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06-26-2013 HUCMMINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, June 26, 2013 Call to order — 3:00 p.m. President Bordson called the meeting to order. Members present: President Bordson; Vice President Leon Johnson; Secretary Monty Morrow; Commissioner Anthony Hanson; Attorney Marc Sebora; General Manager Michael Kumm. Member absent: Commissioner Lenz. 1. Approve Minutes of May 29, 2013 Regular Meeting The minutes of the May 29, 2013 regular meeting were reviewed. A motion was made by Secretary Morrow, seconded by Commissioner Hanson, to approve the May 29, 2013 regular meeting minutes. Motion was unanimously carried. 2. Ratify Payment of Bills for May 2013 The May 2013 payables were discussed. A motion was made by Commissioner Hanson, seconded by Vice President Johnson to ratify the payment of bills in the amount of $2,176,423.94 (detailed listing in payables book). Motion was unanimously carried. 3. Approve Financial Statements /Budget Year to Date Jared Martig presented the May 2013 financial statements /budget year -to -date. The Big Stone II debt was paid off on June 1. After discussion, a motion was made by Vice President Johnson, seconded by Commissioner Morrow to approve the financial statements /budget year -to -date. Motion was unanimously carried. 4. Discuss HUC New Commissioner Matrix (Tabled at the May 29, 2013 Regular Commission Meeting) GM Kumm presented the matrix which was included in last month's meeting along with the C & E matrix Vice President Johnson emailed to the Board to consider including in the review process. President Bordson requested all ideas for potential candidates be emailed to himself or Kim Koski. After discussion, GM Kumm mentioned he will revise the matrix and email a final draft to the Board. 5. Approve Exempt Handbook, Section: Compensation Plan (Tabled at the May 29, 2013 Regular Commission Meeting) GM Kumm presented the exempt handbook, section; compensation plan, tabled at the May 29, 2013 regular commission meeting, explaining additional verbiage was added regarding pay scales and the section "Review of Plan" was revised to reflect that the Customer /HR Manager annually review and maintain the Position Classification Plan. Also, the comprehensive market analysis review to be completed every five years instead of three years. Jan Sifferath received a quote of $5,500 for the comprehensive market analysis. The Board recommended HUC budget for the market analysis in 2014. After discussion, a motion was made by Commissioner Hanson, seconded by Secretary Morrow. Motion was unanimously carried. (Changes attached.) 1 6. Approve Succession Plan (Tabled at the May 29, 2013 Regular Commission Meeting) GM Kumm presented the succession plan tabled at the May 29, 2013 regular commission meeting. Attorney Sebora drafted revisions to the bylaws and a delegation of authority during General Manager's absence policy for the Board to review. The Board requested GM Kumm and Jan Sifferath revise the succession plan further. After discussion, the Board tabled until July's regular commission meeting. 7. Review Policies and Requirements Booklet GM Kumm presented the policies and requirements booklet, sections: • Hutchinson Utilities Commission • Policies and Requirements Brochure • Establishing a New Electric /Natural Gas Account This is part of the policy review and no changes are requested at this time. 8. Approve Changes to Exempt and Non - Exempt Handbooks GM Kumm presented changes to the exempt and non - exempt handbooks, sections: • Retirement • Resignation No changes requested by staff to section: retirement. The proposed changes to section: resignation were for clarification and consistency. A motion was made by Vice President Johnson, seconded by Commissioner Hanson to approve the changes to the exempt and non - exempt handbooks. Motion was unanimously carried. (Changes attached.) 9. Approve City of Brownton Natural Gas Agreements: • Operating Agreement • Capacity Agreement • Commodity Agreement • Transportation Interconnect Agreement — Third Party Signatory GM Kumm presented the operating, capacity, commodity and transportation interconnect agreements with the City of Brownton. After discussion, a motion was made by Secretary Morrow, seconded by Commissioner Hanson to approve the operating, capacity, commodity and transportation interconnect agreements with the City of Brownton. Motion was unanimously carried. (Changes attached.) 10. Approve Marketing Agreement with Sequent Energy Management GM Kumm presented the marketing agreement with Sequent Energy Management, explaining this is a standard agreement to purchase natural gas. After discussion, a motion was made by Commissioner Hanson, seconded by Vice 2 President Johnson to approve the marketing agreement with Sequent Energy Management. Motion was unanimously carried. (Changes attached.) 11. Approve Southern Minnesota Municipal Power Agency (SMMPA) Capacity Confirmation Agreement GM Kumm presented the Southern Minnesota Municipal Power Agency (SMMPA) Capacity Confirmation Agreement. After discussion, a motion was made by Vice President Johnson, seconded by Commissioner Hanson to approve the Southern Minnesota Municipal Power Agency (SMMPA) Capacity Confirmation Agreement. Motion was unanimously carried. (Changes attached.) 12. Update on Unit 6 Project Plan and Spend Plan GM Kumm explained the purpose for unit 6 is 100% risk mitigation and not base load. It is part of a comprehensive, multi -year plan since 2004 to stabilize rates. HUC has been intentional since given Board direction in 2004 to implement different strategies to keep rates stable. There has been no rate increase to HUC's customers for eight years. HUC is currently working on the final three projects of the multi -year plan which include unit 5, unit 6 and a renewable project. GM Kumm reported in calendar years 2011 and 2012, approximately $72,000 had been spent on the unit 6 project for the air permit, generation interconnect study, and HDR's review of specifications. The air permitting is almost complete. GM Kumm further explained HUC's plan was to continue the unit 6 project; however, requested clarification and direction from the Board if they want unit 6 purchased. The Board requested as the project progresses, GM Kumm and Steve Lancaster provide the Board with line items and costs associated with each phase for approval. 13. Communication from the City Administrator City Administrator Carter was absent. 14. Division Reports Electric — Steve Lancaster Nothing to report Business — Jan Sifferath Nothing to report Finance — Jared Martig • Working on sales tax refund which will be approximately $150,000. 3 15. Legal Update Approve Employee Confidentiality, Non - Compete Disclosure Agreements (Tabled at the May 26, 2013 Regular Commission Meeting) Attorney Sebora presented the employee confidentiality, non - compete disclosure agreement tabled at the May 26, 2013 regular commission meeting. Attorney Sebora noted this intellectual property policy would only apply to exempt employees. GM Kumm recommended the following be added to the last paragraph of Disclosure, (c): "; inventions, improvements or discoveries that are made known to HUC within 30 days of the adoption of this policy shall belong to the employee." After discussion, a motion was made by Vice President Johnson, seconded by Commissioner Hanson to approve the intellectual property policy with amended changes. Motion was unanimously carried. (Policy attached.) Commissioner Hanson commended HUC employees on the Brownton project. Unfinished Business • Discuss Separate Business Unit for Wholesale Business Nothing to report Discuss Pre -Pay for Natural Gas Nothing to report • PILOT Committee Recommendation President Bordson explained a subcommittee of GM Kumm, Secretary Morrow and himself was formed to negotiate a number for the PILOT. The Committee has looked at variations of what HUC has done in the past and gave Mayor Cook information to present to the City Council for discussion. The PILOT Committee plans on meeting again in July. New Business Vice President Johnson announced his resignation from Hutchinson Utilities Commission, explaining he is employed at one of Hutchinson's large industrial businesses currently investigating construction of their own generation. In order to mitigate the potential for conflict of interest, his resignation will be effective September 1, 2013. President Bordson thanked Vice President Johnson. The Board will formally approve his resignation at the July regular commission meeting. 11 There being no further business, a motion was made by President Bordson, seconded by Vice President Johnson to go into closed session at 4:40 p.m. to discuss labor negotiations. ATTEST: Dwight Bordson, President 5 Monty Morrow, Secretary MINUTES Regular Meeting — Hutchinson Utilities Commission Wednesday, June 26, 2013 Call to order — 3:00 p.m. President Bordson called the meeting to order. Members present: President Bordson; Vice President Leon Johnson; Secretary Monty Morrow; Commissioner Anthony Hanson; Attorney Marc Sebora; General Manager Michael Kumm. Member absent: Commissioner Lenz. 1. Approve Minutes of May 29, 2013 Regular Meeting The minutes of the May 29, 2013 regular meeting were reviewed. A motion was made by Secretary Morrow, seconded by Commissioner Hanson, to approve the May 29, 2013 regular meeting minutes. Motion was unanimously carried. 2. Ratify Payment of Bills for May 2013 The May 2013 payables were discussed. A motion was made by Commissioner Hanson, seconded by Vice President Johnson to ratify the payment of bills in the amount of $2,176,423.94 (detailed listing in payables book). Motion was unanimously carried. 3. Approve Financial Statements /Budget Year to Date Jared Martig presented the May 2013 financial statements /budget year -to -date. The Big Stone II debt was paid off on June 1. After discussion, a motion was made by Vice President Johnson, seconded by Commissioner Morrow to approve the financial statements /budget year -to -date. Motion was unanimously carried. 4. Discuss HUC New Commissioner Matrix (Tabled at the May 29, 2013 Regular Commission Meeting) GM Kumm presented the matrix which was included in last month's meeting along with the C & E matrix Vice President Johnson emailed to the Board to consider including in the review process. President Bordson requested all ideas for potential candidates be emailed to himself or Kim Koski. After discussion, GM Kumm mentioned he will revise the matrix and email a final draft to the Board. 5. Approve Exempt Handbook, Section: Compensation Plan (Tabled at the May 29, 2013 Regular Commission Meeting) GM Kumm presented the exempt handbook, section; compensation plan, tabled at the May 29, 2013 regular commission meeting, explaining additional verbiage was added regarding pay scales and the section "Review of Plan" was revised to reflect that the Customer /HR Manager annually review and maintain the Position Classification Plan. Also, the comprehensive market analysis review to be completed every five years instead of three years. Jan Sifferath received a quote of $5,500 for the comprehensive market analysis. The Board recommended HUC budget for the market analysis in 2014. After discussion, a motion was made by Commissioner Hanson, seconded by Secretary Morrow. Motion was unanimously carried. (Changes attached.) 1 6. Approve Succession Plan (Tabled at the May 29, 2013 Regular Commission Meeting) GM Kumm presented the succession plan tabled at the May 29, 2013 regular commission meeting. Attorney Sebora drafted revisions to the bylaws and a delegation of authority during General Manager's absence policy for the Board to review. The Board requested GM Kumm and Jan Sifferath revise the succession plan further. After discussion, the Board tabled until July's regular commission meeting. 7. Review Policies and Requirements Booklet GM Kumm presented the policies and requirements booklet, sections: • Hutchinson Utilities Commission • Policies and Requirements Brochure • Establishing a New Electric /Natural Gas Account This is part of the policy review and no changes are requested at this time. 8. Approve Changes to Exempt and Non - Exempt Handbooks GM Kumm presented changes to the exempt and non - exempt handbooks, sections: • Retirement • Resignation No changes requested by staff to section: retirement. The proposed changes to section: resignation were for clarification and consistency. A motion was made by Vice President Johnson, seconded by Commissioner Hanson to approve the changes to the exempt and non - exempt handbooks. Motion was unanimously carried. (Changes attached.) 9. Approve City of Brownton Natural Gas Agreements: • Operating Agreement • Capacity Agreement • Commodity Agreement • Transportation Interconnect Agreement — Third Party Signatory GM Kumm presented the operating, capacity, commodity and transportation interconnect agreements with the City of Brownton. After discussion, a motion was made by Secretary Morrow, seconded by Commissioner Hanson to approve the operating, capacity, commodity and transportation interconnect agreements with the City of Brownton. Motion was unanimously carried. (Changes attached.) 10. Approve Marketing Agreement with Sequent Energy Management GM Kumm presented the marketing agreement with Sequent Energy Management, explaining this is a standard agreement to purchase natural gas. After discussion, a motion was made by Commissioner Hanson, seconded by Vice 0 President Johnson to approve the marketing agreement with Sequent Energy Management. Motion was unanimously carried. (Changes attached.) 11. Approve Southern Minnesota Municipal Power Agency (SMMPA) Capacity Confirmation Agreement GM Kumm presented the Southern Minnesota Municipal Power Agency (SMMPA) Capacity Confirmation Agreement. After discussion, a motion was made by Vice President Johnson, seconded by Commissioner Hanson to approve the Southern Minnesota Municipal Power Agency (SMMPA) Capacity Confirmation Agreement. Motion was unanimously carried. (Changes attached.) 12. Update on Unit 6 Project Plan and Spend Plan GM Kumm explained the purpose for unit 6 is 100% risk mitigation and not base load. It is part of a comprehensive, multi -year plan since 2004 to stabilize rates. HUC has been intentional since given Board direction in 2004 to implement different strategies to keep rates stable. There has been no rate increase to HUC's customers for eight years. HUC is currently working on the final three projects of the multi -year plan which include unit 5, unit 6 and a renewable project. GM Kumm reported in calendar years 2011 and 2012, approximately $72,000 had been spent on the unit 6 project for the air permit, generation interconnect study, and HDR's review of specifications. The air permitting is almost complete. GM Kumm further explained HUC's plan was to continue the unit 6 project; however, requested clarification and direction from the Board if they want unit 6 purchased. The Board requested as the project progresses, GM Kumm and Steve Lancaster provide the Board with line items and costs associated with each phase for approval. 13. Communication from the City Administrator City Administrator Carter was absent. 14. Division Reports Electric — Steve Lancaster Nothing to report Business — Jan Sifferath Nothing to report Finance — Jared Martig • Working on sales tax refund which will be approximately $150,000. M 15. Legal Update Approve Employee Confidentiality, Non - Compete Disclosure Agreements (Tabled at the May 26, 2013 Regular Commission Meeting) Attorney Sebora presented the employee confidentiality, non - compete disclosure agreement tabled at the May 26, 2013 regular commission meeting. Attorney Sebora noted this intellectual property policy would only apply to exempt employees. GM Kumm recommended the following be added to the last paragraph of Disclosure, (c): "; inventions, improvements or discoveries that are made known to HUC within 30 days of the adoption of this policy shall belong to the employee." After discussion, a motion was made by Vice President Johnson, seconded by Commissioner Hanson to approve the intellectual property policy with amended changes. Motion was unanimously carried. (Policy attached.) Commissioner Hanson commended HUC employees on the Brownton project. Unfinished Business • Discuss Separate Business Unit for Wholesale Business Nothing to report • Discuss Pre -Pay for Natural Gas Nothing to report • PILOT Committee Recommendation President Bordson explained a subcommittee of GM Kumm, Secretary Morrow and himself was formed to negotiate a number for the PILOT. The Committee has looked at variations of what HUC has done in the past and gave Mayor Cook information to present to the City Council for discussion. The PILOT Committee plans on meeting again in July. New Business Vice President Johnson announced his resignation from Hutchinson Utilities Commission, explaining he is employed at one of Hutchinson's large industrial businesses currently investigating construction of their own generation. In order to mitigate the potential for conflict of interest, his resignation will be effective September 1, 2013. President Bordson thanked Vice President Johnson. The Board will formally approve his resignation at the July regular commission meeting. it There being no further business, a motion was made by President Bordson, seconded by Vice President Johnson to go into closed session at 4:40 p.m. to discuss labor negotiations. L- Monty Morrow, Secretary ATTEST: v'44-, D t rdson, President 5 EXEMPT COMPENSATION PLAN The Hutchinson Utilities Commission (HUC) has considered the existing positions for HUC and the current economic conditions. For each position there shall be a title.,--an" job description, and a pay scale level assigned. This plan covers all regular full -time, exempt positions /employees only. Plan Objectives To establish and maintain a compensation plan that enables HUC to be highly competitive within our defined industry. To lead or exceed the market in attracting and retaining qualified, reliable and motivated employees who are committed to quality and excellence for those we serve. To ensure, subject to the financial condition of HUC, that employees receive fair and equitable compensation in relation to their individual contributions to HUC's success. To follow the principles of pay equity in establishing and maintaining pay relationships among positions. To ensure program flexibility necessary to meet changing economic, competitive, technological, and regulatory conditions encountered by HUC. To balance compensation and benefit needs with available resources. Open Salary Range HUC shall adopt an Open Salary Range compensation plan that will allow for maximum flexibility since there are not defined or pre - calculated "steps ". Employee movement is based solely on performance. The open salary range concept rewards good and exceptional performers and advances employees to the market rate more quickly. Allocation of New Positions When a new position is created for which no appropriate description exists or when the duties of an existing position are sufficiently changed so that no appropriate description exists, the Commission, after recommendation of the Customer /HR Manager, shall cause an appropriate job description- specification to be written for said position. Pay FradesScales Pay scales will be adjusted on an annual basis in accordance with adiustments made in the labor agreement. Exempt Employees Each position will have a nine -month probationary period. After satisfactory completion of the probationary period, an increase may be granted as warranted by the annual performance appraisal. Thereafter, consideration for increases will be given annually at the first of the year. The General Manager reserves the discretion to adjust individual rates as required. The Commission will determine any pay increase for the General Manager. Consideration for market adjustment will be made each January 1. The General Manager shall maintain the discretion to hire at any point based on the qualifications, experience, market conditions or other relevant factors, to secure the best candidate for the position. Performance Evaluations For all regular full -time employees, a performance appraisal or evaluation will be made on an annual basis. An evaluation made by the employee's director, manager or supervisor shall be submitted in writing to the employee and the General Manager. All evaluations will be forwarded to the Customer/HR Manager for filing in the employee files. Evaluations shall be based upon the performance of the individual in the position measured against established job performance criteria. Such criteria may include level of knowledge, skills, ability, quality of work, personal work traits, compliance with established HUC or departmental rules and regulations or any other criteria that is indicative of performance. The performance appraisal process is the application of performance standards to past performance. In appraising an employee, these are the basic levels of performance: 5 — Outstanding — Performance is exceptional in all areas and is recognizable as being far superior to others. 4 — Exceeds Job Requirements — Results clearly exceed most positions requirements. Performance is of high quality and is achieved on a consistent basis. 3 — Meets Job Requirements — Competent and dependable level of performance. Meets performance standards of the job. 2 — Needs Improvement — Performance is deficient in certain area(s). Improvement is necessary. 1 — Unsatisfactory — Results are generally unacceptable and require immediate improvement. Results - The results of the exempt employee's evaluation will normally have the following effect on his/her salary per the following Merit Increase Guide: 0 to 1.0 — 0% 1.1 to 1.99 — Straight 1 % increase 2.0 to 2.75 — -1% of Union % increase 2.76 to 3.5 — Union % increase 3.51 to 4.25 — +1% of Union % increase 4.26 to 5.0 — +2% of Union % increase Market Conditions Notwithstanding any language to the contrary, HUC retains the right to deviate from the pay plan when, in the sole judgment of the Commission, market conditions or other circumstances dictate such a decision. Market conditions are defined as the availability of a particular position. Eligible employees include all non - represented employees except those who have been subject to disciplinary action per the HUC Employee Handbook as follows: An additional consequence of disciplinary action more severe than oral reprimand will be the permanent loss of the January 1 market adjustment in the calendar year following such disciplinary action. This will occur unless the Director in charge and the General Manager decide otherwise. Annual Market Adjustment Consideration On an annual basis, a market survey will be reviewed. As a result of the current year marketplace, an additional increase may be deemed necessary. The General Manager maintains final approval responsibility for salary increases. Any market adjustment on January 1 of any year shall be separate and apart from the individual merit increases. In determining a recommendation for an annual market adjustment, the General Manager shall consider, at least the following information: 1. U.S. and Minneapolis /St. Paul eenstffaeF index changes (CPIU & CPIW) 2. Social Security calculation of cost of living increase 3. Unemployment rate 4. Employee turnover rate 5. Area wage survey 6. Legislative growth factor constraints 7. Bargaining Unit Increase Modification of the Plan HUC reserves the right to modify any or all of the components or to vary from any of the components of the Compensation Plan at its discretion and at any time. Review of the Plan It is recommended that HUC's Customer /HR Manager annual review and maintain its hire -a eensultant to assist in an adoption of Position Classification Plan, whieh would be review annually by the GustemeF /H Manager.