	 	 	 	 	 	Contract Number:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	U.S. Federal Tax ID Number:	 	73-1423657	 	 	 	U.S. Federal Tax ID Number: 73-1198094
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Notices:	 	 	 	 
	P.O. Box 2400, Tulsa, Oklahoma 74102-2400	 	 	 	One Williams Center, Tulsa OK, 74172 WRC2
	 	 	 	 	 
	Attn:	 	Contract Administration	 	 	 	Attn:	 	Conway Commercial—Joe Edgeller
	 	 	 	 	 	 	 	 	 
	Phone:

	 	(918) 573-5348 
	 	Fax:
	 	(918) 732-0269
	 	 	 	Phone:
	 	573-9917
	 	Fax:	 	 
	 

	 	 
	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Confirmations:	 	 	 	 
	P.O. Box 2400, Tulsa, Oklahoma 74102-2400	 	 	 	One Williams Center, Tulsa OK, 74172 WRC2
	 	 	 	 	 
	Attn:	 	Shannon Aston	 	 	 	Attn:	 	Commodity
Optimization—Wes Holmes
	 	 	 	 	 	 	 	 	 
	Phone:

	 	(918) 573-6626 
	 	Fax:
	 	(918) 732-0247
	 	 	 	Phone:
	 	573-9064
	 	Fax:
	 	573-4074
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Invoices and
Payments:	 	 	 	 
	P.O. Box 2400, Tulsa, Oklahoma 74102-2400	 	 	 	One Williams Center, Tulsa OK, 74172 WRC3
	 	 	 	 	 
	Attn:	 	Williams Power Operations Accounting	 	 	 	Attn:	 	Midstream Acctg—JoEllen Millis
	 	 	 	 	 	 	 	 	 
	Phone:

	 	(918) 573-6337 
	 	Fax:
	 	(918) 573-1965
	 	 	 	Phone:
	 	573-9188 
	 	Fax:
	 	573-6220
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Wire Transfer or
ACH Numbers (if applicable):	 	 	 	 
	BANK:	 	JPMorgan Chase, New York	 	 	 	BANK:	 	JP Morgan Chase, New York
	 	 	 	 	 	 	 	 	 
	ABA:	 	071000013 	 	 	 	ABA:	 	071000013 
	 	 	 	 	 	 	 	 	 
	ACCT:

	 	 	 	 	 	 	 	 	 	ACCT:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Other Details:

	 	 	 	 	 	 	 	 	 	Other Details:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

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

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

	 	o
	 	Written
	 	Payment Date
	 	 	 	delivery (default)
	Procedure

	 	 	 	 	 	 	 	o
	 	      Day of Month following Month of
	 

	 	 	 	 	 	 	 	 	 	delivery
	Section 2.5

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

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

	 	 	 	 	 	Payment
	 	o
	 	Check
	Section 2.6

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

	 	o
	 	Buyer
	 	Netting
	 	o
	 	Netting does not apply
	Party

	 	ü
	 	WPC to confirm	 	 	 	 	 	 
	Section 3.2

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

Obligation

	 	o
	 	Spot Price Standard
	 	Early Termination

Damages
	 	o
	 	Early Termination Damages Do Not Apply
	 

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

Setoffs	 	o	 	Other Agreement Setoffs Do Not Apply
	Section 2.26

	 	ü
	 	Gas Daily Midpoint (default)
	 	Section 14.5	 	 	 	 
	Spot Price

Publication

	 	
o
	 	 	 	Choice Of Law
	 	 	 	Oklahoma
	 

	 	 	 	 	 	 	 	 	 	 
	Section 6

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

	 	 	 	(default)
	 	Confidentiality
	 	o
	 	Confidentiality does not apply
	 

	 	o
	 	Seller Pays Before and At Delivery Point	 	 	 	 	 	 
	ü
Special
Provisions Number of sheets attached: 1 page	 	 	 	 	 	 
	o
Addendum(s):	 	 	 	 	 	 	 	 
	 	 	 	 	 

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

	 	 	 	 	 	 	 
	WILLIAMS POWER COMPANY, INC.	 	Williams Natural Gas Liquids, Inc.
	Party Name	 	Party Name
	 
	 	 	 	 	 	 
	By

	 	/s/ Andrew Sunderman
	 	By
	 	/s/ Alan Armstrong
	 

	 	 
	 	 	 	 
	Name:

	 	Andrew Sunderman
	 	Name:
	 	Alan Armstrong
	 

	 	 
	 	 	 	 
	Title:

	 	Vice President
	 	Title:
	 	Sr. Vice President
	 

	 	 
	 	 	 	 

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

 

 

General Terms and Conditions

Base Contract for Sale and Purchase of Natural Gas

			
	SECTION 1.	 	PURPOSE AND PROCEDURES

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

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

 

Oral Transaction Procedure:
 

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

Written Transaction Procedure:
 

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

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

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

			
	SECTION 2.	 	DEFINITIONS

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

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

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

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

 

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

 

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

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

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

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

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

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

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

2.11.      “Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish
credit support for, or on behalf of, a party to this Contract such as an irrevocable 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

 

					
	Copyright © 2002 North American Energy Standards Board, Inc.
	 	 
