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Resolution No. 2011-173RESOLUTION NO. 2011-173 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS BY AND BETWEEN THE CITY OF VERNON AND EDF TRADING NORTH AMERICA, LLC WHEREAS, the City of Vernon (the "City") owns and operates a municipal natural gas distribution system for supplying the City's municipal electric system with natural gas and providing natural gas to businesses and industries within the City; and WHEREAS, the City desires to sell and purchase prepaid gas to or from EDF Trading North America, LLC ("EDF Trading"), on a firm or interruptible basis, under general terms and conditions published by the North American Energy Standards Board ("NAESB"); and WHEREAS, the City has determined that it is to the City's advantage, and in the public interest of the inhabitants of the City, to enter into a contract with EDF Trading for the purchase and sale of natural gas. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby approves the Base Contract for Sale and Purchase of Natural Gas with EDF Trading, a copy of which is attached hereto as Exhibit A. SECTION 3: The City Council of the City of Vernon hereby authorizes the Mayor or Mayor Pro-Tem to execute said Contract with EDF Trading 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 instructs the Director of Light & Power, or his designee, to take whatever actions are deemed necessary or desirable, and 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 for the purpose of implementing and carrying out the purposes of this Resolution and the transactions herein approved or authorized. SECTION 5: The City Council of the City of Vernon hereby directs the City Clerk, or the City Clerk's designee, to send one fully executed Contract to: EDF Trading North America, LLC Attention: Alayna Estes, Contract Administrator 4700 West Sam Houston Parkway North, Suite 250 Houston, TX 77041 SECTION 6: The City Clerk of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk of the City of Vernon shall cause this resolution and the City Clerk's certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this 18th day of October, 2011. A1 Name: Hilario Gonzales Title: Mayor / M G�—, - 2 - STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 2011-173, was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, October 18, 2011, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. / Executed this Q day of October, 2011, at Vernon, California. (SEAL) L - 3 - EXHIBIT A This Base Contract isentered into oocfthe following date: August 10.2O11 EDF Trading North America, LLC City of Vernon 4700 West Sam Houston Parkway North Suite 250 4305 Santa Fe Ave. Houston, TX M41 ADDRESS Vernon, CA 90058 CONTRACTNUMBER * OTHER: TAX ID NUMBERS o OTHER: Texas JURISDICTION OF California ORGANIZATION • Limited Partnership o Partnership COMPANY TYPE A Chartered City and Municipal Corporation of the State of GUARANTOR AT7N. as Des COMMERCIAL ATTN.' Sandoval 7. Shawn ShadUadah EMAIL: I(M EMAIL! EMAIL., LEGAL '04 OTHEOro TAILS: "(WAPPLICABLE1 OTHER En DETAILS: heCkIng) ABk ACCT. ABA: Atff. OTHER DETAILS: (IFAPPUCABLE) OTHER DETAILS: ADDRESS: CHECKS ADDRESS: (IF APPLICABLE) Copyright 012006 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 aoorooriate box(es) from each section: 'TEST: By: W111ard G. Yamaguc5i Title: City Clerk APPROVED AS TO FORM: Copyright ® 2006 North American Energy All Rights Reserved Inc. Page 2 of 13 =SB 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 oe telephone conversation with the offer and acceptance constituting the agreement of the parties. The parties shall be legally bound frorn the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be considered' a "writing" and to have been "signed". Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party;may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI,prl rutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) p ovided 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 identificatign,and aulhegtication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the. commercia;I terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportationconditions), 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; providetl tFiat the foregoing shall not invatida'te shy transaction agreed to b 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 pass a e'of the Confirm Deadline without ob'ection'fromithe receiving party, as provided in Sectioh 10.', referred to in Sect ding partys Transaction Confirm i t2, such receiving party shall the'Confirifl Deadline, unless such receiving party h receiving party, to so notify the sending party in writir the'tran's ion descnped in the sending parly's T Trahsadtion donfiimations,governing the same tray differences are resolved including the use of any ei event of asconflict amono the terms of M a bindine l arially different from the receiving parry's understanding' blithe agreement coding party via facsimile, EDI or mutually agreeable electronic means by y sent a Transaction Confirmation to the'sendfng party. The failure of the nfinn Deadline constitutes the receiving patty's agreement to the terms of :onfirmation. If there are any: material differences between timely sent inneither Transaction Confirmation shall be binding until or unless such clearly resolves the differences in the Transaction Confirrations. In the Jonfinnation pursuant to Section 1.2;,(ii) thebral agreement of the parties the parties have selected the Orallransaotion Procedure of the Base and Conditions, the terrns of the documents shall govern in the priority 1.4. The` parties agree that each Loarty may electronically record all telephone conversations with.respect to this Contract Between their respective employees, without any special or further notice to the other party. Each,' party shall obtain any necessaryconsent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, the parties agree not to contest the Validity or enforceability of telephonic entered into in acoordancewith the requirements of this Base Contract. SECTION 2 t „i DEFINITION$' Theterms' set for hbeloW-shall have the' meaning ascribed to them below. Other terms are also defined elsewhere in the Contract and shall have the meanings ascribed to them heriin. 2. Addnlonsl, Event of Default' shall mean` Transactional Cross Default of Indebtedness Cross Default; eaoh as and if selected by the paltie;; pursuant to the Base Contract. 2.2. "Affiliate" shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "eontror' of any entity or person means ownership of at least 50 percent of the voting power of the entity or person. 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. "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 tails to perform a Finn 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 reiceved or, if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confrrrrlation 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;bus)ness Day. 2.8. "Confirming Party'shall mean (he party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party. 2.9. "Contract" shall Transaction Confirmations Contract, any and all transa, been confirmed in a binding 2.10. "Contract Price" purchase of Gas as agreed 2.11. "Contract Quant transaction. 2.1.2.. "Cover. Standard thei legally -binding relationship established by (i) the Base Contract, (ii) any and all binding i) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base that the parties have entered into through an EDI transmission or by telephone, but that have not Action Confirmation, all of which shall form a single integrated agreement between the parties. mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the to in then quantity of Gas to be delivered and taken as agreed to by the parties in a there is an panurrmng pany,tWtam vas, for an amernate tuerll elected by buyeranu replacement Gas is not available), or''@) if Seller is the pertorming party,, sell'Gas, in either case, at a price reasonable for the delivery or, production area, a`s, applicable',%consistent with: m the aount of noticeprovided by the nonperforming' party; -the immediacy of the Buyer's Gas consumption needs or. Seller's Gas sales'requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party. 2.13. °Credit Support Obligation(s)" shall mean any obligation(s) to provide ar establish credit I. Support for, or on behalf of, a party to this Contract such as cash, 'an irrevocable;standby letter of credit, a margin,19reement, aprepayment, asecurity Interest in an asset,,guaranty, or{other good and sufficient security of a continuing nature. 2.14. 'Day"shalllmean a period of 24 consecutive -hours, coextensive with a "day" as defined by the Receiving Transporter in a particular transaction, 2.15. behvery period" shall be the period duffing which deliveries.are to be made as agreed to by the parties in a transaction. 2.1.6. DeliveryPoint(s)" shall mean; such points) as are agreed to by the parties ih, a trahsaclion. 2.17, EDI'jshallmean an electronic data interchange pursuant* anagreemententered into'11 by the parties, specifically relating, tothe;oommunication of Transaction Confirmations underthis Contract. 2 18. EFP 'shall mean the purchase, sale or exchange of natural Gas as the "physioal" side of an exchange for physical transaction introlving 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 exohange;regulated under the Commodity Exchange Act; ' 2 �9. "Firm" shall mean that -either party may interrupt its performance without liability only to'the extent ,that such performance ispreVented 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 4.8 related to its ;interruption after the nomination is made to;the Transporter and until the change in deliveries and/ar receipts is confirmed by the Transporter. 2 20. < "Gas+'`shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methaney 2.21. , "Guarantor shall mean any entity that has provided a guaranty of the obligations of a party hereunder. 2.11 2 "Imbalance,Charges" shall mean any fees, penalties, costs car charges ((n cash or in kited) assessed by a Transporter for failure, to satisfy the Transporters balance and/or nomination requirements. 