-. As deemed necessary, the Customer /HR Manager would recommend any changes to the Commission. It is further recommended that a comprehensive review be completed every tiffeefive years. EXEMPT RETIREMENT Any employee who elects to retire shall give the Employer sixty (60) days notice of date that employee intends to retire. RESIGNATION Employees leaving employment with the Utilities HUC in good standing will be paid any accrued unused vacation. To leave employment in good standing, an employee should provide written notice of resignation to Staff °^rs^^^ ^' Supervisor or Manager at least 10 working days prior to the resignation effective date. The General Manager may waive this requirement for good cause. A terminating employee must also return all U#4t- -tUC property, and equipment including keys, security devices, clothing and small hand tools provided by the Ut+4ityHUC. NON - EXEMPT RETIREMENT Any employee who elects to retire shall give the Employer sixty (60) days notice of date that employee intends to retire. RESIGNATION Employees leaving employment with the Utilities in good standing will be paid any accrued unused vacation. To leave employment in good standing, an employee should provide written notice of resignation to Staff PeFs ,.,n@ Supervisor or Manager at least 10 working days prior to the resignation effective date. The General Manager may waive this requirement for good cause. A terminating employee must also return all t�-HUC property, and equipment including keys, security devices, clothing and small hand tools provided by the Wt4it -FHUC. HUTCHINSON UTILITIES COMMISSION OPERATING AGREEMENT NATURAL GAS DISTRIBUTION FACILITIES City of Brownton 6/4/2013 This document sets forth the terms and conditions of service for operation and maintenance of the natural gas distribution facilities provided to the City of Brownton by Hutchinson Utilities Commission. M DISTRIBUTION FACILITIES OPERATING AGREEMENT THIS DISTRIBUTION FACILITIES OPERATING AGREEMENT ( "Agreement ") is made and entered into on this day of June, 2013, by and between the City of Brownton ( "Owner ") with offices located at 335 3rd Street South, P.O. Box 238, Brownton, Minnesota, 55312 and Hutchinson Utilities Commission ( "Operator ") a Minnesota municipal utility located at 225 Michigan St. SE, Hutchinson, Minnesota, 55350. Owner and Operator shall hereinafter sometimes be referred to separately as "Party" or jointly as "Parties." WITNESSETH: WHEREAS, Owner has constructed or is constructing the Facilities (as hereinafter defined); WHEREAS, Owner, on the one hand and United Natural Gas LLC, on the other hand ( "UNG "), are establishing an interconnection between their pipeline facilities and to contract for UNG to provide long -term firm transportation capacity to Owner over UNG's natural gas pipeline facilities, which shall run from natural gas pipeline owned by Operator to Owner's Facilities; WHEREAS, pursuant to the above, Owner and UNG are entering into that certain Interconnect and Natural Gas Firm Transportation Capacity Agreement of even date herewith, which Operator acknowledges; WHEREAS, Owner is contracting with Operator to provide long -term firm transportation capacity to Owner over Operator's natural gas pipeline facilities to the point of interconnection between the facilities of Operator and the facilities of UNG, pursuant to that certain Natural Gas Firm Transportation Capacity Agreement of even date herewith; WHEREAS, Owner has contracted with Operator to purchase a long -term supply of natural gas, pursuant to that certain Natural Gas Commodity Agreement of even date herewith; and WHEREAS, Owner desires to retain Operator to operate the Facilities on behalf of Owner, and Operator is willing to provide said services on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises, mutual covenants, conditions and OPERATING AGREEMENT NATURAL GAS DIST. FAOILRIES CRY OF BROWNTON JOHN WESSMR agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I: DEFINED TERMS Section 1.1 Definitions. The defined terms used in this Agreement shall, unless the context otherwise requires, have the meanings specified in this Article I. "Agreement" means this Natural Gas Distribution Facilities Operating Agreement, as the same may from time to time be amended with written consent of Owner and Operator. "Business Day" means any day except Saturday, Sunday or Federal Reserve Bank Holidays. "Commencement Date" shall mean "Nine a.m. Central Clock Time" on August 1, 2013. "Emergency" means any suspected or actual abnormal condition that has already caused, or represents an imminent threat to cause, Facility failure or damage, danger to or loss of life, pollution, or any hazardous condition. "Facility" or "Facilities" means the natural gas distribution system belonging to Owner, including all apparatuses thereto, commencing at the UFCBrownton Interconnect, as defined in the Interconnect and Natural Gas Firm Transportation Capacity Agreement, and extending to the ends of the Owner's distribution system, as further described and depicted in Exhibit B. "Gas" shall mean natural gas, manufactured, artificial or synthetic gas, or any mixture or combination thereof. "Gas Day" shall mean a period beginning and ending at 9:00 a.m., Central Clock Time. The reference date for any day shall be the date of the beginning of such day. "Governmental Authority" means (i) the United States of America, (ii) any state, county, parish, municipality or other governmental subdivision within the United States of America, and (iii) any court or tribunal or any governmental department, commission, OPERATING AGREEMENT NATURAL GAS DST. FAQLTTIES 2 Cay OF BROWNTON JOHN WEBSTER board, bureau, agency or other instrumentality of the United States of America or of any state, county, parish, municipality or other governmental subdivision with the United States of America. "Law" means any applicable statute, law, ordinance, regulation, rule, ruling, order, decree, writ, injunction, judgment or other official act of or by any Governmental Authority. "Monthly Operating Fee" means the fee for Operator performing operations of the Facilities and Routine Work. "Operations" means all work or services required to be furnished or performed by Operator pursuant to this Agreement. "Operator" means Hutchinson Utilities Commission and its permitted successors and assigns hereunder. "Owner" means City of Brownton and its permitted successors and assigns hereunder. "Permits" means all licenses, permits, certificates, orders, approvals and authorizations of any Governmental Authority necessary for or obtained in connection with operation of the Facilities or performance of the Operations. "Person" means any individual, firm, corporation, partnership, joint venture, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Routine World" includes day -to -day operations, maintenance, testing and repair included in the Monthly Operating Fee and more particularly defined in Exhibit C of this Agreement. "Non- Routine World" includes work not included in the Monthly Operating Fee, but shall be provided on an as- needed basis. Said services and fees are set forth in Exhibit D. OPERATING AGREEMENT NATURAL GAS DIS .. FACILITIES CITY OF 6ROWNTON JOHN WEBSTER 3 "Year" or "year" means a period of 12 consecutive months commencing with January 1 and ending on the following December 31. Section 1.2 References, Gender, Number. Unless the context requires otherwise, all references in this Agreement to an "Article," "Section" or "Subsection" shall be to an Article, Section or Subsection of this Agreement, and the words "this Agreement," "hereof," "hereunder," "herein," "hereby," or words of similar import shall refer to this Agreement as a whole and not to a particular Article, Section, subsection, clause or other subdivision hereof. Whenever the context requires, the words used herein shall include the masculine, feminine and neuter gender, and the singular and the plural. ARTICLE II: RESPONSIBILITIES OF OPERATOR Section 2.1 General Responsibilities. (a) General. Operator is hereby appointed to perform the Operations according to prudent practices generally followed by the gas pipeline industry under similar circumstances. To the extent necessary to carry out its duties hereunder, Operator certifies that it is qualified under the Operator Qualification Program as required by the federal Department of Transportation and the Minnesota Office of Pipeline Safety. Operator shall provide Owner with the services required for the operation, testing, maintenance and repair of the Facilities as more fully described below and on Exhibit C and D. Owner and Operator shall have unrestricted access to the Facilities. It is expressly understood and agreed that in the performance of its obligations under this Agreement, Operator is and shall at all times be an independent contractor. Operator, as an independent contractor, shall be solely responsible for its employees and equipment. Owner acknowledges that the Operations are dependent upon Owner providing Operator access to the Facilities. (b) Routine Work. On and after the Commencement Date, Operator shall perform or cause to be performed all Routine Work for the Facilities, including but not limited to, operation, repair, improvement, maintenance, alteration, inspection, testing, protection and other operations and activities with respect to the Facilities as are reasonably necessary to maintain the OPERATING AGREEMENT NATURAL GAS DIST. FACILITIES CRY OF BROWNiON JOHN WEBSTER Facilities in a "first -class operating condition" in accordance with the federal safety and maintenance standards promulgated under 49 CFR Part 192 and the regulations of the Minnesota Office of Pipeline Safety. The Routine Work is described in greater detail in Exhibit C. (c) Non - Routine Work. Operator will perform all Non - Routine Work as to the Facilities, in accordance with this Section. Operator will recommend Non - Routine Work as described in Exhibit D attached hereto when, in Operator's opinion, the condition of the Facilities might impair reliability, or when it is otherwise deemed necessary or preferable, consistent with prudent practices generally followed by the gas pipeline industry under similar circumstances ( "Recommended Non - Routine Work "). Operator will notify and provide recommendations to Owner as soon as practical after identifying the need for Recommended Non - Routine Work. Owner will review and act on Operator's Recommended Non - Routine Work as soon as practical after notification. Owner will not unreasonably withhold or delay its approval of any reasonable Operator Recommended Non - Routine Work concerning a condition affecting the Facilities that might impair the reliability or safety of the Facilities. In the event that Owner fails to approve Operator Recommended Non - Routine Work, then Operator shall bear no responsibility or liability whatsoever for any claims, losses, costs, expenses, demands, fines, personal injury, or property damage arising from or related to the Facilities connected with such Recommended Non - Routine Work. (d) Emergency Work. Operator will perform all Emergency maintenance and repair of the Facilities consistent with prudent practices generally followed by the gas pipeline industry under similar circumstances. Operator will notify Owner of any Emergency condition affecting the Facilities promptly after Operator learns of such condition and will consult with Owner, as far as practical, concerning the actions that are necessary. If Owner fails to respond or if Operator is otherwise unable to consult with Owner, the Operator shall take those actions that Operator believes are necessary consistent with prudent utility practices and will contact Owner as soon as possible after the fact. OPERATING AGREEMENT NATURAL GAS DIST. FACILITIES CITY OF BROWNTON .JOHN WEBSTER 5 (e) Scheduling. To the extent reasonably possible, the performance of repair or maintenance that affects the operations of the Facilities shall be scheduled to be performed only at times acceptable to Owner. Except for Emergency or unplanned work, in the event it is necessary to either interrupt or curtail the gas supply or to otherwise impose abnormal operating conditions on the Facilities, Owner shall be notified in advance and an agreement must be reached as to the time scheduled for such work. (f) Work by Others. If any part of the Operations is dependent upon the quality and completeness of work performed under another contract unrelated to Operator, Operator shall not be responsible if the work performed under the other contract is defective or unsuitable and such condition affects the timing, scheduling or quality of the Operations performed by Operator hereunder. Section 2.2 Personnel. Operator may employ or, contract for, the services of and be responsible for the supervision of Persons (including consultants and professional, service or other organizations) reasonably required by Operator to perform the Operations in an efficient and prudent manner. The number of Persons used by Operator in conducting the Operations, their hours of work and their compensation for services performed shall be determined by Operator. All employees and other personnel provided by Operator pursuant to this Agreement shall be the employees or independent contractors of Operator and in no event shall such employees or other personnel be deemed employees or contractors of Owner. On or before the Commencement Date, Operator shall designate to Owner in writing a representative who shall be authorized to act on behalf of Operator as to the Operations and with whom Owner may consult at all reasonable times. Operator may change its representative by written notice to Owner. Section 2.3 Operator Warranties. Operator warrants and represents to Owner as follows: Operator shall perform the Operations, and shall require all contractors, subcontractors and materialmen furnishing labor, material or services for the Operations to perform their services and carry out their responsibilities, in a OPERATING AGREEMENT NATURAL GAS DIsT. FACIL MFS CITY OF BROWNTON JOHN WEBSTER C diligent, safe and efficient manner in accordance with good workmanlike and prudent practices generally followed by the gas pipeline industry under similar circumstances, but such practices shall not be less than as may be specifically required by this Agreement. In carrying out such responsibilities, Operator shall comply, and shall use its reasonable efforts to require all contractors, subcontractors and materialmen to comply, with all Laws of Governmental Authorities having jurisdiction. All policies and procedures to be developed by Operator hereunder shall be available to Owner for its review at Operator's office during normal business hours. THESE WARRANTIES ARE EXCLUSIVE AND GIVEN IN LIEU OF ALL OTHER WARRANTIES WHETHER STATUTORY, EXPRESS, OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, OR ANY WARRANTY ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE). Section 2.4 Owner Warranties. Owner warrants and represents to Operator that the information it supplies to Operator upon which the Operations may be based is true and correct to the best of Owner's knowledge. Section 2.5 Monthly Operating Fee for Routine Work With respect to each calendar month from and after the Commencement Date, Owner shall pay to Operator an initial Monthly Operating Fee of $2,250.00 for performing Routine Work. The Parties shall review the Monthly Operating Fee on an annual basis, starting on August 1, 2014 and on each August 1 thereafter, and reserve the right to modify the fees upon mutual agreement. Section 2.6 Compensation for Non - Routine Work Except for any non - routine expenditure that results from Operator's breach of this Agreement, negligence, or willful misconduct, Owner shall bear the cost of any direct out -of- pocket expenditure reasonably incurred by Operator for Non - Routine Work performed in connection with the Facilities, including labor and materials, plus Operator's overhead of 10 percent (10 %) OPERATING AGREEMENT NATURAL GAS DIST. FAcuTIFs CT' OF BROWNTON JOHN WEBSfER 7 of such costs. Any Non - Routine Work that is in excess of $500.00 per event and that is not the result of an Emergency, will be reviewed and approved by the Owner in advance, subject to Section 2.1(c). "Non- Routine Work" is defined in more detail in Exhibit D attached hereto. Section 2.7 Payment. On or before the fifteenth (15th) day of each calendar month, Operator shall render an invoice to Owner indicating tall fees payable under this Agreement for the preceding calendar month. Payment is due from Owner on or before the fifteenth day following the date the bill is issued by Operator. A late payment charge of one and one -half percent per month, or the legally authorized maximum interest rate, whichever is lower, shall be levied on any unpaid balances. Section 2.8 Owner Duties. Owner shall fully cooperate with Operator in performing Operations. Owner hereby grants Operator the non - exclusive right to access and use the Facilities, for purposes of and subject to the terms of this Agreement. ARTICLE III: TRANSFERS OF RESPONSIBILITIES OF OPERATOR Transfer of Responsibilities. (a) Upon the expiration of this Agreement or the removal of Operator under Section 7.2, the Operator shall assign, transfer and deliver to the Person selected by Owner to succeed Operator (or to such other Persons as Owner shall direct) (1) possession and control of the Facilities and all Operations and (2) to the extent requested by Owner, all contracts, warranties, operating and maintenance manuals, designs, drawings, operational plans, proprietary information and operational rights obtained or entered into by Operator exclusively with respect to the Facilities or exclusively in connection with the Operations, in each case without giving rise to any penalty, charge, restriction, lien, security interest, encumbrance, cancellation, termination, acceleration or change in terms not previously approved by Owner. Operator shall fully cooperate with Owner in transfer of Operations hereunder to Owner or a successor operator designated by Owner. Upon termination, Operator shall return to Owner all original records and any materials OPERATING AGREEMENT NATURAL GAS DIST. FACILITIES CITY OF BROWNTON JOHN WEBSTER ff- purchased by Operator and paid for by Owner, such as pretested pipe, valves and other miscellaneous materials and supplies. (b) As soon as practicable after the date on which the Operator is required to transfer its responsibilities as provided in Article III (a), Owner may conduct an audit and inventory of the Facilities and all of Owner's assets and properties operated, managed or controlled by Operator. Such audits and inventory shall be used in the return of and the accounting for the Facilities and Owner's properties and assets by Operator for the purposes of the transfer of responsibilities under Article III. All costs and expenses incurred in connection with such audits and inventory shall be borne by Owner. ARTICLE IV: INSURANCE Section 4.1 Owner's Insurance Owner shall procure and maintain in full force and effect, at the Owner's cost, all risk property insurance in an amount equal to the full insurable value of the Facilities. Section 4.2 Operator's Insurance Operator shall procure and maintain in full force and effect at the Operator's cost, the following insurance coverage: (a) Worker's Compensation and Employer's Liability insurance in accordance with the laws of Minnesota with limits for Employer's Liability of $1,500,000 per accident or disease, aggregate as disease. (b) Business automobile liability insurance covering owned, non -owned and hired vehicles with minimum combined single limits for bodily injury and property damage for any single loss of $1,500,000. (c) Commercial general liability insurance with completed operations coverage for claims alleging bodily injury including death and damage to property of others, with a combined single limit of $1,500,000 for bodily injury and property damage per occurrence and $2,000,000 in the aggregate. OPERATING AGREEMENT NATuRAL GAS DST. FACLL mES CRY OF BROWNTON JOHN WEBSTER N (d) Excess liability insurance for claims alleging bodily injury including death and damage to property with a combined single limit of $5,000,000 for bodily injury and property damage per occurrence and in the aggregate. Section 4.3 Other Insurance Requirements. Each Party shall be listed as an additional insured with respect to the insurance coverage required under this Article IV. All insurance policies shall be endorsed to provide that all insureds and additional insureds hereunder be given thirty (30) days' advance notice of cancellation or material change. Within thirty (30) days of the date of this Agreement, each Party shall furnish to the other Party certificates as evidence showing that the insurance policies to be carried in accordance with this provision have been obtained. Section 4.4 Maximum Liability. Operator's maximum liability is limited to a combined single limit of $1,500,000 by Minnesota Statute. ARTICLE V: FORCE MAJEURE Section 5.1 Performance Excused. If any Party is rendered unable, wholly or in part, by force majeure to carry out its obligations under this Agreement, other than the obligation to make money payments or to furnish security, that party shall give to all other parties prompt written notice of the force majeure with reasonably full particulars concerning it; and thereupon, the obligations of the party giving notice, so far as they are affected by the force majeure, shall be suspended during, but no longer than, the continuance of the force majeure. The party claiming force majeure shall notify the other parties of the force majeure situation within a reasonable time after the occurrence of the facts relied on and shall keep all parties informed of all significant developments. Such notice shall give reasonably full particulars of said force majeure, and also estimate the period of time, which said party will probably require to remedy the force majeure. Force Majeure does not relieve the operator of the contractual responsibilities to operate the Facilities; provided that, the Facilities can be operated utilizing reasonable and safe methods. The affected party shall use all reasonable diligence to remove the force majeure situation as quickly as practicable in an OPERATING AGREEMENT NATURAL GAB DIST. FACILITIES Crtv OF BROWNTON JOHN WEBSTER 10 economic manner. The requirement that any force majeure shall be remedied with all reasonable dispatch, shall not require the settlement of strikes, lockouts or other labor difficulty by the party involved, contrary to its wishes; how all such difficulties shall be handled shall be entirely within the discretion of the party concerned. Section 5.2 Force Maieure Defined. The term "force majeure", as here employed, shall mean an act of God, strike, lockout or other industrial disturbance, act of the public enemy, war, blockade, public riot, lightning, fire, storm, flood, earthquake, explosion, governmental action, governmental delay, restraint or inaction, unavailability of equipment and any other cause, whether of the kind specifically enumerated above or otherwise, which is not reasonably with the control of the party claiming suspension. ARTICLE VI: ASSIGNMENT Section 6.1 Assignment by Owner. Owner may not assign all or any part of its rights or obligations under this Agreement without prior written consent of Operator. Section 6.2 Assignment by Operator. Operator may not assign all or any part of its rights or obligations under this Agreement without the prior written consent of Owner. Such approvals shall not be unreasonably delayed, withheld or conditioned. ARTICLE VII: TERM Section 7.1 Term. This Agreement shall become effective on the Commencement Date and shall continue in force and effect until "Nine a.m. Central Clock Time" on August 1, 2018, and year -to -year thereafter, subject to termination. (a) Owner shall notify Operator in writing ninety (90) days prior to the expiration date of this Agreement as to Owner's desire for Operator to continue operations of the Facility. Operator shall respond in writing to Owner within thirty (30) days of receipt of Owner's OPERATING AGREEMENT NATURAL GAS DIST, FACILITIES CITY OF BROWNTON JOHN WEBSTER notice and on or before sixty (60) days prior to the expiration of this Agreement regarding the Operator's desire to continue as Operator. Section 7.2 Default and Termination. Upon failure by either Party in the performance of any provision, condition or requirement herein, the other Parry may give notice in writing to the defaulting party specifying the default. Unless such default is cured within thirty (30) days following receipt of such notice to the defaulting Party, or if such default is susceptible of being cured and such cure cannot be completed with such thirty (30) days period, then if the cure thereof is not undertaken promptly upon receipt of such notice and diligently prosecuted thereafter, this Agreement may be terminated within sixty (60) days of the date of the notice claiming default was written at the option of the Party serving such notice of default. Section 7.3 Effect of Termination. Termination of this Agreement shall not relieve either Party from any obligation including payments due for Operations as provided in this Agreement, accruing to the date of such termination or relieve any Parry of any liability for its breach of this Agreement. Article III shall survive any termination of this Agreement. ARTICLE VIII: MISCELLANEOUS Section 8.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota without reference to the choice or conflict of law, rules or principals thereof which would refer the matter to the laws of another jurisdiction. Each Party shall abide by the Laws of any Governmental Authorities with jurisdiction over the matters of this Agreement, as may be amended from time to time. Section 8.2 Entire Agreement. This Agreement and the Schedules and Exhibits hereto contain the entire agreement between the Parties with respect to the subject matter hereof and there are no agreements, understanding, representations or warranties between the parties other than those set forth or referred to herein. OPERATINGAGREEMENT NATURAL. GAS DIST. FACILITIES CRY OF BROWNTON .JOHN WEBSTER Section 8.3 Notices. Except as otherwise specifically provided, all notices authorized or required between the Parties by any of the provisions of this Agreement, shall be in writing, in English and delivered in person or by registered mail or by courier service or by any electronic means of transmitting written communications that provides confirmation of complete transmission, and addressed to such Parties as designated below. The originating notice given under any provision of this Agreement shall be deemed delivered only when received by the Party to whom such notice is directed, and the time for such Party to deliver any notice in response to such originating notice shall run from the date the originating notice is received. The second or any response notice shall be deemed delivered when received. "Received ", for purposes of this Section with respect to written notice delivered pursuant to this Agreement, shall be actual delivery of the notice to the address of the Parry to be notified, specified in accordance with this Section. Each Party shall have the right to change its address at any time and/or designate that copies of all such notices be directed to another Person at another address, by giving written notice thereof to all other Parties. OPERATING AGREEMENT NATURAL GAS DIS .. FACILITIES CRY OF BROWNTON JOHN WEBSfER City of Brownton 335 3rd Street South P.O. Box 238 Brownton, MN 55312 Attention: Ella Kruse E -Mail: ekruse @centurylink.net Telephone No.: 320 - 328 -5318 Hutchinson Utilities Commission 225 Michigan St. SE Hutchinson, Minnesota 55350 Attention: John Webster E -Mail: jwebster @ci.hutchinson.mn.us Fax No.: 320 -587 -4721 13 Section 8.4 Successors and Assigns. Subject to the restrictions and requirements on assignment and transfer contained in this Agreement, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns. Section 8.5 Headings. The headings to Articles, Sections and other subdivision of this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. Section 8.6 Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing, signed by all Parties. Any Party may, only by an instrument in writing, waive compliance by another Party hereto with any term or provision of this Agreement on the part of such other Party hereto to be performed or complied with. The waiver by any Party of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach. Section 8.7 Schedules and Exhibit. All Schedules and Exhibits to this Agreement are hereby incorporated by reference. Section 8.8 Agreement for the Parties' Benefit Only. This Agreement is not intended to confer upon any Person not a party hereto or a permitted successor or assign of a Party any rights or remedies hereunder, and no Person, other than the Parties or a permitted successor or assign thereof, is entitled to rely on any covenant or agreement contained herein. Section 8.9 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the OPERATING AGREEMENT NATURAL. GAS DIST. FACILRIES CLTY OF BROWNTON JOHN WEBSTER 14 transactions contemplated hereby is not affected in any adverse manner to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. Section 8.10 Independent Contractor; No Partnership. Operator shall perform its duties and obligations hereunder as an independent contractor, and nothing contained herein shall be deemed to create a relationship of employer /employee, master /servant, agency, partnership or joint venture. This Agreement is not intended to create, and shall not be construed to create, a relationship of partnership or an association for profit between Operator and Owner. Section 8.11 Data Practices Act. The Parties acknowledge that Hutchinson and Brownton are subject to Minnesota Government Data Practices Act, Minnesota Statutes, Chapter 13 (the "Act "), including limiting public access to trade secret and other protected data. Each Party agrees to defend, indemnify, and hold harmless the other Party, its officials, officers, agents, employees, contractors, and subcontractors from any claims resulting from unlawful disclosure and/or use of such protected data. Brownton agrees to promptly notify Hutchinson if Brownton receives a request to access the terms of this Agreement, and to cooperate with Hutchinson if Hutchinson seeks a protective order, at Hutchinson's expense. Brownton agrees to promptly notify Hutchinson if Brownton becomes aware of any potential claim, or facts giving rise to potential claims, under the Act. The terms of this section shall survive the termination of this Agreement. Section 8.12 News Releases. News releases concerning the Operations or the Facilities shall only be made in accordance with the following guidelines, subject to the requirements of applicable laws and governmental rules and regulations: No public announcement or statement shall be issued by Operator unless prior to its release Owner has been furnished with a copy of such statement or announcement and the reasonable OPERATING AGREEMENT NATURAL GAS DIST. FACILMES CTfY OF BROWNTON JOHN WEBSTER 15 approval of the Owner has been obtained. Where a public announcement or statement becomes necessary or desirable because