	 	NAESB Standard 6.3.1
	All Rights Reserved
	 	Page 3 of 10	 	April 19, 2002

 

of such high and low prices. If no price or range of prices is published for such Day, then the
Spot Price shall be the average of the following: (i) the price (determined as stated above) for
the first Day for which a price or range of prices is published that next precedes the relevant
Day; and (ii) the price (determined as stated above) for the first Day for which a price or range
of prices is published that next follows the relevant Day.

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

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

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

			
	SECTION 3.	 	PERFORMANCE OBLIGATION

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

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

Cover Standard:
 

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

 

Spot Price Standard:
 

3.2.      The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or
receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by
Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered
by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by
subtracting the Contract Price from the 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.

 

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

 

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

			
	SECTION 5.	 	QUALITY AND MEASUREMENT

All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of
the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be
one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established
procedures of the Receiving Transporter.

			
	SECTION 6.	 	TAXES

The
parties have selected either “Buyer Pays At and After Delivery
Point”
or “Seller Pays Before and At Delivery Point” as indicated on the Base
Contract.
 

Buyer Pays At and After Delivery Point:
 

Seller shall pay or cause to be paid all taxes, fees, levies, penalties,
licenses or charges imposed by any government authority (“Taxes”) on or with
respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to
be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and
all Taxes after the Delivery Point(s). If a party is required to remit or pay
Taxes that are the other party’s responsibility hereunder, the party
responsible for such Taxes shall promptly reimburse the other party for such
Taxes. Any party entitled to an exemption from any such Taxes or charges shall
furnish the other party any necessary documentation thereof.
 

Seller Pays Before and At Delivery Point:
 

Seller shall pay or cause to be paid all taxes, fees, levies, penalties,
licenses or charges imposed by any government authority (“Taxes”) on or with
respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery
Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to
the Gas after the Delivery Point(s). If a party is required to remit or pay
Taxes that are the other party’s responsibility hereunder, the party
responsible for such Taxes shall promptly reimburse the other party for such
Taxes. Any party entitled to an exemption from any such Taxes or charges shall
furnish the other party any necessary documentation thereof.

			
	SECTION 7.	 	BILLING, PAYMENT, AND AUDIT

7.1.      Seller shall invoice Buyer for Gas delivered and received in the 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.

 

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

 

			
	SECTION 8.	 	TITLE, WARRANTY, AND INDEMNITY

8.1.      Unless otherwise specifically agreed, title to the Gas shall pass from Seller to
Buyer at the Delivery Point(s). Seller shall have responsibility for and assume 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.

 

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

 

The parties have selected either “Early Termination Damages Apply” or “Early
Termination Damages Do Not Apply” as indicated on the Base Contract.
 

Early Termination Damages Apply:
 

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

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

 

					
	Copyright © 2002 North American Energy Standards Board, Inc.
	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved
	 	Page 7 of 10	 	April 19, 2002

 

 

date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest
published under “Money Rates” by The Wall Street Journal, plus two percent per annum; or (ii) the
maximum applicable lawful interest rate.

10.5.      The parties agree that the transactions hereunder constitute a “forward contract”
within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each “forward
contract merchants” within the meaning of the United States Bankruptcy Code.

10.6.      The Non-Defaulting Party’s remedies under this Section 10 are the sole and exclusive
remedies of the Non-Defaulting Party with respect to the occurrence of any Early Termination Date.
Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it
is or may be entitled to arising from the Contract.

10.7.      With respect to this Section 10, if the parties have executed a separate netting
agreement with close-out netting provisions, the terms and conditions therein shall prevail to the
extent inconsistent herewith.

SECTION 11.      force majeure

11.1.      Except with regard to a party’s obligation to make payment(s) due under Section 7,
Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for
failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The
term “Force Majeure” as employed herein means any cause not reasonably within the control of the
party claiming suspension, as further defined in Section 11.2.

