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Resolution No. 97431 RESOLUTION NO. 9743 2 3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A 4 BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS BY AND BETWEEN THE CITY OF VERNON AND BP ENERGY 5 COMPANY 6 7 WHEREAS, the City of Vernon (the "City") owns and operates a 8 municipal natural gas distribution system for supplying the City Is 9 municipal electric system with natural gas and providing natural gas to 10 businesses and industries within the City; and 11 WHEREAS, the City desires to sell and purchase prepaid gas to 12 or from BP Energy Company ("BP"), on a firm or interruptible basis, 13 under general terms and conditions published by the North American 14 Energy Standards Board ("NAESB"); and 15 WHEREAS, the City has determined that it is to the City's 16 advantage, and in the public interest of the inhabitants of the City, 17 to enter into a contract with BP for the purchase and sale of natural 18 gas. 19 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 20 CITY OF VERNON AS FOLLOWS: 21 SECTION 1: The City Council of the City of Vernon hereby 22 finds and determines that the recitals contained hereinabove are true 23 and correct. 24 SECTION 2: The City Council of the City of Vernon hereby 25 approves the Base Contract for Sale and Purchase of Natural Gas with 26 BP, a copy of which is attached hereto as Exhibit A and incorporated by 27 reference. 28 / / / 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 3: The City Council of the City of Vernon hereby authorizes the Mayor or Mayor Pro-Tem to execute the Contract with BP for, and on behalf of, the City of Vernon and the City Clerk or Deputy City Clerk is hereby authorized to attest thereto. SECTION 4: The City Council of the City of Vernon hereby directs the City Clerk, or her designee, to give one fully executed Contract to: BP Energy Company Attn. Contract Services P. 0. Box 3092 Houston, TX 77253-3092 SECTION 5: The City Council of the City of Vernon hereby authorizes the City Administrator, or his designee, to execute and deliver such other agreements, documents and certificates, and to perform such other acts and deeds, as may be necessary or convenient to effect the purposes of this Resolution and the transactions herein authorized. SECTION 6: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 20th day of October, 2008. ATTE T• MAN ELA GIRON, Ity.Clerk Name: Leonis C. Mal.burg Title: Mayor / - 2 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 9743, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Monday, October 20, 2008, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. (SEAL) MANUELA GIRON, City Clerk - 3 - EXHIBIT A Base Contract for Sale and Purchase of Natural Gas This Base Contract is entered into as of the following date: October 1st, 2008 The parties to this Base Contract are the following: Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved September 5, 2006 Base Contract for Sale and Purchase of Natural Gas (Continued) 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 the appropriate box(es) from each section: ATTEST: APPROVED AS TO FORM: By: - Manuela Giron, City Clerk Jeff A. Harrison, City Attorney Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 2 of 13 September 5, 2006 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 hafwaan tha narrirns shall he the r nntrnt 4 tie rinfi—I in C— inn 1) n 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 considereda "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, EDl or:mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction i'iocedure) provrded that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. 0ianfrmng PartyJadopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identifrcatioh4and authentication of Confirming Party. If the Transaction Confirmation contain's any provisions ommercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, other than those relating to the c 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 repre e.ntations and warranties), slash provisions shall not be deemed to be accep ed purpuant �to,.S°ection 1 3 but must be expres"sly agreed to "by both vparties, prbvlded'`A-& the foregoing sliail -not invalydate;an transaction a reed to; _tile arties . Written Transaction Procedure: 1.2 The parties w}ill use the folloWing Transaction Confirmation procedure. Should -the parties come to an agrok4ii4nt regarding a Gas purchase antl sale transaction for: a particular Dehuery Period, ',tile Confirming Party shall, and the 'other party inay record that agreement on a Transaction Confirmation and communicate such Transaction, ,Confirmation by facsimile EDI: or mutually agreeable electron1cmeans, to tho other party by the cl©se of the BU iness Day following they date of a�reemgnt Tfi'e,parties acknouirledge that their agreement wfll not be binding until the exdtange of nonconflicting Transaction= Confirmations or the a'ssa a of the Confrrrn�beadline wtthout'obiection from the receivin a` , as rovided in Section 1 �3: 1. If a se .drag perty's Transacfioh Confrmatioh is` , ' k 'ally different from the receiving pariys understanding of the agreement refened to-mecticn 2, such receiving party shall notify the ending parly via facsimile,l=Dl or mutually agreeable electroic rrieans by the Corifirrt5 Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party The failure of the reserving pfarty to so notify the sending party in writing bye, Confirm Deadline constitutes the receiving patty's ag"reement to the terms of the transacti©n descnbed an the sending patty's Transaction Confirmation If there are any,matenal differences;between"timely sent Transactioh Confirnlatlons'goveming the same transaction, then neither Transaction Confirmation`shall be binding until or unless such difie�ences are resolved rnaluding the - of any evrdencethat clearly resolves the'differences in the Transadtion Confirmat!orts. In the event of a :conlct among the terms of (t) a binding Tr`ansactlon Confirmation pur°su;iit to Section 1.2 (n) the oral agreernentof the parties wtjrch may be evidenced by a recorded =conversation, vvhere the partiee ;have selected the Oral'' - Ir §action Procedure:: of the Base Contrai;t, (ni) the Base Contract, and f(av),#hese Genersl T'erfrts and Conditions, the terms of the docurnens shall goverrt.n the priority - _ e that each Onrty may electronically record all telephone conversations vwth repest:#o this �-oct,k etween without an special or further notice to the other party. Each.;party shall obtain -any necessary ,consent of its uch recording: Where the partrea have selected the Or Transaction Prodedure in Section of the agree not to.contest the validity -or enforceability of telephonic;.recordings entered into in accordance:With the Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 3 of 13 September 5, 2006 2.3. 'Altemative 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. 2.4. "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. 2.5. "British thermal unit" or "Btu" shall mean the International BTU, which is also called the Btu (IT). 2.6. "Business Day(s)" shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S. 2.7. "Confirm Deadline" shall mean 5:00 p.m. in the receiving parry'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 Confirma ion 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. 2.8. "Confirming Party" shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party. 2.9. "Contract" shall mean the ,legally binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and (ui) 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 Confimi'ation, all of which shall form a single integrated agreement between the parties. 2.10. "Contract Price' ;hall mean th&,-6-11 mount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by f6 parties in a° transaction. 2.11. "Contract Quantity' shall mean the 'quantity of Gas to be delivered and taken as agreed to by the parties in a transaction. 2.12 "Cover Standard' as referred to in Section 3 2, shall mean that if there is an unexcused failure to take or deliver an quantity of Gas p`ursuant;to-#his Contract, then #he,.oerform►na=narty Cil"AII LICA Cnmmarnia ro �,,.;�h � ,.0 + .�....__ :_ ;�,_y 2. PC ar 2. al 2. 2. 2. rel 2. t2 ex ex 2. pe in% the 2., 'Cis, (or an , It6mate fue in either case, at a pr ided by the nonperform plicable the quantities ii t Obligatipn(s)"'shall m( as cash an irrevocable r good and sufficient se an a period of:24 conse T' shall by the period dt s)" shall rriean_such poi an an electronic data ion of Transaction Conf ian the purof?ase, sale Futures contracts. EFP :e of its obligations to the Commodity Exchan can that either party for reasons of Force I ay be resppnsibI for a the Transporter and unt an any mifxture of hydr by Buyer and replacerhi able for the -delivery or;pr the immediacy of the Bti id the anticipated length,: digation(s)Ao provide or_:f ;tter of credit, a margin ac continuing ;nature. s, coextensive with a "da deliveries are to be mad s agreed tb`by the parties as defined buahP "Reraly e of natural Gas as the "physical'- porate the; meaning `and remedies receive Gas will be ,governed by apt its performance without liabi wided, however, that during Forc :e Charges as set forthLf' in Section e in deliveries and/or receipts is co id noncombustible gases in a qa; the with: Gas of, a :st in in 2.21 Guarantor shall mean arty entity that has proved' d a guaranty,of the obligations of a party hereur ter 2 22 Imbalance Charges" shall mean any fees penalties, costs or charges (in..cash or in kind) assestsed by al' ransporter for failure to satisfy the `fransporter's balance and/or nomma#ion requirements. 223 'Indebtedness Cross DetaulY' shall mean if selected on the Base Contract by the parties with respect to a party, that it or+,its .Guarantor; if any, ,experiences ;a default' ox„sr►nilar po edition' or event" however #hgreln cietlned, untl6t,'dhe or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable. uopyngn► to zuun ivortn American tnergy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 13 September 5, 2006 2.24. "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. 2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm. 2.26. "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. 2.27. "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. 2.28. "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. 2.29. "Scheduled Gas" shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management. 2.30. "Specified Transaction(s) shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any. other transaction or agreement identified as a Specified Transaction under the Base Contract. 2.31. "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 publish @d, 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 #ftrto price or range of prices is published for such Day, then the Spot Price shall be the average of the following (r) Elie 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 (H) 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. 