of an Emergency as a result of activities arising under this Agreement, Operator is authorized to issue and make such announcements or statements without prior reasonable approval of the Owner, but shall promptly furnish Owner with a copy of the announcement or statement. Section 8.13 Authority to Enter Agreement. Each party to this Agreement represents and warrants that it has full and complete authority to enter into and perform this Agreement. Each person who executes this Agreement on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby. Section 8.14 Alternative Dispute Resolution. Whenever the Parties disagree on the interpretation or enforcement of this Agreement, or upon calculations or payments, then upon written request of either Party, representatives with settlement authority for each Party shall meet in person and confer in good faith to resolve the dispute. If the Parties are unable to resolve the dispute, they shall submit their dispute to mediation pursuant to the Minnesota Civil Mediation Act. If the dispute is not resolved by mediation, the Parties may invoke their legal remedies available at law. Section 8.15 Other Documents. This Agreement, the Firm Transportation Capacity Agreement, and the Commodity Agreement between the Parties, shall be construed to give effect to all provisions of the documents to the maximum extent possible. In the event of a direct and irreconcilable conflict between the documents, they must be construed in the following order of priority: (1) the Firm Transportation Capacity Agreement; (2) the Commodity Agreement; (3) this Agreement. Section 8.16 Counterparts. This Agreement may be executed in counterparts, and each executed counterpart shall have the same force and effect as an original instrument. OPERATING AGREEMENT NATURALGAS DIST. FACILITIES CITY OF SROWNTON JOHN WEBSTER ARTICLE IX: LIABILITY; INDEMNITY Section 9.1 Indemnification by Owner. Owner shall defend, protect, indemnify, and hold harmless Operator, and its members, directors, officers, employees and agents from and against all liability, claims, liens, costs, expenses, demands, fines or other actions imposed by any Governmental Agency with jurisdiction, suits and causes of action of every kind and character arising in favor of any third party on account of personal injuries or death, or damages to property (including without limitation claims for pollution and environmental damage) in any way directly resulting from the negligent acts or omissions of the Owner, its agents, employees, representatives, or contractors, or from the failure of Owner, its agents, employees, representatives, or contractors to perform its obligations under this Agreement and in compliance with all applicable Laws. This indemnity includes Owner's agreement to pay all costs of defense, including without limitation attorneys' fees, incurred by any person or party indemnified herein. Owner acknowledges that utility equipment malfunction or failure may occur notwithstanding the inspection, maintenance, and repair work performed hereunder, and hereby indemnifies, releases, and holds Operator harmless from any claim or liability, and any direct or indirect damages claimed or actually suffered (including, without limitation, consequential damages and loss of profits), resulting from any utility equipment malfunction or failure occurring during the term of this Agreement, except such claims or liability directly resulting from the negligent acts or omissions of Operator. Section 9.2 Indemnification by Operator. Subject to Section 2.1 (c), Operator shall defend, protect, indemnify, and hold harmless Owner, and its members, directors, officers, employees and agents from and against all liability, claims, liens, costs, expenses, demands, fines or other actions imposed by any Governmental Agency with jurisdiction, suits and causes of action of every kind and character arising in favor of any third parry on account of personal injuries or death, or damages to property (including without limitation claims for pollution and environmental damage) in any way directly resulting from the OPERATING AGREEMENT NATURAL GAS DIST. FAOL MES CTTY OF BROWNTON JOHN WEBSTER 1! negligent acts or omissions of Operator, its agents, employees, representatives, or contractors, or from the failure of Operator, its agents, employees, representatives, or contractors to perform its obligations under this Agreement and in compliance with all applicable Laws. This indemnity includes Operator's agreement to pay all costs of defense, including without limitation attorneys' fees, incurred by any person or party indemnified herein. Operator agrees that the obligations of indemnification herein include, but are not limited to, liens by third parties against Owner and its property because of labor, services, materials, or any other subject of lien, furnished to Operator or its assignees or subcontractors, in connection with any work performed by Operator hereunder. Section 9.3 No Consequential Damages Under no circumstances shall either Party hereto be liable to the other hereunder for indirect, special, consequential or similar damages, or for loss of profits. OPERATING AGREEMENT NATURAL GAS DIST. FACILMES 18 CfrY OF BROWNTON JOHN WEBSTER WHEREFORE, the Parties have executed this Agreement in two (2) duplicate originals by their duly authorized, respective officers, effective as of the date specified above. HUTCHINSON UTILITIES COMMISSION By: /" AU- ►fit tM' SS/ rll, By: Name: '° _ % A Nam Title: Co i&4= President Title Date: 6 Date Witness: )�� leQSLI Date: OPERATING AGREEMENT NATURAL GAS DST. FAaLR1E5 Q CITY OF BROWNTON v JOHN WEBSTER CITY OF BROWNTON Witness: L 11 Date: p t - � k '->) EXHIBIT "A" This Exhibit "A" is attached to and made part of that certain Operating Agreement — Natural Gas Distribution Facilities (the "Agreement ") by and between the City of Brownton ( "Owner ") and Hutchinson Utilities Commission ( "Operator "). OPERATOR'S PAYMENT INSTRUCTIONS: For the purpose of this Agreement, Owner shall make all payments provided in the Agreement to Operator via Check to the following: Hutchinson Utilities Commission 225 Michigan St SE Hutchinson, Minnesota 55350 EXHIBIT "B" This Exhibit `B" is attached to and made part of that certain Operating Agreement — Natural Gas Distribution Facilities (the "Agreement ") by and between the City of Brownton ( "Owner ") and Hutchinson Utilities Commission ( "Operator "). Owner has constructed (or will construct) and own the natural gas distribution system, including all appurtenances thereto, ( "Facility" or "Facilities ") serving the City of Brownton, Minnesota in the following drawing attached hereto and made a part hereof. Each interconnected third party natural gas pipeline shall operate their respective measurement station connecting to the Facilities. -; r �a�,� , 3 -� o �' I _f _ ___ —__ —_ _. _ _� �� Y I- _ { _ ". O '� s II � J j _ -�Z' a z _ �;�' .,. ,✓ _ _ .i _ C � �� �= a _ _ _I - � `'+ �. z �? e� '��a���g _ I I I i � .� \. _ J ;i — ___ —._. __ —� i._ _.___. __ __c - -_— � � 3 \ s �y _ _ 3 1i —�� �h', _ ,4 _ �t __ �� __ '4 r ' a 'I. k a_ I � -. �� :t 9 �` si 1 Y � f I '��� i , a /r,,T/ � - ` � , �: EXHIBIT "C" This Exhibit "C" is attached to and made part of that certain Operating Agreement — Natural Gas Distribution Facilities (the "Agreement ") by and between the City of Brownton ( "Owner ") and Hutchinson Utilities Commission ( "Operator "). ROUTINE WORK TOTAL PRICE: $ 2,250.00 per Month COMPLETE LIST OF ROUTINE ITEMS: A. Maintenance, Repair and Security 1. Perform all day -to -day operations and maintenance of the Facilities 2. Maintain, repair and test valves, including relief valve 3. Perform continuing surveillance of the Facilities and provide valve security 4. Maintain, repair, and test regulator 5. Maintain the cleanliness and environmental soundness of the Facilities 6. Make minor mechanical repair requiring no replacement of pipe, appurtenances, or mechanical parts 7. Perform preventative maintenance requiring no replacement of pipe, appurtenances, or mechanical parts 8. Respond to service calls, including emergencies, during HUC standard work hours (6:30 AM to 5:00 PM, Monday through Friday), except to the extent response to an emergency requires additional personnel that are not on duty during said emergency and/or additional outside contractors B. Legal and Regulatory Compliance 1. DOT regulatory agency reporting 2. Maintain DOT Distribution System records 3. Maintain Training & DOT Operator Qualification records 4. Maintain drug and alcohol compliance programs 5. Perform annual Class Location Study 6. Develop and maintain operating procedures, maintenance procedures, and training plans and procedures to be followed for Operations, and make such procedures and plans available for review by Owner in Operator's office during normal business hours 7. Maintain membership in Gopher State One -Call Program and any other applicable local one -call program 8. Provide line locating and one call response services, including documentation 9. Maintain Right -of -Way markers and signs 10. Perform all DOT mandated inspections at required frequency 11. Develop and maintain Emergency Response Plan, Operation & Maintenance Manual, Operator Qualification Plan, Public Awareness Program, Control Room Management Plan, and Distribution Integrity Management Program, including annual updates 12. Prepare all necessary reports related to field operations of the Facilities for applicable Governmental Authorities 13. Reporting to Owner any notices of violations of any Laws or Permit provisions 14. Develop any other plans, reports, and other documents as may be required by any Governmental Authority with jurisdiction over the Facilities 15. Otherwise maintain the Facilities' and Operations' ongoing compliance with all Laws and Permits C. Monitoring and Testing 1. Read Interconnect Station (as defined in the Interconnect and Natural Gas Firm Transportation Capacity Agreement) meter through RUC's SCADA meter reading system and provide data to Owner and United Farmers Cooperative. 2. Perform routine meter testing and calibration of the Interconnect Station meter 3. Provide cathodic protection monitoring, maintenance, documentation, and recordkeeping for the Facilities 4. Witness third party meter calibrations at the request of data to Owner, United Farmers Cooperative, United Grain Systems, and/or United Natural Gas LLC 5. Perform routine field level monitoring of distribution system operations 6. Perform internal and external corrosion inspections 7. Perform monthly odorization monitoring 8. Perform atmospheric corrosion surveys 9. Perform routine pipeline patrols 10. Continuously monitor system pressures and flows in real -time 11. Test overpressure protection equipment 12. Perform distribution leakage surveys 13. Maintain proper documentation on all inspections, tests and calibrations D. Natural Gas Customer Services 1. Read customers' natural gas meters through RUC's Sensus AMI meter reading system and provide data to Owner 2. Perform routine customer meter testing and calibration 3. Perform routine customer service turn-ons and turn-offs 4. Reconnect customers after shutoff for non - payment 5. Perform routine valve inspections and testing 6. During standard HUC work hours, respond to service calls for suspected leaks, perform leak complaint investigations, and make minor mechanical repairs to the Facilities that require no replacement of pipe, appurtenances, or mechanical parts. Operator shall not repair any facilities owned by any third -parry other than Owner. E. Community Relations 1. Facilitate annual damage prevention training meeting for excavation contractors 2. Develop and implement community awareness programs, including, but not limited to, membership in Minnesota Community Awareness Emergency Response program 3. Act as public liaison with appropriate emergency responders and public officials 4. Take other such measures as are reasonably necessary to cultivate and maintain good public relations with members of the Brownton community and persons whose pipelines are interconnected with the Facilities, and educate the public so as to increase awareness of the Facilities and the dangers associated therewith F. Other 1. Maintain in force and effect, and require all contractors (and their subcontractors) performing services for the benefit of Owner to maintain in force and effect, insurance of the types and in the amounts specified by Owner. 2. Undertake all reasonable efforts to keep the Facilities, all contracts relating to the Operations, and all property and rights of Owner free and clear of any and all liens, encumbrances, security interests, charges, claims and restrictions arising out of or on account of the Operations 3. Maintain 24 -hour emergency telephone number 4. Procure and fiunish all materials, equipment, services, supplies, labor and supervision necessary to carry out Operator's responsibilities under this Agreement. EXHIBIT "D" This Exhibit "D" is attached to and made part of that certain Operating Agreement — Natural Gas Distribution Facilities (the "Agreement ") by and between the City of Brownton ( "Owner ") and Hutchinson Utilities Commission ( "Operator "). NON - ROUTINE WORK EXAMPLE OF NON - ROUTINE ITEMS: Cost *Amount 1. Painting Cost + 10% 2. Depth of Cover Surveys Cost + 10% 3. Extension/Addition to Distribution System Cost + 10% 4. Associated Line Blow Downs & Purging Cost + 10% 5. Installation of New Service Lines Cost + 10% 6. Retirement of Facilities Cost + 10% 7. Line Relocations Cost + 10% 8. Engineering Studies (as required) Cost + 10% 9. Replacement of cathodic protection facilities Cost + 10% 10. SCADA parts Cost + 10% 11. Measurement and distribution facilities pis Cost + 10% 12. After - hours, holidays, weekends emergency response Cost + 10% 13. After — hours, holidays, weekends emergency locating of natural gas facilities Cost + 10% 14. Additional personnel as my be required during emergencies Cost + 10% 15. Additional contractors as may be required during emergencies Cost + 10% 16. Fees for Public Awareness Program Materials Cost + 10% 17. Fees associated with Community Awareness Emergency Response Program Cost + 10% EXHIBIT "W', continued 18. Any and all other items relevant to distribution facility operation and maintenance that are neither listed above or included in the attached Exhibit C. Cost + 10% * "Expense ", as referenced above, shall be the cost of materials, equipment and third party labor to complete the applicable work or project. Operator shall invoice such cost plus 10 %. In addition thereto, Operator shall charge $60.00 per man-hour. All vehicles and equipment shall be charged by the amount reflected in the following table Equipment Rates per Hour AIR COMPRESSOR $42.00 TRENCHER $82.00 WELDER $52.00 BACKHOE $80.00 MOLE W /COMPRESSOR $52.00 MINI EXCAVATOR $70.00 VACTRON $70.00 VEHICLE $47.00 OPERATOR $60.00 1385872.1 HUTCHINSON UTILITIES COMMISSION NATURAL GAS FIRM TRANSPORTATION CAPACITY AGREEMENT City of Brownton 6/4/2013 This document sets forth the rates and conditions of service for firm transportation capacity provided to the City of Brownton by Hutchinson Utilities Commission. NATURAL GAS FIRM TRANSPORTATION CAPACITY AGREEMENT THIS NATURAL GAS FIRM TRANSPORTATION CAPACITY AGREEMENT ( "Agreement ") is made and entered into on this day of June, 2013, to be effective as of the 1st day of August, 2013, by and between the City of Brownton (`Brownton ") with offices located at 335 3rd Street South, P.O. Box 238, Brownton, Minnesota, 55312 and Hutchinson Utilities Commission ( "Hutchinson ") a Minnesota municipal utility located at 225 Michigan St. SE, Hutchinson, Minnesota, 55350. Brownton and Hutchinson shall hereinafter be referred to separately as "Party" or jointly as "Parties." WITNESSETH: WHEREAS, Brownton has constructed or is constructing a natural gas distribution system including all apparatuses thereto, commencing at the UNG/Brownton Interconnect (as hereinafter defined), and extending to the ends of the distribution system, as further described and depicted in Exhibit A attached hereto; WHEREAS, Brownton, on the one hand, and United Natural Gas LLC, on the other hand ( "UNG "), are establishing an interconnection between their pipeline facilities and to contract for UNG to provide long -term firm transportation capacity to Brownton over UNG's natural gas pipeline facilities, which shall run from natural gas pipeline owned by Hutchinson to Brownton's natural gas distribution system; WHEREAS, pursuant to the above, Brownton and UNG are entering into that Interconnect and Natural Gas Firm Transportation Capacity Agreement of even date herewith, which Hutchinson acknowledges; WHEREAS, Brownton has retained Hutchinson to operate its natural gas distribution system on behalf of Brownton, pursuant to that certain Distribution Facilities Operating Agreement by and between Brownton and Hutchinson of even date herewith; WHEREAS, Brownton and Hutchinson have arranged for Hutchinson to sell to Brownton a long -term supply of natural gas, pursuant to that certain Natural Gas Commodity Agreement of even date herewith; and WHEREAS, Brownton desires Hutchinson to provide long -term firm transportation capacity to Brownton over Hutchinson's natural gas pipeline facilities to the point of interconnection between the facilities of Hutchinson and the facilities of UNG, upon the terms and conditions set forth herein, and the Parties desire to set forth the terms and conditions of their agreement. NOW THEREFORE, in consideration of the premises and mutual covenants and conditions contained in this Agreement, the sufficiency of which is hereby acknowledged, Hutchinson and Brownton agree as follows: 1. Character of Service. a. Firm Natural Gas Transportation Service. Hutchinson shall provide to Brownton volumetric firm natural gas transportation capacity in the amount of, and not to exceed, 2000 Dth per day for 365 days per year ( "Maximum Daily Quantity "). The Maximum Daily Quantity shall not be curtailed or interrupted except pursuant to the terms of this Agreement. The Maximum Daily Quantity shall be transported to the HUC/LTNG Interconnect, defined in Attachment A. b. Obligation to Provide Natural Gas Supply. The Parties have separately entered into a Natural Gas Commodity Agreement in which Hutchinson is obligated to provide, and Brownton is obligated to purchase, all gas supplies to Brownton for the length of and under the terms of the Natural Gas Commodity Agreement. This Agreement is designed to be co- terminus with the Natural Gas Commodity Agreement. C. Definitions. 1. All capitalized terms not otherwise defined herein shall have the same meaning as ascribed in the Distribution Facilities Operating Agreement. 2. "HUC/UNG Interconnect" shall mean the point at which UNG's natural gas pipeline facilities connect to the pipeline owned and operated by Hutchinson. 3. "UNG/ Brownton Interconnect" shall mean the point at which custody of natural gas flowing through the pipeline of UNG shall transfer from UNG to Brownton, which shall be located at the outer flange of the emergency valve, and which point is described in greater detail on the attached Exhibit A. 2. Availability and Conditions. a. Generally. Hutchinson hereby certifies that it has sufficient firm transportation capacity to provide the Maximum Daily Quantity of firm transportation to Brownton pursuant to the terms of this Agreement for the term of this Agreement. Hutchinson shall always provide firm transportation capacity, up to the Maximum Daily Quantity, unless such capacity is curtailed or interrupted pursuant to the terms of this Agreement. b. Natural Gas Standards. All gas supplies transported by Brownton under the terms of this Agreement shall meet the standards reasonably specified by Hutchinson from time to time. The gas supply standards shall be identical to the standards imposed on Hutchinson by its interstate natural gas pipeline transporter, Northern Border Pipeline Company. C. Metering. Brownton shall provide, at its expense, automatic telemetering equipment at or near UNG/Brownton Interconnect. Brownton shall also provide telephone, computer, and other interfaces, as well as electric connections to the meter at Brownton's final interconnect station and allow Hutchinson access to all metering equipment. Hutchinson will inspect and test Brownton- installed metering instrumentation (allowing Brownton and UNG representatives to observe). Grounding equipment shall be designed and installed by Hutchinson. The Parties acknowledge that gas intended for use by UNG shall be commingled and transported with gas intended for use by Brownton between the HUClLTNG Interconnect and the UNGBrownton Interconnect. Hutchinson shall monitor the meters located at or near the HUC/UNG Interconnect and the UNGBrownton Interconnect and use such meter readings and thereby calculate the portion of the transportation capacity between the HUC/UNG Interconnect and the UNGBrownton Interconnect which is attributable to Brownton and thus chargeable to Brownton under the terms of this Agreement. d. Contact Persons. 1. Brownton shall supply to Hutchinson the name, business address, a primary and secondary contact person, telephone numbers for the primary and secondary contact person, and a twenty -four hour emergency telephone number. 2. Hutchinson shall supply to Brownton the name, business address, a primary and secondary contact person, telephone numbers for the primary and secondary contact person, and a twenty -four hour emergency telephone number. e. Conditions Precedent. Service under this Agreement shall not commence until both Parties have fully executed this Agreement and complied with all relevant requirements contained herein. f. Contract Fees. Hutchinson has the right to pass through actual costs due to fees or changes imposed by third -party entities that relate to the services provided by Hutchinson under this Agreement. 3. Term. The initial term of this Agreement is 9 years and I month from the Effective Date (the "Initial Term "). Representatives of Hutchinson and Brownton shall meet approximately two (2) years prior to the end of the Initial Term of this Agreement to discuss future operations. If Brownton desires to continue services under this Agreement after the Initial Term, Brownton must notify Hutchinson in writing one (1) year prior to the expiration of the Initial Term. If Brownton has provided such timely notice, has complied with all terms of this Agreement, and has no outstanding arrearages, collectively, the ( "Extension Conditions "), then this Agreement shall be extended for a mutually agreed -upon period. If Brownton fails to satisfy the Extension Conditions, then Hutchinson is not obligated to renew service for Brownton. Any extension or renewal of the Initial Term of this Agreement shall be contingent upon United Natural Gas, LLC, or its successor, renewing, extending, or entering into a new interconnect agreement with Hutchinson for a term at least as long as the extended term of this Agreement. 4. Rates. a. Rates for Service The following charges shall apply to the firm transportation capacity to be provided to Brownton by Hutchinson: 1. Reservation Charge. Per Dth of Maximum Daily Quantity -- $0.00 per Day 2. Transportation Charge. Per Dth of transportation - $0.54/Dth The transportation charge will be adjusted, starting on August 1, 2014 and on each August 1 thereafter, according to any change in the CPI -U from the previous year; provided, however, that such charge shall never be less than $0.54. CPI -U shall mean the annual average Consumer Price Index — All Urban Consumers as published by the United States Department of Labor, Bureau of Statistics, Washington, D.C. b. Third Party Charges. Brownton is responsible for all charges, taxes and fees imposed by any supplier, broker, marketer or any other third parry for any service that is provided to, or on behalf of, Brownton related to the supply, transportation or delivery of natural gas. These charges include, but are not limited to, the cost of gas, reservation charges, administrative fees, billing fees, minimum take charges, and any and all other types of charges from any such entity. C. Penalties. Brownton shall pay any fines, additional amounts, or penalties imposed under the terms of this Agreement. 5. Billing and Payment. a. Billing. An invoice for transportation charges and any additional charges under this Agreement will be issued to Brownton or its agent by the fifteenth day of the month following the month in which service was rendered. b. Payment. Payment is due from Brownton on or before the fifteenth day following the date the bill is issued by Hutchinson. A late payment charge of one and one -half percent per month, or the legally authorized maximum interest rate, whichever is lower, shall be levied on any unpaid balances. C. Pipeline, Supplier, and Third Party Charges. Any charges that Hutchinson reasonably incurs on behalf of Brownton in performing under this Agreement, including but not limited to charges from any pipeline, supplier, or other third party, shall be passed through to, and paid in full by, Brownton. Hutchinson shall provide to Brownton in writing full details concerning any such charges. d. Good Faith Dispute. If Brownton, in good faith, disputes the amount of any invoice rendered by Hutchinson, or any part thereof, Brownton shall pay the full amount of the invoice. Hutchinson shall promptly provide in writing to Brownton supporting documentation acceptable in industry practice to support the amount invoiced, and Brownton shall promptly provide to Hutchinson in writing the basis for any dispute, including supporting documentation acceptable in industry practice. In the event the Parties are unable to resolve such dispute, the Parties shall follow the dispute - resolution procedure in section 12. e. Right to Inspect. Each 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 this Agreement. This right to examine, audit, and to obtain copies shall not be available with respect to information not directly relevant to transactions under this Agreement. f. Finali1y. 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 initial billing date for the invoice or bill in dispute. 6. Operational Requirements. a. Responsibility for Facilities. Hutchinson shall provide or cause to be provided, and shall maintain and operate the gas pipeline facilities necessary to transport natural gas to the HUCIUNG Interconnect. Brownton shall provide or cause to be provided any and all metering equipment and any and all other facilities required to take delivery of the Maximum Daily Quantity hereunder at the HUC/UNG Interconnect, and for the transportation and distribution of gas from the HUC/UNG Interconnect to the UNGBrownton Interconnect. Brownton shall be responsible for all costs to install and maintain the metering and other facilities sufficient to take delivery and to communicate Brownton's delivery quantities as required to perform this Agreement. b. Responsibility for Transporting Gas Sup 1pp ies. Hutchinson shall have the sole responsibility for transporting natural gas supplies to the HUC/UNG Interconnect. Brownton shall have the sole responsibility for transporting natural gas from the HUC/UNG Interconnect. C. Indemnity. Each Parry (each, an "Indemnifying Party ") agrees to defend, indemnify, and hold harmless the other Parry from any liability, claims, causes of action, judgments, damages, losses, costs, or expenses, including reasonable attorney's fees, for death, bodily injury, or third -party property damage to the extent resulting directly or indirectly from any negligent act or omission of the Indemnifying Party, its employees, agents, and representatives in the performance of this Agreement. d. Commingling of Gas. Gas transported on behalf of Brownton may be commingled with other gas supplies in Hutchinson's system. e. Impact on Bonds. The Parties acknowledge and agree that Hutchinson has financed the pipeline used to provide services under this Agreement with the proceeds of bonds, the interest on which is excluded from the gross income of the owners thereof for income tax purposes ( "Tax- Exempt Bonds "). The Parties covenant and agree that each Party will not take any action, or fail to take any action, or permit any action to be taken on its behalf or cause or permit any circumstances within its control to arise or continue, unless specifically so ordered by a governmental authority with jurisdiction over the Parry, if any such action or inaction would adversely affect the status of the Tax- Exempt Bonds or otherwise violate the Tax Code and the U.S. Treasury Regulations thereunder. 