2.23. 'Indebtedness Cross Default' shall mean)f selected on the Base Contract by the parties with respect to a party, that it or its Guarantor; if any, i experiences a default, or similar cond tio7l car event however herein 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 eurely 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 0 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 :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 othertransaclon 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 geographicJocation 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: f. no price or range of prices is published for such Day, then the Spot Price shall be the average of the followmg;;(i) the price: (determined as stated above) for the first Day for which a price or range of prices is published that next precedesAhe relevanf Day; and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published that,next followstlla relevant Day. 2.32. 'Transaction Confirmation" shall mean a document similar to the form of Exhibit A settin forth the terms o f 2 2.34. 2. formed pursuant to'Section 1 for a particular''; DeliveryPeriod default, however therein "Termination Option" she inn obligation to deliver G recified on the applicable "Transporter(s)" shall mr transporting Gas for Se N 3. PERFORR Seller agfeas to sell and i or (1) in such C by the ity for v or Self under'tnis- Section `3.2, but Seller end/oi amount of such unfavorable difference which shall set forth the basis upon whir shall mean if selected on the Base Contract. by the p d, under any Specified Transaction. i the option of; either party to terminate a transaction in a case of Seller or to receive Gas in the case of Buyer for lion Confirmation.` Gas gathering or pipeline companies, or local distribution Buyer upstream or downstream, respeorwly, of the C LytiC®71, and Buyer agrees to receive and purchase, the Coritracl Sales and purchases will be on a Firm or Interruptible ba g a rtith respect to a party, that it re event that the other, party fails to designated number, of days during a Dmpanies, acting in the capacity of a Wry 'Point pursuant to a particular tuaritity for a particular transaction in s, as agreed to by the 'parlies in a y of the partiesin the event of a breach of a Firm obligation to deliver or receive Gas shall :nt of a breach by Seller on any Day(s), payment by Seller 6'86yer in an;amount equal to the purchase, price paid by Buyer utilizing.the Cover Standard and the Contract Price, iifferences in transportation -costs to or from the Delivery Pbmt(s), multiplied by the i and the�quantity:actually delivered by Seller for such bayO excludingeny,quantity for in the evenfof a breach b'ytBuyer on any Day(s), payment by Buyer tq Seller in the if any, between the Contract Price and the price received by Seller ufrlking the Cover djusted for commercially reasonable differences in transportation costs to or from the ence between the Contract'Quantity and the quantity actually taken by Buyer for such no sale Is availdble; and (iii) in the event that Buyer has used commercially reasonable a used commercially reasonable efforts to sell the Gas to ;a.'third party, and no such or any portion `ot;the Contr of Quantity of ,Gas, then ih'a't{dh6n,to (1) or (H).above, as y of the performing party with respect to the Gas not replaced 6r sold shah ce an amount weer theContract Price and'the Spot.Pfice, adjusted ;for such transportation to the to quantity of such Gas not replaced or sold. Imbalance Charges shall not be recovered 3uyer shall be responsible for" Imbalance Charges, if any; as provided m Section 4.3. The hall be payable five Business Days after presentation of the performing party's invoice, Copyright 0 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 13 September 5, 2006 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 Section3.2`,tho writing by both parties. 3.4. In addition to Sections 3.2.,and executed in writing by both parties. Thal nonperformance triggering the Termination be compensated, and how liquidation costs SECTION 4. TRANSPORTATI 4.1. Seller shall have the sots respond for transporting the Gas from the Delivery Poirk parties may agree to Alternative Damages in a Transaction Confirmation executed in the parties may provide for a Termination Option in a Transaction Confirmation fiction Confirmation containing the Termination Option will designate the length of m and the procedures for exercise thereof, how damages for nonperformance will e calculated. TIONS, AND IMBALANCES transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility 4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s). Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party, 4.3. The parties shall use commercially reasonable efforts to avoid imposition of er y, Imbalance Charges. If Buyeror 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 in 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 Sellers delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall payforsuch Imbalance Charges,or reimburse Byer for such Imbalance Charges paid by Buyer. SE, IQN 5.:" 1QUALITY AND MEASUREMENT Alf Gas delivered by Seller shall meet the,ptessure, quality and heat content requirements of the Receiving Transporter. The unit -of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hareumder 1:1shall be 16 accordance with the established procedures of the Receiving Transporter AXES The parltds }cave indicated on 4ha selected either "Buyer Pays At and After Delivery Point", or "Seller Pay$ Before,`and At De)niery point" as Base Contract. Bu er Pa 's At and After Delive Point: Seger shall'pay or bause to be paid all taxes, fees levies," penalties, licenses or charges imposed by any government authoriity ('Taxes") on or with respect totlle Gds prior to the Delivery Porntts).. Buyer shall payor cause to be paid all Taxes onbr with respect to the Gas at the Delivery Polnl(s) a'rrd all Taxes after the Delive)y Poigt(sj. If a party' is required to remit or pay Taxes that are'the other parlys responsibility hereunder, tte party responsible for such Taxes hall promptly reimburse the; other party fp[ such Taxes. Any party entitled to an exem' tion from any such Taxes, or charcies shall famish the other party any necessa ` documeniatiomthereof. Seller' & Before"and At Delivery Point: Seller �hall,;pay or cause to tie paid a)Ltazes, fees, levies, penalties, licenses or charges, imposed by any government authority ("Taxes") on or wllh respect to the Gas prior to the Delivery Points) Snd all Taxes at.'1he Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas, after the Delivery Point(s). If a party is require to:remit or pay Texas that are;.the other partys responsiblity hereunder, the party responsible for su�Fr Taxesshall promptly reimburse the other party for such Taxes. Any party entitled to an exam lion from an such Taxes orcha esTaxes es sh II furoish'the other a an neces'sa"` documentatiorilhereof. SECTION 7. I. .BILLING, Pr4YMENT, q`ND"AUDIT 7 1. , Seller shaltinvoice Buyer for Gas delivered and receYed in the.preceding Monfh and for any otheFapplicable charges, providing supporting doarmentation acceptable in industry prectioe 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, N 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 party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section. 7.5. If the invoiced party fails to rermt the full amount payable when due, interest on the unpaid portion shall accrue from the date due unlit 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;(n) the maximum applicable lawful interest rate. 7.6. A party shall have the fight, 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 rbooks, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy: of any statemont;;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 presurned 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 SECTION 8. TITLE, WA 8.1. Unless otherwise specific have responsibility for acid assum, Point(s). 'Buyer shall have respon DeliveryPotnt(s). 8.2. Seller 4arrants that it hereunder and delivered, by it to B SECTION 64 AND IN SECTION 1 MERCHANIABILIW OR OF FITNES 8.3. . Seller, agrees to indem attorneys' fe?s and costs of court (including -de �th) or property dama agrees, to ild mnify $elle',r and save t personal injury(includng death) or pi 8.4. The parties agree that tl Customs Territory of'the, United St U.S.C. 51202,'General Notes, pag Territory of the (United States, Salle the United States, and Stull be rest R Q twdhstaht ing the other from the failure of Gas 9.; NOTICES Transaction Confirm lice§") shall be made i f the net,amountto the other party inaccordance with Section 7; provided that no payment firms of any Credit Support Obligation or pursuant to Section 7 3 shall 'ba subject to netting executed a separate netting agreement, the terms and conditions therein shall prevail to the ANTY, AND INDEMNITY "- agreed, title to the.Gas shall pass from Sellerto Buyer at the Delivery Point(s). Seller shall r ,y liability with respect to the Gas prior to its delivery to Buyeat the specified 'Delivery tty for and assume any liability with respect to said Gas aftenits delivery, to Buyer at the the and delivery of Sr (as defin 3); providr :presents a isible for at requiremer visions ofth vered by Se I liens, e >NTIES, PURPO harmless d all ,peg �r charg( from any as or oth lsfer of at note : that in that it I: y summ as betwe transfer good and brances, and clairr ;ESS OR IMPLIED, 3E DISCLAIMED.".. I all losses, fabilil arising from or of repo which attach', II persons, arising frc itle to all Gas under this C of the Harmonized Tariff the event Seller took title 'the importer of record for rry filings as We11`as the pa :n Seller and Buyer, Seller fequirementsof Section 5. and title to all Gas sold i PROVIDED -IN THIS lNY WARRANTY OF molu, ding reasonable title;personal injury ses,jo Buyer. Buyer ins regarding, payment, 11 rsses;to Buyer: lake place within the the United States 19 outside the Customs ad apd delivered into es, taxes and fees, if all Claims to the extent )ursuant to the Base imee, _ Y.L. :-All Noticesrequired hereunder shall be,in writing andmaybe sentby facsimile ormutually 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 0 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 security 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 firstpriority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash.trensferred. 