2.32. "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 De ivery Period. 2.33 ` ' Transacfiorial Cross Default'= hall mean rf selected on the ;Base Contraot by the parties vvtth respect #o .a:party, that it sha11 be Sri default however therein deflnd, under�ar5y.�pecifred Transaction. 2.4 Termination Option" shall mean the option of either party to Germinate a transaction in the event #hat the other party fails to mFrroblioGas nthe case ofSelloperfottreceive Gas in the case of Buyer for a designated number ofdays during a penotl is specified._bn the, applicable Transaction Confirmation. 2.35 "Transporter(s)" shall mean aII Gas gathenng or pipeline companies, or local distribution companies acting rn the capacity of a transpprter, transporting' Gas for Seller p -Buyer upstream or downstream; respectively of the Delivery y`Polnt pursuant Go. a ;particular tranact sion SECTION PERFORMANCE OBLIGATION 3 9 Seller agrees to;sell and deliver; and Buyer agrees to receive and purchase, the -Contract QUanttty for a particular transaction in accordance with the terms zf the Contract Sales and purchases will be ona Firm or Interruptible basr& as agreed to by_.the p`srfies in a transaotron 77,.. ; . The parties I�ave;.selected either the `.`Cover Standalyd°' orah`e "Spot PnceS#andard" as trlHicated.on the'Base.;tnntract. Cover Standard 3 The sole and exclusive remedy of the parties h the event oV6 breach of.a Firm obligation to delver or rece ue Gas shall be recovery of thefiollowmg: (i) in the event of a breach by Seller on any Days) payment by Se11er to.Buyer'in an amount equal to the positive drtFerertce� rf any, between the purchase puce paid by Buyer utilizing fhe Cover Standard and the Contract Price, adjusted for commercially reasonable "differences in transportationcosts to or from the Delivery Point(s), multiplied ;by the differencebefin/eenhe Contract Quantity and the oua�i#rtyactually delivered by Seller for such Day(5) excluding any quantity for whioh no replacement is available, or (ii) in the event of, a breach by', -,.;Buyer on any'Day(s), payment by Buyer to :Seller in the arriount equal to :the positive difference, if any, between the Contradt "Price and the ,price received y Seller utalt�irig the Cover Standard ',--,-,for the ;resale of such Gas; ;adjusted for dorrtm:ercially reasonable differences in transpartat�on costa #o`or from the Delivery P,,oint(s), multiplied by the drffe.rence between the Contract Quantity and the quantity actually taken by Buyer for such Days) xcludrng7any quantity for vvhrch' no sale rs avarlati1e; and (tu)-h the event that Buyer has used'commercrally 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 for all, or any portion of Ehe Contract Quantity of" Gas, then rn addition to (i) or .(r) above, as applicable; the s©le and exclusive remedy of the perforrnrng party with respect to the Gas not replaced jr, spld shall be an :amount equal to any unfauorable difference between the Contract Price and the Spot Price, adjusted for: such transportafion to the applicable' Delivery Pomt,'multiplied by the quantity of such Gas not replaced or sold Imbalance Charges shall not be recovered underthis Section°3.2, brat Seller anti/or'Buyer shall be responsible for`" mbaiante Charges, ifany; 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. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 13 September 5, 2006 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 2and"3.31 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 vvill;be calculated. SECTION 4. TRANSPORTATION,'NOMINATIONS, AND IMBALANCES 4.1. Seller shall have the sole responsibihty for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the pelivery Points) - 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 Transporters) 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 Points) ar..e greater or lesser than the Scheduled Gaa such,partyshall promptly notify the other party.. j SECTION 7. BILLING, Py4YMENT, AND AUDIT 7.1 sha Seller ll invoice Buyer for Gas delivered and receivedin the preceding Month and for any other applicable charges, providing supporting documentation acceptable in intlustrypractice to`support the amount charged. If the actual quantity deliveretl 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. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 6 of 13 September 5, 2006 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 without undue delay. In the event the parties are unable to resolve such dispute, either patty 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 remitthe 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 tower of (i) the then -effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum,; or (_i) the maximum applicable lawful interest rate. 7.6. A party shall have the tight 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,ofi 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 conclusive►y presume' 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 retroaotiVe "a justments;ui der 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 liar shall net all undisputed amounts amount shall make a single payr redOiW to .be made aur'§UAr t to SI 8. hE 8. at (ir ac PE 8. CI U. TE th ar A 8. TiTLE, W SECTION 9. NOTICES 9 All Tr rasaetion Confirmations, invoices, payment instruction's, and otheF. communications made:_ pursuant10 the Base Contract ("Notces") sha11 be made to the addressE`s specified in writing by the respective parties from tune to'time. 9.2, All NOW6 Tequired hereunder shall be.ln writing and may besent;by facsimile or, rrrutually accepfabie-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 Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 7 of 13 September 5, 2006 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. 9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice. 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 or its Guarantor,, if applicable), X may demand Adequate Assurance of Performance. "Adequate Assurance of Performance" shall mean sufficient seourity in the form, amount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuing first.priority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash transferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the security:"interest and lien granted hereunder on that Adequate Assurance of Performance shall be released automatically and, to the a extent possible, without any further action by either party. 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 commencernen# of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or procee iiflg'col mencad against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as they fall tiue; (v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to lfi or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relatiin'g to xhe 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; (viii) not have paid any amount due the other party hereunder on wri or before the second Business Day following tten Notice that such payment is due or ix) be the affected party u,if respect to any Aticlitional-Event of Default.'then fhesother �artv`(the "Non-f)afaiiltiran'�l- ;ParFic„ hap h�o — o lrnme lately withhold and/or su - "'d deliveries or payments upon Notice and/or to 6i:m1nate and liquidate the under the Contract m the:. manner provided in Section '10.3, in addition to any and,other rerna8fe5.;_available 0 `1 As of the Early Termination Date the hibn-Defaulting :Rarty shay determine -in good faith and in a commercially rea p-, abl;e manner, (r} tho amount jowed (whether or not then due) by each party with respect to al(�Qas delivered Ondrteceived between the parti s under Terminated Transactions dr Excluded Transactions on. and before the Barly 7erminatibn.Date and all other applicable charges relating to such, deliveries and receipts (including without limitation any amounts owed underSection 3.2), for ufioh paymert'has hot yet been made by the party that owes suo>�"payment under this Contract and (ii) the IVlarket Value, as defined below of each Terminated Transaction {The Non -Defaulting ;Party shall (x), liquidate and accelerate each Terminated Transactlon at its`yMari f-Value, so fhat,each amount equal to the difference between.such Market Ualue and the Contract Value, as defined below;: of such ;Terminated Transaction(s) shill tie due to the Buyer under the Terminated TYansaction(s) if such; Market Value exceeds the Contract Value arfid,to the Seller If the Opposite is the case; and ("y) where appropriate, discount"each, amount them due under clause (x)::above to present value m a commercially reasonable menner as of the Early Te�nination `Date(to take account of the peso}tl betvyeen the date of liquidation end tha date on Mich such amount would have ;otherwise been due "pursuant to fhe lelevant 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 mulfiplied by xkia Contract Price, and Marlcef Value" mean. _;fha amniint"nf mac ramaW1111r,n rk 6. under a #rahsactipn Multiplied by the market price fora similar transaction at the Delivery Point deterrnmed--by the N.on Defaulting Party in acommere�al(y reasonable mariner. To ascertain the Market Value, the Non -Defaulting Partyanay r;onsider among other valuations; any or all of the settlement ,prices of NYiyl)=X Gas`future5,contracts, quotations fromaeading 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 Copyright U 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 8 of 13 September 5, 2006 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 resent 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 ail 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 Agreemenf` Setoffs Apply" or "Other Agreement Setoffs Do Not Apply" as indicated on the Base Contract. Other Agreement Setoffs Apply: Bilateral Setoff Option: 10.3.2. The Non -Defaulting Party'shali net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all Isuch 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 is hereby authorized to setoff any'Net Settlement Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by the ;party that is entitled to the Net Settlement Amount under any other agreement or arrangement between the parties. Triangular Setoff Option 10.3.2. The Non-Defaultin,. 