7. Curtailment and interruption. a. Generally. Service under this Agreement may be curtailed or interrupted as necessary due to physical, operational, or other similar constraints on Hutchinson's system, as determined by Hutchinson in its sole discretion. If Hutchinson is required to curtail or interrupt service due to capacity constraints, Force Majeure, system integrity, or other conditions, any interruptible services provided to other entities by Hutchinson shall be curtailed completely before Firm services are curtailed, and firm transportation services under this Agreement shall be curtailed on a pro rata basis with Hutchinson's other firm sales and/or transportation services. b. Notice. Hutchinson shall provide notice of any interruption or curtailment to Brownton by any means practicable, including, but not limited to, telephone or facsimile, and shall confirm the details in writing within a reasonable amount of time thereafter. Hutchinson shall keep Brownton apprised of the time, date, and circumstances when services under this Agreement shall be restored. C. Penalty for Unauthorized Takes During Curtailment or Interruption. Provided that Hutchinson has complied with the terms of this Agreement with respect to curtailment or interruption, if Brownton fails to curtail or interrupt its takes when directed to do so by Hutchinson: (i) Brownton shall be billed for all volumes taken in excess of the applicable limitation at a rate equal to the Daily Chicago Index plus $10.00 per Dth; and (ii) Hutchinson shall have the right to disconnect Brownton's supply of gas. Hutchinson must restore service as soon as practicable following any such disconnection. 8. Title, Loss of Gas, Insurance, and Limitations of Damages. a. Title and Risk of Loss of Gas. Title to and risk of loss of gas received or transported by Hutchinson on behalf of Brownton for delivery to Brownton shall pass between the Parties as provided in the Natural Gas Commodity Agreement. b. Insurance. Brownton shall be responsible for maintaining sufficient insurance as necessary to protect its property and other interests in the gas prior to, during, and after its receipt by Hutchinson. Hutchinson shall be responsible for maintaining sufficient insurance as necessary to protect its property and other interests in providing transportation service under this Agreement to Brownton. C. Limitation of Damages. The Parties confirm that the express remedies and measures of damages provided in this Agreement satisfy the essential purposes hereof. For breach of any provision for which an express remedy or measure of damages is herein provided, such express remedy or measure of damages shall be the sole and exclusive remedy, the obligor's liability shall be limited as set forth in such provision, and all other remedies or damages at law or in equity are waived, unless such breach is the result of gross negligence or willful misconduct. Without regard to the cause or causes related thereto, 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, unless such breach is the result of gross negligence or willful misconduct. 9. Force Majeure. Except with regard to a Party's obligation to make payment(s) hereunder, neither Party shall be liable to the other for failure to perform an obligation, to the extent such failure was caused by Force Majeure. Each Party shall make commercially reasonable efforts to avoid the adverse impacts of Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance. a. Definition "Force Majeure" shall mean acts and events not within the reasonable control of the Party claiming Force Majeure, or, in the case of third party obligations or facilities related to the performance of a Party hereunder, the third -party claiming Force Majeure. Force Majeure shall include, but not be limited to, acts of God, strikes, lockouts, or other industrial disturbances, material, equipment, or labor shortages, wars, riots, insurrections, acts of terrorism, sabotage, epidemics, landslides, lightning, earthquakes, floods, hurricanes, fires, storms, washouts, government or court orders, civil disturbances, explosions, breakage or accident or repair to machinery or pipelines, freezing of wells or pipelines, or any other cause of whatever kind, whether specifically enumerated herein or not, that is not within the control of the party claiming Force Majeure. b. Effect. 1. If Hutchinson is unable to provide service under this Agreement due to Force Majeure, Hutchinson's obligation to provide service under this Agreement shall be suspended for the duration of the Force Majeure. Hutchinson shall notify Brownton of the Force Majeure as soon as reasonably possible by any means practicable, including, but not limited to, telephone or facsimile, and shall confirm the details of the Force Majeure in writing within a reasonable amount of time thereafter. Hutchinson shall I work to remedy the Force Majeure as soon as reasonably possible and shall keep Brownton apprised of the time, date, and circumstances when service under this Agreement shall be restored. Brownton is not required to pay any charges under this Agreement during the term of Hutchinson's declared Force Majeure. 2. If Brownton is unable to take service under this Agreement due to Force Majeure, Hutchinson's obligation to provide service under this Agreement shall be suspended for the duration of the Force Majeure. Brownton shall notify Hutchinson of the Force Majeure as soon as reasonably possible by any means practicable, including, but not limited to, telephone or facsimile, and shall confirm the details of the Force Majeure in writing within a reasonable amount of time thereafter. Brownton shall work to remedy the Force Majeure as soon as reasonably possible and shall keep Hutchinson apprised of the time, date, and circumstances when Brownton will resume service under this Agreement. Hutchinson is not required to provide service under this Agreement during the term of the Force Majeure. C. Limitations on Force Majeure. 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 Force Majeure failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship of either Party. Notwithstanding any other provision of this Agreement, the Party claiming Force Majeure shall not be excused from its responsibility for imbalance charges. 10. Notices. a. Addresses. All invoices, payments and other communications made pursuant to this Agreement shall be made to the addresses specified in writing by the respective Parties from time to time. b. Acceptable Forms. All notices required hereunder may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail, or hand delivered. C. Delivery Date. In the absence of proof of the actual receipt date for such notices, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sending party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is not a business day or is after 5:00 p.m. Central Clock Time 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 parry. Notice via first class mail shall be considered delivered five business days after mailing. 11. Laws, Regulations, and Orders. a. Service under this Agreement is subject to all present and future valid laws, orders, rules, and regulations, issued by any federal, state, or local authority having jurisdiction over the matters set forth herein. b. It is understood by Brownton that it is economically feasible to enter into this Agreement solely because Hutchinson is a self - regulated municipal utility. If at any time any of the activities covered under this agreement become subject to regulation by the Public Utilities Commission of the State of Minnesota or any other state or federal agency that do not currently control the activities of Hutchinson under this Agreement, Hutchinson shall have the option, at its sole discretion, to pass all costs incurred due to Hutchinson's regulation, to Brownton for the length of this Agreement. 12. Alternative Dispute Resolution. Whenever the Parties disagree on the interpretation or enforcement of this Agreement, or upon calculations or payments, then upon written request of either Party, representatives with settlement authority for each Party shall meet in person and confer in good faith to resolve the dispute. If the Parties are unable to resolve the dispute, they shall submit their dispute to mediation pursuant to the Minnesota Civil Mediation Act. If the dispute is not resolved by mediation, the Parties may invoke their legal remedies available at law. 13. Miscellaneous Provisions. a. Declaration of Invalidity. If any provision of this Agreement is determined to be invalid, void, or unenforceable by any court or other entity having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Agreement; and the Parties agree to negotiate in good faith a replacement to such invalid, void or unenforceable provision and/or any other amendments as may be necessary to ensure that the Agreement as a whole reflects the original intentions of the Parties. b. No Continuing Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party against whom such waiver is claimed. No waiver of any breach shall be deemed a waiver of any other subsequent breach. C. Relationship of the Parties. The Parties shall not be deemed in a relationship of partners or joint ventures by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Party as an independent contractor. d. Complete Agreement. This Agreement sets forth all understandings between the Parties as to the subject matter of this Agreement as of the effective date herein. Any prior contracts, understandings and representations, whether oral or written, relating to the matters addressed in this Agreement are merged into and superseded by this Agreement. This Agreement may be amended only by a writing executed by both Parties. e. Other Documents. This Agreement, the Commodity Agreement, and the Operating Agreement, shall be construed to give effect to all provisions of the documents to the maximum extent possible. In the event of a direct and irreconcilable conflict between the documents, they must be construed in the following order of priority: (1) this Agreement; (2) the Commodity Agreement; (3) the Operating Agreement. f. Governing Law. The interpretation and performance of this Agreement shall be governed by the laws of Minnesota, excluding, however, any conflict of laws rule that would apply the law of another jurisdiction. g. Data Practices Act. The Parties acknowledge that Hutchinson and Brownton are subject to Minnesota Government Data Practices Act, Minnesota Statutes, Chapter 13 (the "Act "), including limiting public access to trade secret and other protected data. Each Party agrees to defend, indemnify, and hold harmless the other Party, its officials, officers, agents, employees, contractors, and subcontractors from any claims resulting from unlawful disclosure and/or use of such protected data. Brownton agrees to promptly notify Hutchinson if Brownton receives a request to access the terms of this Agreement, and to cooperate with Hutchinson if Hutchinson seeks a protective order, at Hutchinson's expense. Brownton agrees to promptly notify Hutchinson if Brownton becomes aware of any potential claim, or facts giving rise to potential claims, under the Act,. The terms of this section shall survive the termination of this Agreement. h. Authority to Enter Agreement. Each Party to this Agreement represents and warrants that it has full and complete authority to enter into and perform this Agreement. Each person who executes this Agreement on behalf of either Party represents and warrants that the person has full and complete authority to do so and that such Parry will be bound thereby. i. No Third Party BeneficiarX. There is no third party beneficiary to this Agreement. j. Counterparts. This Agreement may be executed and acknowledged in multiple counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument. WHEREFORE, the Parties have executed this Agreement in two (2) duplicate originals by their duly authorized, respective officers as of the date specified above. HUTCHINSON UTILITIES COMMISSION By: �� r 5�'1 U�� �ji' �-, By: Name: Nam Title: President Title Date: (o a (a- % 3 Witness:'l4� Date: .6 -0?, (o --/3 Date CITY OF BROWNTON s'. Witness: —LAG 1Ct�c� Date: (p �--, k k ?j J NATURAL GAS FIRM TRANSPORTATION CAPACITY AGREEMENT BETWEEN HUTCHINSON UTILITIES COMMISSION AND CITY OF BROWNTON Attachment "A" Delivery Points Brownton may receive gas from Hutchinson at the following Delivery Points: Station name County Cky State HUC/UNG Interconnect McLeod Brownton Minnesota Brownton may receive gas from UNG at the following Delivery Points: Station name County city State UNGBrownton Interconnect McLeod Brownton Minnesota 1385875.1 HUTCHINSON UTILITIES COMMISSION NATURAL GAS COMMODITY AGREEMENT City of Brownton 6/4/2013 This document sets forth the natural gas commodity rates and conditions of service provided to the City of Brownton by Hutchinson Utilities Commission. 0 NATURAL GAS COMMODITY AGREEMENT THIS COMMODITY AGREEMENT ( "Agreement ") is made and entered into on this day of June, 2013, to be effective as of the 1st day of August, 2013, by and between the City of Brownton (`Brownton ") with offices located at 335 3rd Street, P.O. Box 238, Brownton, Minnesota, 55312 and Hutchinson Utilities Commission ( "Hutchinson ") a Minnesota municipal utility located at 225 Michigan St. SE, Hutchinson, Minnesota, 55350. Brownton and Hutchinson shall hereinafter be referred to separately as "Party" or jointly as "Parties." WITNESSETH: WHEREAS, Brownton has constructed or is constructing a natural gas distribution system including all apparatuses thereto, commencing at the UNG/Brownton Interconnect (as hereinafter defined), and extending to the ends of the distribution system, as further described and depicted in Exhibit A attached hereto; WHEREAS, Brownton, on the one hand, and United Natural Gas LLC, on the other hand ( "UNG "), are establishing an interconnection between their pipeline facilities and to contract for UNG to provide long -term firm transportation capacity to Brownton over UNG's natural gas pipeline facilities, which shall run from natural gas pipeline owned by Hutchinson to Brownton's natural gas distribution system; WHEREAS, pursuant to the above, Brownton and UNG, are entering into that Interconnect and Natural Gas Firm Transportation Capacity Agreement of even date herewith, which Hutchinson acknowledges; WHEREAS, Brownton has contracted with Hutchinson to provide long -term firm transportation capacity to Brownton over Hutchinson's natural gas pipeline facilities to the point of interconnection between the facilities of Hutchinson and the facilities of UNG, pursuant to that certain Natural Gas Firm Transportation Capacity Agreement by and between Brownton and Hutchinson of even date herewith (hereinafter the "Hutchinson Transportation Capacity Agreement "); WHEREAS, Brownton has retained Hutchinson to operate Brownton's natural gas distribution system, pursuant to that certain Distribution Facilities Operating Agreement of even date herewith; WHEREAS, Brownton desires to purchase, and Hutchinson desires to sell, a long- term supply of natural gas for use at Brownton, upon the terms and conditions set forth herein, and the Parties desire to set forth the terms and conditions of their agreement; and WHEREAS, Brownton acknowledges that Hutchinson is entering into the Hutchinson Transportation Capacity Agreement in reliance upon this Agreement. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as the follows: 1. Definitions. (a) All capitalized terms not otherwise defined herein shall have the same meaning as ascribed in the Distribution Facilities Operating Agreement. (b) "Baseload Commodity Rate" shall mean the Baseload Gas Rate, plus $0.05 per Dth, plus 3.25% of said sum. (c) `Baseload Gas Cost" shall mean the Baseload Gas Volume times the Baseload Commodity Rate. (d) `Baseload Gas Rate" shall mean Hutchinson's monthly average price, for the current month, for all natural gas contracts purchased within Hutchinson's Risk Management Purchasing Program. (e) "Baseload Gas Volume" shall mean 65% of Brownton's total daily natural gas consumption. (f) "UNG /Brownton Interconnect" shall mean the point at which custody of natural gas flowing through the pipeline of UNG shall transfer from UNG to Brownton, which shall be located at the outer flange of the emergency valve, and which point is described in greater detail on the attached Exhibit A. 2 3. (g) "Daily Index" shall mean the index published for the day by Platt's "Gas Daily" in its "Daily Price Survey ($/Dth)" for "Northern, Ventura" "Midpoint." (h) "Delivery Period" shall commence on the Effective Date at 9:00 a.m. Central Clock Time and shall conclude upon the termination of this Agreement. (i) "Swing Supply Gas Cost" shall mean the Swing Supply Volume times the Swing Supply Rate. 0) "Swing Supply Rate" shall mean the Daily Index plus $0.05 per Dth, plus 3.25% of said sum. (k) "Swing Supply Volume" means 35% of Brownton's total daily natural gas consumption. (1) "HUC/UNG Interconnect" shall mean the point at which UNG's natural gas pipeline facilities connect to the pipeline owned and operated by Hutchinson. Effective Date. This Agreement shall become effective upon the Effective Date, contingent upon the Parties executing the Hutchinson Transportation Capacity Agreement and Hutchinson receiving a signed resolution by the governing board of Brownton directing Hutchinson to proceed with its responsibilities under this Agreement and the Hutchinson Transportation Capacity Agreement. Term. The initial term of this Agreement is 9 years and 1 month from the Effective Date (the "Initial Term "). Representatives of Hutchinson and Brownton shall meet approximately two (2) years prior to the end of the Initial Term of this Agreement to discuss future operations. If Brownton desires to continue services under this Agreement after the Initial Term, Brownton must notify Hutchinson in writing one (1) year prior to the expiration of the Initial Term. If Brownton has provided such timely notice, has complied with all terms of this Agreement, and has no outstanding arrearages, collectively, the ( "Extension Conditions "), then this Agreement shall be extended for a mutually agreed -upon period. If Brownton fails to satisfy the Extension Conditions, then Hutchinson is not obligated to renew service for Brownton. Any extension or renewal of the Initial Term of this Agreement shall be contingent upon United Natural Gas, LLC, or its successor, renewing, extending, or entering into a new interconnect agreement with Hutchinson for a term at least as long as the extended term of this Agreement. 4. Sale and Purchase of Gas. Hutchinson agrees to sell to Brownton, and Brownton agrees to purchase and take from Hutchinson, firm gas in an amount not to exceed 2000 Dth per day ( "Daily Contract Quantity ") for each day during the Delivery Period at the HUC/UNG Interconnect pursuant to the terms and conditions set forth in this Agreement. Hutchinson shall deliver and Brownton shall receive the Daily Contract Quantity at the HUC/UNG Interconnect. It is intended that Brownton receive all of its gas requirements, up to the Daily contract Quantity, under this Agreement. The Parties acknowledge that gas intended for use by the United Farmers Companies shall be commingled and transported with gas intended for use by Brownton between the HUC/UNG Interconnect and the UNG /Brownton Interconnect. Hutchinson shall monitor the meters located at or near the HUC/UFC Interconnect and the UFCBrownton Interconnect and use such meter readings and thereby calculate the portion of the gas transported between the HUC/UNG Interconnect and the UNGBrownton Interconnect which is attributable to Brownton and thus chargeable to Brownton under the terms of this Agreement.. 5. Fees. Brownton shall pay Hutchinson the Baseload Gas Cost for the Baseload Gas Volume, plus the Swing Supply Gas Cost for the Swing Supply Volume as each provided during the Delivery Period. The Parties shall review the fees associated with this Agreement on an annual basis, starting on August 1, 2014 and on each August 1 thereafter, and reserve the right to modify the fees upon mutual agreement. 6. Payment. Hutchinson will provide a bill for the fees charged pursuant to the above Paragraph 3 to Brownton or its agent by the fifteenth day of the month following the month in which service is rendered. Payment is due from Brownton on or before the fifteenth calendar day following the date said bill is issued by Hutchinson. A late payment charge of one and one -half percent per month, or the legally authorized maximum interest rate, whichever is lower, shall be levied on any unpaid balances. If Brownton disputes any amount in a bill, Brownton shall (except in the case of manifest error) nonetheless pay the amount required by the bill. The Parties shall meet as soon as practicable after notification of any billing dispute to resolve the dispute informally. 7. Suspension. In the event that Brownton fails to pay when due any amounts owed to Hutchinson and such failure continues beyond three (3) business days after the time any such amounts were due, then delivery of the Daily Contract Quantity shall be suspended ( "Suspension Status ") until either (a) Brownton's payment is received in full, including any late charges, on or before the 20`x' day of the month following the month that payment was originally due, or (b) this Agreement is terminated. Hutchinson may sell any gas affected by the Suspension Status. Hutchinson shall have no obligation to draw upon the security deposit or performance bond posted by Brownton. 8. Early Termination. In the event that Brownton fails to pay when due any amounts owed to Hutchinson on or before the 20ffi day of the month following Brownton's Suspension Status, then Hutchinson may, at its option terminate this Agreement. If the Agreement is terminated, Hutchinson shall have no obligation to sell or deliver gas to Brownton under this Agreement, and the obligation of Brownton to purchase and receive gas from Hutchinson under this Agreement will terminate. 9. Force Majeure. Except with regard to a Party's obligation to make payment(s) hereunder, neither Party shall be liable to the other for failure to perform an 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 Parry claiming suspension, as further defined in Section 8(a). Each Party shall make commercially reasonable efforts to avoid the adverse impacts of Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance. (a) Force Majeure Defined. "Force Majeure" shall mean acts and events not within the reasonable control of the Party claiming Force Majeure, or, in the case of third party obligations or facilities related to the performance of a Party hereunder, the third -party claiming Force Majeure. Force Majeure shall include, but not be limited to, acts of God, strikes, lockouts, or other industrial disturbances, material, equipment, or labor shortages, wars, riots, insurrections, acts of terrorism, sabotage, epidemics, landslides, lightning, earthquakes, floods, hurricanes, fires, storms, washouts, government or court orders, civil disturbances, explosions, breakage or accident or repair to machinery or pipelines, freezing of wells or pipelines, stoppage of flow on the receiving or transporting pipeline supplying the Uptake Point, Northern Border Pipeline Company equipment failure, or any other cause of whatever kind, whether specifically enumerated herein or not, that is not within the control of the party claiming Force Majeure. (b) Exclusions. Neither Party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is prevented by any or all of the following circumstances: (i) the Party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; (ii) economic hardship, to include, without limitation, Hutchinson's ability to sell gas at a higher or more advantageous price, the ability of Brownton to purchase gas at a lower or more advantageous price; or (iii) the curtailment of interruptible or secondary firm transportation unless primary, in- path firm transportation is also curtailed. (c) Procedure. In the event that Hutchinson or Brownton is rendered unable, wholly or in part, by Force Majeure to carry out its obligations hereunder, it is agreed that upon such Party's giving notice and full particulars of such Force Majeure to the other Party as soon as reasonably practicable, the obligations of the Party giving such notice, to the extent they are affected by such event, shall be suspended from the inception and during the continuance of the Force Majeure. Initial notice may be given orally; however, written notice (which notice may be sent by electronic mail or facsimile, with such notice complete upon transmission) with reasonably full particulars of the event or occurrence is required within 24 hours following oral notice. (d) Settlement of Labor Disputes 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 Parry experiencing such disturbance. 10. Failure to Take or Deliver Gas (a) Failure to Deliver Gas. If Hutchinson fails to deliver all or any portion of the Daily Contract Quantity at the HUC/UNG Interconnect and such failure is not due to either (a) the actions or inactions of Brownton, or (b) Force Majeure, then Brownton may exercise commercially reasonable efforts to purchase replacement gas for the portion of the Daily Contract Quantity not provided for a particular day ( "Replacement Gas "). To the extent that Brownton purchases Replacement Gas, Hutchinson shall pay or credit to Brownton the amount by which the Replacement Gas price exceeds the applicable fees under this Agreement. (b) Failure to Take Gas. If Brownton fails to take all or any portion of the Daily Contract Quantity at the HUC/UNG Interconnect and such failure is not due to either (a) the actions or inactions of Hutchinson, or (b) Force Majeure, then Brownton shall remain responsible for the payments owing under this Agreement. Hutchinson shall have the right to sell any portion of the Daily Contract Quantity not taken by Brownton. Brownton shall have no right to any proceeds that may result from the sale of gas due to Brownton's failure to take. (c) Sole Remedies. The remedies set forth in Section 9 shall be each Party's sole and exclusive remedies for any failure by the other Party to deliver or take gas under this Agreement. 11. Title and Risk of Loss. Title to the gas delivered hereunder and risk of loss shall pass from Hutchinson to Brownton at the HUC/UNG Interconnect. Hutchinson assumes all liability for and shall indemnify, defend, and hold Brownton harmless from any claims, including death of persons, arising from any act or incident occurring when title to gas is vested in Hutchinson. Brownton assumes all liability for and shall indemnify, defend, and hold Hutchinson harmless for any claims, including death of persons, arising from any act or incident occurring when title to gas is vested in Brownton. 