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 extent possible, without any further action by either party. 10.2. In the event (eack,an "Event of Qefault") 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 commencernent of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or procee}ting commenced against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as they fall.due; (v) have`a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to; it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligationa relating to the Contract; (vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before .the second Business Day following written Notice that such,payment.is,due; or ix) be the affected party with ;respect to any Additional Event of Default; then the other patty (the ' Non -Defaulting Pady'") shall have She right; at its sole election, to immediately withhold and/or suspend deliveries or payments upon Notice anti/or to terminate and liquidate the transactions under the Contract, in the manner provided -in Section'10.3, in addition to any and all other remedies available hereunder: 10 31. Af an Event of Default has occurred and is continuing, the Non -Defaulting Party shall have the right,, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such'Notice is given, as An early termination date (tha "Early Termination Date") for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a 'Terminated Transaction". On the Early Termination; Date, all 'transactions will terminate other than those transactions, if any, that may not be liquidated and terminated under applicable law ("Excluded Transactions"), Whicli; Excluded Transactions must be liquidated and terminated as soon thereaftef as is legally (permissible, and upon'termination shall be.a Terminated Transaction And be valued consistent with 'Section 103,1 below. With'respectto each Excluded Transaction its actual termination date shall be the Early Termination Date for purposes of Section 110.3.1. The parties have aelosted either "Early Termidation',Damages Apply", or "Early Termination Damages DoNot Apply" as Earl Teimihatldn Damages Apply: 100,3?1 ',As of the Early Termination Date the Non -Defaulting Party shall determine m good taith and in a commercially reonable manner,.(i) the amount.owed (whether or not then due) by each party with respect to all Gas delivered And received bqasde',n the parties under Terminated Transactions and Excluded Transactions on and before he EaNy Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any`amou`nts owed under Section 3.2), for„Which payment has not yet been made by the �party'that owes such payment finder this Contract and (ii) the Market Value, as daYned below;,of each Terminated Transaction. the Nan -Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, sothabeach amcunt equal to the difference between: such Market Value and the`iContract Value, as defned'beloyv of such,Terminated Transactionfs) shall he due to the Buyer under the Termmatetl Trahsactionts) if suchMarket Value exceeds the Contract Value end ao the Seller if the opposite is,the case; arid (y) where appropriate, diswi)nt each amount then .due under clause (x) above to present value,in a con)mercially reasonable manner as of the Early Termination Date'(to take account of the patiotl ti'etween the date, of liquidation and;the date on which such amount would have otherwise been due dursuant of this Section 10.3. the amount of Gas reriiainino to transaction multip"ediby the Contiaot Price, and "Market Value" means;the amount of'Gas remaining, to be delivered or purchased u 'der a'transaction multiplied by the market price.fo'r aSimilar transaction at the Delivery Point determined by th'`Ncn,-Defaulting P�rty in a eommemielly r&asonable manner To sc7 daih the Market,Ualue, the f�bn-Defaulting'Part y tnay consider, among other valuations, any or all 'of the sett lament_ prices of YMEX Gas futures` contracts, quotatio2s from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other tiona 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 extensions) 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 © 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. 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 allsuch 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 Settlemenf`Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to thwContract; 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 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 authorizers 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 anlount(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 arr (s) ,(including any excess cash margin or excess cash collateral) owed by the Non -Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or m arrangeent; (iv)any Not Settlement Amount awed to the DefaultingParty against, any amount(s) (including any excess cash margin or. Excess cash collateral) owed by the Defaulting Party to the Non -Defaulting Party or its Affiliates under any other agreement or arrangement; and/or (v) any Net Settle ' enf Amount owed to the Defaulting Party, against any amaunt(s) (including any excess cash imaigin or excess cash collateral) owed by the Defaulting Party or its Affiliates to thei Non -Defaulting Party under an other a reement,or arran ement. Other. A reement Setoffs Do Not.A ply: 10.3.2. The Non -Defaulting Party shall net or aggregate, as appropriate, any and all amounts .owing between the parties under, Section %3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the "Net Settlement Amount;). At: its sole option and without prior Notice to the Defaulting Party, the Non -Defaulting Party may setoff any Net Settlement Amount against any margin or other collateral field by a party in Connection with any Cfedit Support Obli ation relating'to the, Contract. 10.3:3. If any obligation that is to be includegi to any netting, aggregation or setc unasceetaihed, the Non -Defaulting Party may in good falth estimate that obligation; and net, ag respect of he'estirrrate, subject to the Non -Defaulting Party acwunting'to the Defaulting Party'i Ariy amount not then iiue which is included in any netting, oggregation,_or setoff p}(rsuanl to Se net present value in a commercially reasonable manner determined by the Non -Defaulting Party. 104, As soon as practicable after a liquidation; Notice shall be given by the Non-Defaultii the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the shall include a written statement explain{ng in reaeonatile detail the calculation of the'Net Selllei to,give such No{ice shall not affect the validity or enforceability of the iguidation or give rise to against;the Non -Defaulting Party. The Net Settlement Amount as well as any setoffs applied Section 10.3.2, shall be paid by the close of business on the second Business Day following sL e Mier than the Early Termination Date.' Interest on any Unpaid portion of he Net Settlement Amoul fr , the date due until fhe date of payment at a rate equal to the lower of (i} the then-eff ve prime rat Rates" by The Wafl Street Journal, plus two;perceM par annum; or (ii) the maximum applicable lawful 1Q.5., The parties agree that {he transactions hereunder corlsti{ute a "forward bontract"-: States.BankruptcY Code and that Buverand Seller are each "forward contract merchants"-with'ir I to Section 10.3.2 is setoff, as applicable, in bligation is ascertained. tshall be"diseounled to the Defaulting Party of Iting Patty. The Notice irtt, provided that failure by theDefaulting Party ch amount pursuant to Which bate shall not be d by setoffs, shall accrue published under"Money meaning,of the United ng 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 dstorm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or aCcioent 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 disturbance`s <fiQts, sabotage, insurrections or wars, or acts of terror; and (v) governmental actions such as necessity for compliance withany O rt 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: (1) 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 obligatiors with Yeasorlable.dispatch; or (iii) economic hardship, to include, without limitation, Seller's ability to sell Gas at a higher or more advantageous pdce'than the Contract Price, Buyer's ability to purchase Gas at a lower or more advantageous price than the Contract Price ar,a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buye lsiharket(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 Iosi br failure of Sellers gas supply or depletion of reserves, except, in either case, as provided in Section 11:2. The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges. 11,,4, Notwithstanding anything to `,the contrary herein, the parties agree that ;the settlement of strikes, lockouts or other industrial disturbances Shall be within the'sole discretion of the party experiencing suah disturbance, 11.5. The party whose performance is prevented by Force Majeure must provide'Notice to the other party. Initial Notice may be, given orally; however, written Notice with reasonably full` particulars pf the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure'to the other party, the affecIled.party will be relieved of its obligation, from the onset of"the Force Majeure' event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall, be deemed to,have failed in such obligations to the other during such occurrence or event: 11.6. , ii Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions In A Transaction Confirmation executed in writing by,bottiparties. SECTION 12:. TERM This Contrao inay:be terminated on SO Days written Notice „but shall remain in effect until.the expiration of the latest Delivery Period of any.trans?cli�,6(s) The rights of eith@t party pursuant to Section 7.6, Section 10, Section 13, the obligation's,to make payment hereunder, and the obligation of :either parry to indemnify the -other pursuant hereto shall survive the termination of the Base Contract or any transaction. SECTION,113.'