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 Arno. unt } At its sole option and without poor Notice to the Defaulting Par y; the Non Defaulting Party is hereby authorized to setoff,(ij any Net Settlement Amount against any [nargin or other collateral held by a party m oofnectionwith any Cretlif Support,9, J of on relating to'the Contract (ti) airy Net Settlement Amount against anyarnount(s,); (includ�rig ahy excess cash margin or excess cash collateral} w✓ed by or #o a party under ahyother agreement or arrangement, between the, parties; (iii) " any Net Settlement Amouht owed to the Non-Defaial#ing'Party against any amount(s);(including any excess,eash margin or excess cash collateral) Awed by the Non Defaulting Party n_r,`ifs Affiliates ; o the Defaulting Party under any other agreement or arrangement, (iv) any Net Settlemen#Amount owetl to tt:a Defaulting Party against any amounts)„(including any excess cash margin or excess: cash collateral) owed by the Defaulting Party to',fhe Non -Defaulting Party or its Affiliates uher any other agreement or arrar�gemerit, and/ors apy Net Settiem nt Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin gr excess icash'collateral) owed_`by the Defaulting Party or its Affiliates to the;Non=Defaulting Party under an$ o#herla reement or Arran eme . Other greerner Setoffs Do Not Apply: 117 32 Thy Non Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties untler Sebfioh 10r3 1, so that all suph amounts are netted or aggregated to a single ligtaitla#ed amountpaya4le by one patty to the other (the,;"Net S 'ttlement Amount`) A its sole option and without plCor Notice to the Defaulting Party, the Non Defaulting Party may setoff ally Nt Settlement Amount against any margin or other collateral held by a party in`connection with any Credit Support 4 Obli ation,iielattn ;to the Contract. 10 3 3 ' If any >obhgation that is to be inbluded in any netting ag jtegation or setoff pursuant ; to Section 10.3.2 is un`a5certained the Non Defaulting 0a6may in good fa th estimate that obligation, and net, aggregate oreetoff as applicable, in respeot ol,fhe �eati_nra#e,�ubject to the Nan -Defaulting I'rtj accounting _to the Defa�ilting Party'when.fhe obligation as -ascertained. Ary, amount not then due which is included in any llettih'g, aggregatioh or setoff purauant to Secfion 10 3 2,'shall be `discounted to net present valPe; in a commercially reasonable manner determined Wethe Non -Defaulting Party 10:�4, As soon as practicable 9 Of_' -a liquidation, Notice shall be given by the,Nor -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 indlude a written statement explaining in reasonab1Q detail the calculation of the Net Settlement Amount, provided that failure to give sUeh Notice shall not affect `the ;validity or enforceability of the liquidation or give rise to any claim'by the DefaUlttrig Party against the Non befaUltirag Party. The`_Net Settlement Amount as well as any setoff applied agamt sUdh ampurit pursuant to S66166,16.3.2.shall be paid by the close of business on file second Business Day foilowing suoh Notice <which date hall not be earlier than the Early Termination Date: Interest on any unpaid portion of6he Net Settlement Amount as adjusted by setoffs; shall accrue from the date due until the elate of payfnent,at a rate egyal tdahe lower of (i).ihe then -effective prime rate of rnteres# published under"'Money Rates" by The WaliSfreet Joumal, plus twp:percent per annurn; or (ii) the maimum apphpable lawful inter. mate. 105 fihe pFarties ,agree that the transactions hereunder _constitute a "forward 'contract,• Wi#hm.:`the 'meaning of,tle United States Eai kruptcy: Code, and that Buyer'and SelleP are.:each "forward ci "rite cct-merchants" within .the i5 eaning 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. Copyright© 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 9 of 13 September 5, 2006 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 parry'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, or acts of terror; and (v) governmental actions such as necessity for compliance with any cout;order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having luristliction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the' everif 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 `reasoneble dispatch; or (iii) economic hardship, to include, without limitation, Seller's ability to sell Gas at a higher or more advantageous price than fhe Contract Price, Buyer's ability to purchase Gas at a lower or more advantageous price than the Contract Pnce or ;a reguia#ory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyer-"s,rmarket(s) oriBuyees inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the,.loss 6r 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. 114 Notwithstandinganything to ahe contrary herein the parties agree that ahe settlement of strikes lockouts or other Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 10 of 13 September 5, 2006 SECTION 14. MARKET DISRUPTION If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non- affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party's two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, withrespect to an index specified for a transaction, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or, materjal; suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a' material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the Calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number,is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than fiv¢, then' the third decimal number shall remain unchanged. SECTION 15. MISCELLANEOUS` 15.1. This Contract shall; be,binding upon the respective parties heretot and the coven Contract. No assignment of 1;his,Co6tract, in (and shall not relieve the assigning;party from either party may (i) transfer, sell(;pledge en`pu with any financing or other financial arraiigemE 1! d( 1! 1! cc th 1! C1 1! g( th 1! 1! C1 to C( 1! a transaction(s). This 1 and performance of tl any coAid, of laws ru i all provisions herein i9 iurisdidd _over the i; inure to the benefit of the successors, assigns, personal representatives, and heirs of conditions, rights and obligations of this Contract shall run for the full term of this e`or in part, will be made without the prior written consent of the non -assigning party ity hereunder), which consent will not be unreasonably withheld or delayed; provided, or assign this Contract or the accounts, revenues, or proceeds hereof in connection or (ii) transfer its interest to any parent or Affiliate by assignment, merger or otherwise any, such assignment, transfer and assumption, the transferorshall,remain principally rom any obligations hereunder. erm n' #o,; be invalid' Ivoid or unenforceable by:,any court, faaving jurisdiction, such here is nq #tiirci party beneficiary to this ach party to ,this Contract represents ch`person wlio executesthis.Contract that such party will be bound fhereby. he headings and subheatlings contain( veer the parties and shall.,'npt be used t nless>the parties have elected on the E dileetly or indirectly without the prior, �loyees, lenders, royalty, bwners, coun all of a party s assets or of any rights axcept (�) in order to comply with any s of thus Contract , (iii) to ithe.=extent ne( its 'that it has full and either part i preppri mtract are used solely )r interpretthe provisic ct not to make this Se ;ent of the other party tants and',other agen Contract, provided su w, order, regulation, c wa this regulatory agencys reporting requirements including but not limited to gas`cost recovery proceedings or (v) o the:extent such information is delivered to sup. third party for the sole purpose of calculating a published index Each party shall-Adf, the other__parly of any prticeedmg of which it is avvere which imay result in disclosure of the terms of any transaction (other than as ;permitted hereunder) and use reasonable„effortso prevent or limit the disclosure. The existence of this,.Contract is not subject to this confidentiality obligation: Subject to ;Section 13 theta<parties shall be entitled to all remedies available at lain% or in equity to enforce, of seek relief in connection with this confidentiality obligation= The terms 0*ny transaction .hereunder 9,JbII 0, kept cpnfi_ dential by the, patties; heret0. 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, Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 11 of 13 September 5, 2006 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. 15.11. 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 15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the "Imaged Agreement"). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced as evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the recording, the Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence. 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 TONAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS,ORJMPLIED, ORAL OR;WRITTEN, WITH RESPECT TO THIS CONTRACTOR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDI110NS OF TITLE, NON -INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (W[�E�'HER OR,NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE)jWFIETH9R_ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER1jF 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 © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 12 of 13 September 5, 2006 TRANSACTION CONFIRMATION FOR IMMEDIATE DELIVERY EXHIBIT A 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 Deliuery Penod y;Be�m End: Perfar *ce Obligation and Contract Quantity (Select One) list a Buyer: By Title:;; Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 13 of 13 September 5, 2006 SPECIAL PROVISIONS ATTACHED TO AND FORMING PART OF THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS Dated October 1st, 2008 by and between BP Energy Company ("BP") And City of Vernon (the "Counterparty") Collectively BP and the Counterparty shall be referred to as the "Parties", and individually may be referred to as a "Party" Section 1. Purpose & Procedures Add the phrase "or other electronic means of communication" after "conversation" and before `with" in the second line of Section 1.2. Delete Section 1.3 and replace with the following: "If a sending Party's Transaction Confirmation is materially different from the receiving Party's understanding of the agreement referred to in Section 1.2, such receiving Party shall notify the sending Party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving Party has previously sent a Transaction Confinnation to the sending Party. The failure of the receiving Party to so notify the sending Party in writing by the Confirm Deadline constitutes the receiving Party's agreement to the terms of the transaction described in the sending Party's Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, or if the receiving Party has timely objected to the terms of the sending Parry's Transaction Confirmation, such transaction remains valid and the Parties remain legally bound thereby, however, both Parties shall in good faith attempt to resolve such differences. Once such material differences are resolved, the Confirming Party shall transmit a written Transaction Confirmation to the other Party, and such Transaction Confirmation shall be accepted (or disputed) pursuant to the provisions of this Section 1.3. The provisions of this Section 1.3 may be repeated as many times as necessary to produce a written Transaction Confirmation that is accepted or deemed accepted by the receiving Party. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the Parties (which may be evidenced by a recording of such transaction, oral testimony, data in a computer system, trade tickets, and/or notes), where the Parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the items shall govern in the priority listed in this sentence." Section 3. Performance Obligation Add the following at the end of Section 3.1: "Unless expressly agreed to by the Parties under a Transaction Confirmation, Seller is under no obligation to source the Gas being sold to Buyer from storage." Add the following as Section 3.5: "3.5 In the event that the Contract Price for a transaction is a Fixed Price (as defined below), and such transaction (a) has a Firm performance obligation, and (b) a Delivery Period of at least one Month, then, notwithstanding anything to the contrary in this Contract, including, without limitation, anything in Sections 3.2 or 11 of this Contract: (i) if, upon the occurrence of an event of Force Majeure, and as a result of the event of Force Majeure (a) Seller is unable to sell and deliver or (b) Buyer is unable to purchase and receive, the Contract Quantity of Fixed Price Gas, either in whole or in part, for such transaction, (ii) then, for the duration of the event of Force Majeure, for each Day that Seller is unable to sell and deliver, or Buyer is unable to purchase and receive, such Fixed Price Gas, as set out in Section 3.5(a)(i) above, the following settlement obligations between the Parties shall apply: a. if the FOM Price (as defined below) exceeds the Fixed Price, Seller shall pay Buyer the difference between the FOM Price and the Fixed Price for each MMBtu of such Gas not delivered and/or received on that Day, or b. if the Fixed Price exceeds the FOM Price, Buyer shall pay Seller the difference between the Fixed Price and the FOM Price for each MMBtu of such Gas not delivered and/or received on that Day. For the purpose of this Section 3.5: "Fixed Price" means, a Contract Price for a transaction that is expressed as a flat dollar amount for the Month of delivery, excluding any transactions that have been entered into after the last trading day (as defined by the NYMEX) for the applicable Month. Subject to the foregoing exclusion, "Fixed Price" also includes any transaction containing a Contract Price or a component of a Contract Price that has been converted from a floating price mechanism (i.e., a NYMEX/first of the month index basis component and a fixed price or floating price component, or a NYMEX/first of the month index priced component with a fixed basis component) to a flat dollar amount for any Month of delivery, either upon the mutual agreement of the Parties or as a result of a Party exercising a pricing "trigger" option in the Contract. "FOM Price" means the price per MMBtu, stated in the same currency as the transaction subject to such event of Force Majeure, for the first of the Month delivery, either as the NYMEX settlement price or as an index price published in the first issue of a publication commonly accepted by the natural gas industry (selected by the Seller in a commercially reasonable manner) for the Month of such event of Force Majeure for the geographic location closest in proximity to the Delivery Point(s) for the relevant Day, adjusted for the basis differential between the Delivery Point(s) and the NYMEX or such published geographic location as determined by the Seller in a commercially reasonable manner." Section 6. Taxes Add the following after the last sentence in Section 6 for "Buyer Pays At and After Delivery Point": "Absent such exemption documentation, for each Month that Gas is delivered to Buyer, Buyer shall provide Seller with the actual consumption information by meter number and physical address (U.S. Postal Service nine digit zip code), including the fuel requirements from the Delivery Point(s) to each meter. The required information shall be provided by Buyer to Seller by the tenth (1 Oth) Day of the Month following the Month the Gas is delivered by Seller to Buyer, and to the extent BP is the Seller, such information shall be tendered in either hard copy (Financial Operations, Attn: Tax Coordinator, BP Energy Company, 501 WestLake Park Blvd, Houston, TX 77079), by fax (Attn: Tax Coordinator -BP Energy Company 281-366-5925), or electronic media (NAGPSales&UseTax@bp.com). To the extent that Buyer fails to provide Seller with either exemption documentation or the required actual consumption information, Seller shall, using its sole discretion, unilaterally assess and invoice all applicable taxes using the information available to it." Section 7. Billing, Payment and Audit In Section 7.7 add the following after the words "subject to netting under this Section" at the end of the first sentence: "and provided further, however, that the Party due payment under Section 7.3 may net all undisputed sums due thereunder against any amounts payable by it when making payments under Section 7." Section 8. Title, Warranty, and Indemnity Delete Section 8.4 in its entirety. Section 9. Notices In the first sentence of Section 9.4 delete the words "commercially acceptable". Section 10. Financial Responsibility Add the following at the end before the "." in the last sentence of Section 10.2: "provided that no suspension of performance shall continue for more than thirty (30) Days unless an Early Termination Date has been declared and the Defaulting Party given Notice thereof in accordance with Section 10.3." Add the following as the third paragraph of Section 10.3.1. "Early Termination Damages Apply": "The Non -Defaulting Party shall also aggregate the costs that the Non -Defaulting Party incurs in liquidating and accelerating each Terminated Transaction, or otherwise settling obligations arising from the cancellation and termination of each Terminated Transaction, including brokerage fees, commissions, and other similar transaction costs and expenses reasonably incurred by the Non -Defaulting Party including costs associated with hedging its obligations, transaction costs associated with obtaining replacement suppliers or markets (e.g. brokerage fees, or other such payments), additional transportation costs, and like costs incurred in moving the replacement Gas to or from the Delivery Point, and reasonable attorneys' fees and other reasonable litigation costs incurred in connection with enforcing its rights under this Contract (collectively "Costs") and such Costs shall be due to the Non -Defaulting Party." Delete the words "and without prior Notice to the Defaulting Party" in the second sentence of Section 10.3.2 "Other Agreements Setoffs Apply". Add the following after the last sentence of Section 10.3.2: "To the extent that amounts otherwise owed by the Non -Defaulting Party Affiliate to the Defaulting Party, have been setoff by the Non -Defaulting Party pursuant to this section, the Non -Defaulting Party Affiliate shall not be liable to, and shall be released by, the Defaulting Party; provided further that the Defaulting Party shall be forever estopped from asserting that the Non -defaulting Party Affiliate owes the setoff amounts to the Defaulting Party. The obligations of the Non -Defaulting Party, the Non -Defaulting Parry's Affiliates, the Defaulting Party and the Defaulting Party's Affiliates under this Contract or otherwise in respect of such amounts shall be deemed satisfied and discharged to the extent of any such setoff. For this purpose, the amounts subject to the setoff may be converted at the applicable prevailing exchange rate into U.S. Dollars by the Non -Defaulting Party. The Non -Defaulting Party will give the Defaulting Party Notice of any setoff effected under this section provided that failure to give such notice shall not affect the validity of the setoff. Nothing in this paragraph shall be deemed to create a charge or other security interest. The rights provided by this Section are in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) to which a Party may be entitled (whether by operation of law, contract or otherwise). "Setoff' as used herein means setoff, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the Non -Defaulting Party is entitled or subject to (whether arising under this Contract, another contract, applicable law or otherwise) that is exercised by, or imposed on, the Non -Defaulting Party." Delete Section 10.5 in its entirety and replace with the following: "The Parties specifically agree that this Contract and all transactions pursuant hereto are "forward contracts" as such term is defined in the United States Bankruptcy Code and that each Party is a "forward contract merchant" as such term is defined in the United States Bankruptcy Code. Each Party further agrees that the other Party is not a "utility" as such term is used in 11 U.S.C. Section 366, and each Party agrees to waive and not to assert the applicability of the provisions of 11 U.S.C. Section 366 in any bankruptcy proceeding involving such Party. In addition, each Party agrees that, for any Gas actually consumed (rather than resold) by such Party, if Gas is not delivered pursuant to this Contract, the local gas distribution utility for such Party is the provider of last resort and can supply such Parry's Gas consumption needs." Section 11. Force Majeure Delete Section 11.4 and replace with the following: "Notwithstanding anything to the contrary in this Section 11, 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, and further agree that upon the occurrence and continuance of any 1 event of Force Majeure, neither Party shall be obligated to purchase or sell Gas hereunder if such purchase or sale would result in material economic impact to such Party under this Contract." Add the following as Section 11.7: "Without restricting the generality of Section 15.3, if an event of Force Majeure occurs, the Party affected may, in its sole discretion and without notice to the other Party, determine not to make a claim of Force Majeure and to waive its rights hereunder as they would apply to such event. Such determination or waiver shall not preclude the affected Party from claiming Force Majeure in respect of any subsequent event, including any event that is substantially similar to the event in respect of which such determination or waiver is made." Section 14. Market Disruption In Section 14, delete "and averaging the four quotes" at the end of the first sentence. In Section 14, delete the second sentence and replace it with the following: "Once the Parties obtain the quotes, the following methodology shall be used to determine the replacement price for the Floating Price: (i) if each Party obtains two quotes, the arithmetic mean of the quotations, excluding the highest and lowest values, shall be utilized; (ii) if one Party obtains two quotes and the other Party only obtains one quote, the highest and lowest values shall be excluded and the remaining quotation shall be utilized; (iii) if both Parties each obtain one quote, the arithmetic mean of the quotations shall be utilized; or (iv) if only one Party is able to obtain a quote, the obtained quotation shall be utilized. For purposes of the foregoing sentence, if more than one quotation is the same as another quotation, and such quotations are the highest and/or lowest values, only one of the quotations shall be excluded." Section 15. Miscellaneous Delete Section 15.3 in its entirety and replace