12. Taxes. Hutchinson shall be responsible for all ad valorem, excise, severance, production and other taxes assessed upstream of the HUC/UNG Interconnect. Brownton shall be responsible for all such taxes assessed at or downstream of the HUC/UNG Interconnect. 13. Warranty of Title. Hutchinson 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 Brownton, free and clear of all liens, encumbrances, and claims. EXCEPT FOR THE WARRANTIES EXPRESSLY MADE BY HUTCHINSON IN THIS SECTION, HUTCHINSON HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE. 14. Representations and Warranties. Each Party, with respect to itself, hereby represents and warrants to the other Party as of the Effective Date as follows: (a) it is duly organized and validly existing in good standing under the laws of the state of Minnesota, and has all requisite power and authority, corporate or otherwise, to enter into and to perform its obligations hereunder and to carry out the terms and conditions hereof and the transactions contemplated hereby; (b) there is no litigation, action, suit, proceeding or investigation pending or, to the best of such Party's knowledge, threatened, before or by any government agency, that could reasonably be expected to materially and adversely affect the performance by such Party of its obligations hereunder; and (c) this Agreement has been duly executed and delivered on behalf of such Party by an appropriate officer or authorized person of such Party and constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally and by general principles of equity. 15. Limitation of Damages. The Parties confirm that the express remedies and measures of damages provided in this Agreement satisfy the essential purposes hereof. For breach of any provision for which an express remedy or measure of damages is herein provided, such express remedy or measure of damages shall be the sole and exclusive remedy, the obligor's liability shall be limited as set forth in such provision, and all other remedies or damages at law or in equity are waived, unless such breach is the result of gross negligence or willful misconduct. Without regard to the cause or causes related thereto, 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, unless such breach is the result of gross negligence or willful misconduct. 16. Regulation. It is understood by Brownton that it is economically feasible to enter into this Agreement solely because Hutchinson is a self - regulated municipal utility. If at any time any of the activities covered under this agreement become subject to regulation by the Public Utilities Commission of the State of Minnesota or any other state or federal agency that do not currently control the activities of Hutchinson under this agreement, Hutchinson shall have the option, at its sole discretion, to pass all costs incurred, due to Hutchinson's regulation, to Brownton for the length of this Agreement. 17. Alternative Dispute Resolution. Whenever the Parties disagree on the interpretation or enforcement of this Agreement, or upon calculations or payments, then upon written request of either Party, representatives with settlement authority for each Party shall meet in person and confer in good faith to resolve the dispute. If the Parties are unable to resolve the dispute, they shall submit their dispute to mediation pursuant to the Minnesota Civil Mediation Act. If the dispute is not resolved by mediation, the Parties may invoke their legal remedies available at law. 18. General Terms. (a) Entire Agreement. This Agreement sets forth all terms agreed upon between the Parties concerning the subject matter hereof, and no prior oral or written agreements shall be binding. This Agreement shall not be altered, amended or modified except as in writing and executed by both Parties. (b) Governing Law. This Agreement and the rights and duties of the Parties hereunder shall be governed by and construed, enforced, and performed in accordance with the laws of the State of Minnesota, without regard to any conflicts of law principle that would direct the application of another jurisdiction's law. (c) Data Practices Act. The Parties acknowledge that Hutchinson and Brownton are subject to Minnesota Government Data Practices Act, Minnesota Statutes, Chapter 13 (the "Act "), including limiting public access to trade secret and other protected data. Each Parry agrees to defend, indemnify, and hold harmless the other Party, its officials, officers, agents, employees, contractors, and subcontractors from any claims resulting from unlawful disclosure and/or use of such protected data. Brownton agrees to promptly notify Hutchinson if Brownton receives a request to access the terms of this Agreement, and to cooperate with Hutchinson if Hutchinson seeks a protective order, at Hutchinson's expense. Brownton agrees to promptly notify Hutchinson if Brownton becomes aware of any potential claim, or facts giving rise to potential claims, under the Act. The terms of this section shall survive the termination of this Agreement. (d) Other Documents This Agreement, the Hutchinson Transportation Capacity Agreement, and the Distribution Facilities Operating Agreement, shall be construed to give effect to all provisions of the documents to the maximum extent possible. In the event of a direct and irreconcilable conflict between the documents, they must be construed in the following order of priority: (1) the Hutchinson Transportation Capacity Agreement; (2) this Agreement; (3) the Distribution Facilities Operating Agreement. (e) Non - Waiver. No waiver of any breach of any of the terms of this Agreement shall be effective unless such waiver is in writing and signed by the Party against whom such waiver is claimed. No waiver of any breach shall be deemed a waiver of any other subsequent breach. (f) Assi ent. , Neither Party shall assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party. (g) Severability. If any provision of this Agreement is determined to be invalid, void, or unenforceable by any court or other entity having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Agreement; and the Parties agree to negotiate in good faith a replacement to such invalid, void or unenforceable provision and/or any other amendments as may be necessary to ensure that the Agreement as a whole reflects the original intentions of the Parties. (h) Relationship of Parties. The Parties shall not be deemed in a relationship of partners or joint ventures by virtue of this Agreement, nor shall either Party be an agent, representative, trustee or fiduciary of the other. Neither Party shall have any authority to bind the other to any agreement. This Agreement is intended to secure and provide for the services of each Parry as an independent contractor. (i) Headings. Headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. (j) No Third Party Beneficiaa. There is no third party beneficiary to this Agreement. (k) Counterparts. This Agreement may be executed and acknowledged in multiple counterparts, each of which shall be an original and all of which shall be and constitute one and the same instrument. IN WITNESS WHEREOF, Brownton and Hutchinson have executed this Agreement in two (2) duplicate originals by their duly authorized, respective officers as of the date first above written. HUTCHINSON UTILITIES COMMISSION By: U't4,4inst ,��. Cpi'>�+'hlSSr�'► Name: yf Title: Ga miasien President Date: CITY OF BROWNTON Witness: A"'."rn /ea>� -t Witness: hV tt tx� Date: Fl ��iy'"l� Date: W Z U ?) EXHIBIT A DIAGRAM OF UNGBROWNTON INTERCONNECT, UNG INTERCONNECT FACILITIES AND CITY INTERCONNECT FACILITIES LOCATIONS [Attached) 1385945.1 11 ts 2� INTERCONNECT AND NATURAL GAS FIRM TRANSPORTATION CAPACITY AGREEMENT THIS INTERCONNECT AND NATURAL GAS FIRM TRANSPORTATION CAPACITY AGREEMENT (hereinafter the "Agreement ") is made and entered into this _ day of June, 2013, by and between the City of Brownton (the "City "); United Natural Gas LLC ( "UNG "). The City and UNG shall hereinafter from time to time be referred to separately as "Party" or jointly as "Parties." Hutchinson Utilities Commission acknowledges the terms and conditions set forth herein. United Farmers Cooperative is a signatory to this Agreement for the limited purpose of guarantying the performance of UNG's obligations hereunder. RECITALS WHEREAS, the Hutchinson Utilities Commission ( "Hutchinson ") owns and operates an existing natural gas pipeline system which commences from a point on the Northern Border Pipeline near Trimont, Minnesota, to a point of terminus near Hutchinson, Minnesota (the "Hutchinson Transmission Pipeline "); WHEREAS, UNG owns and operates an existing intrastate natural gas pipeline system which commences from a point on Hutchinson Transmission Pipeline to a point of terminus approximately one mile from Brownton, Minnesota (the "UNG Pipeline Facilities). WHEREAS, the City will own intrastate pipeline facilities which are located within the State of Minnesota; WHEREAS, the City desires to establish an interconnection between its pipeline facilities (the "City Pipeline Facilities ") and the UNG Pipeline Facilities, and UNG is willing to establish such interconnection under the terms and conditions set forth herein; WHEREAS, the City, on the one hand, and UNG, on the other hand, desire to have the interconnection between their respective facilities in service on or before August 1, 2013 (the "Service Connection Date "); WHEREAS, the City desires to contract with UNG for the provision of long -term firm transportation capacity by LNG to the City; WHEREAS, UNG has the capability to provide the City with long -term firm transportation capacity; WHEREAS, the Parties desire Hutchinson's acknowledgment of the terms of this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth herein, the Parties hereby agree as follows: ARTICLE I INTERCONNECTION POINT The point of interconnection between Interconnect Facility, as defined herein, shall Minnesota, legally described to -wit: the UNG Interconnect Facility and the City be located on property in McLeod County, A 25.00 foot easement for utility purposes and the installation and maintenance of a gas line, over, under, and across part of the North Half of the Northeast Quarter of Section 36, Township 115 North, Range 30 West, and that part of the Northwest Quarter of the Northwest Quarter of Section 31, Township 115 North, Range 29 West, all in McLeod County, Minnesota. Said easement being 12.50 feet to the right and 12.50 feet to the left of a line, hereinafter described as "Line A ". Together with an easement 40.00 feet in width over, under, and across said Northwest Quarter of the Northwest Quarter, being 12.50 feet to the right and 27.50 feet to the left of a line, hereinafter described as "Line B ". "Line A" is described as commencing at the northeast corner of said North Half of the Northeast Quarter of Section 36; thence South 00 degrees 10 minutes 47 seconds West, assumed bearing, along the east line of said North Half of the Northeast Quarter 576.10 feet; thence South 21 degrees 29 minutes 28 seconds West 32.56 feet; thence South 49 degrees 14 minutes 19 seconds West 419.05 feet; thence North 36 degrees 20 minutes 22 seconds West 12.54 feet to the point of beginning of said "Line A "; thence South 36 degrees 20 minutes 22 seconds East 223.71 feet, to a point distant 12.50 feet northerly, measured at right angles to, the northerly right of way line of Twin Cities and Western Railroad Co.; thence North 83 degrees 37 minutes 20 seconds East, along a line parallel, distant 12.50 feet northerly of said right of way line, 217.72 feet; thence northeasterly 1123.07 feet, along a tangential curve, concave to the north, central angle 11 degrees 21 minutes 16 seconds, radius 5667.15 feet, along said parallel line, and said "Line A" there terminating. "Line B" is described as beginning at the terminus of said "Line A "; thence northeasterly 66.19 feet along the prolongation of said "Line A ", having a central angle of 00 degrees 40 minutes 09 seconds; thence North 71 degrees 35 minutes 55 seconds East 30.83 feet to a point on the westerly right of way line of Trunk Highway No. 15, as shown on MINNESOTA DEPARTMENT OF TRANSPORTATION RIGHT OF WAY PLAT NO. 43 -9, according to the recorded plat thereof, McLeod County, Minnesota, and said "Line B" there terminating. The easterly side line of said "Line B" easement shall be prolonged or shortened to terminate on said westerly right of way line. 2 (the "Interconnect Station") ARTICLE II UNG INTERCONNECT FACILITY 2.1 UNG shall own and maintain the following components of the Interconnect Station (hereinafter, the "UNG Interconnect Facility "): 2.1.1 Piping from T Intersection to Custody Transfer Point. The City or its agents shall purchase, design, construct, and install pipeline from the point at which UNG's existing pipeline shall connect with pipeline running to the Interconnect Station (said point hereinafter referred to as the "T Intersection "), to the Custody Transfer Point. On or before the Service Connection Date, the City shall deed, convey, and transfer all right, title, and interest in the piping running from the T Intersection to the Custody Transfer Point to UNG. From the date of the conveyance and thereafter, the T Intersection and the piping conveyed to UNG under this Section 2.1.1 shall be deemed a part of the UNG Interconnect Facility, and all maintenance, repair, and compliance with Federal, state, and local regulations related to said piping shall be the sole responsibility of UNG. UNG shall grant the City all temporary easements to their property necessary and expedient for the construction of the T Intersection and said piping. The T Intersection and the pipeline to be constructed and installed by the City and subsequently transferred to UNG is described in greater detail on the attached Exhibit A. 2.1.2 Upstream Piping and Related Equipment. The City shall purchase, construct, install, and maintain any additional or replacement connecting pipeline or ancillary equipment (for example, natural gas heaters), if any, required upstream from the T Intersection to facilitate the City's purchases of natural gas. ARTICLE III CITY INTERCONNECT FACILITY 3.1 The City shall own, design, purchase, construct, maintain, and operate the following components of the Interconnect Station (hereinafter the "City Interconnect Facility "): 3.1.1 Meter and Meter Run. The City or its agents shall install one 16M rotary meter with pressure and temperature corrector and associated meter run piping at the Interconnect Station, which shall be used for custody transfer gas volume measurement (the "Meter "). 3.1.2 Filter/Meter Skid. The Meter assembly will contain the meter and a bypass line around the Meter for meter maintenance. The filter assembly will contain the filter and a bypass line around the filter for filter maintenance. Monitoring the bypass line shall be the responsibility of the City. W 3.1.3 Valves and Related Pipes. Piping shall be installed from the Custody Transfer Point (as defined herein) to the emergency valve. The emergency valve shall be manually operated. Piping shall be installed from the emergency valve to the piping on the filter run, regulator run (with overpressure protection and pilot heaters), and meter run. All buried piping shall be installed at a minimum depth of five feet. All piping upstream of the regulator run shall be designed for a maximum pressure of 285 psig. All piping downstream of the regulator run shall be designed for a pressure of 100 psig. 3.1.4 Pressure and Temperature Transmitters. The City shall have SCADA installed for continuous monitoring of the gas pressure and temperature at the meter run, and be responsible for providing continuous monitoring of the meter run. 3.1.5 Reserved 3.1.6 Electronic Flow Measurement Device. The City shall install an electronic flow measurement device at the Interconnect Station, including all cables, conduit, and appurtenances, with a communication interface (collectively, the "EFM Device "). Such cable and conduit shall be galvanized and rigid above ground and PVC coated rigid below ground. 3.1.7 Signage and Line Markers. The City or its agents shall install, maintain, and otherwise be responsible for all signage and line markers required by Federal, state, or local law or regulations at the Interconnect Station, as defined hereafter. 3.1.8 Reserved. 3.1.9 Downstream Piping and Related Equipment. The City or its agents shall install connecting 2 -inch steel line with overprotection pressure as required downstream of the Custody Transfer Point, as defined herein. ARTICLE IV INTERCONNECT STATION 4.1 Custody Transfer Point. The point at which custody of natural gas flowing through the UNG Interconnect Facility and Interconnect Station shall transfer from UNG to the City shall be located where UNG's outer flange makes contact with the upstream flange of the emergency valve (the "Custody Transfer Point "), which point is described in greater detail on the attached Exhibit A. 4.2 Engineering Standards. Each Party covenants and agrees that all piping and other materials and equipment shall be designed in compliance with industry engineering standards and applicable law. 4.3 Right -of -Way; Permits. The City shall obtain all of the property or right -of -way necessary for the construction, operation, and access to the Interconnect Station. The City shall 0 obtain all applicable regulatory and/or environmental permits, clearances, and consents necessary for the construction and operation of the Interconnect Station. 4.4 Operation; General Maintenance. The City shall operate and maintain the Interconnect Station, including but not limited to: (i) general maintenance and monthly testing of the Interconnect Station; (ii) performing monthly calibration of pressure and temperature transmitters and EFM maintenance and annual meter proving and inspection on the Meter; and (iii) general maintenance of the site immediately surrounding the Interconnect Station (including painting, weed control, and general building and ground maintenance). ARTICLE V DATA AND METERING 5.1 Data Sharing. The EFM Device will collect data on a continuous basis. The Parties each reserve the right to request particular data concerning their respective gas flow at the Interconnect Station, and authorize the other Party to review such data. 5.2 Power and Telecommunications Connection. The City shall be responsible for connecting the Interconnect Station to a power source and for providing electric or other power necessary to operating the Interconnect Station and its appurtenances. 5.3 No Warranty. Neither the City nor UNG make any warranties as to the accuracy or completeness of any data from the EFM Device provided pursuant to this Agreement. 5.4 Odorant Data. UNG is responsible to maintain adequate levels of odorization. UNG shall provide odorization data on a monthly basis to the City, including, but not limited to, the amount of odorant used (in pounds) per MMCF of gas odorized (the " Odorization Rate "). The City reserves the right to require UNG to adjust the Odorization Rate if testing anywhere within the City's pipeline system indicates that odorant is not detectable at one -fifth of the lower explosive limit by a person with a normal sense of smell, as defined in Part 192 of the federal Pipeline Safety Regulations. 5.5 Meter Inspection. The Meter will undergo a flow calibration prior to delivery. A meter calibration report shall be provided to any Party upon written request. The Parties shall also have the right to audit the records of the measurement equipment at the metering facilities. 5.6 Metering Standards. All measurement of gas quantities delivered from the Interconnect Station to the City shall be done by Hutchinson under the Natural Gas Firm Transportation Capacity Agreement between Hutchinson and the City, using the EFM Device. Flowing volumes shall be calculated in accordance with industry standards. Measured gas volumes shall be converted to gas heating values in decatherms (Dth) using Hutchinson - determined gas quality data. 5.7 Parties Bound by Meter Reading Except for the Parties' audit right set forth in Section 5.3, the Parties agree to be bound by the readings of the Meter for all purposes related to E this Agreement, unless testing demonstrates that the Meter reading deviates more than two percent from the actual amount. 5.8 UNG Gas Loss; Negligence. LING shall be responsible for any gas lost due to the LING Pipeline Facilities and/or the UNG Interconnect Facility. LING shall be liable for all loss and damage to the City Interconnect Facility, City Pipeline Facilities, and any other property of the City which results from the negligent acts or omissions of UNG or its or their agents, employees, representatives or contractors in the design, construction, operation or maintenance of the UNG Interconnect Facility or UNG Pipeline Facilities. 5.9 City Gas Loss, Negligence. The City shall be responsible for any gas lost due to the City Interconnect Facility and/or the City Pipeline Facilities. The City shall be responsible for all loss and damage to the UNG Interconnect Facility, UNG Pipeline Facilities, and any other property of UNG which results from the negligent acts or omissions of the City or its agents, employees, representatives or contractors in the design, construction, operation or maintenance of the City Interconnect Facility or City Pipeline Facilities. ARTICLE VI INTERCONNECT CONSTRUCTION COSTS 6.1 Interconnect Station Construction. The City shall reimburse UNG for all of the costs for the design, purchase, construction, and installation of the UNG Interconnect Facility. The City shall also reimburse UNG for all taxes incurred by UNG in connection with the construction, maintenance, and operation of the UNG Interconnect Facility. 6.2 Construction Damages. The City shall be responsible for all costs for damages to the property of UNG or any third party due to construction of the T Intersection and the City Interconnect Facility, including, but not limited to, any damage to growing crops. 6.3 Railroad Crossing Permit. The City shall pay when due the cost of any and all railroad right -of -way use permits required for the Interconnect Station. ARTICLE VII NATURAL GAS FIRM TRANSPORTATION CAPACITY 7.1. Character of Service, Availability and Conditions. 7.1.1 Firm Natural Gas Transportation Service. UNG shall provide to the City volumetric firm natural gas transportation capacity in the amount of no more than 60,000 Dth per year (the "Maximum Annual Quantity "), and 600 Dth per day (the "Maximum Daily Quantity "), at a maximum pressure of 250 psig, for 365 days per year, commencing on the 1st day of August, 2013, and continuing for an initial period of nine years and one month, through the last day of August, 2022, and under the rates, terms and conditions set forth in this Agreement (the "Initial Term "). This service shall always be available to the G City unless curtailed or interrupted pursuant to the terms of this Agreement, and such service may not be curtailed or interrupted except pursuant to the terms of this Agreement. 7.1.2 Delivery. UNG shall provide such firm natural gas transportation capacity from the point at which the UNG Pipeline Facilities connect to the Hutchinson Transmission Pipeline operated by Hutchinson (the "Uptake Point ") to the Custody Transfer Point. UNG shall have the sole responsibility for transporting natural gas supplies from the Uptake Point to the Custody Transfer Point. The City shall have the sole responsibility for transporting natural gas from the Custody Transfer Point. 7.1.3 No Obligation to Provide Natural Gas Supply. UNG's sole obligation under this Article 7 is to provide firm capacity to the City over which the City may transport natural gas supplies purchased from an entity other than UNG. UNG shall have no obligation at any time or under any circumstances to provide any gas supplies to the City, and the City shall have no obligation at any time or under any circumstances to provide any gas supplies to UNG. It is the intention of the Parties that each Party shall remain solely responsible for obtaining its own natural gas supplies. 7.2 Term. The parties agree that this Agreement shall have an Initial Term as provided in Section 7.1.1, and that after such Initial Term, the City and UNG shall negotiate any renewals or extensions thereof on the basis that such extension or renewal of the term of this Agreement shall mirror the renewed or extended term of the Interconnect Agreement between Hutchinson and UNG, and that any extension or renewal of the Initial Term of this Agreement shall be contingent upon UNG renewing, extending, or entering into a new Agreement with Hutchinson for a term at least as long as the extended term of this Agreement. 7.3 Transportation Charges. The following charges shall apply to the firm transportation capacity to be provided to the City by UNG: $0.90 per Dth of flow (the "Transportation Charges "). If the City exceeds 600 Dth per day or 60,OOODth per year , the City shall pay a rate equal to twice the transportation charge for the Dths in excess of the daily or annual rate. 7.3.1 Billing and Pa Ment. Invoices for the Transportation Charges shall be rendered to the City no later than the 15th day of the month following the month in which transportation service is rendered by UNG. Payment is due from the City on or before the 15th day of the month following the date the invoice is issued by UNG. A late payment charge of one and one -half percent per month, or the legally authorized maximum interest rate, whichever is lower, shall be levied on any unpaid balances. 7.3.2 Good Faith Dispute. If the City, in good faith, disputes the amount of any invoice rendered by UNG, or any part thereof, the City shall pay the full amount of the invoice. UNG shall promptly provide, in writing to the City, supporting documentation acceptable in industry practice to support the amount invoiced, and the City shall promptly provide to UNG, in writing, the basis for any dispute, including supporting documentation acceptable in industry practice. In the event the Parties are unable to 7 resolve such dispute, either Party may pursue any remedy available at law or in equity to enforce its rights pursuant to this provision; provided, however, that all associated claims for overpayment shall be deemed waived unless such invoices are objected to, in writing, within two years after the invoice date. 7.3.3 Right to Inspect. Each 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 and records of the other Party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under this Agreement. This right to examine, audit, and to obtain copies shall not be available with respect to information not directly relevant to transactions under this Agreement. 7.3.4 Third -Party Charges. The City is responsible for any and all charges imposed by any supplier, broker, marketer, or any other third party for any service that is provided to, or on behalf of, the City. These charges include, but are not limited to, cost of gas, reservation charges, administrative fees, billing fees, minimum take charges, and any and all other types of charges from any such entity. 7.4 Title to Gas. Gas received by UNG on behalf of the City for delivery to the City shall remain the property of the City. Four the avoidance of doubt, the City shall take title to the gas transported under this Agreement at the Uptake Point. The City's gas may be commingled with other gas supplies in the UNG Pipeline Facilities. 