11.2.      Force Majeure shall include, but not be limited to, the following: (i) physical
events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings,
such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions,
breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii)
weather related events affecting an entire geographic region, such as low temperatures which cause
freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm
transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or
other industrial disturbances, riots, sabotage, insurrections or wars; and (v) governmental actions
such as necessity for compliance with any court order, law, statute, ordinance, regulation, or
policy having the effect of law promulgated by a governmental authority having jurisdiction.
Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and
to resolve the event or occurrence once it has occurred in order to resume performance.

11.3.      Neither party shall be entitled to the benefit of the provisions of Force Majeure to
the extent performance is affected by any or all of the following circumstances: (i) the
curtailment of interruptible or secondary Firm transportation unless primary, in-path, Firm
transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and
to resume the performance of such covenants or obligations with reasonable dispatch; or (iii)
economic hardship, to include, without limitation, Seller’s ability to sell Gas at a higher or more
advantageous price than the Contract Price, Buyer’s ability to purchase Gas at a lower or more
advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in
part, the pass through of costs resulting from this Agreement; (iv) the loss of Buyer’s market(s)
or Buyer’s inability to use or resell Gas purchased hereunder, except, in either case, as provided
in Section 11.2; or (v) the loss or failure of Seller’s gas supply or depletion of reserves,
except, in either case, as provided in Section 11.2. The party claiming Force Majeure shall not be
excused from its responsibility for Imbalance Charges.

11.4.      Notwithstanding anything to the contrary herein, the parties agree that the
settlement of strikes, lockouts or other industrial disturbances shall be within the sole
discretion of the party experiencing such disturbance.

11.5.      The party whose performance is prevented by Force Majeure must provide Notice to the
other party. Initial Notice may be given orally; however, written Notice with reasonably full
particulars of the event or occurrence is required as soon as reasonably possible. Upon providing
written Notice of Force Majeure to the other party, the affected party will be relieved of its
obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as
applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed
to have failed in such obligations to the other during such occurrence or event.

11.6.      Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force
Majeure provisions in a Transaction Confirmation executed in writing by both parties.

SECTION 12.      term

This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until
the expiration of the latest Delivery Period of any transaction(s). The rights of either party
pursuant to Section 7.6 and Section 10, the obligations to make payment hereunder, and the
obligation of either party to indemnify the other, pursuant hereto shall survive the termination of
the Base Contract or any transaction.

SECTION 13.      limitations

FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH
EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY
HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW
OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A
TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT
ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR
IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS
INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE.
IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.

 

					
	Copyright © 2002 North American Energy Standards Board, Inc.
	 	 
	 	NAESB Standard 6.3.1
	All Rights Reserved

	 	Page 8 of 10
	 	April 19, 2002

 

 

TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE
THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE
REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION
OF THE HARM OR LOSS.

SECTION 14.      miscellaneous

14.1.      This Contract shall be binding upon and inure to the benefit of the successors,
assigns, personal representatives, and heirs of the respective parties hereto, and the covenants,
conditions, rights and obligations of this Contract shall run for the full term of this Contract.
No assignment of this Contract, in whole or in part, will be made without the prior written consent
of the non-assigning party (and shall not relieve the assigning party from liability hereunder),
which consent will not be unreasonably withheld or delayed; provided, either party may (i)
transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds
hereof in connection with any financing or other financial arrangements, or (ii) transfer its
interest to any parent or affiliate by assignment, merger or otherwise without the prior approval
of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain
principally liable for and shall not be relieved of or discharged from any obligations hereunder.

14.2.      If any provision in this Contract is determined to be invalid, void or unenforceable
by any court having jurisdiction, such determination shall not invalidate, void, or make
unenforceable any other provision, agreement or covenant of this Contract.

14.3.      No waiver of any breach of this Contract shall be held to be a waiver of any other
or subsequent breach.

14.4.      This Contract sets forth all understandings between the parties respecting each
transaction subject hereto, and any prior contracts, understandings and representations, whether
oral or written, relating to such transactions are merged into and superseded by this Contract and
any effective transaction(s). This Contract may be amended only by a writing executed by both
parties.

14.5.      The interpretation and performance of this Contract shall be governed by the laws of
the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule
which would apply the law of another jurisdiction.

14.6.      This Contract and all provisions herein will be subject to all applicable and valid
statutes, rules, orders and regulations of any governmental authority having jurisdiction over the
parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof.

14.7.      There is no third party beneficiary to this Contract.

14.8.      Each party to this Contract represents and warrants that it has full and complete
authority to enter into and perform this Contract. Each person who executes this Contract on
behalf of either party represents and warrants that it has full and complete authority to do so and
that such party will be bound thereby.