(IMITATIONS`" FOR BREACH,OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES iS PROVIDED, SUCH EXPRESS REMEDY 'OR "MEASURE .OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY'S LIABILITY HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN" EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS .EXPRESSLY, PROVIDED HEREIN OR IN A TRANSACTION, A PARTY'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY: SUCH DIRECT ACTUAL DAMAGESSWILL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW ORA EQUITY AE E.:WAIVED UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY; SHALL BE LIABLE .FOR c6NSEQUENTIAL, INCIDENTAL, PUNITIVE-, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS'INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR'CONTRACT,,UNDER ANY INDEMNITY PROVISION OR OTHERWISE: IT ISTHE INTENT OF THE PARTIES THAT - THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASUE OF DAMAGES SE .WITHOUT REGARD TO TH CAUSE OR CAUSESRELATED THE12ET0, INCLUDING THE NEGLIGENCE O,:/aNY PARTY, WHETHER SUCH NEGLIGENCE BE SOLEJOINT OR CONCURRENT, OR gCTIVE OR PASSIVE. TO THEEXTENT /'NY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE QAMAGES ARE DIFFICULT ORIMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY'tS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. Copyright m 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, with'}espect 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 (a) 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.11 SECTION 15. M 15.1. This Contract she the respective parties heretic Contract. No assignment of (and shall not relieve the ass either party may (i) transfer, with any financing or other fir 3r and shallr not be relieved of If anyprovision in this iination shall not invalidate, vc No waiver of any breach This Contract sets forth 15.5. The Contract; exclui 15.6. Thii governmental thereof. 15.7. The 15.8. Eac Contract. Each to do so and tn' 15.9; The Contract betwei 15.16. '::iUnl, shall disclose d than the ernplo supstantially all cohlidential) exi enforcement of is delivered to f 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 6 or in part, will be made without the prior written consent of the non -assigning party ily hereunder), which consent will not be unreasonably withheld or delayed; provided, r, or assign this Contract or the accounts, revenues, or proceeds hereof in connection or (i) transfer its interest to any parent or Affiliate by assignment, merger or otherwise any such assignment, transfer and assumpflon, the transferor shall remain principally ram any obligations hereunder. act is determined to be invalid, void or une make unenforceable: any other provision, agr a Contract shall be held to be a waiver of any nderstandincts betvreen the oarlies resoectir effective transaction(s). This Col retation and performance of this )wever, any conflict of laws rule i act and all provisions herein will y having jurisdiction over the pis )third! party beneficiary to this Cc vill be bound thereby written, relating to such the y be amended only by a wit shall be governed by thele Ad apply the law of another ct to all applicable and valk it facilities, or Gas supply, its that it has full and com either party represents and ct not to r ern of the tents and Contract, w, order, nplemeni led to gas sting a pt the term; ice of this solely 1t or covenam orsubseque ;h transactio ;actions are ig executed b s of the juri irisdictiom statutes, file its :Contract in such n s or mis uontract. it breach. subject hereto, and any prior into andsuperseded by y both parties. sdiction as indicated on the Base , orders and regulations of any or transaction or any provisions to enter into:and perform this full and complete'authorty iot constitute 81)art of this provisions of tnis contract. this Section 15.10 applicable to this Contract, helther party :r party the Penns of anyy transaction to a>third 'party (other it agents Iof the party, or piispective purchasers :of all or ded such)persons shall have agreed tokeep such terms ation, or exchange rule, (ii) to the extent necessary for the transaction, "(iv) to the extent necessaryto comply with a ;had indek. ,Each partyshall:notiN, the of any rid use with this _- 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, I subheadings contained and shall nc be used to: a have elected on the Be ectly withoutthe prior wi royaltybwners, counst assets or of any rights u ar to comply with any abi , (iii) to the extent necg requirements including It rty, for the sole purpose e which may,result in dis or limit the disclosure. T all be entitled to all ran)( a terms of anv transactic any transaction (other than as.permitted I ntrad is not subject to this confidentiality it in equity to enforcer or seek relietin s .ept confidential by the parties°hereto foi 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 (?.ecords 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 fay'litate trade, avoid misunderstandings and make more definAe the terns of contracts of purchase and sale of natural gas. Further NAESN does not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CONTRACT ACKNOWLEDGES AhD AGRE€STb _NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRA��NqT�IES.OR CONDITIONS OF TITLE, NON -INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE *RTNER ORNOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF TMISCDNTRACT 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 Letterhead/Logo TRANSACTION CONFIRMATION EXHIBIT A FOR IMMEDIATE DELIVERY Date: Transaction Confirmation #: This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated . The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified in the Base Contract. SELLER: BUYER: Attn: Phone: Fax: Base Contract No. _ Transporter: Transporter Contract Contract Price: Attn: Phone: Fax: Base Contract No. Transporter: Transporter Contract Number 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 TO THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS BETWEEN EDF TRADING NORTH AMERICA, LLC ("Party A") AND CITY OF VERNON ("Party Bf>) DATED AS OF August 16, 2011 As set forth herein, these Special Provisions amend the North American Energy Standards Board, Inc. ("NAESB") Base Contract for Sale and Purchase of Natural Gas and its accompanying General Terms and Conditions, as published September 5, 2006 (the "Base Contract", which, together with these Special Provisions, the Transaction Confirmations and any Credit Support Obligation form a single agreement between Party A and Party B) (collectively, the "Contract'). In the event of an inconsistency between the Base Contract, the General Terms and Conditions and the Special Provisions, these Special Provisions shall govern. Except as amended herein, the Base Contract and the General Terms and Conditions shall remain in full force and effect. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Base Contract. Amendment to Section 10 Financial Responsibility: Section 10.5 is amended by adding the following at the end thereof: "In addition, each party represents and warrants to the other party, as of the date of the Base Contract and as of the date of each transaction thereunder, and as of each date of delivery of Gas in connection with such transaction, that: (a) Status of Parties. It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; and the other party is not acting as a fiduciary for or an adviser to it in respect of a transaction; (b) Non -Reliance. It is acting for its own account, and it has made its own independent decisions to enter into a transaction and as to whether a transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary; it is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into a transaction, it being understood that information and explanations related to the terms and conditions of a transaction will not be considered investment advice or a recommendation to enter into a transaction; and no communication (written or oral) received from the other party will be deemed to be an assurance or guarantee as to the expected results of a transaction; (c) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of any transaction, is capable of assuming, and assumes, the risks of any transaction and acknowledges that the other party is not acting as a fiduciary for, or an advisor to, it in respect of this Contract or any transaction; (d) Eligible Contract Participant. It is an "Eligible Contract Participant" as defined in Section 1 a(12) of the Commodity Exchange Act, as amended, 7 U.&C. § la(12); and (e) Eligible Commercial Entity. It is an "Eligible Commercial Entity" as defined in Section la(11) of the Commodity Exchange Act, as amended, 7 U.S.C. § la(11)." Amendment to Section 15. Miscellaneous: Section 15 is amended by adding the following new sections to the end thereof: "15.13. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any proceedings relating to the Contract, these Special Provisions, the Base Contract, Transaction Confirmation or any transaction hereunder.'; "15.14. With respect to any proceeding in connection with any suit, action or proceedings arising out of or relating to this Contract, the parties hereby consent to the exclusive jurisdiction of the federal and state courts sitting in Harris County, Texas.'; "15.15. 