7.5 Insurance. Except as otherwise provided in this Agreement, the City shall be responsible for maintaining sufficient insurance as necessary to protect its property and other interests in the gas prior to, during, and after its receipt from UNG. Except as otherwise provided in this Agreement, UNG shall be responsible for maintaining sufficient insurance as necessary to protect their property and other interests in providing transportation service under this Agreement to the City. 7.6 Curtailment and Interruption. 7.6.1 Permitted Curtailments and Interruptions. UNG shall be permitted to curtail or interrupt service to the City as necessary for inspection, maintenance, repair, Force Majeure events, and safety reasons concerning the UNG Pipeline Facilities and/or the Interconnect Station. Except for curtailments or service interruptions in response to emergencies, each Party shall provide the other Parties and Hutchinson reasonable advance notice of any intent or plan to curtail or interrupt service, and the City shall not cause service to UNG to be interrupted during any time that UNG is supplying gas for drying grain. 7.6.2 Partial Curtailment, City's Priority If UNG is required to partially curtail or interrupt service for any reason, any services provided by UNG to third parties shall be curtailed completely before firm services to the City are curtailed, but the City will use its best efforts to the extent permitted by applicable law to curtail grain drying within the City proportionately to the curtailment that UNG imposes on third parties. 7.6.3 Unauthorized Taking During Curtailment or Interruption. Provided that UNG have complied with the terms of this Agreement with respect to such curtailment or interruption, if the City fails to curtail or interrupt its use of gas when directed to do so by UNG, UNG shall have the right to disconnect the City's supply of gas. UNG must restore such service as soon as practicable following any such disconnection. ARTICLE VIII REPRESENTATIONS AND WARRANTIES 8.1 City's Representations and Warranties. The City hereby represents and warrants as follows: 8. 1.1 Authorization. The City is a municipal corporation duly existing under the laws of the State of Minnesota. The City has full power and authority to enter into and perform its obligations under this Agreement. The Agreement constitutes a valid and legally binding obligation of the City, enforceable in accordance with its terms and conditions. 8.1.2 Gopher State One Call. The City shall register any underground portions of the City Interconnect Facility no later than upon completion of construction on the Interconnect Station. 8.1.3 Third -Party Taps. The City shall have the right to authorize any third parry to tap or otherwise access its natural gas pipe downstream of the City's Interconnect Station; provided, however, that neither the City nor any of its subsidiaries or affiliates shall authorize any grain drying facility located outside the April 1, 2013 city limits of the City of Brownton to tap or otherwise access its natural gas pipe without the prior written consent of UGS and UNG. The City warrants that any -such third -party taps shall be the City's sole responsibility. 8.2 UNG's Representations and Warranties. UNG hereby jointly represent and warrant as follows: 8.2.1 Third -Party Taps. UNG warrants that third -parry taps, if any, whether now in existence or added hereafter, shall be UNG's sole responsibility, and that under no circumstances shall the City or Hutchinson have any liability related to such third -party taps or any third party's right to install or access such a tap, nor shall the existence or use of any such third party taps be an excuse to full performance by UNG of the terms and conditions of this Agreement. 8.2.2 Firm Capacity Requirement. UNG has and shall continue to have sufficient firm transportation capacity to provide the amount of firm transportation service to the City pursuant to the terms of this Agreement. 8.2.3 Right and Title to Related Real Propert y. UNG represents that said companies have all right, title, and interest in the real property in which any part of the UNG Pipeline Facilities is located and in which any part of the UNG Interconnect Facility shall be located. There are no matters affecting the right, title, and interest of UNG which would materially and adversely affect the City's rights or UNG's ability to perform its obligations under this Agreement. 8.2.4 National Pipeline Mapping System. UNG is currently in compliance with the National Pipeline Mapping System requirements of Section 15 of the Pipeline Safety Improvement Act of 2002 ("NPMS'). United Natural Gas warrant that the UNG Interconnect Facility and the UNG Pipeline Facilities shall remain in compliance with NPMS during the term of this Agreement. Copies of all of NPMS submissions made by UNG is attached hereto as Schedule 8.2.4. UNG warrants that they shall provide the City with any additional reports, modifications, or updates to said documentation during the term of this Agreement. 8.2.5 Specifications: Upon request, UNG will provide the City with a list of the make, model, size, and specifications of all equipment and materials used or to be used as part of the UNG Interconnect Facility, and, to the extent that any of the following exist, will provide upon request copies of operations and maintenance manuals related to such equipment and materials. 8.2.6 Pipeline Installation Records. To the extent that any of the following exist, true and correct copies of all pipeline inspection records (including, but not limited to, pressure test records; welder and welding procedure qualifications; anode locations; pipe mill test reports; coating, type and thickness of pipes; maximum allowable operating pressure establishment records; and pipeline class location studies) of the UNG Pipeline Facilities made in the past ten months are attached hereto as Schedule 8.2.6. 8.2.7 Gopher State One Call. UNG has registered all underground natural gas facilities it operates with the Gopher State One Call System and shall register any underground portions of the UNG Interconnect Facility no later than upon completion of construction on the Interconnect Station. 8.2.8 Integrity Management. UNG is currently in compliance with the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration Gas Transmission Integrity Management Program, including, but not limited to, the following: (1) UNG has developed an integrity management program or, if there are no high consequence areas ( "HCAs ") on pipeline or systems operated by UNG, UNG has a process in place to periodically evaluate its pipeline to determine if an HCA has been created; (2) UNG has submitted all performance measure reports in accordance with 49 C.F.R. § 192.945; and (3) UNG has implemented third -party damage enhanced protection [[I] if required under 49 C.F.R. § 192.935 (collectively, "Integrity Management Regulations "). UNG warrants that the UNG Interconnect Facility and the UNG Pipeline Facilities shall remain in compliance with all Integrity Management Regulations during the term of this Agreement. Copies of all of the plans, policies, reports, and other documents related to UNG's compliance with Integrity Management Regulations are attached hereto as Schedule 8.2.8. UNG warrants that it shall provide the City with any additional reports, modifications, or updates to said documentation during the term of this Agreement. 8.2.9 Audits and Inspections. To the extent that any of the following documents exist, true and correct copies of all Minnesota Office of Pipeline Safety audits of UNG and all United States Department of Transportation Pipeline and Hazardous Materials Safety Administration inspections (including, but not limited to, valve maintenance, test station readings, atmospheric corrosion, odorization records, regulator inspections, patrolling, leak surveys, external coating and pipe inspections, annual reports, public awareness records, damage prevention records, and contractor crossings) of the UNG Pipeline Facilities made in the past ten months are attached hereto as Schedule 8.2.9. 8.2.10 No Litigation. Except as disclosed in Schedule 8.2.10, (a) there is no claim, demand, suit, action, cause of action, dispute, bankruptcy, insolvency or other proceeding, litigation, investigation, grievance, arbitration, governmental proceeding or other proceeding including appeals and applications for review, in progress against, by or relating to UNG or affecting any part of the UNG Pipeline Facilities or UNG Interconnect Facility which would individually or in the aggregate prohibit or materially impair UNG's ability to perform its obligations under this Agreement; (b) there is not outstanding against UNG any order, judgment or decree of any court, tribunal or governmental authority that materially and adversely affects any portion of the UNG Pipeline Facilities or the UNG Interconnect Facility; (c) no facts exist which could reasonably provide a basis for any such claim, action, or proceeding; (d) no assignment has been made or taken for the benefit of creditors of UNG; and (e) no action has been taken with a view, or which would constitute the basis for, the restitution of any insolvency proceedings. 8.2.11 Environmental Matters. To UNG's knowledge, the use, maintenance, and operation of the UNG Pipeline Facilities have been and are in compliance in all material respects with all environmental, health, and safety requirements. UNG has complied with all reporting and monitoring requirements under all environmental, health, and safety requirements in respect of the UNG Pipeline Facilities. All permits, certificates, approvals, registrations and licenses necessary to own and operate the UNG Pipeline Facilities and the UNG Interconnect Facility in compliance with all environmental, health, and safety requirements have been obtained and are described in Schedule 8.2.11. To UNG's knowledge, the transactions and obligations contemplated herein will not result in the revocation, suspension, modification or amendment of any such permits, approvals, registrations or licenses. 11 8.2.12 Legal and Regulatory Compliance Except for those matters set forth on Schedule 8.2.12, no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against UNG alleging any failure to comply, UNG and its affiliates have complied and are in compliance with all applicable laws and regulations. 8. 2.13 Authorization. UNG is a limited liability company duly organized, validly existing, and in good standing under the laws of the state of Minnesota. UNG has full power and authority to enter into and perform its obligations under this Agreement. The Agreement constitutes a valid and legally binding obligation of UNG, enforceable in accordance with its terms and conditions. ARTICLE IX INDEMNITY AND INSURANCE 9.1 Indemnification by UNG. Except as provided in Section 5.3, UNG shall, defend, protect, indemnify and hold harmless the City, its members, directors, officers, employees and agents from and against all liability, claims, liens, costs, expenses, demands, suits and causes of action of every kind and character arising in favor of any person or party, including the Parties hereto, and their employees and representatives, on account of personal injuries or death, or damages to property (including without limitation claims for pollution and environmental damage) in any way directly resulting from the negligent acts or omissions of UNG, or its agents, employees, representatives or contractors. This indemnity includes UNG's agreement to pay all costs of defense, including without limitation attorneys' fees, incurred by any person or party indemnified herein. UNG agrees that the obligations of indemnification herein include, but are not limited to, liens by third parties against the City and its property because of labor, services, materials, or any other subject of lien, furnished to UNG, or its assignees or subcontractors, in connection with any work performed by UNG hereunder. 9.2 Indemnification by the City. Except as provided in Section 5.3, the City shall defend, protect, indemnify and hold harmless UNG, and its members, directors, officers, employees and agents from and against all liability, claims, liens, costs, expenses, demands, suits and causes of action of every kind and character arising in favor of any person or party, including the Parties hereto, and their employees and representatives, on account of personal injuries or death, or damages to property (including without limitation claims for pollution and environmental damage) in any way directly resulting from the negligent acts or omissions of the City, its agents, employees, representatives or contractors. This indemnity includes the City's agreement to pay all costs of defense, including without limitation attorneys' fees, incurred by any person or party indemnified herein. The City agrees that the obligations of indemnification herein include, but are not limited to, liens by third parties against UNG and its property because of labor, services, materials, or any other subject of lien, furnished to the City, its assignees or subcontractors, in connection with the work performed by the City hereunder. 12 9.3 Limitation on Damages. Notwithstanding anything to the contrary, the Parties acknowledge and agree that: 9.3.1 UNG, its successors and assigns, shall be solely responsible and liable for UNG's obligations under the terms of this Agreement, and failure by UNG to meet such obligations shall not create or give rise to any claim, liability or obligation of Hutchinson; and 9.3.2 The City, its successors and assigns, shall be solely responsible and liable for the City's obligations under the terms of this Agreement, and failure by the City to meet such obligations shall not create or give rise to any claim, liability or obligation of Hutchinson. 9.3.3 Nothing in this Section 9.3 is intended to limit or modify the rights of the City or UNG under any separate agreements either the City or UNG has or may have with Hutchinson. 9.4 Prior Construction. Without limiting the foregoing, it is expressly understood and agreed that under no circumstances shall the City be responsible or liable for the failure of any natural gas facility, pipeline, or related equipment constructed by or contracted to be constructed by or for the benefit of UNG prior to the date of this Agreement to comply with any Federal, state, or local law, regulation, inspection, audit, order, or other requirement. The City makes no representation as to the soundness of such prior constructions of UNG or such prior - constructed facility, pipeline, or equipment's compliance with any applicable law or regulation, regardless of whether said facility, pipeline, or equipment is necessary to the transportation of natural gas from the Hutchinson Transmission Pipeline to the Interconnect Station. 9.5 Authorized Taps into City Pipeline. Without limiting the foregoing Section 9.2, and notwithstanding any other provision herein, UNG shall defend, protect, indemnify, and hold harmless the City, its citizens, directors, officers, employees, and agents from and against all liability, claims, liens, costs, expenses, demands, suits and causes of action of every kind and character arising in favor of any person or party, on account of any dispute as to the City's legal and contractual authority to authorize any third party to tap or otherwise access its natural gas pipe downstream of the Interconnect Station in compliance with the terms of Section 8.1.3 of this Agreement if such claim or challenge to the City's authority is based upon any agreement (including easements) between such person and UNG or any of its affiliated companies, including UFC. This indemnity includes UNG's agreement to pay all costs of defense including, without limitation, attorneys' fees incurred by any person or party indemnified herein. 9.6 Insurance. At all times during this Agreement, each Party, or their agents, shall obtain and maintain the following insurance: 9.6.1 Worker's Compensation insurance in accordance with the State of Minnesota or such other state in which work is performed; 9.6.2 Commercial general liability insurance for claims alleging bodily injury including death, and damage to property of others, with a combined single limit of One it] Million Five Hundred Thousand Dollars ($1,500,000) for bodily injury and property damage per occurrence and in the aggregate; 9.6.3 Automobile Liability Insurance covering owned, non - owned, and hired vehicles with minimum combined single limits for bodily injury and property damage for any single loss of One Million Five Hundred Thousand Dollars ($1,500,000). 9.6.4 Excess liability insurance for claims alleging bodily injury including death and damage to property with a combined single limit of One Million Five Hundred Thousand Dollars ($1,500,000) for bodily injury and property damage per occurrence and in the aggregate. All insurance coverage described in this Section 9.6 must be endorsed with a Waiver of Subrogation Endorsement effectively waiving a parry's right of subrogation with respect to the other Party. The insurance required under Paragraphs 9.6.2, 9.6.3, and 9.6.4 shall reflect that the other Party is an additional insured. Within thirty (30) days of the effective date of this Agreement, each Party shall furnish to the other Party certificates demonstrating that the insurance policies required under this Section 9.6 have been obtained. All insurance policies required under this Section 9.6 shall be endorsed to require the insurer to furnish 30 days written notice prior to the effective date of any modification or cancellation of such insurance to the certificate holder. 9.7 No Consequential Damages. Neither Party shall be liable to the other Party for any indirect, consequential, special, exemplary or punitive damages of any nature whatsoever arising out of or related to actions taken or omissions of such Party in connection with this Agreement. ARTICLE X FORCE MAJEURE 10.1 Definition. The term "Force Majeure" as employed herein shall mean, but not by way of limitation, acts of God, the elements, strikes, lockouts or other labor or industrial disturbances, acts of the public enemy, arrests, wars, blockades, insurrections, riots, civil disturbances, criminal act, vandalism, terrorism or a terrorist act or acts and epidemics; landslides, lightning, earthquakes, fires, hurricanes, storms, floods and washouts; arrests, orders, directives, restraints and requirements, priority limitation or restraining orders of any government or governmental agencies, whether federal, state, civil or military; accident or obstructions involving a pipeline, machinery or lines of pipe; repairs or outages (shutdowns) of power plant equipment or lines of pipe for inspection, maintenance, change or repair; freezing of lines of pipe; tests, maintenance, or repairs to machinery, equipment, lines of pipe or other facilities; freezing of equipment, lines of pipe or other facilities; inability to obtain, or unavoidable delay in obtaining, material, equipment, rights -of -way or permits; and any other causes, whether of the kind herein enumerated or otherwise, not reasonably within the control of the Party claiming suspension. Failure to prevent or settle any strike or strikes or any dispute 14 leading to a lockout shall not be considered to be a matter within the control of the Party claiming relief. 10.2 Effect. In the event any Party is rendered unable, wholly or in part, by force majeure to carry out its obligations under this Agreement, except payment of money, it is agreed that, on such Party's giving notice concisely describing the cause of such Force Majeure, in writing to the other Party within a reasonable time after the occurrence of the cause relied on, the obligations of the Parry giving such notice, to the extent they are affected by such Force Majeure, will be suspended during the continuance of any inability so caused, but for no longer period, and such cause will, so far as possible, be remedied with all reasonable dispatch. The affected Parry shall keep the other Party apprised of the time, date, and circumstances upon which the affected Party's obligations under the Agreement shall be suspended. 10.3 Limitations on Force Majeure. 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 Party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (ii) economic hardship of either Party. Notwithstanding any other provision of this Agreement, the Party claiming Force Majeure shall not be excused from its responsibility for any imbalance charges. ARTICLE XI MISCELLANEOUS 11.1 Assignment. This Agreement shall not be assigned or transferred by any Party in any manner, by operation of law or otherwise, without the prior written consent of the other Parties, which consent shall not be unreasonably withheld; provided, however, any Party may, without the consent of the other Parties, transfer or assign its rights and obligations hereunder to any parent, affiliate, or subsidiary of such Party if such assignee shall agree in writing to be bound by the terms and conditions of this Agreement. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the successors, assigns, and legal representatives of the respective Parties. 11.2 Governing Law. This Agreement will be governed by and construed in accordance with the domestic laws of the State of Minnesota without giving effect to any choice or conflict of law provision or rule (whether of the State of Minnesota or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Minnesota. 11.3 Notices. All notices, requests, demands, claims and other communications under this Agreement will be in writing. Any notice, request, demand, claim or other communication under this Agreement will be deemed duly given two business days after it is sent by registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below: 15 To UNG: Copy to: To the City: City of Brownton Attn: Ella Kruse 3353 rl St. So. Brownton, MN 55312 Phone: 335- 328 -5318 Email: ekruse @centurylink.net Copy to: Dustan J. Cross Gislason & Hunter LLP 2700 South Broadway P. O. Box 458 New Ulm, MN 56073 Phone: 507 -354 -3111 Email: dcross @gislason.com Any Party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other Party notice in the manner set forth in this Agreement. 11.4 Emergency Contacts. The Parties shall supply to one another a 24 -hour emergency telephone number. 11.5 Right of Inspection. To the extent permitted by law, each Party shall have the right to inspect and audit all books, records, and any other supporting evidence reasonably necessary in order to determine the other Party's compliance with this Agreement and with regulatory authorities, regulations, and laws. This right to audit shall extend through the term of this Agreement and for a period of three years thereafter, or longer if required by law. 11.6 Entire Agreement. This Agreement (including the documents referred to in this Agreement) constitutes the entire agreement between the Parties and supersedes any prior understandings, agreements or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter of this Agreement. 11.7 Laws, Regulations, and Orders. Service under this Agreement is subject to all present and future valid laws, orders, rules, and regulations issued by any federal, state, or local authority having jurisdiction over the matters set forth herein. 16 11.8 Amendments and Waivers. No amendment of any provision of this Agreement will be valid unless the same is in writing and signed by the City, UNG, UGS, and UNG. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 11.9 Declaration of Invalidity. If any provision of this Agreement is determined to be invalid, void, or unenforceable by any court or other entity having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, ; agreement or covenant of this Agreement; and the Parties agree to negotiate, in good faith, a replacement to such invalid, void or unenforceable provision and /or any other amendments as may be necessary to ensure that the Agreement, as a whole, reflects the original intentions of the Parties. 11.10 No Third -Party Beneficiary. There is no third -party beneficiary to this Agreement. 11.11 No Joint Venture. The Parties expressly acknowledge and agree that it is neither the purpose of this Agreement nor their intent to create a partnership, joint venture contract or company, association or trust, fiduciary relationship or partnership between them. Except as expressly provided herein, no Party shall have any authority to act for or assume any obligations, or responsibilities on behalf of, any other Party. 11.12 Effective Date. This Agreement shall be effective upon the date stated in the Preamble; provided, however, that notwithstanding any other provision herein, this Agreement shall not become effective until the City, on the one hand, and Hutchinson, on the other, have executed: (1) a Natural Gas Firm Transportation Capacity Agreement, (2) a Distribution Facilities Operating Agreement, and (3) a Natural Gas Commodity Agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement in two duplicate originals. CITY OF BROWNTON I: UNITED NATURAL GAS LLC A Its 17 With Acknowledgment of Hutchinson Utilities Commission Date 6- a(, — 13 HUTCHINSON UTILITIES COMMISSION By Its V(c e ��es► c�.e�-F Guaranty by United Farmers Cooperative United Farmers Cooperative hereby guarantees United Natural Gas LLC's full performance of its obligations under the foregoing Agreement. Date UNITED FARMERS COOPERATIVE IC 18 Its EXHIBIT A DIAGRAM OF CUSTODY TRANSFER POINT, UNG INTERCONNECT FACILITIES, AND CITY INTERCONNECT FACILITIES LOCATIONS [Attached] 1386211.1 2.1 Base Contract for Sale and Purchase of Natural Gas This Base Contract is entered into as of the following date: June 1, 2013 The parties to this Base Contract are the following: PARTY A PARTY B PARTYNAME Sequent Energy Management, L.P. Hutchinson Utilities Commission 1200 Smith Street. Suite 900 ADDRESS 225 Michigan St. SE Houston, TX 77002 Hutchinson, MN 55350 www.seciuentenerciy.com 4 BUSINESS WEBSITE www.hutchinsonutilities.com CONTRACT NUMBER irk 61-2075846 D-U-N-S@ NUMBER 154-439-301 * US FEDERAL: 58-2642294 E] US FEDERAL: 41 -6005251 ❑ OTHER: TAX ID NUMBERS ❑ OTHER Georgia JURISDICTION OF Minnesota ORGANIZATION ❑ Corporation ❑ ❑ Corporation ❑ LLC * Limited Partnership El hership COMPANY TYPE ❑ Limited Partnership ❑ Partnership ❑ LLP ❑ LLP 0 Other: Municipal Utifity_ GUARANTOR IF APPLICABLE ) CONTACT INFORMATION A 'ATTN: V AM eo merd. ii 7.1709 29— "z MOW • Sc SCHEDULING'' A ATrW4 John Wtdipbpsflehr*480,;� EA SMI TELMj,' 320-234650 S i FAX#: NrlrgL27 20*1 =320-;587-4721 EMAIL,?; iwebstei @6 hWErjLhsRn.mn.uE ATTNx4!UasSchedd011In 77k47f-,, %31397.117 FAX#: �i�97.11709 A A ATTN Contract A=&W�i on 3 832 3971781 CONTRACI� AND LEGAL NOTICES TTjV Marc bdW TEeii; = 320-23 662 FAX#: h _.co ationsaseaJ99OW&Y Co EM i2aa ME E msebora mn.us; 7-W �A i. , , I - X V, W 1314M , 141 !K-Crediuve artrngnt,1'. ELM '7 00 00 UF 832.39V- CREDIT TTN- A Jared TEL#: w, ��.320-23 FA X#.320 - 587 -4721 _1321MV17 R—W EMA 119Y%W� fi M Wentene j45112, EMAIL: C_ M IS VIP r"10796 C on., FW ATT& C6nfirih 0TAL g_1 �A TTN. .0.4, VYebsterd 0-102, 4 E''832ix�.3417.1760, 832.391-.081 ;3 i MOP" n tr. EMAIL: 0, trip rirmations@seluenitonergy,,clom "Coln TRANSAC TIf 0 CONFIRMATI I W61 It f�r ' " W, ,fL#: 32 0111- 2 -587-4721 'k L: jwebs on.mn.us Mt te Nl M K 0 R-lt 71 WING INFORMATION`.; , Mm— , WO A 5 IN 'VOICES A Jenniter"T _AN:11�GasAccounffn T 832.397.1700411',IR 832.39f:3Tfj 'FAX# MR, A W&W 10, PAYMENTS��,--' SETTLEMENTS 320 -234 -0569 21 our, @cf. u so mn.us - 21, A izluuuz 004-2ii C ational Wir*e' �-insfer WIRE TRANSFER NUMBERS BA Kc- Citizens Ban rust Co. AB Vorl IF APPLICABLE OT an er CQ4MMFT BIQ: WFBIUS6S MOWN, 9 BAN M thism- MOW C16br-Ifid House Interbank Pei�ment Syste Pjr"&code: ACH NUMBERS (IF APPLICABLE) Ct T: ! k EOT I ETAILS: 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 ® Oral (default) Section 10.2 ID No Additional Events of Default (default) Transaction OR Additional ION Procedure ❑ Written Events of Default ❑ Indebtedness Cross Default ` Section 2.7 ® 2 Business Days after eceipt (default) B ❑ Part A: Y Confirm Deadline OR - .k,�<�.: ;�« ❑ Party B: El Business6ays:;afte{> "receipt :. ❑ Transactional Cross Default James J. Goeri "' Specified Transactions: Section 2.8 ® Seller (default) Vice President of Risk Control Confirming Party OR TITLE Vice President ❑ Buyer Date: 6/26/13 Section 10.3.1 ® Earl Termination Damages Apply default Y g PP Y ( ) Section 3.2 ❑ Cover Standard. (default)?.