14.9.      The headings and subheadings contained in this Contract are used solely for
convenience and do not constitute a part of this Contract between the parties and shall not be used
to construe or interpret the provisions of this Contract.

14.10.      Unless the parties have elected on the Base Contract not to make this Section 14.10
applicable to this Contract, neither party shall disclose directly or indirectly without the prior
written consent of the other party the terms of any transaction to a third party (other than the
employees, lenders, royalty owners, counsel, accountants and other agents of the party, or
prospective purchasers of all or substantially all of a party’s assets or of any rights under this
Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in
order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent
necessary for the enforcement of this Contract , (iii) to the extent necessary to implement any
transaction, or (iv) to the extent such information is delivered to such third party for the sole
purpose of calculating a published index. Each party shall notify the other party of any
proceeding of which it is aware which may result in disclosure of the terms of any transaction
(other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure.
The existence of this Contract is not subject to this confidentiality obligation. Subject to
Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce,
or seek relief in connection with this confidentiality obligation. The terms of any transaction
hereunder shall be kept confidential by the parties hereto for one year from the expiration of the
transaction.

In the event that disclosure is required by a governmental body or applicable law, the party
subject to such requirement may disclose the material terms of this Contract to the extent so
required, but shall promptly notify the other party, prior to disclosure, and shall cooperate
(consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain
protective orders or similar restraints with respect to such disclosure at the expense of the other
party.

14.11      The parties may agree to dispute resolution procedures in Special Provisions attached to the
Base Contract or in a Transaction Confirmation executed in writing by both parties.

DISCLAIMER: The purposes of this Contract are to facilitate trade, avoid misunderstandings and
make more definite the terms of contracts of purchase and sale of natural gas. Further, NAESB does
not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF
THIS CONTRACT ACKNOWLEDGES AND AGREES TO NAESB’S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS
OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART
THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT,
MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS,
HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER
ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH
USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT,
SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS
CONTRACT.

 

					
	Copyright © 2002 North American Energy Standards Board, Inc.
	 	 	 	NAESB Standard 6.3.1
	All Rights Reserved
	 	Page 9 of 10	 	April 19, 2002

 

 

					
	 	 	 	 	 
	 
	 	TRANSACTION CONFIRMATION
	 	EXHIBIT A
	 
	 	FOR IMMEDIATE DELIVERY	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Letterhead/Logo

	 	 	 	Date:
	 	 	 	,	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Transaction Confirmation #:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

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

	 	 	 	 	 	 	 	 	 	 	 
	SELLER:

	 	 	 	 	 	BUYER:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 
	Attn:

	 	 	 	 	 	Attn:	 	 	 	 
	 	 	 	 	 	 	 
	Phone:

	 	 	 	 	 	Phone:	 	 	 	 
	 	 	 	 	 	 	 
	Fax:

	 	 	 	 	 	Fax:	 	 	 	 
	 	 	 	 	 	 	 
	Base Contract No.	 	 	 	Base Contract No.	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	Transporter:	 	 	 	Transporter:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	Transporter Contract Number:	 	 	 	Transporter Contract Number:	 	 
	 

	 	 	 	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 
	Contract Price:

	 	 	 	/MMBtu or	 	 
	 

	 	 
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	Delivery Period: Begin:

	 	,
	 	 	 	End:	 	 
	 

	 	 
	 	 
	 	 	 	 

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

	 	Firm (Variable Quantity):
	 	Interruptible:
	      MMBtus/day

	 	      MMBtus/day Minimum
	 	Up to       MMBtus/day
	o EFP

	 	      MMBtus/day Maximum	 	 
	 

	 	subject to Section 4.2. at election of	 	 
	 

	 	o Buyer or o Seller	 	 

	 	 	 	 	 
	Delivery Point(s):

	 	 	 	 
	 

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

Special Conditions:

 

	 	 	 	 	 	 	 
	Seller:

	 	 	 	Buyer:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 

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

Page 10 of 10

 

WILLIAMS POWER COMPANY, INC.

	 	 	 	 	 
	 
	 	 	 	One Williams Center
	 
	 	 	 	P.O. Box 2848
	 
	 	           
               Physical Confirmation
	 	Tulsa, OK 74101
	 

	 	 	 	(918) 573-2000
	 
	 	 	 	 
	To:

	 	WILLIAMS NATURAL GAS LIQUIDS, INC	 	 
	Att:

	 	Confirmation Administrator	 	 
	Date:

	 	August 19, 2005	 	 
	Fax:

	 	(918) 573-4686	 	 
	Ref:

	 	S83217-1	 	 

Pursuant and subject to the terms and conditions of the Natural Gas Purchase Contract dated
August 15, 2005 by and between one of the Williams subsidiaries set forth below (“Williams”)
and WILLIAMS NATURAL GAS LIQUIDS, INC, this confirms the following Transaction negotiated
between Chad Panter of WILLIAMS and Wes Holmes of WILLIAMS NATURAL GAS LIQUIDS, INC.