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 Agreement 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 14.13 is unenforceable or ineffective as to such party), a non-party or FERC acting sua suonte, shall be the "public interest" standard of review set forth in United Gas Pipe 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)."; "15.16 Financial Documents and Tax Certificates. If requested by a party the other party or its Guarantor, if applicable, ("Delivering Party") shall deliver (i) within 120 days following the end of each fiscal year, a copy of the annual report containing audited consolidated financial statements for such fiscal year for the Delivering Party and (ii) within 60 days after the end of each of its first three fiscal quarters of each fiscal year, a copy of quarterly report containing unaudited consolidated financial statements for such fiscal quarter for the Delivering Party. In all cases the statements shall be for the most recent accounting period and shall be prepared in accordance with generally accepted accounting principles; provided, however, that should any such statements not be available on a timely basis due to a delay in preparation or certification, such delay shall not be an Event of Default so long as the relevant entity diligently pursues the preparation, certification and delivery of the statements. The delivery of such financial statements shall be deemed to be a Credit Support Obligation. The parties shall also deliver to each other, upon the execution of this Contract, United States Internal Revenue Service Form W-9, or any successor form. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the Effective Date. EDIT T IN AME CA, LLC :�-CITY OF VERNON Ey: By: Name: W. Eric Dennison Name: Hilario Gonzales Senior Vice President Title: Title: Mayor ATTEST: By: Name: Wilhlard G. Yamaguchi Title: City Clerk APPROVED AS TO FORM: Michael B. Montgomery, Interim City Attorney OFFICE OF THE CITY CLERK 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) W-8811 October 20, 2011 Alayna Estes Contract Administrator EDF Trading North America, LLC 4700 West Sam Houston Parkway North, Suite 250 Houston, TX 77041 Re: Base Contract for Sale and Purchase of Natural Gas Dear Ms. Estes: Transmitted herewith is an original fully executed agreement as referenced above, approved by City Council on October 18, 2011, through Resolution No. 2011-173. If you have any questions regarding this matter, please call Carlos Fandino, at (323) 583-8811 ext. 834. Very y yours, WI LARD G. YA A UC City Clerk WGY:dj Enclosure c: Carlos Fandino Purchasing Department Resolution No. 2011-173 Agreement No. 11-112 Exc(usivefy Industrial Base Contract for Sale and Purchase of Natural Gas This Base Contract is entered into as of the following date: August 16, 2011 The parties to this Base Contract are the following: PARTY A PARTY B PARTYNAME EDF Trading North America, LLC City of Vernon 4700 West Sam Houston Parkway North Suite 250 4305 Santa Fe Ave. Houston, TX 77041 ADDRESS Vernon, CA 90058 www.editrading.com BUSINESS WEBSITE www.cityofvemon.org CONTRACTNUMBER 130385763 D-U-N-SONUMBER 060883022 x US FEDERAL: 98-0596593 ❑ US FEDERAL: 95-6000808 ❑ OTHER: TAXIDNUMBERS ❑ OTHER: Texas JURISDICTION OF California ORGANIZATION ❑ Corporation x LLC ❑ Limited Partnership ❑ Partnership COMPANY TYPE A Chartered City and Municipal Corporation of the State of ❑ LLP ❑ Other: California GUARANTOR IF APPLICABLE CONTACT INFORMATION Same as above • COMMERCIAL ATTN: Gas Desk ATTN; Efrain Sandoval /Shawn Sharifzadeh TEL#: (3231826.1424 FAX#: (3231826.3629 TELM 281.781.0333 FAX#: 281.781-0360 EMAIL; EMAIL. esandoval ci.vemon.ca.us/ssharif ci.vemon.ca.us Same as above ATTN: Gas Scheduling ATTN: Same as Above • SCHEDULING TEL#: FAX#: TELM 281.781.0333 FAX#: 281-7814360 EMAIL: EMAIL: Same as above • CONTRACTAND ATTN: Contract Administration ATTN: - Javier Valdez LEGAL NOTICES TELM 281-781-0333 FAXW 281-653-1454 TEL#; (3231683-8811 - FAX#: 1323)826-1431 EMAIL: EMAIL: Same as above ATTN: Credit Department ' ATTN: •CREDIT TELil: FAX#: TEL#:. 281-781-0333 -FAX#: 281-781-0360 EMAIL: EMAIL; Same as above • TRANSACTION ATTN: Confirmation Department ATTN; Edwin Ochoa TELM, (3231583-8811 FAX#: (323)8264629 TELA 281-781-0333. FAX#:. 281-6534034 CONFIRMATIONS EMAIL: - EMAIL: eochoa cLvemon.ca.us ACCOUNTING INFORMATION Same as above • INVOICES ATTN: City of Vemon Treasury Department ATTN; Gas Accounting. • PAYMENTS TELM 13231583-8.811 FAX#: (323) 626-1491 TELM' 281-T81-0333 FAX#:. 281.653.1034 EMAIL: - . SETTLEMENTS - EMAIL Invoices®cLvemon.ca.us BANK. Wells Fargo. N.A. .WIRE TRANSFER BANK: East West Bank ABA; #322070381 - ACCT.' 80362817 ABA: 121000248 ACCT.. 4121947964 NUMBERS OTHER DETAILS. (IF APPLICABLE) OTHER DETAILS: /ACCT is Gas Enferorise Checkinpl BANK: - ACH NUMBERS BANK: ABA: ACCT. ABA; ACCT. OTHER DETAILS: (IF APPLICABLE) OTHER DETAILS: ATTN: CHECKS ATTN; ADDRESS: ADDRESS: (IF APPLICABLE) 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: Section 1:2 x Oral (default) Section 10.2 x No Additional Events of Default (default) Transaction OR Additional Procedure Cl Written Events of Default ❑ Indebtedness Cross Default ❑ Party A: Section 2.7 x - 2 Business Days after receipt (default) Confirm Deadline OR ❑ Party B: ❑ _ Business Days. after receipt ❑ Transactional Cross Default Specified Transactions: Section 2.8 x Seller (default) - Confirming Party OR ❑ Buyer Section 3.2 x Cover Standard (default). - Section 10.3.1 x Early Termination Damages Apply (default) Performance OR Early Obligation ❑ Spot Price Standard Termination OR Damages ❑ Early Termination Damages Do Not Apply Note: The following Spot price Publication applies to both of the immediately preceding, Section 10.3.2 Other. x Other Agreement Seloffs Apply (default). - - Section 2.31 x Gas Daily Midpoint (default) Agreement x Bilateral (default) Spot Price-. OR Setoffs. ❑ Triangular Publication ❑ OR ❑ Other Agreement Setoffs Do Not Apply Section x Buyer Pays At and After Delivery Point (default) Taxes - OR - ❑ .Seller Pays Before and At Delivery Point Section 7.2 x 25'" Day of Month following Month of delivery Section 16.5 Texas Payment Date (default) - Choice Of Law OR ❑ Day of Month following Month of delivery- - - Section 7.2 - x - Wire transfer (default) Section 15.10 x Confidentiality applies (default) Method of Payment ❑ Automated Clearinghouse Credit.(ACH) Confidentiality OR. ❑ - Check ❑ Confidentiality does not apply Section 7.7 x Netting applies (default) Netting OR ❑ Netting does not apply x Special Provisions Number of sheets attached: 2 _ ❑ Addendum($): IN WITNESS WHEREOF, the parties -hereto have execktpd this Base Contract in duplicate. EDf Tradi mer' a, LLC W PARTYNAME Cityof Vernon By; SIGNATURE _ B: FIC nnlso PRINTED NAME- Hilario Gonzales Ice FresAffit TTLE Mayor rTEST: By; APPROVED AS TO FORM: ijkIarduc Title: City C1 PaMichael B. r ontgomer; Copyright m 2006 North American Energy Standards Board, Inc. All Rights Reserved "- Page 2 of 13 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 a "writing" and to have been "signed". Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identification and authentication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the commercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportation conditions), which modify or supplement the Base Contract or General Terms and Conditions of this Contract (e.g., arbitration or additional representations and warranties), such provisions shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provided that the foregoing shall not invalidate any transaction agreed to by the parties. Written Transaction Procedure: 1.2. The parties will use the fallowing Transaction Confirmation procedure. Should the parties come to an agreement regarding a Gas purchase and sale transaction for a particular Delivery Period, the Confirming Party shall, and the other party may, record that agreement on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile. EDI or mutually agreeable electronic means, to the other party by the close of the Business Day following the date of agreement. The parties acknowledge that their agreement will not be binding until the exchange of nonconflicting Transaction Confirmations or the passage of the Confirm Deadline without ob'ection from the receiving as provided in Section 1.3. 1.3. If a sending parry's Transaction Confirmation is materially different from the receiving parts understanding of the agreement referred to in Section 12, such receiving party shall notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party. The failure of the receiving party to so notify the sending party in writing by the Confirm Deadline constitutes the receiving parry's agreement to the terms of the transaction described in the sending parts Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, then neither Transaction Confirmation shall be binding until or unless such differences are resolved including the use of any evidence that clearly resolves the differences in the Transaction Confirmations. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the documents shall govern in the priority listed in this sentence. 1.4. The parties agree that each party may electronically record all telephone conversations with respect to this Contract between their respective employees, without any special or further notice to the other party. Each party shall obtain any necessary consent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 12 of the Base Contract, the parties agree not to contest the validity or enforceability of telephonic recordings entered into in accordance with the requirements of this Base Contract. SECTION 2. DEFINITIONS The terms set forth below shall have the meaning ascribed to them below. Other terms are also defined elsewhere in the Contract and shall have the meanings ascribed to them herein: 2.1. "Additional Event of Default" shall mean Transactional Cross Default or Indebtedness Cross Default, each as and if selected by the parties pursuant to the Base Contract. 2.2. "Affiliate" shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of at least 50 percent of the voting power of the entity or person. 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. "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 Terns 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 parry'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 (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" shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the parties in a transaction. 2.11. "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 any quantity of Gas pursuant to this Contract, then the performing party shall use commercially reasonable efforts to (i) if Buyer is the performing party, obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gas is not available), or (it) if Seller is the performing party, sell Gas, in either case, at a price reasonable for the delivery or production area, as applicable, consistent with: the amount of notice provided by the nonperforming party; the immediacy of the Buyer's Gas consumption needs or Seller's Gas sales requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party. 