with the following: "No waiver of any breach of this Contract, or delay, failure or refusal to exercise or enforce any rights under this Contract, shall be held to be a waiver of any other or subsequent breach, or be construed as a waiver of any such right then existing or arising in the future." In second line of Section 15.10, add the following: "or any financial information provided by a Party under the terms of this Contract" after "the terms of any transaction". Add the following as Section 15.13: "15.13 Mobile -Sierra. To the extent, if any, that a transaction does not qualify as a "first sale" as defined by the Natural Gas Act and §§ 2 and 601 of the Natural Gas Policy Act, each Party irrevocably waives its rights, including its rights under §§ 4-5 of the Natural Gas Act, unilaterally to seek or support a change in the rate(s), charges, classifications, terms or conditions of this Contract and any transaction hereunder (collectively, the "Agreements"). By this provision, each Party expressly waives its right to seek or support: (i) an order from the U.S. Federal Energy Regulatory Commission ("FERC") finding that the market -based rate(s), charges, classifications, terms or conditions agreed to by the Parties under the Agreements are unjust and unreasonable; or (ii) any refund with respect thereto. Each Party agrees not to make or support such a filing or request, and that these covenants and waivers shall be binding notwithstanding any regulatory or market changes that may occur hereafter. Absent the agreement of both Parties to the proposed change, the standard of review for changes to any section of the Agreements proposed by a Party (to the extent that any waiver as set forth in this Section 15.13 is unenforceable or ineffective as to such Party), a non-party or FERC acting sua sponte, shall be the "public interest" standard of review set forth in United Gas Pine Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the "Mobile -Sierra" doctrine)." Add the following as Section 15.14: "15.14 This Contract shall be considered for all purposes as prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the manner in which this Contract was negotiated, prepared, drafted or executed." Add the following as Section 15.15: "15.15 Each Party will be deemed to represent to the other Party each time a transaction is entered into that: (a) it is acting for its own account, and it has made its own independent decisions to enter that transaction and as to whether that transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary; (b) it is not relying on any communication (written or oral) of the other Party as investment advice or as a recommendation to enter into that transaction; it being understood that information and explanations related to the terms and conditions of a transaction shall not be considered investment advice or a recommendation to enter into that transaction; (c) no communication (written or oral) received from the other Party shall be deemed to be an assurance or guarantee as to the expected results of that transaction; (d) it is capable of assessing the merits and understanding (on its own behalf or through independent professional advice), and understands and accep the terms, conditions and risks of that transaction; (e) it is capable of assuming, and assumes, the risks of that transaction; and (f) th"the_ Party i not acting as a fiduciary for, or an advisor to, it in respect of that transaction." ENERGYJCOMPANY,,✓ ,,% CITY OF VERNON Name Scott R Bond Title: VP Marketing & Origination ATTEST: 0 Name: Title: Mayor / Mayor Pro—Tem APPROVED AS TO FORM: By: Manuela Giron, City Clerk Jeff A. Harrison, City Attorney E 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583-8811 October 29, 2008 BP Energy Company Attn: Contract Services P.O. Box 3092 Houston, TX 77253-3092 Re: Base Contract for Sale and Purchase of Natural Gas Ladies and Gentlemen: Transmitted herewith is a fully executed agreement as referenced above, approved by City Council on October 20, 2008, through Resolution No. 9743. If you have any questions regarding this matter, please call Mr. Donal O'Callaghan, at (323) 583-8811 ext. 834. Very truly yours, N ly r4 City Clerk NG:dr c: Donal O'Callaghan Resolution No. 9743 Agreement File No. 08-104 E,c(usive(y Industrial Base Contract for Sale and Purchase of Natural Gas This Base Contract is entered into as of the following date: October 1 st, 2008 The parties to this Base Contract are the following: rt th S C PARTY A PARTY B PARTYNAME BP Energy Company City of Vernon 501 Westlake Park Blvd. 4305 Santa Fe Ave. Houston, TX 77079 ADDRESS Vernon, CA 90048 www.bp.com BUSINESS WEBSITE www, CONTRACTNUMBER 62-527-5755 D-U-N-S® NUMBER 060883022 0 US FEDERAL: 36-3421804 ® US FEDERAL: 95-6000808 ❑ OTHER: TAX ID NUMBERS ❑ OTHER: Delaware JURISDICTION OF ORGANIZATION ® Corporation ❑ JLLC ❑ Corporation ❑ LLC ❑ Limited Partnership ❑, Partnership COMPANY TYPE ❑ Limited Partnership ❑ Partnership ❑ LLP ❑ Other: ❑ Ch LLP d Ct d M ® Other: The City of Vernon, a 1 C f f f I'f GUARANTOR (IF APPLICABLE) a e y an un c pa orpora on o e Late o a i orma CONTACT INFORMATION ATTN: TEL#; 281- 366-2000 FAX#: EMAIL: '- COMMERCIAL ATTN: "Donal O'Callaghan TEL#: -323-583-8811 FAX#: 323-826-1425 EMAIL: 'docalla han ci.vernon.ca.us ATTN: Gas Scheduling rme. 2R%I_QRR_'SMn eevfe• •SCHEDULING. ATTN: 'Donal O'Callaghan TEL# 323--MRARII 'FAX#- 323-R2rr-1d25 ATTN- Credit Services TEL#: .281-366-2000 FAX#: 281-366 6335 • CREDIT ATTN: Donal O'Callaghan TEL#: 323-583-8811 FAX#: 323-826-1425 EMAIL: EMAIL: docalla han ci.vernon.ca.us - BP Energy Company P.O. Box:3092: Houston' TX 77253=3092 •'; TRANSACTION ATTN: Donal O'Callaghan ATTN: Confirmations Dept.; CONFIRMATIONS TEL#: t 323-583-8811 FAX#: 323-826-1425 TEL#: 281-366-2000 FAX#: 281-366-1633 EMAIL: docaliaghan(&&i.vernon.cb.us EMAIL: ACCOUNTING INFORMATION P.O. Box 3092 Houston; TX 77253-3092 ATTN: Gas ACCOunting TEL#r 281-366-2000 FAX#: 281-366-5313 • INVOICES •' PAYMENTS •', SETTLEMENTS ATTN: Donal O'Callaghan TEL#: :323-583-8811 FAX#: 323-826-1425 EMAIL: EMAIL: "docallaghanCc_ki.vernon.ca.us BANK: JP Morgan Chase Bank, New York, NY WIRE TRANSFER BANK: The Bank of New Yourk ABA: 021000018 ACCT. 800457 ABA: 021000021 :ACCT. 916-2-548097 NUMBERS OTHER DETAILS: : For the Account of BP. Energy (IFAPPLICASLE) OTHER DETAILS: BANK: JP Morgan Chase Bank, New York, 'NY ABA: 021000021 ACCT. 910-2-548097 OTHER DETAILS: For the Account of BP Energy Company ACH NUMBERS (IFAPPLICABLE) BANK: ABA: ACCT. OTHER DETAILS: ATTN: ADDRESS: CHECKS. (IFAPPLICABLE) ATTN: Donal O'Callaghan TEL#: 323-583-8811 FAX#: 323-826-1425 EMAIL: docallaghan(aei.vernon.ca.us Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved September 5, 2006 Base Contract for Sale and Purchase of Natural Gas (Continued) 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 the appropriate box(es) from each section: B,P RGY COMPA PARTYNAI EE City of Vernon SIGNATURE i tt Mnd PRINTED NAME TITLE Mayor /�P4a3�br ire -Tear ATTEST By: d Wuela Giron, \411 Copyright © 2006 North American All Rights Reserved At JjC!1erk J . Energy Standards Board, Inc. U Page 2 of 13 S TO FQ-,RM: rrison, City Attorn NAESB Standard 6.3.1 September 5, 2006 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 2.9. 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 ca "writing" and to have been "signed". Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, andthe other party. may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDl,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 identificationand 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 6g reed 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 assage of the, Confirm Deadline without ob'ection,from the receiving party, as provided in Section 1.3.' 1.3. If a sending party's Transaction Confirm referred to in Section 1.2, such receiving, party shall the Confirm Deadline, unless such receiving party h, receiving partyto so notify'the sending party in writin the transaction described in the sending 'party's Tr Transaction Confirmations; governing the same tran differences are resolved including the use of any ev, event of a conflict among the terms of (i) a ,binding T which maybe; evidenced by a recorded conversat Contract, (iii,) the Base Contract, and (iv) these Gen listed in this sentence. 1.4. The= parties agree that each party may e their respective employees,, without any special or fl agents and..employees to- such recording. Where SECTION 2. DEFINITIONS ially different from the 'receivinc iding party via facsimile, EDI or sent a Transaction Confirmatid firm Deadline constitutes the re! >nfirmation. If there are ar'v n the parties' have sE and Conditions, thf record all telephon( to the other party. have selected the :nforceability of telex Section 1 9d the On ns of the shall ,actic ans by of the .rms of ly sent s such In the parties Base priority this Contract between cessary consent of its in Section 1.2 of the n accordance with the Copyright © 2006 North American Energy Standards Board, Inc. All Rights Reserved Page 3 of 13 NAESB Standard 6.3.1 September 5, 2006 2.3. "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. 2.4. "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. 2.5. "British thermal unit" or "Btu" shall mean the International BTU, which is also called the Btu (IT). 2.6. "Business Day(s)" shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S. 2.7. "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 of the opening of the next.Business Day. 2.8. "Confirming Party" shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party. 2.9. "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, all of which shall form a single integrated agreement between the parties. 2.10. Contract Price" `shallmean 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 therparties in a transaction. 2.11. "Contract Quantity" ishall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction. 2.12. "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 pe'.rforming 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 Gasi 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 offailure by the nonperforming party. 2.13. "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 cash,,an irrevocable.standby letter of credit, a margin agreement, a prepayment, a security interest in an, asset, guaranty, or other good and sufficient security of a continuing nature. 2.14. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by the Receiving Transporter in a particular transaction.` , 2.15. ' "Delivery Period" shall be the period during which deliveries are to be made as agreed to by the parties in a'transaction. 2.16. :'.'Delivery Point(s)" shall mean such point(s) as are agreed to by the parties in a transaction. 2.11. ",'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: 2.18. "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 underthe Commodity Exchange Act. 2.19. "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.. 