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<br />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:
<br />(i) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant
<br />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
<br />relevant Day.
<br />2.27. "Transaction Confirmation" shall mean a document, similar to the form of Exhibit A, setting forth the terms of a transaction formed
<br />pursuant to Section 1 for a particular Delivery Period.
<br />2.28. "Termination Option" shall mean the option of either parry to terminate a transaction in the event that the other parry fails to perform a Firm
<br />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
<br />the applicable Transaction Confirmation.
<br />2.29. "Transporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter,
<br />transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction.
<br />SECTION 3. PERFORMANCE OBLIGATION
<br />3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance
<br />with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to bV the parties in a transaction.
<br />The parties have selected either the "Cover Standard" or the "Spot Price Standard" as indicated on the Base Contract.
<br />Cover Standard:
<br />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
<br />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
<br />positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for
<br />commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the
<br />Contract Quantity and the quantity actually delivered by Seller for such Day(s); or (ii) in the event of a breach by Buyer on any Day(s),
<br />payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by
<br />Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs
<br />to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer
<br />for such Day(s); or (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used
<br />commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available, then the sole and
<br />exclusive remedy of the performing party shall be any unfavorable difference between the Contract Price and the Spot Price, adjusted
<br />for such transportation to the applicable Delivery Point, multiplied by the difference between the Contract Quantity and the quantity
<br />actually delivered by Seller and received by Buyer for such Day(s). Imbalance Charges shall not be recovered under this Section 3.2,
<br />but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable
<br />difference shall be payable five Business Days after presentation of the performing party's invoice, which shall set forth the basis upon
<br />which such amount was calculated.
<br />Spot Price Standard:
<br />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
<br />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
<br />difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied
<br />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
<br />Buyer on any Day(s), payment by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual
<br />quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting
<br />the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or
<br />Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall
<br />be payable five Business Days after presentation of the performing party's invoice, which shall set forth the basis upon which such
<br />amount was calculated.
<br />3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing
<br />by both parties.
<br />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
<br />writing by both parties. The Transaction Confirmation containing the Termination Option will designate the length of nonperformance
<br />triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and
<br />how liquidation costs will be calculated.
<br />SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES
<br />4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for
<br />transporting the Gas from the Delivery Point(s).
<br />4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s). Each
<br />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
<br />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
<br />lesser than the Scheduled Gas, such party shall promptly notify the other party.
<br />Copyright © 2002 North American Energy Standards Board, Inc. NAESB Standard 6.3.1
<br />All Rights Reserved Page 4 of 10 April 19, 2002
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