2.13. "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. 2.17. "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 under the 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 state consisting primarily of methane: 2.21. "Guarantor" shall mean any entity that has provided a guaranty of the obligations of a party hereunder. 2.22. "Imbalance Charges" shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter's balance and/or nomination requirements. 2.23. "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 m 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 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 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: (1) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant Day; and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published that next follows the relevant Day. 2.32. "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. "Transactional Cross Default" shall mean if selected on the Base Contract by the parties with respect to a party, that it shall be in default, however therein defined, under any Specified Transaction. 2.34. "Termination Option" shall mean the option of either party to terminate a transaction in the event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer for a designated number of days during a period as specified on the applicable Transaction Confirmation. 2.35. "Transporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction. SECTION 3. PERFORMANCE OBLIGATION 3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction. The parties have selected either the "Cover Standard" or the "Spot Price Standard" as indicated on the Base Contract. Cover Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s) excluding any quantity for which 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 amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s) 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 (ii) 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 quantity of such Gas not replaced or sold. 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. Copyright 0 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 13 September 5, 2006 Price Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the Contract Price from the Spot Price; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party's invoice, which shall set forth the basis upon which such amount was calculated. 3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing by both parties. 3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed in writing by both parties. The Transaction Confirmation containing the Termination Option will designate the length of nonperformance triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and how liquidation costs will be calculated. SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES 4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s). 4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s). Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantifies of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party. 4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyers receipt of quantifies 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 Sellers delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer. SECTION 5. QUALITY AND MEASUREMENT All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter. SECTION 6. TAXES The parties have selected either "Buyer Pays At and After Delivery Point or "Seller Pays Before and At Delivery Point" as indicated on the Base Contract. Buyer Pays At and After Delivery Point: Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority ("Taxes") on or with respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other parys responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or char es shall furnish the other party any necessary documentation thereof. Seller Pays Before and At Delivery Point: Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority ("Taxes") on or with respect to the Gas prior to the Delivery Point(s) and all Taxes at. the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other parly's responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof. SECTION 7. BILLING, PAYMENT, AND AUDIT 7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any other applicable charges, providing supporting documentation acceptable in industry practice to support the amount charged. If the actual quantity delivered is not known by the billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quantity on the following Month's billing or as soon thereafter as actual delivery information is available. 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 party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section. 7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then -effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (i) the maximum applicable lawful interest rate. 7.6. A party shall have the right, at Its own expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Contract. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Contract. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the Month of Gas delivery. All retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy. 7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other party in accordance with Section 7; provided that no payment required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting under this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the extent inconsistent herewith. 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 15.8, 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 harmless 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. 8.4. The parties 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. §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 and fees, if any, and all applicable record keeping requirements. 8.5. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5. SECTION 9. NOTICES 9.1. All Transaction Confirmations, invoices, 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 and may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered. 9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sending party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is �opyrignt iV ZUW rvonn v+mencan tnergy stanaaras hoard, 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 security 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 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 commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as they fall due; (v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relating to the Contract; (vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before the second Business Day following written Notice that such payment is due; or ix) be the affected party with respect to any Additional Event of Default then the other party (the "Non -Defaulting Party") shall have the right, at its sole.election, to immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and liquidate the transactions under the Contract, in the manner provided in Section 10.3, in addition to any and all other remedies available hereunder. 10.3. If an Event of Default has occurred and is continuing, the Non -Defaulting Party shall have the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date (the "Early Termination Date") for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a "Terminated Transaction'. On the Early Termination Date, all transactions will terminate, other than those transactions, if any, that may not be liquidated and terminated under applicable law ("Excluded Transactions"), which Excluded Transactions must be liquidated and terminated as soon thereafter as is legally permissible, and upon termination shall be a Terminated Transaction and be valued consistent with Section 10.3.1 below. With respect to each cxauueu i ransacuon, its actual termination date snail be the Early Termination Date for purposes of Section 10.3. 1 The parties have selected either "Early Termination Damages Apply" or "Early Termination Damages Do Not Apply" as indicated on the Base Contract. 10.3.1. As of the Early Termination Date, the Non -Defaulting Party shall determine, in good faith and in a commercially reasonable manner, (1) the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section 3.2), for which payment has not yet been made by the party that owes such payment under this Contract and (ii) the Market Value, as defined below, of each Terminated Transaction. The Non -Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, so that each amount equal to the difference between such Market Value and the Contract Value, as defined below, of such Terminated Transaction(s) shall be due to the Buyer under the Terminated Transaction(s) if such Market Value exceeds the Contract Value and to the Seller if the opposite is the case; and (y) where appropriate, discount each amount then due under clause (x) above to present value in a commercially reasonable manner as of the Early Termination Date (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Terminated Transactions). For purposes of this Section 10.3.1 "Contract Value" means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the Contract Price, and "Market Value" means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the market price for a similar transaction at the Delivery Point determined by the Non -Defaulting Party in a commercially reasonable manner. To ascertain the Market Value, the Non -Defaulting Party may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures contracts, quotations from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third -party offers, all adjusted for the length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Copyright O 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 ContractValues 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: Bilateral Setoff Option: 10.3.2. The Nan -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 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 (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 or 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 collateral) owed by the Defaulting Party to the 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 any other agreement or arrangement. Other Agreement Setoffs Do Not Apply: 10.3.2. The Non -Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the "Net Settlement Amount"). At its sole option and without prior Notice to the Defaulting Party, the Non -Defaulting Party may setoff any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract. 10.3.3. if any obligation that is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unascertained, the Non -Defaulting Party may in good faith estimate that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to the Nan -Defaulting Party accounting to the Defaulting Party when the obligation is ascertained. Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to net present value in a commercially reasonable manner determined by the Non -Defaulting Party. 10.4. As soon as practicable after a liquidation, Notice shall be given by the Non -Defaulting Party to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the Non -Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of the liquidation or give rise to any claim by the Defaulting Party against the Non -Defaulting Party. The Net Settlement Amount 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. 10.5. The parties agree that the transactions hereunder constitute a "forward contract" within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each "forward contract merchants" within the meaning of the United States Bankruptcy Code. 10.6. The Non -Defaulting Party's remedies under this Section 10 are the sole and exclusive remedies of the Non -Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract. 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 court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance. 11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in -path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, Seller's ability to sell Gas at a higher or more advantageous price than the Contract Price, Buyer's ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyers 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 Sellers gas supply or depletion of reserves, except, in either case, as provided in Section 11.2. The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges. 11_4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party experiencing such disturbance. 11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event. 11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed in writing by both parties. SECTION 12. TERM This Contract may be terminated on 30 Day's written Notice, but shall remain in effect until the expirafion of the latest Delivery Period of any transaction(s). The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make payment hereunder, and the obligation of either party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any transaction. SECTION 13. LIMITATIONS FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY'S LIABILITY HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, A PARTY'S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. Copyright 0 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, 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 (a) 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 waiver 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. 15.5. The interpretation and performance of this Contract shall be governed by the laws of the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction. 15.6. This Contract and all provisions herein will be subject to all applicable and valid statutes, rules, orders and regulations of any governmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof, 15.7. There is no third party beneficiary to this Contract. 15.8. Each party to this Contract represents and warrants that it has full and complete authority to enter into and perform this Contract. Each person who executes this Contract on behalf of either party represents and warrants that if 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 parry 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 partys 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 agencys reporting requirements including but not limited 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 parry shall notify the other party of any proceeding of which it is aware which may result in disclosure of the terms of any transaction (other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure. The existence of this Contract is not subject to this confidentiality obligation. Subject to Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with this confidentiality obligation. The terms of any transaction hereunder shall be kept confidential by the parties hereto for one year from the expiration of the transaction. In the event that disclosure is required by a governmental body or applicable law, the party subject to such requirement may disclose the material terms of this Contract to the extent so required, but shall promptly notify the other party, prior to disclosure, 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 OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NONdNFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CONTRACT. Copyright 0 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. Transporter: Transporter Contract Number: Base Contract No. Transporter: Transporter Contract Number: Contract Price: $ /MMBtu or Delivery Period: Begin: End: Performance Obligation and Contract Quantity: (Select One) Firm (Fixed Quantity): Firm (Variable Quantity): Interruptible: MMBtus/day MMBtus/day Minimum Up to MMBtus/day ❑ EFP MMBtus/day Maximum subject to Section 4.2. at election of ❑ Buyer or 11 Seller Delivery Point(s): (If a pooling point is used, list a specific geographic and pipeline location): Special Conditions: Seller: Buyer: By: By. Title: Title: Date: Date: Copyright® 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved - Page 13 of 13 September 5, 2006 SPECIAL PROVISIONS TO THE BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS BETWEEN EDF TRADING NORTH AMERICA, LLC ("Party A") AND CITY OF VERNON ("Party B11) DATED AS OF August 16, 2011 As set forth herein, these Special Provisions amend the North American Energy Standards Board, Inc. ("NAESB") Base Contract for Sale and Purchase of Natural Gas and its accompanying General Terms and Conditions, as published September 5, 2006 (the "Base Contract', which, together with these Special Provisions, the Transaction Confirmations and any Credit Support Obligation form a single agreement between Party A and Party B) (collectively, the "Contract'). In the event of an inconsistency between the Base Contract, the General Terms and Conditions and the Special Provisions, these Special Provisions shall govern. Except as amended herein, the Base Contract and the General Terms and Conditions shall remain in full force and effect. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Base Contract. Amendment to Section 10 Financial Responsibility: Section 10.5 is amended by adding the following at the end thereof: "In addition, each party represents and warrants to the other party, as of the date of the Base Contract and as of the date of each transaction thereunder, and as of each date of delivery of Gas in connection with such transaction, that: (a) Status of Parties. It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; and the other party is not acting as a fiduciary for or an adviser to it in respect of a transaction; (b) Non -Reliance. It is acting for its own account, and it has made its own independent decisions to enter into a transaction and as to whether a transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary; it is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into a transaction, it being understood that information and explanations related to the terms and conditions of a transaction will not be considered investment advice or a recommendation to enter into a transaction; and no communication (written or oral) received from the other party will be deemed to be an assurance or guarantee as to the expected results of a transaction; (c) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of any transaction, is capable of assuming, and assumes, the risks of any transaction and acknowledges that the other party is not acting as a fiduciary for, or an advisor to, it in respect of this Contract or any transaction; (d) Eligible Contract Participant. It is an "Eligible Contract Participant"as defined in Section 1 a(12) of the Commodity Exchange Act, as amended, 7 U.S-.C. § la(12); and (e) Eligible Commercial Entity. It is an "Eligible Commercial Entity" as defined in Section la(11) of the Commodity Exchange Act, as amended, 7 U.S.C. § la(11)." Amendment to Section 15. Miscellaneous: Section 15 is amended by adding the following new sections to the end thereof: "15.13. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any proceedings relating to the Contract, these Special Provisions, the Base Contract, Transaction Confirmation or any transaction hereunder."; "15.14. With respect to any proceeding in connection with any suit, action or proceedings arising out of or relating to this Contract, the parties hereby consent to the exclusive jurisdiction of the federal and state courts sitting in Harris County, Texas."; "15.15. 