2.20. ''Gas" shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous Istate consisting primarily of 2.21.' Guarantor" shall mean any entity that has provided a guaranty of the obligationsof a party hereunder 2.22. "Imbalance Charges" shall mean any fees, penalties, costs or charges (i,n cash or in kind) assessed by a Transporter for failure to satisfy the Transporter's balance and/or nomination requirements. ;F 2.23. "Indebtedness Cross Default" shall mean if selected .on the Base Contract by the parties with respect to a'party, that it or, its Guarantor, if any, experiences_a default` or similar condition`or event however therein defined, under one or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 13 September 5, 2006 2.24. "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. 2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm. 2.26. "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. 2.27. "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. 2.28. "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. 2.29. "Scheduled Gas" shall, -mean Jlhe quantity of Gas confirmed by Transporter(s) for movement, transportation or management. 2.30. "Specified Transaction(s)" shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any other transaction or agreement identified as a Specified Transaction under the Base Contract. 2.31. "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 precedesahe'relevant Day; and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published thatnext follows the relevant Day. 2.32. "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. 2.33. "TransactionalCross Default":shall mean if selected on the Base Contract ibv the parties with respect to a`oarty. that it 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 Buyerin 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) excluding any quantity for which no replacement is available,.or O 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 idifference between 'the' Contract Quantity and the quantity actually taken by Buyer for such Day(s) excluding any quantity for which'no sale is available; and (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 for all or any portion of the Contract Quantity of Gas, then in addition to (i) or (i) above, as applicable; the sole and exclusive remedy of the performing party with respect to the Gas not replaced or sold shall be an amount equal to any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the quantify of such Gas not replaced or sold. Imbalance Charges shall not be recovered under this, Sectionf 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. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 13 September 5, 2006 Spot Price Standards 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, lesserthanthe 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, 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 deliveryof 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 MMBWAry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter. SECTION 6.il,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 respectto the Gas at the Delivery Points) 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;partyentitled to an exem , tion,from.an 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 o'r with respect to the Gas after the Delivery Point(s). If a party is requiretl,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;par tyentitled to an exemption from an such Taxes or char es shall fumish the other party any necessarydocumentation thereof. SECTION 7. ` BILLING, PAYMENT, AND AUDIT 7.1. Seller shall invoice Buyer for Gas delivered and receivedin 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. Copyright© 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 6 of 13 September 5, 2006 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 without undue delay. In the event the parties are unable to resolve such dispute, either parlymay 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, of 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,-thes 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 theparties have executed a separate,""netting agreement, the terms and conditions therein shall prevail to the 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 assume 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 1`5.8, 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 (including death) 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 hamless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury (including death) or property damage from said Gas or other charges thereon which attach after title passes to Buyer. 1.8.4. Theparties.agree that the delivery of and the transfer of title to all Gas under this Contract shall take place within the Customs Territory of the United States (as defined in general note 2; of the Harmonized Tariff Schedule of the United States 19 U.S.C. 1 §1202,:General Notes, page 3);' provided, however, that in the event Seller took title .to the Gas outside the Customs Territory of,the United States, Seller represents and warrants that it is;the importer of record for all Gas entered and delivered into the United States, and shall be responsible for entry'and entry summary filings as well as the payment of .duties, taxes andfees, if any, and all applicable record keeping requirements. 8.5. Notwithstanding the other provisions of this Section 8, as betweenSeller and Buyer, Seller will be liable for all Claims to the extent that such apse from the failure of Gas delivered by Seller to meetthe quality requirements'of Section 5. SECTION 9. NOTICEs 9.1. All Transaction=: Confirmations, invoices, payment instructions, 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 shall be;in writing andimay 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 Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 7 of 13 September 5, 2006 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. 9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice. SECTION 10. FINANCIAL RESPONSIBILITY 10.1. If either party ("X") has re (whether or not then due) by the creditworthiness of Y or its Guaran of Performance" shall mean sufficie X, including, but not limited to cash, Y hereby grants to X a continuing. Performance in the form of cash tr Assurance of Performance, the sec released automatically and, to the e 10.2. In the event (each ,'an assignment or any general arrang acquiesce in the commencementof such petition filed or proceeding co unable to pay its debts as they fall official appointed with respect to `it . to any Credit Support Obligations r, within 48 hours but at least one Bu an asonable grounds for insecurity regarding the performance of any obligation under this Contract other party ("Y") (including, without limitation, the occurrence of a material change in the tor;'if applicable), X may demand Adequate Assurance of Performance. "Adequate Assurance Irtsecurity in the form, amount, for a term, and from an issuer, all as reasonably acceptable to a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. first priority security interest in, lien on, and right of setoff against all Adequate Assurance of sferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate urify interest and lien granted hereunder on that Adequate Assurance of Performance shall be xtent possible, without any further action by either party. o "Event of Default") either party (the "Defaulting Party") or its Guarantor shall: (i) make an ement for the benefit of creditors; (ii) file a petition or otherwise commence, authorize, or a proceeding'or case under any bankruptcy or similar law for the protection of creditors or have mmenced against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be due; (v).have,a receiver, provisional liquidator, conservator, custodian, trustee or other similar r substantially all of its assets; (vi) fail to perform any obligation to the other party with respect elating" to the Contract; (vii) fail to give Adequate Assurance of Performance under Section 10.1 siness Day of a written request by the other party; (viii) not have paid any amount due the other Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 8 of 13 September 5, 2006 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 resent 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:.f Bilateral Setoff Option: 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 is hereby authorized to setoff any, Net Settlement Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the, Contract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by the, party that is entitled to the Net Settlement Amount under any other agreement or arrangement between the parties. Triangular Setoff Option: " 10.3.2. The Non -Defaulting Partyshall,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 is hereby authorized to setoff (i)' any Net Settlement Amount against any.margin or other collateral held by a party in connection.with any Credit Support Obligation relating to the.Contract; (ii) any Net Settlement Amount against any amount(s) (including any excess cash margin' or excess cash collateral) owed by or`to a party under any other agreement or arrangement between the parties; (iii) any Net Settlement Amount owed to,the. 'Non -Defaulting : Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Non -Defaulting Party ar its Affiliates to the Defaulting Party under, any other agreement or arrangement' (iv) any Net Settlement Amount owed to the Defaulting Party against=any amount(s) (including any.excess cash margin or excess cash col lateral)owed by the Defaulting Party to,fhe Non -Defaulting Party or, its"Affiliates under any other agreement or arrangement; and/or ;(v) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any, excess cash margin or excess cash collateral) owed by the Defaulting Party or its: Affiliates to the Non -Defaulting, Party under an other a reement.or Arran ement. Other, Agreement Setoffs Do Not Apply: 10.3.2. The Non-pefaulting Party 'Shall net`or aggregate, as appropriate, any and all amounts owing between theparties under Section 1'03.1, so that all such amounts are netted or aggregated to'a single liquidated' amount payable by one party to the other (the "Nei Settlement Amount"). At its sole option and without prior Notice to the Defaulting Party, the Non -Defaulting Party may setoff any Net Settlement Amountagainst any`margin or other collateral held by a party in connection with any Credit Support Obli ation relating" to the Contract. 10.3.34. If, any obligation that Jsto be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is un`ascertaned, the Non -Defaulting Party, may in good faith 'estimate that obligation,and net, aggregate;or setoff, ,as applicable, in respect o€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 presentvalde in a commercially reasonable manner determined by the Non -Defaulting Party. 