=;,; ;; Performance OR4' :'-° `" ��: �:4.,�, b,�:: >,:,;:.:.;.;. Early Obligation ` "" g ® Spot Price "_Stan(ard _ k'e = <`` Termination OR Damages ❑ Early Termination Damages Do Not Apply Note: The2fol /owing Spq't:Pr;ce Publication "aPnlies to both`of ttie'``" immetliatel recedm Section 10.3.2 Other.; ® Other Agreement! etoffs'Apply (default) �v s Section 2 31 ® Gas Dail Mid oint default P r Y P{ ) S of Pice O >- A reement g Setoffs" ® Bilateral default ` )� a Publication ❑�" ,, "` %" .. <:° ❑Trlangtac; z" - ORS El Other Agreement "Setoffs Do Not pp y e Section 6 ® #°Bti er Pa �r Y ys At and After Delivery Point (default) r,N - Taxes ❑ 1,;SeIIW Pays Bef6re`ari6 At Delivery ° 1 °-' ifs R�Ja9 - � "v a• �N',^ '"h - �� f�, �S'�' iy�`F ydjXpE`° gm Section / defive �'1v 'G +p� 71 ® 15r" Da of Month followin Month of KIWI' w Y 9 rY Paymenfg Section y ZC:(default) .Choice N r r�] 'ROW 6f of Month followlri` Month of delive MOM,�yG�a' Section,? 2 ®Nre transfer ( defailt) Metho Paymentl ®quomated Clea�rnghouse Credit Section15.10 � ® Confidentiality�applies (de Ault) t' of (ACH) ❑ Check Confidentiality OR aPly „; - ax c.' izr wn t ,^��^ , .. ',a•,'y ❑ onfdentialityloes "riot :., •': - t ++ "` - of w "tip Section 7 7 t ®�Netting applies (default) Netting x pNe na does nota �n,:t, ❑ Specral'Pio "visions Ner pf sheets attached:, r 4e r - ❑Ad endu IN iV1/ITNESS WHEREO1= sthe varties0fiereto have executed'this Base Cr,ntrnnf in r iRliir -aro x"�6F+ +? diS+.,d ^. cSEQUENT ENERGY MANAGEMENT, L.P. min.. PARTYNAM HUTCHIN, ION R Z B SIGNATURE„ ;�« By: , James J. Goeri "' PRINTEDNAME Lel)n M � t Vice President of Risk Control TITLE Vice President Date: Date: 6/26/13 %,opyngnt U zvuo Man American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 2 of 13 September 5, 2006 General Terms and Conditions Base Contract for Sale and Purchase of Natural Gas SECTION 1. PURPOSE AND PROCEDURES 1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. "Buyer" refers to the party receiving Gas and "Seller' refers to the party delivering Gas. The entire agreement hatWoon the nareiae ehnil ha the rnntrnrit as ripfineri in Rprtinn i q ?_> sc.. 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 follow fi§g Transaction Confirmation procedure. Any Gas purchase and sale transaction may be effectuated in an EDI transmission op telephone conversation with the offer and acceptance constituting the agreement of the parties. The parties shall be legally bound;fr,'brn the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be consider4a "writing" and'to have been "signed ". Notwithstanding the foregoing sentence, the parties agree ok, that Confirming Party shall, and other pa� may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EQU%W tually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction xopedure) pro `Idea that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confi , ingP'arty dopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identificatiola, nd a ,thentication of Confirming Party. If the Transaction Confirmation contains any provisions � fr " other than those relating to the.=mmercial: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 ordditional,representations,and warranties), such. r visions shall ot•be deemed to be accepted pursu n a ;.Section 1.3'but must �e 4expressly - agreed to by both ,,pa es; pro ide t . a e #orego' grsha ::not in al'Idate ri transac ions reed to b the parties .%M .,�,- _ w x. .' 'W$ WriO Transaction Procedure: f "8 �s; L � 1.2 hYTh parties„ ill °ase the followingTransaction }C,onfrmation procedure. Shoed the parties, co a o - an agreein nt: egarding a Gas purchase an ale- transacfi for. a particular 'Delivery Period, tie Confirming .Party shall - n he other pa may; record X. r aka },,:.:.F: that agreement on a. Transaction Confirmation and ,communicate such Transaction gConfirmation: y. acsimile, ED or mutually agreea6Id., eiectronic-means, to the ",other party byy, the; close of the Business Day, following thw a e- .fJ greemerit . 'The parties & v Aa-m2 { -:x t "t8 a• -. 8 mad ackkno edge that theiriiagreement -,Will not be bmditlg until the exchange of non6onflicting Tfransa Ion Confi ations# or the assn e,.of,the C o n . Deadline wi ho�t='ob'ectlon from tWreceivin a, , as rove. ed In Section '. ' 1. }-.lf a ' e ding arty's Transaetion Confirmation °is materially different from the receiving pa 's u d tanding of the a eement referred >to';in'S cti n 2; such recei 'ng arty shall notify the sending par y Via facsimile,`tDI or mut all tee bee el nip eans by the CorififfliMeadline, u . ess such receive g MR party has�preveously sent a T nsaction Confirmati on to e e din - arty. a adore of the receiving partytto so no ' -tae sendin kpa .' in writing by the confirm Deadline •' nstitutes the em n to eaerms of the.. a aeon descnbe . In the sending party's TransactionConfirmation:° ff.' ere are an _ ateria ffe n s tweenytmely sent .. Transaction: Confirm Opp` the :same tran�ction en neither Transaction Confirmatio s = 1= a 'n n n 'I s 'r u less such �.a , . differencesare'reso I eluding theuse:of any evidence tFiat'clearly resolves e;Adifferences i e ra sa 'o Con a41on In the eve ,of a confli t g. "e terms of (i "binding Transaction` Confirmation .p _ rsuant'to Section 1�2, iii a agreement o he parties w ichriay 'be- de ceby a recorded= onversation ere the parties have selected the Oral Tra coo rote ore o the Base Contta�(q� the Base Contract, and ese GeneralTe,z s and Condetions, the teems of the doe s all govern in f e priority listed to hisseneripe. �.,.•, , ;L 1 4 = a The'pa .'es a tee that ea party may else orncally record alltelephone c eisations with re o this k n c „etween theerpective e' p ogees,; without ayecial or furter ,notice to the other party. Each arty shall o in a ecessa t co s nt of its ag en`tan %hemp oye ta. uch recording f W here trhhe artier have selected the Oral ransaction- o ore in Se eon of the Base Contract, the,. altiesaagree not #o :contest the validity or,'enforceability of telephonic�recordings en erne -in acco anceawith the require ents of this' se °Contr act x a, �,• - SECT.ON 2DEFINITIONSS " •, r r The te.. 9-set forth el w hall haveJMe °.meaning scribed, -to them below. Other terms are also de . e e sewhere;m t e�Contract and spa lave th ea, ings ascribed tokthem herein } :::r ra r 2.1 "Additiortaf - E,` },ent of DefaufY� shall mean }Transacfional Cross Default or-lndebtedness: toss Defaults eaph as and if selected by the parties;pursuant to the Contrac =Base 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 Terms and Conditions 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 Intemational 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 pis time stamped after 5:00 p.m. in the receiving party's time zone, it shall be deemed h' -t received at the opening of the next Business Day. 2.8. "Confirming Party" shall mean tfe;party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party. 2.9. "Contract" shall mean the lefgaA , binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and '`(iii) where theParties 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 ED[ transmission or by telephone, but that have not been confirmed in a binding Traansaction Conf or ation, 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 t'ya�h'e' parties, a ransaction. 2.11. "Contract Quantity "` shall mea lie'' quantity of Gas to be delivered and taken as agreed to by the parties in a transaction. 2.1.2.,.:ri;.. ,. , "Cover.,Standard °, as referred to in Section..3.2 - shall -mean hat_.if .there is an up exc�u�s�ed .failure to take or deliver any quantty of Gas pursuant to'this Contract, then the pe tormin party s all, use commercially r asonabl �e o ssto (i) f Buyer s the peifi rmin party vobtaf as, (or an .alternate fue'(166M` ected by Buyers rid replacew t Gas is not ovaila " e. , or ii if,:S ler is the e gparty f ell, in either ca e;, at a price reasonable for the delivery or=production area;, s3applicable� con i. tent with: the "arriou twof note a provided b the no performin a y y p'' .s , y> y ggp ,rty; the immediac of the Bu ers Gas cons m i n- needsgor ellers Gas sales requirements as applicable the „quantities involved, and the anticipated length °of failure by ythem nperferming�ar`�y� ' fir, i,�wt $'', 2 13 , , G,redit Support Obligafion( ., shall mean any�obligation(s) o provide ors establish cred -,-1 pport "for, or'.won behalf of, partyy to�this Contract such as cash San err evocable Standby letter of credit, a margin agreement a pre�a meet, a security.i to Brest in an asset guaranty, or {other good andysufficient security f 4 continuing -,nature. , Day'shallmean a period {of�24 consecufive hours, coextensive with a day as defined by- therReceivmg Transporter in a particular transactionw� St2 5 Delivery5,16nod" shall besthe period du ngTwhich deliveries^are ^to be made as a reedto� he arties1nfa tr nsaction. w g 2.1 1 *, `�,�D ive Pomt(s)” shall r ,ean. such points as are agreed toabytthe parties rn "a ransactiorr _ ; .. �. a ° -.? 2. <7,.s ^F.. ='��"EDI' ha l a can an electronic data mte�an a pursuant an..a reemenn Bred into b the parties,�secificall g P Y relating'to�thecomm,unica ion of Transaction Confirrati'tis nde�this ro rz .v:. 2.::`8: `'« EFP 5 "s II man the pu % chase, sale o4exclar ge of nat ral `Gas °as. the "physical" ' ic)eof n xchaN gefo sphysical tra ction, mvolvin as futures contracts. EFP #shall ncorporate the mean n and remedies f F ' . rovide ha a a ' � g P party's excuse or'nonperfo nan #ce of its obligations to delPer.3& receive as will be ',governed b t e es f the elevant futures exchan e% u a ed.under.the Com odity Exch n t .µ" g. g, $ age � �_ fq ,' 2..:. `yFirm�all'rriean thateitlier party a� interrupt its performance without liabi6 onl t he a enY t at such A K - ,. �'° perfo anee is pre . ented_ for reasons ;of Force Mae re' provided, however, that" during Force. , I e re mterrup i tie party :. �� in o -Ing Force WMa a re ;ay be resppnsable for any mbalance Charges as set forth n Section el ted o its ante ion after thee oinafion i ; title ?to „the Transporter and until .:echaiige in deliveries and /or receipts is confirmed ti tie Train portef kV ? �,. t can any ure of h droca,bo swand noncombustible aces in a aseousxstate,consis ' nga i»aril of gq vc r :. Y Y 9, 9 me harne `• ` -” ;.._. a�. PFD Y uz 2 X N611 mean anyentity that has prgwded a guaranty of the obligations of a party hereunder = M. 2 22� Imbalance Charges shall mean any fees,- penalties, costs or charges sh or in kind ,xassessed by a¢Trans other for failure�to3atisfy therTransporter's balance and /or nomi action requirements. CM 2 �3 `Indebfedness`,Cross Default" shall mean,dselected on the'Base Contract`by the part h h espe #o a arty, that it or its. Guarantor rf. any;'^ °experiences :a default arsimilac,:cogctitionor.:even# - however,:therem .defneunder %ohe or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligati whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowe money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 13 September 5, 2006 2.24. "Interruptible" shall mean that either party may interrupt its performance at any time for any reason, whether or not caused by an event of Force Majeure, with no liability; except such interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by Transporter. 2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm. 2.26, "Month" shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. 2.27. "Payment Date" shall mean a date, as indicated on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month. 2.28. "Receiving Transporter" shall mean the Transporter receiving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter deliveririg Gas at a Delivery Point. 2.29. "Scheduled Gas" shaLls ea„pn;�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'othert,, -- action 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, t #£ V` ; -. 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 publisledafo %such location for such Day, but there is published a range of prices, then the Spot Price shall be the average of such high arad1 prices: " I no price or range of prices is published for such Day, then the Spot Price shall be the average of the followingOhe price(dtermined as stated above) for the first Day for which a price or range of prices is published that next precedes °t, J Hleva Day and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published thaf,ne. 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 f. -tryb ra trans "cfion formeu- 2.3 ursuaii o Section 1 for a° articular'Delive ` .;Peno' "d IPA ' ^v ,-.;�4 s -:t ;i? ' -;:i .. - �''r' `` °fir r"°' Via` 3 �, Trans 68 ional'Cross Default° #shall meeffi J elected on the Base Contract by the parties with rrespect "toga party, that it �..: «,.. shall ;be in,default�owever therein defined, under any�Specified Transaction. °, t.6> S �r :� - §', 'F� -� x'�'. :c 2.34:' x` _ Termina'on� ' e a Option" shall'mean the option iof either party to terminate a transaction in the ieve t�5t the o er party fails to Q n, peg obligation #o deliver Gas ,the case ofS6II&br3to receive Gas =in the case of -Buyer for a des/ nat d number of days luring a pie as specified o the,apphcable Transaction Confirmation 2 35 TranspoFt &',(§)" shall mean all Gas gathering or pipeline companies, or loc.I!distribution companies, acting in thewcapacity of a � 4 :. T . transpo er Uanspo ng f,Gas for Seller nor Buyer upstream nor downstream, respectively;; -'of the DehveryPpursuanoa articular transacti on SE i ®N:13. U PERFORM CE OBLIGATION �� ��` f`�F �. �A­­"'e=��y .s;: �� +3.Sel er agrees'tosell and defivQr, and Buyersagrees to receive and ;purchase, the Contract :Qiian "r parti cul transaction in a he terms�of the Confrad6"�Sales and,p rch ses will be on a iiin or Interrup ble�bas s as"ag eed to b. t e: parties in a *a> y transaction: .._.,.s:' ��.:ss: Price Standard: 3.2. The sole and exclusive remedy of the parties in the event ofa breach ofa Firm obligation bz deliver or ��--------- ` receive Gas shall meooveryofthofnUowing:(i)inthoevontofobmaohbySed|oronanyDay�).paymontbySeUerbn8uyorinon—'--'t equal to difference between the Conb�ot{uanUtyand the actual quantity delivered bySoUorand n»u* ked by Buyer for such Day (m'mu�p|iadby the poo�vod�enonno—� any, n�ainodbyeubbauUng the C«nbaotph m* from m»Spot ph ««;»r(ii)in the event ofa breach by Buyer on any Oay(o)p"x mentbyBuyerto8oUorinanemoun�o qua | m �n* o'o*»»nce �*$w*un the Contract Quantity the actual quantity delivered by Seller and received by B uyer for such Day(n), multiplied by the positive difference, fony obtained by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under orthi` Section 33 but S U and/or 8 anooCharges, � any, aopm�dodinSenUon4.3. The amount = such unfavorable difference shall o after presentation of the performing party's invoice, which shall -set forth the basis upon whic such aiVunt was calculated. ].3. Notwithstanding Se writing by both parties. 3.4. |n addition hoGooti executed in writing by both pa nonperformance triggering the bo compensated, and how|iqu SECTION 4. 4.1' Seller shall have spons for transporting the Gas from i- pNnd parties may agree bn Alternative Damages ino Transaction Confirmation executed in the parties may provide for Termination Option in o TronenoUun Confirmation �oUon Confirmation containing the Termination Option will designate the length of m and the procedures for exercise thereof, how damages for nonperformance will ocu|ou|ated. CIM|NAFONS.AND IMBALANCES transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility 4.2. The parties shall cod-RdRd"106 thdJ%'AQ'6rN1_5�N NIN ppation activities, giving sufficient time to meet the deadlines of the affected Transporter(s). titnelyipfio Notice, sufficient to meet the requirements of all Transporterl(s) involved in the transaction, of Each party shall give the other pafty' the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery nb*'the other pairty� 't ge y' al ell as such or reimburse Seller$ ?ncRe, I Jyleller If th -of Gas greater1han or less than--t "e, chedule- 'n Sel 4"n"' uantky ES IR yer Pays Pe Seller,7 6 be paid all'tdxes fees, levies,'--,." It Gas at all promptly' reimburse W-cither entitled other pa Sell' h5l0pay or se paid a[�, 't I Taxes a ' ',the I'"' , NEW paid all is r If a pail or pal; SM all promptly reimburse the b1ther pa T, u Mu %4077'axes. Yj entitled SECKTION T. BILLING PAYMENT AND.Aub IT 1­11��*ing Month and 6th billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quant' on the following Month's billing or as soon thereafter as actual delivery information is available. kv ZUUb mon American F-nmgv Standards Board, Inc. wAsoaetandard 6.31 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 connect; 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 pari 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 tohmit a full amount payable when due, interest on the unpaid portion shall accrue from the date due wk until the date of payment at a rate equal to ;lower of (i) the then - effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annurp;,%:(i) the maximum applicable lawful interest rate. 7.6. A party shall have thennght, ats owl expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the �b�ooks, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy�,of any statemencharge, payment, or computation made under the Contract. This right to examine, audit, iV 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 co cdli s V61y presum d final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or.billidg§'we objee ed to in writing, with adequate explanation and/or documentation, within two years after the VOW Month of Gas delivery. All retroaetive:adjustm'er' under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy - • w ' 7.7. Unless the parties Hb'ye'elected'.1('Wthe Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and'`owtng, and /or past due, arising under the Contract such that the party owing the greater amountshall makea�sigle payment of the netamoun�tKrtotheother party,in accordance withecti n- 7;provded hat no payment o requited made�pursuarit to the" erms of any Credi�SupportFOblligation or pursuant to Sectio h 1 be b ect to setting underhis;:Sectiori Ifeaparties hayeexecuted a -4r J-7- agreement, thesterms and conditions therein sha I „rerailo the SECTION 8.= �ry�,TITLE, W. ;x,.} 8, Unless othelse specii haveisesponnsibility p fqr an8 assun Poir t(s): A13,uyer sti5IPhave respo 8.2 :-`ySeller ' arrants that it hegun erg nd de fiver derby it to I SEGO SANI SECTION MERCHA _ T L1, F FITNE 8.3 •. ,:Selfecaarees:. o indei _.. "P tG. The' Customs Tern of U.S '1202, sC Temto , fAhe U theyUni e State., anyiland all appll 8.5" Now y that "sudh ;a X rise froi SECTaON 9. `'All Tr of court ty dama id save I ath) or pr ;e that tl be rest J keepi e other of Gas ICES made liability for and ve the i ree and -L OTHI ANY Pp uyer an ms "), fn Ti said ( ess from damage very of is define provide :sents ai e for en uiremen )ns of thi :d by Sel t EMNITY ',,. Gas shall pass from Set ect to the Gas prior to anv liability: with respe( liens, eriQuip rances, `a N F�CP TIES,RESS OR I 'URPOSE ARE DISCLAI :o Buyer a! "'delivery t said Ga: 36d and r nd claims. harrmlless fffr�m!.%all losses, lia- bilitig, id`;Mle,,persons;,�Vansing from orieuV er charges,thereo� which attac be from any anted ,all,,persons, arising from )as or other charges thereon which a ft insfer of title to all Gasgunder this C ral note 26f the Harmo zed Tariff r, that in the event Sel epjook title s that it is ithe importererecord for :ry summary filings as wellas the pa as between °Seller and Buyer, Seller w the quality requirementsoJ,Section 5. -0` t instructions, and othet,�gommunlu J , in vvr1 1 9n by the respective parties, 9.Z,;': ` `1- All Notices required hereiaride r shall be'in` iinffng and may be "sent by facsimile or a nationally recognized overnight courier service, first class mail or hand delivered. all ClaiCris- 1to—tl a extent pu Base means, 9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sending party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 7 of 13 September 5, 2006 not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as is confirmed by the receiving party. Notice via first class mail shall be considered delivered fiv 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 Guarantot, "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 sta dby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuingfirstriority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash�ft' f M!by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the securi 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 fo ;the benefit of creditors; (ii) file a petition or otherwise commence, authorize, or I acquiesce in the commenceme t� o a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceedig: "corrimence'd, :against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be 47- r s' unable to pay its debts as thy'f_all due; (vhave'a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respectuto t or sutistantialJy all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligationsrelating .tothe 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.) e nder on. or befforre,ahe second Business Day_followin ,written Notice that such.,paymentJs_due;,-orJx).be the affected p rlyztth respect tom y gtlditionalEvent of Default.; Then „the..o her party (the Non,- Defaulfing is a"II havetheright,at: its sole election, to imme%ately withhold and /or suspend deliveries or payments upon "Notice andto teminate 'and Gliquidate the �,,�, tra 'gactiorf$ under theF Contract in the manner provided 'in Section 10.3, in addittiion to any and�all other remedies/available heleunder. ; 10 3 Event of Default has ~occurred and is� continuing, the Non- Defaulfing Party shat have tF e,nght4by�o ge to t Defaultin Pa grty, �t esgnate a Day no earlier than the FDay such Notice is given and no later t a 20 p ys aftersuch Notice given as angarly: #e rrimafion date(the Early Termination Date ") for the liquidation. and terminate . n� ursuant to Sects n X10.3.1 of � r p: aIl,Ftransactions under he Contract, .each a "Teiminated.;Transaction ". On the�.Early Terminafiori ate, all ;transactions will yn $; terminated th:er than those transactions, if any that ma not be liquidated and`- ,brminated tiunder Iicable`i1aw Excluded Transactons ; w ich EXCluded Transactions must be liquidated and terminated as oon therea r s isle ally # e is"sible and upon ;terminafon=sha Yoe a Terminated;; ^Transaction; and <b`e valued consistent wit ection 10 .i�f: tie o With res _ U,410 each Excluded Trafisaciian; ' s actual termination date shall be ttie Earl Termination Date for ur oseM ec ion X10.3. ,, 4 p Theparties hav e'selected either`Early Termination Damages Apply' or "Early Termination: Da . ges Do of Apply" as in icated4on he t3aseContract.:'. Eart''ermina ion.. arrfa es A ply: Ib::3 I As f he arly Termination Date, thb-Non- Defaulting Party; hall determine, in ood "faith and in``a co "merciall reasonable ma er; (i" e amount (whether,�or;< of ;then due) byeachitY.with respec# o N as'c�eliver d neceived �:um between3the pa es er Term inated'Transactio s a d:�Ezcluded Transactions oil'-and before he a y ermina 'on Dafe" and all x� �. AW- otFierzapplicablebchar es:relating to st�ch` deliveries and.- ee ipts ( includAg without limitation any a, ,ou sowed underSection 3.2), for 'wliseh payment" s t yet been; made b the a' t o owes suct payment under this Contra n- . !i) the r et Value, as defined Blow, of$- aeh° erminateddryT ansaction. =-:TheRNon -Defaulting �Party shalCfll liquidate :n c aerate each:° 51,J Mn Transac ion at ft a eVValue so thaVeach amouriVequal to the difference between�such Mark aloe a d the Contract Value, u, eN as define kbelo =s c, ;Terminate �Transaction(s) halle due to the Buyer under the Terming ed T saction(s if such` Market Value exceeds he Con ~act Value and to the Seller}if theme Apposite is the case; an,d ° . , where ap"propnate > isco nt each amount th n due under clau e- x' above to Present value In a commercially reasonable maan, r as of the�Early : ermination'- , to take account u",Jhe pie.. fotl be `een the dateyof liquidation and the date on which such amount would have_ herwise been due pursuant zg bw to the relevant Te inatedt Transactions). For =purposes of tf'i 7Section 10.3.1! "Contract Value” %means the amount of Gas remaining to be°delly re ,or pu chased under a VI h" , .. , �� Vk 4 Art v ,. transactiWirnultiplie, yv, he Contrac�tl�,e Pce, and "Markef:_)3alue" means�the amount remainirig't, .be delivered: =oUpurchased uncle aJransactio u #iplied by theparket pnce for, similar transaction at the bel a Point determi a the No "Defaultin Party In:a commer sal. `[ easonable `manner. To asceitam :the. :Market Value, the Non = Defaultin ,Ra ay. =con d�eamong other va!uatlgns, ,any or" afl ";of ;flee settlers, ~'- ,prices of NYMEX Gas ,fu#ures,. contracts, , quotations from lea tng' aters -m energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third -party offers, all adjusted for t length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) i order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Termination Date (including but not limited to "evergreen provisions ") shall not be considered in determining Contract Values and Copyright © 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. gym:: The parties have selected either ; =`Other Agreement Setoffs Apply" or "Other Agreement Setoffs Do Not Apply" as indicated on the Base Contract. {u. . Other Agreement Setoffs Apply: . 4 IN, ' Bilateral Setoff Option: t " =? 10.3.2. The Non - Defaulting Party,sfiall 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 "). =Af •i(s sole option and without prior Notice to the Defaulting Party, the Non - Defaulting Party is hereby authorized to setoff an[;`Net Settlement :Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligatiot%elating to thet6ritract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by th party that is - entitled to the Net Settlement Amount under any other agreement or arrangement between the parties. yr¢e;° Triangular Setoff Option: may. y L;:ay: 10.3.2. The Non- DefaultingV 4Partyi°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 other4(theNet Settle. ,ent:A�mo.unt "). At its sole option, Aand;without5prorotice to the Defaultg Parley; he on-:Defaulting Party is hereby authorzed to a off (i) any NetbSettlement Amount against any margin or other collat' khe d y' party: connection With any Credit' uppo "O ' iq Pion relating to the Contract ;(u) any Net Settlement Amount against an, mo t( :(including any excess cash m,a - in or excess - ash collatera oved b or 4to',a.,pa t, under a "other a reement or aria me t etwee the. artiest m ,�.> YP,ttY oY' 9 9 ,P (...) 