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 Agreement 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 14.13 is unenforceable or ineffective as to such party), a non-party or FERC acting sua snonte, shall be the "public interest" standard of review set forth in United Gas Pipe 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)."; "15.16 Financial Documents and Tax Certificates. If requested by a party the other party or its Guarantor, if applicable, ("Delivering Party") shall deliver (i) within 120 days following the end of each fiscal year, a copy of the annual report containing audited consolidated financial statements for such fiscal year for the Delivering Party and (ii) within 60 days after the end of each of its first three fiscal quarters of each fiscal year, a copy of quarterly report containing unaudited consolidated financial statements for such fiscal quarter for the Delivering Party. In all cases the statements shall be for the most recent accounting period and shall be prepared in accordance with generally accepted accounting principles; provided, however, that should any such statements not be available on a timely basis due to a delay in preparation or certification, such delay shall not be an Event of Default so long as the relevant entity diligently pursues the preparation, certification and delivery of the statements. The delivery of such financial statements shall be deemed to be a Credit Support Obligation. The parties shall also deliver to each other, upon the execution of this Contract, United States Internal Revenue Service Form W-9, or any successor form. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the Effective Date. EDF TRA IN AME CA, LLC (.iv -CITY OF VERNON By: By: Name: W. Eric Dennison Name: Hilario Gonzales Senior Vice Pre s' dent Title: ATTEST: By: Name: Wilhlard am chi Title: Mayor APPROVED AS TO FORM: Title: City Clerk Micael B. Montgomery, Attorney RECEIVED OCT 0 5 2011 CITY CLERK'S OFFICE kdk' F VIP STAFF REPORT DATE: October 5, 2011 LIGHT & POWER TO: Honorable Mayor and City Council f FROM: Carlos R. Fandino, Jr., Director of Light & Power RE: EDF Trading North America, LLC PURPOSE: RECEIVED OCT 0 5 2911 CITY ,^,9:fln!IcTI)nT+nr, This agreement is a standard North American Energy Standards Board (NAESB) form. It includes two pages of special conditions at the end. This agreement constitutes general terms and conditions only and does not obligate the City to enter into a specific purchase or sale transaction; however, the result of fully executing the agreement will be to enable the City to transact with EDF. The City has similar (but not identical because of the special conditions) NAESB agreements in place with SMUD, BP Energy, and Shell Trading. RECOMMENDATION: The complete package from EDF is attached, and has been approved as to form by the City's legal department. It is recommended that this agreement be submitted for consideration by the City Council at the October 18, 2011 meeting. FISCAL IMPACT: None. CRF:ah Attachments CITY ATTORNEY'S OFFICE INTER -DEPARTMENT MEMORANDUM DATE: October 4, 2011 TO: Carlos Fandino, Director of Light & Powwer FROM: Mike Montgomery, Interim City Attorney RE: EDF Trading North America, LLC I have received and reviewed the Memorandum dated September 14, 2011, and the attachments thereto. The natural gas agreement is approved as to form. MM:em Enclosures VON eDF EDF TRADING 4700 West Sam Houston Parkway North Suite 250 Houston, TX 77041 T +1 281 781 0333 F +1 281 781 0360 August 23, 2011 City of Vernon 4305 Santa Fe Ave. Vernon, CA 90058 Attn: Dan Bergmann RE: NAESB Agreement dated August 16, 2011 ATTACHED PLEASE FIND THE FOLLOWING DOCUMENTS: Two (2) partially executed originals of the above referenced Agreement(s) One (1) fully executed original of the above referenced Agreement(s) X EDF Trading's W-9 and Incumbency Certificate EDF Trading's Sales & Use Tax Certificates (Multi jurisdictional, WV, WY, LA, MS, NY- if applicable) Letter regarding Sales & Use Tax Certificate PLEASE TAKE THE FOLLOWING ACTION: Sign and Return Both Originals for full execution Sign and Return One Fully Executed Original Retain for your files XReturn your W-9, Incumbency Certificate, and Sales & Use Tax Certificates (if applicable) If you have any questions, please contact me at 281.653.1679 or via email — alayna.estes@edftrading.com. Sincerely, Alayna Estes Contract Administrator Enclosure(s) w .edftradingxom EOF Trading North America, LLC 10i eDF EDF TRADING 4700 West Sam Houston Parkway North Suite 250 Houston, Tans, TX 77041 T +1 281 781 0333 F +1 281 781 0360 May 9, 2011 To Whom It May Concern: In order to comply with State Sales and Use Tax Laws, EDF Trading North America, LLC must maintain properly executed resale/exemption certificates or direct pay permits from all customers who claim exemption from sales tax on their purchases. Sales tax resale/exemption certificates or direct pay permits are required for each state in which you make purchases. Please provide us with your exemption information by sending your state specific certificate(s) or the multijurisdictional uniform sales & use tax certificate. Under Audit, States will disallow an exempt sale and assess tax if a seller cannot produce sufficient documentation to prove that the sale was entitled to an exemption. Therefore, unless appropriate documentation is provided to EDF Trading, we will be required to assess the applicable state sales tax on all future and retroactive invoices. You may fax the completed and signed certificate to 281.653.1433, email to Chien.Duong@edftrading.com or mail to the following address at your earliest convenience: EDF Trading North America, LLC 4700 West Sam Houston Parkway North, Suite 250 Houston, TX 77041 Attention: Chien Duong Your prompt attention to this matter will be greatly appreciated. If you have any questions or concerns, please contact me at 281.653.1074 or Chien.Duong@editrading.com. Regards, Chien Duong www.editrading.conn EOF Trading Noah America, LLC INCUMBENCY AND SIGNATURE CERTIFICATE The undersigned Treasurer and Vice President of EDF Trading North America, LLC, a limited liability company organized under the laws of the State of Texas, hereby certifies that the officer listed below holds the title indicated opposite his name on the date hereof, is duly authorized as a signatory of EDF Trading North America, LLC, and the signature of such person appearing opposite his name is his genuine signature. NAME TITLE SIGNATURE r Eric Dennison Senior Vice President nn�� IN WITNESS VMEREOF, the undersigned has executed this certificate the day of �P vtaary , 2011. ussell S neider Treasurer and Vice President Form W77 Request for Taxpayer - Give form to the (Rev. October 200& Identification Number and Certification requester. Do not aepamae11 of aW Treasury - send to. the IRS. eaerr,ei Ravens Service Name lee shown on your Income tax return) EDF Trading North America, Inc, o. Business name. It Wlferem from above `o EDP Trading North America LLC, Cheok'appropdate box: ❑ Individusl/sole proprietor ❑ Corporation ❑ Partnership jJ ® Ur111C6ddtablla corn y party. Enter the tax classification (D.dlslegartled entity, r:=dorprxadon,P=partnership):► .Q.... - Exempt ❑ u. o ppp ❑ cow teas inshclorei► payee. Atldress (number, street, and apt. orsuae no.) Requester's name and address (optional) 4700 west Sarn.Houston Parkway North, Suite.250 City, state, and ZIP cone Houston, Texas 77041 Usteccount numberis) here (opttonsli Taxpayer Identification Number (TIN) Enter your TIN in the appropriate box. The TIN provided must match the name given on Line 1 to avoid social security number backup withholding. For Individuals, this Is your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the Pan I instructionson page 3. For other entities; It Is your employer Identification number (EIN) It you do not have: a number, aeeHow to. get,a TIN on. page 3. or Note. If the: account is in more than one name, seethe chart on page 4 for guidelines on whose Employer identification number Under penalties of perjury, I certify that: 1. The number shown on this form is my correct taxpayer Identification number (or I. am waiting for a. numberto be issued to me), and 2. 1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that ) am subject to backup withholding as a result of a'failure to report all Interest or dividends, or (c) the IRS has notified me that i am no longer subject to backup withholding, and 3. 1 am. a. U.S. citizen or other U.S. person (defined below). Certification Instructions, You must cross out Item 2 above if you have been notified by they IRS that youarecurrently subjectto backup withholding because youhave felled to report all Interest and dividends on your tax return. For real estate transactions,. Item 2 does not apply. For mortgage Interest paid. acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement .(IRA), -and generally, payments other Than Interest and dividends, you. are not required to sign the Certification, out you must provide your correct TIN. See the Instructions on page 4. Crean I'. .. ,A"I._.. Here._ I U.S., person :► GeneralInstructions Section references are totheinternal Revenue Cade unless otherwise noted. Purpose of Form A person. who Is required to file an information return with the IRS must obtain your correct taxpayer identification number (TIN) to report, for example, Income paid to you, real estate transactions; mortgage interest you paid, acquisition or. abandonment of secured property, cancellation of debt, or contributions you made to an IRA. - Use Form W-9 only If you are a U.S. person :.(Including a resident alien), to provideyourcorrect TIN to the person requesting: it (the requester) and, when applicable, to: 1. Certify that the TIN you are giving Is correct (or are waiting for a number to be issued), 2. Certify that you arenot subject to backup withholding, or S. Definition of a U.S. person. For federal tax -purposes,. you are considered a U.S, person if you are; • An individual who is a U.S. citizen or U.S.. resident alien, • A partnership, corporation, company, or association created or organized In the United States or under the lawsof the United States, • An estate (other than a foreign estate), or • A domestic trust (as defined In Regulations section 301,7701-7). in Partnerships that conduct a Rates aregenerallyrequired to is tax. a ed States, rom The person who gives Form W-9 to the partnership for on purposes of establishing Its. U.S. status and avoiding. withholding an Its allocable -share of net Income from the partnership conducting, a trade or business in the United States is-in'the following; cases: e' The U.S. owner of dlsregarded entlty and not the entity, Cat. No. 10231x" Form W-$ (Rev. 10-2007)