10A. �As soon as practicable after a liquidation, Notice shall be given by the' -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-06fault ng Party. The; Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of tha'l quidation or give rise to any claim by the Defaulting Party against the Non -Defaulting Party. The Net Settlement' Amount as well. as any setoffs applied "against such amount pursuant to Section 10.3.2, 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 as adjusted; by setoffs; 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. 1 Q.5. iThe parties agree that the transactions •hereunder rconstitute� a "forward. contract" within the, meaning of the United States Bankruptcy Code, and that Buyer and Seller are each "fo."rward 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 Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 9 of 13 September 5, 2006 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, or acts of terror; 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 advantageou's price than he 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 Contract; (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 be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its onset of the Force "Maieuresevent, to make or accept delivery of Gas, as applicable, to the,extent and for the duratio and neither party shall be deemed tahave failed in such obligations to the other dudn4 such occurrence or event.' 11,.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisio 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 late: any transaction(s): ' The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make I and the" obligation of either party to indemnify the other,' pursuant hereto shall .survive the termination of the Ba 5tL I IUN 1 .i'. LIMITATIONS iitial Notice may �n as reasonably ligation, from the if Force Majeure, in a Transaction )elivery Period of finent hereunder, Contract or any SUCH 31LITY W OR IN A IS THE INTENT OF 3ES BE WITHOUT WHETHER SUCH REQUIRED TO BE 1R IMPOSSIBLE TO DES CALCULATED Copyright © 2006 North American Energy Standards Board, Inc. All Rights Reserved Page 10 of 13 NAESB Standard 6.3.1 September 5, 2006 SECTION 14. MARKET DISRUPTION If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non- affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party's two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a,factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, with respect to an index specified for a transaction, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material-, suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than five, then the third decimal number shall remain unchanged. SECTION 15. MISCELLANEOUS 15.1. 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. 15.2. 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. 15..3. No waver.of any breach of this Contract shall be held to be a waiver of any other or subsequent breach. 15'.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. 'The interp"retafiorr 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 anotherjurisdiction. ' 15',6. This Contract and all provisions herein will besubject to all applicable and valid statutes, rules, orders and regulations of any govemmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof. There;s no third party beneficiary to this Contract. 15.8. Each party to his 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. 15`.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: 15.10. Unless the parties have elected on the Base Contract not to make this Section 15.10 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, (iv) to the extent necessary, to comply with a regulatory agency's reporting requirements' including but` notlimited to gas cost recovery proceedings; or (v) 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 Iof 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 reliefin 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, Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 11 of 13 September 5, 2006 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. 15.11 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 15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the "Imaged Agreement"). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced as evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the recording, the. Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence. DISCLAIMER: The purposes ofthi sale of natural gas. Further, NAESE THIS CONTRACT ACKNOWLED,( REPRESENTATIONS, EXPRESS ANY AND ALL IMPLIED WARRAI ANY PARTICULAR PURPOSE (VI AWARE OF ANY SUCH PURPOS COURSE OF DEALING. EACH U DIRECT, SPECIAL, INCIDENTAL; tract are to facilitate trade, avoid misunderstandings and make more definite the terms of contracts of purchase and s not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF WD!AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR IIPLfED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING 1 OR CONDITION$'OF TITLE, NON -INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR 0, OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT HETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY �F THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY APLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CONTRACT. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 12 of 13 September 5, 2006 TRANSACTION CONFIRMATION FOR IMMEDIATE DELIVERY EXHIBIT A Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 13 of 13 September 5, 2006 SPECIAL PROVISIONS ATTACHED TO AND FORMING PART OF THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS Dated October 1st, 2008 by and between BP Energy Company ("BP") And City of Vernon (the "Counterparty") Collectively BP and the Counterparty shall be referred to as the "Parties", and individually may be referred to as a "Party". Section 1. Purpose & Procedures Add the phrase "or other electronic means of communication" after "conversation" and before `with" in the second line of Section 1.2. Delete Section 1.3 and replace with the following: "If a sending Parry'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 Parry 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 Parry to so notify the sending Party in writing by the Confirm Deadline constitutes the receiving Party's agreement to the terms of the transaction described in the sending Party's Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, or if the receiving Party has timely objected to the terms of the sending Party's Transaction Confirmation, such transaction remains valid and the Parties remain legally bound thereby, however, both Parties shall in good faith attempt to resolve such differences. Once such material differences are resolved, the Confirming Party shall transmit a written Transaction Confirmation to the other Party, and such Transaction Confirmation shall be accepted (or disputed) pursuant to the provisions of this Section 1.3. The provisions of this Section 1.3 may be repeated as many times as necessary to produce a written Transaction Confirmation that is accepted or deemed accepted by the receiving Parry. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the Parties (which may be evidenced by a recording of such transaction, oral testimony, data in a computer system, trade tickets, and/or notes), where the Parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the items shall govern in the priority listed in this sentence." Section 3. Performance Obligation Add the following at the end of Section 3.1: "Unless expressly agreed to by the Parties under a Transaction Confirmation, Seller is under no obligation to source the Gas being sold to Buyer from storage." Add the following as Section 3.5: "3.5 In the event that the Contract Price for a transaction is a Fixed Price (as defined below), and such transaction (a) has a Firm performance obligation, and (b) a Delivery Period of at least one Month, then, notwithstanding anything to the contrary in this Contract, including, without limitation, anything in Sections 3.2 or 11 of this Contract: (i) if, upon the occurrence of an event of Force Majeure, and as a result of the event of Force Majeure (a) Seller is unable to sell and deliver or (b) Buyer is unable to purchase and receive, the Contract Quantity of Fixed Price Gas, either in whole or in part, for such transaction, (ii) then, for the duration of the event of Force Majeure, for each Day that Seller is unable to sell and deliver, or Buyer is unable to purchase and receive, such Fixed Price Gas, as set out in Section 3.5(a)(i) above, the following settlement obligations between the Parties shall apply: a. if the FOM Price (as defined below) exceeds the Fixed Price, Seller shall pay Buyer the difference between the FOM Price and the Fixed Price for each MMBtu of such Gas not delivered and/or received on that Day, or b. if the Fixed Price exceeds the FOM Price, Buyer shall pay Seller the difference between the Fixed Price and the FOM Price for each MMBtu of such Gas not delivered and/or received on that Day. For the purpose of this Section 3.5: "Fixed Price" means, a Contract Price for a transaction that is expressed as a flat dollar amount for the Month of delivery, excluding any transactions that have been entered into after the last trading day (as defined by the NYMEX) for the applicable Month. Subject to the foregoing exclusion, "Fixed Price" also includes any transaction containing a Contract Price or a component of a Contract Price that has been converted from a floating price mechanism (i.e., a NYMEX/first of the month index basis component and a fixed price or floating price component, or a NYMEX/first of the month index priced component with a fixed basis component) to a flat dollar amount for any Month of delivery, either upon the mutual agreement of the Parties or as a result of a Party exercising a pricing "trigger" option in the Contract. "FOM Price" means the price per MMBtu, stated in the same currency as the transaction subject to such event of Force Majeure, for the first of the Month delivery, either as the NYMEX settlement price or as an index price published in the first issue of a publication commonly accepted by the natural gas industry (selected by the Seller in a commercially reasonable manner) for the Month of such event of Force Majeure for the geographic location closest in proximity to the Delivery Point(s) for the relevant Day, adjusted for the basis differential between the Delivery Pbint(s) and the NYMEX or such published geographic location as determined by the Seller in a commercially reasonable manner." Section 6. Taxes Add the following after the last sentence in Section 6 for "Buyer Pays At and After Delivery Point": "Absent such exemption documentation, for each Month that Gas is delivered to Buyer, Buyer shall provide Seller with the actual consumption information by meter number and physical address (U.S. Postal Service nine digit zip code), including the fuel requirements from the Delivery Point(s) to each meter. The required information shall be provided by Buyer to Seller by the tenth (I Oth) Day of the Month following the Month the Gas is delivered by Seller to Buyer, and to the extent BP is the Seller, such information shall be tendered in either