	 	 	 	 	 
	Transaction Date:	 	August 19, 2005
	 
	 	 	 	 
	Buyer:	 	WILLIAMS NATURAL GAS LIQUIDS, INC
	Seller:	 	WILLIAMS POWER COMPANY, INC.
	 
	 	 	 	 
	Product:	 	Natural Gas
	 
	 	 	 	 
	Contract Quantity:	 	2,263,226 MMBtu
	Measuring Pipeline:	 	Southern Star Pipeline
	Meter No.:	 	000166
	Delivery Point(s) (F.O.B.):	 	Conway Fractionator
	Performance Obligation:	 	Firm
	 
	 	 	 	 
	Contract Period	 	Quantity                            Price
	8/23/2005-12/31/2007	 	80,000 MMBtu/Mth        See Special Provisions Below
	 
	 	 	 	 
	Special Provisions:	 	Requires physical delivery of 80,000 mmbtu per month during term. Difference between forward
market price and $2.80 to be paid by Williams Natural Gas Liquids, Inc to Williams Power Company,
Inc. no later than August 22, 2005. Monthly price will be FOM Panhandle Gas Price, plus credit
cost and transport cost to Conway, not to exceed $2.80 per mmbtu delivered.

These specific terms and conditions together with the Natural Gas Purchase Contract shall
constitute the entirety of the agreement between Buyer and Seller unless WILLIAMS NATURAL GAS
LIQUIDS, INC furnishes to Williams notice of alleged errors by facsimile, other electronic
transmission, or first class mail before 4:00 p.m. PCT of the second (2nd) Business Day of
receipt of the Confirmation from Williams.

	 	 	 	 	 	 	 
	WILLIAMS POWER COMPANY, INC.

(acting for itself or acting on behalf of its subsidiaries)
	 	WILLIAMS NATURAL GAS LIQUIDS, INC

 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Andrew Sunderman
	 	By:
	 	/s/ Alan S. Armstrong
	 

	 	 
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	Prepared By: Shannon Aston, Risk Control
	 	Phone: (918) 573-6626	 	Fax: (918) 732-0247	 	Email: shannon.aston@williams.com	 	Ref: 83217-1

Page 1 of 1exv4w1

 

Exhibit 4.1

1. The Company is a Private Company within the meaning of the Companies Ordinance and accordingly
the following provisions shall have effect namely:

a) The right to transfer and transmit the shares of the Company is restricted in the manner
hereinafter provided.

b) The number of Members of the Company (exclusive of persons who are in the employment of the
Company and of persons who have been formerly in the employment of the Company who were, while in
such employment and have continued after the termination of such employment to be Members of the
Company) is limited to fifty provided that where two or more persons hold one or more Shares of
the Company jointly, they shall for the purpose of this Article be treated as a single Member.

c) Any invitation to the public to subscribe for any shares or debentures or debenture stock of
the Company is hereby prohibited.

2. The Shares of the Company shall be allotted by the Directors to such persons at such times and
upon such terms and conditions and either at a premium or at par as they think fit, and with full
power to give to any person the call of any Shares either at par or at a premium during such time
and for such consideration as the Directors think fit.

3. No Shares in the Company may be transferred to any person or company without the approval of
the Board of Directors. The Directors may, in their absolute discretion and without assigning any
reason therefore, decline to register any transfer of any share whether or not it is a fully paid
share. Subject to the provisions of Section 46 of the act, any preference shares may with the
sanction of a special resolution be issued upon the terms that they are or at the option of the
Company, are liable to be redeemed.

4. In regulation 7 of Table A, the words (“not being a fully paid share” and “other than fully paid
shares”) shall be omitted and the lien conferred by that Regulation shall attach to all shares
registered in the name of any person indebted or under liability to the Company whether he shall be
the sole registered holder thereof or one of two or more joint holders.

5. The Company may issue redeemable shares on such terms and conditions as it sees fit. The Company
may redeem, cancel, sell or otherwise deal in its own shares as permitted by law.

6. The
shares may be divided into several classes, and there may be attached
thereto respectively any preferential, deferred or other special
rights, privileges, conditions or restrictions as to dividend,
capital, voting or otherwise.

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