9 ) Y ,n. any::Net§ettlement A oant owed to th °e :Non- Defaulting ;Pasty against Kan_y amount's:1(including any1e ss ash margin �o excess � x cash collateral) o edn b Y the Non Defaulting Party�ori Affiliates fo the Defaulting Party un . er other" agreement or arrangement; (iv > �y Net Settlement Amount owed <to the Defaulting _Party against any amoun °s) (including any xcess cash �. Re ,. �- margin.�or' excesMash .collateral) owed by the Defaulting Party to the Non -Defy Iting Party ;yor i s ,A iliates untler any other agreementor arras emgnt; and /or (v)`' 'hy Net Settlement Amount owed to the Defaulting Party3againsay amount( )}(Including any ecesashm�gor exc ess collateral) owed by the Defaulting Party oats Affiliates totheNonDefauItlrig +Party under any.00jeri a reemenf or r,.-an ement Other; A" reement;vetoffs Do Not Ap I' � 0 3 -2, r'R, The No Defaulting P,artyshall net nor- aggregate, as ap ropriate, any and -• ll..a .•oun s o g be twe they - parties uride Sec ion "1:.0 *3, soathat all such amounts are nette=o °r aggregated'-"' single liquidate Y moon , ay ' le b . - e to the f x• r other :the Net Se le`nie t Amount'q -.'tj' At its sole optiori ghd without p . otice to the De ulti a he Non <De aulting Party r. s. may etoffr y Ne ttlement Amount'against anymargrn,orother collateraltheld by a pa n• onnec ion i `hl =ari . C edit Support ObII a on relatln` ?tom . e'Gontract. 710. ' f y ob1i ation that 's to be included Iii any netts g,ggregation or setoff ursua t to Sec '0 10.3.2 is .4 x : �. unasc aimed ;. =t No - Defaulting Paarly' may in good,fa #hs,estimate that obligationand net, agg egate r etoff, as pp cable, in respect .ftthe es im to subject to th.62Non- Defaulting :Party accounting to the Defaulting Party when obligation. °is• s brtained. AnQ amount no, -t en: due:, hich is Included in any netting aggregation or setoff pursuant to Sectio 0 3 2 shall 2 tlI co nted to net prase 'valuer n {aEcommercially reasonable manneradetermined bythe Non - Defaulting Party.ry. ;.. N, 0 � BAs soon practicable afters Iiquidatidh Notic shall be given by the Non - Defaultin the De aulti g?Party of t-S6- lement mount, and whether the Net Settlement Amount K;due to or from the on -Def u ting Party, he. Notice ,. �,_ -r; shat inncl -de a wnttens atement explaining in reasonable detail the calculation of the Net Settlement - unt, provide hha failure m � c > t i1 to dive such Notice: s. all,not affect he Validity or enforceability of the liquidation or Ive rise to any cCai. the a ting Party agate nst ge' Non = Tefaulting Party. TfeNet Settlement Amount as well, as any se offs applied against such amo ursuant to Section A 0 .2, shall a paid by the close of busines�,on {tie second Business Dar flowing su . o 'ce; which a e, shall not be ea ierftf an the Ea y aTermination D e �, Interest oil ;anySunpaid portion of the Net Settll moment Amount as djusC by setoffs, hall accrue from a date due u ' jthe date of paymenitrvat a rate equaltoe lower of (i)' #the then - effective prime rateofi publish u der. "Money Rates" b The Wal ;Stn�etT.loumal, lus.two` percent er annum ,or a the maximum a Iicable lawful interes rate 10 5ft "'The pa eslagree that f e transactions, Hereunder constitdte a "forw6 d•> °contract "o - t —n, a means .g' 6 ift United St tes Bankruptcy Code and that Bu�yer-and Seller are each,16rwdfd contract merchants" -within th'e:meaning_o he' nited States Bankruptcy Code. 10.6. The Non - Defaulting Party's remedies under this Section 10 are the sole and exclusive remedies of the Non - Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 9 of 13 September 5, 2006 10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close -out netting provisions, the terms and conditions therein shall prevail to the extent inconsistent herewith. SECTION 11. FORCE MAJEURE 11.1. Except with regard to a party's obligation to make payment(s) due under Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term "Force Majeure" as employed herein means any cause not reasonably within the control of the party claiming suspension, as further defined in Section 11.2. 11.2. Force Majeure shall include, but not be limited to, the following: (i) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms ot.'ltorm 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 disturbarices;:snots, sabotage, insurrections or wars, or acts of terror; and (v) governmental actions such r as necessity for compliance withany cout order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority hav#,ing junsic�{ion. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the'everit o', =occurrenee once it has occurred in order to resume performance. 11.3. Neither party shall,: 'b entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circimsances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in -path, Firm transportation is also cur ile ;4(ii) the party�claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations:;with easonable di' §patch; or (iii) economic hardship, to include, without limitation, Seller's ability to sell �.,. ..��. Gas at a higher or more advantageous price;,, ; afi7$he Contract Price, Buyer's ability to purchase Gas at a lower or more advantageous price than the Contract Price;.po . a pregu�latory?1 gency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyers: markets }oi - `Buyer's inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the�loss or failure of Seller's gas supply or depletion of reserves, except, in either case, as provided in Section 1,1:2. The party claiming Force Majeure s.ball,not be excused from As -responsibility for:,lW balance 11 4k 'Notwithstanding anythingo the contrary h n, the parti s agree that'ahe settlem f'stnkesiocko�its..orother industrial disturbancesshall be within the sole disereti6ri the art experiencing such disturbance � > Y 11 5 .a The party whose performance is prevented bey Force Majei re must prw de�Notice to the othef party. In f al Notice may be given orally; howe er; written Notice with reasonably,.full:particulars oof :the event or bocurrence 19,require d as soon s reasonabl possible Upon pr�owding written Notice`aof Force Maleure io the other party, the affected party will b&ffilie�ved :of its otingafion from t onset of the;Force Maleure, event, to,rriake or accept ddlr�very:of Gas, as applicable to fhe extent and for fhe duration of Force Maleure, and neither party sh911'b deemed to haYiei !led in such obligations to the'other during tbdh occurrence or event, a•. ,. 11 6 Notwithstanding Sections 11 2 and 11 3, ttie parties may agr "ee to alternative Force Majeufe;provisionsn a Transaction Confirmation executed iriiivriting by both `parties g K ,., s pl; SECTION X12 � s a ;, s t drat' s .� C TFiis Contract; ay be terminated on 30Day s written No ce,.liut shall remain in effect until the °eprration o he <atest Deli a period of an transaction(s). The.Prights of eitherypa_y pursuant o.6ec on 7.6, Section r10 Section 13,'the?obligati `ns o makezpaym thereunder, and the obhgpatron f either party to indemnify the ther, 4pursuant hereto Shall survive the1emiina own o ih Base, -on tract or any transac on SECTION 13� = » = � L= =IMITATIONS FOR CH nFANYPROVISION FAR WHICHAIIEXPRESS REMEDY OR 9u{EASURE OFD' ES 1S PRQVI®ED SUCH EXPRESSREMEDY OR yMEASURE ='OF DAMAGES SHALL BE THE SOLE AND }EXCLUSIVE RE " EDYA PAR S LIABILITY zm- ES'S. 3 ..*a � , ,.s -z'.z m X64 HEREUNDER SHALL.BE LIMITED ASSET FORTH INSUCH PROVISION, AND ALL!OTHER REMEDIESiOR=DAMAGES T W OR INECU'ITY. ARE :ALVED. IF NO3aRMEDY O MSURE OF DAMAGES IS; E�X PRESSLY P OVfDED HE PIN R IN A T SAGTION;` A P�4�RT- S LIABIL +ITS SHALL BE LT ITED TO DIRECT ACTUAL DAMAGES ON Y S CH D EC�T CTUAL �.. DAMAGES SHAL_- B ` E SOLE ANDY CCLUSIVE' EMEDY, AND ALL OTHER REMEDIES OR DAMAGES.. T LAWr . ' . EQUITY ARE1NVED.UNLESS EXPRESSLY HEREIN - POVIDED, NEITHER PARTYSHALL BE LIABLE. OR CONS QUENTIAL, +..i «,w INCIDENTAL, PUNIIVE, ;EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS{ OR OTIR, USNESS IERRUPTION DAMAGES;OBY STATSUTE, IN TORT QR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTERWISE IT IS THE ENT OF THE PARTES THATTH_E LIMITATIONS HEREIN IMP�OgSED ON REMEDIES AND�THE MEASURE: OF +A MAGES - ITHOUT REGARD TO THE ,CAUSE OR CAUSES „RELATED Ulf' TO, INCLUDING THE NEGLIGENCE O TY, VN ER SUCH NEGLIGENCE BE OLE,,JOIN I OR CONCURRENT OR�IVE OR PASSIVE. TO THE¢EXTENTAN.. ES REQ IRE TO BE PAID HEREUNDER -A LIQUIDATED - %E PARTIES- ACKKNOWLEDGE THAT THE DAMAGES ARE DIi=FICULT OR IMP SSIBLE TO aN DETERMINE, OR ,O�"F{ERWISE OBTAINING AN ADEQUATE;REMEDY81Sx INCONVENIENT ANDTHE<DAMAGESGLCULATED w w� . :',':a . 'B'A•.csrc�%'°.. :XCSx� atis x2{{atw. - t d �r.v 'i"'.'',' ?.° HEREUNQERCONSTITUTE AREASONABLE APPROXIMATION OF'THE•HARM,OR LOSS. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 10 of 13 September 5, 2006 SECTION 14. MARKET DISRUPTION If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non- affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party's two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, 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 dP .� the permanent discontinuation or materr I; suspension of trading on the exchange or market acting as the index; (c) the temporary %ln1. or permanent discontinuance or un�avai bility of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a a'terial 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 nu�i ber;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. MISC'ELLANEOUS' v_ . 15.1. This Contract shall be: 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 i 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. k� ; 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,.& -use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER THIS CONTRACT ACKNOWLEDGES AND AGREES zTQ,NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, OF CONDITIONS OR REPRESENTATIONS, EXPRESS��t IED,OOL OR WRITTEN, WITH RESPECT TO THIS CONTRACTOR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES .O,R CONDITION &OF TITLE, NON - INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER ORNOT,NA.mESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE-),'A ETHERIALLEGED TO ARISE BYLAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF DEALING. EACH USER OF THIS ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE "CONTRACT FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CONTRACT. nt ' NI x a '.�h ffi � i t i ti �� �PSf �'f"L�Ktd. •l i:.-?' r� 1 ^ :. _ Y �".✓ ' Wit"" h'bts 3'fi,b 5 i iy F d d xMW2 "ids _+'- s as a , f.j A OW Cs i-b q S e;E•.c.' �-.opyngni v /-UUU rvorm American E=nergy 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. {a SELLER: BUYER: Attn: ``' Attn: Phone:; '' :' ' Phone: tl #" Fax: .A.� .K,.,. = Fax: Base Contract No. "A,3 ='>- f. �,�... , -� Base Contract No. Trans orter:ri p` Transporter: Transporter Contract Numler:3 }" Transporter Contract Number: Contract Price: $ /MMBtu'or Ts.,9.'� e9'.`',"f'J�, - ''.`4�, i ". DeliveryPeriod k,^ t >§�y+*"4''k �[ �+5'�• ,ry,..,•'... Begiri End Performance Obligation Contract Quantity One) and ,(S61ect w Al �T Firm (Fixed Quanta):,+ )=arm (Variable Quantity): ,tn'erruptible:, :,* E - xf :- MMBtus /day ;`„ - MMBtus /day Minimum - 1 6. Y Up to 7p•}ny n MMBtus /day ❑ EFP :, -;, MMBtus /day Maximum .;�` _ ' -, subtecf to Section42. at electi on, bfz� =:Qjpuybr or ❑ Selle Delivrery (lfga p oli g oints` sed, list a specific geographic tl,pipeline location IN i;:'b;'.` `;i ; -.`' .• :•_. •r•= e; ?r'Fr°',.,'?a i+,e.. Spec alCond t10;t,.:c•, k E t , s+✓'�.'_7,^T. -'.�' '` �,z g P 'i'" X4"1 Selle. >�, Bu rer: _ s Y r By:,:.:�4 a Title Title:- rcr> f a.0. IT Date Y'w Date: ¢ r d �.:.c � tx,�,#'�?"`+. ✓,fib: fh, a«r', ,�s" „3� - `` 3Pk4;,�-`: �.'•S � b- �.� aw- 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 NAESB BASE CONTRACT Sequent Energy Management, L.P., a Georgia limited partnership ( "Sequent "), and Hutchinson Utilities Commission ( "Counterparty ") hereby agree effective as of the 1st day of June, 2013 to the following special provisions ( "Special Provisions ") to the NAESB Base Contract for Sale and Purchase of Natural Gas ( "Base Contract"), which hereby modifies and amends the Base Contract dated and effective as of the date hereof between Sequent and Counterparty. Unless specifically agreed otherwise in a Transaction Confirmation, the Base Contract, as modified by these Special Provisions, shall apply to all transactions for the purchase and sale of Gas between the parties. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Base Contract. 1. The following new Section 15.13 is added at the end of Section 15: "When Counterparty enters into a transaction with Sequent, Sequent may be acting as principal for our account or acting as agent for a third party or an affiliated utility or asset management customers, provided that regardless of whether it is representing one of its affiliated utilities or asset management customers, the obligations of Sequent are the same as if it had entered into such transaction for its own account and in all instances Sequent shall be responsible for and obligated as a principal under all transactions." IN WITNESS WHEREOF, the parties have executed these Special Provisions to supplement and, where applicable, to modify and supersede the Base Contract by and between the parties. SEQUENT ENERGY MANAGEMENT, L.P. HUTCHINSON UTILITIES COMMISSION By: Name: James J. Goerig Title: Vice President of Risk Control Date: —e—WM qle�� By: Name: Leon Johnson Title: Vice President Date: 6/26/13 Proposed Capacity Contract: June 2015 - May 2020 Total $ 5,478,000.00 2015 2016 2017 2018 2019 2020 Jan $ - $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 Feb $ $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 Mar $ $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 Apr $ $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 May - - -$ - - -------------- $- -- 42,000.00 $ 66:500:00 $ - 96,000 00 $ 116,000 00 $ 136,000.00 Jun $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 - $ ------------------ 136,000.00 $ - - - - -- - Jul $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 $ Aug $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 $ - Sep $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 $ - Oct $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 $ - Nov $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 $ - Dec $ 42,000.00 $ 66,500.00 $ 96,000.00 $ 116,000.00 $ 136,000.00 $ - $ 294,000.00 $ 675,500.00 $ 1,004,500.00 $ 1,292,000.00 $ 1,532,000.00 $ 680,000.00 Total $ 5,478,000.00 RUC -SMMPA CAPACITY CONFIRMATION AGREEMENT This Confirmation Agreement ( "Agreement ") shall confirm the agreement reached on June 12, 2013 ( "Transaction Date "), by and between Hutchinson Utilities Commission ( "HUC ") and Southern Minnesota Municipal Power Agency ( "SMMPA ") (hereinafter HUC and SMMPA are sometimes referred to singly as a "Party" and collectively as the "Parties ") with respect to the purchase and sale of capacity under the terms and conditions as follows: Seller: HUC Buyer: SMMPA Schedule P Product: [X] Other: Capacity, which for the purposes of this transaction shall mean "Zonal Resource Credits" ( "ZRC "), as such term is defined in (i) the Midwest Independent Transmission System Operator, Inc. ( "MISO ") Open Access Transmission, Energy, and Operating Reserve Markets Tariff, as may be amended from time to time ( "MISO Tariff"); and (ii) the MISO Resource Adequacy Business Practices Manual, as may be amended from time to time ( "RA BPM ", or together with the MISO Tariff referred to as the "MISO Rules "). For clarification purposes, the Parties acknowledge and understand that, in accordance with the MISO Rules, one ZRC represents one megawatt ( "MW ") of Unforced Capacity from a Planning Resource that qualifies to satisfy the resource adequacy requirements of Module E -1 of the MISO Tariff. Contract Quantity and Contract Price: The Quantity of ZRCs and the applicable Local Resource Zone 1 credits ( "LRZ111), as further described in Attachment VV of the MISO Tariff, associated with such ZRCs for each Planning Year (i.e., June I" of one year through May 31St of the following year) encompassed by this Transaction, and the Contract Price(s) associated therewith shall be as follows: $1,400 per MW -month x 30 MW = $42,000 per month June 2015 — May 2016 $1,900 per MW -month x 35 MW = $66,500 per month June 2016 — May 2017 $2,400 per MW -month x 40 MW = $96,000 per month June 2017 — May 2018 $2,900 per MW -month x 40 MW = $116,000 per month June 2018 — May 2019 $3,400 per MW -month x 40 MW = $136,000 per month June 2019 - May 2020 Seller represents and warrants that with respect to the Product, Seller. (A) Will enter the ZRCs in the MISO Module E capacity tracking system; and (B) Has not and will not sell such ZRCs (or the MWs of Unforced Capacity associated with each ZRC) to any other counterparty. Special Conditions: 1. Delivery and Receipt: Seller shall accomplish delivery of the Quantity by submitting the appropriate transaction(s) in MISO's Module E capacity tracking system, or any successor system ( "MECT ") to electronically assign the Quantity to Buyer. Buyer shall accomplish receipt of the Quantity by confirming the appropriate transaction(s) submitted by Seller in the MECT. It is the intention of the Parties that Seller and Buyer shall accomplish delivery and receipt of the Quantity by submitting and confirming the appropriate transaction(s) in the MECT not later than ten (10) Business Days prior to each Resource Plan Deadline, as such term is defined in the MISO Tariff, for the first Planning Year and each subsequent Planning Year encompassed by this Transaction as is permissible to deliver and receive in the MECT ( "Transfer Deadline "). 2. Pavment Terms: The Parties agree that the payment schedule for the Product delivered and received hereunder shall be governed by the terms and conditions of the North American Energy Marketers Association ( "NAEMA ") Capacity and Energy Tariff, effective February 22, 2011 (the "NAEMA Tariff "). For the avoidance of doubt, as soon as practicable, after the end of each electronic delivery for each Planning Year set forth above, Seller will render to Buyer an invoice for the ZRCs attributable to the delivery. 3. Failures to Deliver and /or Receive: (a) Seller's Failure to Deliver. In the event that: (i) Seller fails to deliver all or part of the Product by the Transfer Deadline, and such failure is not excused by Buyer's failure to perform; (ii) Buyer provides notice of such failure to Seller at least nine (9) Business Days prior to the Resource Plan Deadline; and (iii) Seller fails to cure such failure within one (1) Business Day after notice from the Buyer, then Seller shall pay Buyer, within five (5) Business Days of invoice receipt, all Financial Settlement Charges assessed to Buyer (either directly or through contractual obligation) resulting directly from Seller's failure to deliver all or part of the Product. In addition, to the extent that Seller's failure to deliver all or part of the Product results in Buyer being assessed (i) Financial Settlement Charges for an amount of MW that is less than the Quantity that Seller failed to deliver, or (ii) no Financial Settlement Charges for the Quantity that Seller failed to deliver, then Buyer shall also be entitled to the positive difference, if any, obtained by subtracting the Contract Price from the Replacement Price and multiplying such positive difference, if any, by the portion of the Quantity which Seller failed to deliver and for which no Financial Settlement Charges are assessed to Buyer. In the event that: (i) Seller fails to deliver all or part of the Product by the Transfer Deadline, and such failure is not excused by Buyer's failure to perform; and (ii) Buyer fails to provide notice of such failure to Seller at least nine (9) Business Days prior to the Resource Plan Deadline, then Seller shall pay Buyer, within five (5) Business Days of invoice receipt, the positive difference, if any, obtained by subtracting the Contract Price from the Replacement Price and multiplying such positive difference, if any, by the Quantity which Seller failed to deliver. Buyer shall use commercially reasonable efforts to purchase replacement Product for the Quantity which Seller failed to deliver. The invoice from Buyer to Seller for any amount owed by Seller to Buyer pursuant to this provision shall include a written statement explaining in reasonable detail the calculation of such amount. The Parties acknowledge and agree that with respect to this Transaction only, Section 2.47 of the NAEMA Tariff shall be amended to delete all references to "at the Delivery Point" and "to the Delivery Point" contained in such section. (b) Buyer's Failure to Receive. In the event that: (i) Buyer fails to receive all or part of the Product by the Transfer Deadline, and such failure is not excused by Seller's failure to perform; (ii) Seller provides notice of such failure to Buyer at least nine (9) Business Days prior to the Resource Plan Deadline; and (iii) Buyer fails to cure such failure within one (1) Business Day after notice from the Seller, then Buyer shall pay Seller, within five (5) Business Days of invoice receipt, an amount equal to the Contract Price multiplied by the portion of the Quantity which Buyer failed to receive. In the event that: (i) Buyer fails to receive all or part of the Product by the Transfer Deadline, and such failure is not excused by Seller's failure to perform; and (ii) Seller fails to provide notice of such failure to Buyer at least nine (9) Business Days prior to the Resource Plan Deadline, then Buyer shall pay Seller, within five (5) Business Days of invoice receipt, an amount equal to the positive difference, if any, obtained by subtracting the Sales Price from the Contract Price and multiplying such positive difference, if any, by the portion of the Quantity which Buyer failed to receive; provided, however, that if Seller, after using commercially reasonable efforts, is unable to resell all or a portion of the Quantity which Buyer failed to receive, the Sales Price with respect to such Quantity that Seller is unable to resell shall be deemed to be equal to zero (0). The invoice from Seller to Buyer for any amount owed by Buyer to Seller pursuant to this provision shall include a written statement explaining in reasonable detail the calculation of such amount. The Parties acknowledge and agree that with respect to this Transaction only, Section 2.49 of the NAEMA Tariff shall be amended to delete all references to "at the Delivery Point" contained in such section. (c) Limitation of Remedies. The Parties acknowledge and agree that the remedies set forth herein regarding failures to deliver /receive shall supersede and replace Sections 5.1 and 5.2 of the NAEMA Tariff with respect to this Transaction only. 4. Governing Agreement: Seller is entering into this Confirmation in accordance with its market -based rate tariff, which is on file with the Federal Energy Regulatory Commission. The commercial terms and conditions of the NAEMA Tariff shall apply to this Confirmation; provided, however, that to the extent that there is an inconsistency between the terms and conditions of this Confirmation and the NAEMA Tariff, the applicable terms and conditions of this Confirmation shall govern. Terms used but not defined herein shall have the meanings ascribed to them in the NAEMA Tariff. Capitalized terms used but not defined herein or in the NAEMA Tariff shall have the meanings ascribed to such terms in the MISO Rules. HUTCHINSON UTILITIES COMMISSION By: Date: 6/26/13 Name: Leon Johnson Title: Vice President SOUT MINNESOTA MUNICIPAL POWER AGENCY By: Date: /fir _ Name: David P. Geschwin Title: Executive Director & CEO INTELLECTUAL PROPERTY Assignment All inventions that are: (a) developed using equipment, supplies, facilities or trade secrets of HUC; or (b) result from work performed by an employee of HUC; or (c) relate to the HUC's current or anticipated business and business models, will be the HUC's sole and exclusive property and are hereby assigned by the employee to HUC. If necessary, the employee will assist HUC in the prosecution and issuance of patents, copyrights and other proprietary rights necessary to protect inventions that are developed. Disclosure While employed by HUC, the employee will promptly inform HUC of the full details of all inventions, discoveries, improvements and innovations, whether or not patentable, copyrightable or otherwise protectable, that the employee conceives, completes or reduces to practice (whether jointly or with others) and which: (a) relate to HUC's present or prospective business, or actual or anticipated business and business models; or (b) result from any work that the employee does using any equipment, facilities, materials, trade secrets or personnel of HUC; or (c) result from, or are suggested by, any work that the employee may do for HUC. The employee will inform HUC within 30 days of the adoption of this policy of all previous inventions, improvements or discoveries actually made or copyright registration or patent applications filed prior to the incorporation of this policy. Inventions, improvements or discoveries not made known to HUC within 30 days of the adoption of this policy shall be deemed to have been made while this policy was in effect.. -; inventions, improvements or discoveries that are made known to HUC within 30 days of the adoption of this policy shall belong to the employ Confidentiality From time to time, HUC may develop, and employees may have exposure to, formulas, programs, devices, techniques or processes that have been designated by HUC as confidential or proprietary information of HUC. The employee shall not directly or indirectly disclose, furnish, or make accessible to any person or other entity any confidential or proprietary information of HUC that the employee developed or obtained while the employee was employed by HUC. As required by Minnesota law, this policy does not apply to an invention for which no equipment, supplies, facility or trade secret information of HUC was used and which was developed entirely on the employee's own time and (1) does not relate (a) directly to the business of HUC or (b) to HUC's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for HUC. Memorandum Agenda Item 15a. To: Members of the Hutchinson Utilities Commission From: Marc A. Sebora, City Attorney As you are all probably aware, intellectual property policies are becoming commonplace with employers involved in technical or production work so that intellectual property developed in the course and scope of business may be protected as an asset of the employer just as with any physical asset. Over the past year or so I have been contacted by various commissioners regarding instituting a policy to cover intellectual property developed at Hutchinson Utilities. As a result, attached please find an attempt to address the disposition of inventions that are developed on utilities time and with utilities resources. The policy attempts to do the following things: • Informs HUC employees that inventions that are developed on utilities time and with utilities resources are the property of the Hutchinson Utilities Commission. • Instructs HUC employees that they are to disclose discoveries inventions to the commission in a prompt fashion. • Reminds HUC employees that they are not to disclose utilities information that has been deemed to be confidential or proprietary to outside parties. I would be happy to discuss this proposed policy with the commission and answer any questions you may have about it at the Commission meeting. Finally, as these situations would most likely be applicable to exempt employees, this policy would only apply to them and it is recommended that the policy only be added to the exempt employee handbook.