hard copy (Financial Operations, Attn: Tax Coordinator, BP Energy Company, 501 WestLake Park Blvd, Houston, TX 77079), by fax (Attn: Tax Coordinator -BP Energy Company 281-366-5925), or electronic media (NAGPSales&UseTax@bp.com). To the extent that Buyer fails to provide Seller with either exemption documentation or the required actual consumption information, Seller shall, using its sole discretion, unilaterally assess and invoice all applicable taxes using the information available to it." Section 7. Billing, Payment and Audit In Section 7.7 add the following after the words "subject to netting under this Section" at the end of the first sentence: "and provided further, however, that the Party due payment under Section 7.3 may net all undisputed sums due thereunder against any amounts payable by it when making payments under Section 7." Section 8. Title, Warranty, and Indemnity Delete Section 8.4 in its entirety. Section 9. Notices In the first sentence of Section 9.4 delete the words "commercially acceptable". Section 10. Financial Responsibility Add the following at the end before the "." in the last sentence of Section 10.2: "provided that no suspension of performance shall continue for more than thirty (30) Days unless an Early Tenmination Date has been declared and the Defaulting Party given Notice thereof in accordance with Section 10.3." Add the following as the third paragraph of Section 10.3.1. "Early Termination Damages Apply": "The Non -Defaulting Party shall also aggregate the costs that the Non -Defaulting Party incurs in liquidating and accelerating each Terminated Transaction, or otherwise settling obligations arising from the cancellation and termination of each Terminated Transaction, including brokerage fees, commissions, and other similar transaction costs and expenses reasonably incurred by the Non -Defaulting Party including costs associated with hedging its obligations, transaction costs associated with obtaining replacement suppliers or markets (e.g. brokerage fees, or other such payments), additional transportation costs, and like costs incurred in moving the replacement Gas to or from the Delivery Point, and reasonable attorneys' fees and other reasonable litigation costs incurred in connection with enforcing its rights under this Contract (collectively "Costs") and such Costs shall be due to the Non -Defaulting Party." Delete the words "and without prior Notice to the Defaulting Party" in the second sentence of Section 10.3.2 "Other Agreements Setoffs Apply". Add the following after the last sentence of Section 10.3.2: "To the extent that amounts otherwise owed by the Non -Defaulting Party Affiliate to the Defaulting Party, have been setoff by the Non -Defaulting Party pursuant to this section, the Non -Defaulting Party Affiliate shall not be liable to, and shall be released by, the Defaulting Party; provided further that the Defaulting Party shall be forever estopped from asserting that the Non -defaulting Party Affiliate owes the setoff amounts to the Defaulting Party. The obligations of the Non -Defaulting Party, the Non -Defaulting Party's Affiliates, the Defaulting Party and the Defaulting Party's Affiliates under this Contract or otherwise in respect of such amounts shall be deemed satisfied and discharged to the extent of any such setoff. For this purpose, the amounts subject to the setoff may be converted at the applicable prevailing exchange rate into U.S. Dollars by the Non -Defaulting Party. The Non -Defaulting Party will give the Defaulting Party Notice of any setoff effected under this section provided that failure to give such notice shall not affect the validity of the setoff. Nothing in this paragraph shall be deemed to create a charge or other security interest. The rights provided by this Section are in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) to which a Party may be entitled (whether by operation of law, contract or otherwise). "Setoff' as used herein means setoff, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the Non -Defaulting Party is entitled or subject to (whether arising under this Contract, another contract, applicable law or otherwise) that is exercised by, or imposed on, the Non -Defaulting Party." Delete Section 10.5 in its entirety and replace with the following: "The Parties specifically agree that this Contract and all transactions pursuant hereto are "forward contracts" as such term is defined in the United States Bankruptcy Code and that each Party is a "forward contract merchant" as such term is defined in the United States Bankruptcy Code. Each Party further agrees that the other Party is not a "utility" as such term is used in I I U.S.C. Section 366, and each Party agrees to waive and not to assert the applicability of the provisions of I 1 U.S.C. Section 366 in any bankruptcy proceeding involving such Party. In addition, each Party agrees that, for any Gas actually consumed (rather than resold) by such Party, if Gas is not delivered pursuant to this Contract, the local gas distribution utility for such Party is the provider of last resort and can supply such Party's Gas consumption needs." Section 11. Force Majeure Delete Section 11.4 and replace with the following: "Notwithstanding anything to the contrary in this Section 11, 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, and further agree that upon the occurrence and continuance of any event of Force Majeure, neither Party shall be obligated to purchase or sell Gas hereunder if such purchase or sale would result in material economic impact to such Party under this Contract." Add the following as Section 11.7: "Without restricting the generality of Section 15.3, if an event of Force Majeure occurs, the Party affected may, in its sole discretion and without notice to the other Party, determine not to make a claim of Force Majeure and to waive its rights hereunder as they would apply to such event. Such determination or waiver shall not preclude the affected Party from claiming Force Majeure in respect of any subsequent event, including any event that is substantially similar to the event in respect of which such determination or waiver is made." Section 14. Market Disruption In Section 14, delete "and averaging the four quotes" at the end of the first sentence. In Section 14, delete the second sentence and replace it with the following: "Once the Parties obtain the quotes, the following methodology shall be used to determine the replacement price for the Floating Price: (i) if each Party obtains two quotes, the arithmetic mean of the quotations, excluding the highest and lowest values, shall be utilized; (ii) if one Party obtains two quotes and the other Party only obtains one quote, the highest and lowest values shall be excluded and the remaining quotation shall be utilized; (iii) if both Parties each obtain one quote, the arithmetic mean of the quotations shall be utilized; or (iv) if only one Party is able to obtain a quote, the obtained quotation shall be utilized. For purposes of the foregoing sentence, if more than one quotation is the same as another quotation, and such quotations are the highest and/or lowest values, only one of the quotations shall be excluded." Section 15. Miscellaneous Delete Section 15.3 in its entirety and replace with the following: "No waiver of any breach of this Contract, or delay, failure or refusal to exercise or enforce any rights under this Contract, shall be held to be a waiver of any other or subsequent breach, or be construed as a waiver of any such right then existing or arising in the future." In second line of Section 15.10, add the following: "or any financial information provided by a Party under the terms of this Contracf' after "the terms of any transaction". Add the following as Section 15.13: "15.13 Mobile -Sierra. To the extent, if any, that a transaction does not qualify as a "first sale" as defined by the Natural Gas Act and § § 2 and 601 of the Natural Gas Policy Act, each Party irrevocably waives its rights, including its rights under §§ 4-5 of the Natural Gas Act, unilaterally to seek or support a change in the rate(s), charges, classifications, terms or conditions of this Contract and any transaction hereunder (collectively, the "Agreements"). By this provision, each Party expressly waives its right to seek or support: (i) an order from the U.S. Federal Energy Regulatory Commission ("FERC") finding that the market -based rate(s), charges, classifications, terms or conditions agreed to by the Parties under the Agreements are unjust and unreasonable; or (ii) any refund with respect thereto. Each Party agrees not to make or support such a filing or request, and that these covenants and waivers shall be binding notwithstanding any regulatory or market changes that may occur hereafter. Absent the agreement of both Parties to the proposed change, the standard of review for changes to any section of the Agreements proposed by a Party (to the extent that any waiver as set forth in this Section 15.13 is unenforceable or ineffective as to such Party), a non-party or FERC acting sua ssponte, shall be the "public interest" standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corgi, 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956) (the "Mobile -Sierra" doctrine)." Add the following as Section 15.14: "15.14 This Contract shall be considered for all purposes as prepared through the joint efforts of the Parties and shall not be construed against one Party or the other as a result of the manner in which this Contract was negotiated, prepared, drafted or executed." Add the following as Section 15.15: "15.15 Each Party will be deemed to represent to the other Party each time a transaction is entered into that: (a) it is acting for its own account, and it has made its own independent decisions to enter that transaction and as to whether that transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary; (b) it is not relying on any communication (written or oral) of the other Party as investment advice or as a recommendation to enter into that transaction; it being understood that information and explanations related to the terms and conditions of a transaction shall not be considered investment advice or a recommendation to enter into that transaction; (c) no communication (written or oral) received from the other Party shall be deemed to be an assurance or guarantee as to the expected results of that transaction; (d) it is capable of assessing the merits and understanding (on its own behalf or through independent professional advice), and understands and 4pcepts the terms, conditions and risks of that transaction; (e) it is capable of assuming, and assumes, the risks of that transaction; and (f) the other Party i)not acting as a fiduciary for, or an advisor to, it in respect of that transaction." p ENERGY MPANY JA Name: Scott R Bond Title: VP Marketing & Origination ATTEST : // ,� �- By: J CITY OF VERNON By: Name: LEonis ;. Malburg Title: Mayor / A OVED A TO FORM: 3 Je IVII. H is on, City Attorney Manuela Giron, City (clerk