<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1 to
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1993
Commission File Number 1-7196
CASCADE NATURAL GAS CORPORATION
(Exact name of registrant as specified in its charter)
Washington 91-0599090
(State of incorporation or organization) (IRS Employer
Identification No.)
222 Fairview Avenue North
Seattle, Washington 98109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, 206-624-3900
including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of October 31, 1993
Common Stock, $1.00 par value 5,696,519
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
<TABLE>
<CAPTION>
Sequential
No. Description Page Number
<S> <C> <C>
10.1 Amendment dated September 1, 1993, to
Natural Gas Purchase Agreement dated
November 1, 1990, between the Corporation
and Canadian Hydrocarbons Marketing Inc.
SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT 3
10.2 Long Term Gas Sales Agreement dated
August 26, 1993, between the Corporation
and Canadian Hydrocarbons Marketing Inc.
SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT 5
</TABLE>
b. Reports on Form 8-K:
No Form 8-K was filed during the quarter for which this report is
filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to this report to be
signed on its behalf by the undersigned hereunto duly authorized.
CASCADE NATURAL GAS CORPORATION
(Registrant)
By /s/ W. Brian Matsuyama
W. Brian Matsuyama
President
By /s/ James E. Haug
James E. Haug
Treasurer and Chief Accounting Officer
DATED: February 4, 1994 <PAGE>
<PAGE>
EXHIBIT 10.1
[Canadian Hydrocarbons Marketing Inc. Letterhead]
September 1, 1993
Cascade Natural Gas Corporation
222 Fairview Avenue North
Seattle, Washington U.S.A. 98109
Attention: Ms. Melissa Whitten
Dear Madam:
Re: Canadian Hydrocarbons Marketing Inc./Cascade Natural Gas
Corporation Natural Gas Purchase Agreement Dated November 1,
1990
Pursuant to Section 7.09 of the above noted agreement, Canadian
Hydrocarbons Marketing Inc. ("CHMI") proposes via this letter
that the Reserves Standby Fee and Gas Commodity Price be
renegotiated for the contract year November 1, 1993 to
October 31, 1994.
Gas Commodity Price
In regard to the Gas Commodity Price, CHMI proposes the following
two alternatives for Cascade Natural Gas Corporation's
("Cascade") consideration.
Alternative #1
The Gas Commodity Price would be calculated monthly as being
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION] of the Index Price for "Spot Sales" of gas
delivered into the Northwest Pipeline Corporation ("NWP")
System at Sumas, Washington as quoted in the first
publication of each applicable month by the publication
Inside F.E.R.C. Natural Gas Market Report plus the Westcoast
Motor Fuel Tax.
Alternative #2
The Gas Commodity Price would be set at [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION]/MMBtu.
Reserves Standby Fee
Common to Alternatives #1 and #2, CHMI proposes that the Reserves
Standby Fee be rolled over at the existing [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION]/MMBtu.
The gas industry is currently experiencing a period of
uncertainty and CHMI is cognizant of Cascade's need to moderate
the transition in gas prices to its customers. CHMI feels that
the foregoing pricing proposal is reasonable and would provide
Cascade with supply costs which are competitive and in line with
the expected prices to be paid by other customers off the NWP
System.
If you are in concurrence with the foregoing, please indicate
your preference of alternative #1 or #2 in the space provided
below and sign both copies of this letter and return both copies
to CHMI. Upon execution CHMI will return one copy to Cascade for
your files.
Yours truly,
CANADIAN HYDROCARBONS MARKETING INC.
/s/ J.A. Thompson
J.A. Thompson
Director, Marketing & Supply
JAT/sk
AGREED AND ACCEPTED TO Alternative #1
this 15th day of October, 1993
CASCADE NATURAL GAS CORPORATION Alternative #2
Per: /s/ King Oberg
King Oberg
Vice President, Gas Supply
AGREED AND ACCEPTED TO
this 20th day of October, 1993
CANADIAN HYDROCARBONS MARKETING INC.
Per: /s/ D. I. Andrews
<PAGE>
<PAGE>
EXHIBIT
10.2
[Canadian Hydrocarbons Marketing Inc. Letterhead]
August 26, 1993
Cascade Natural Gas Corporation
222 Fairview Avenue North
Seattle, Washington 98109
U.S.A.
Attention: Ms. Melissa Whitten
Dear Madam:
Re: Long Term Gas Sales Agreement
Over the last few weeks, Canadian Hydrocarbons Marketing Inc.
("CHMI") and Cascade Natural Gas Corporation ("Cascade") have had
discussions respecting the long term supply of gas by CHMI to
Cascade. The general terms and conditions CHMI proposes for this
sale are as follows:
1. SALE AND PURCHASE
CHMI ("Seller") will sell and deliver and Cascade ("Buyer")
will purchase and receive the quantity of gas which Cascade
requests CHMI to deliver in accordance with the provisions
hereof.
2. TERM
The delivery of gas hereunder will commence on November 1,
1993 and terminate October 31, 1998. Prior to termination,
both parties shall use reasonable efforts to seek an
extension of this agreement under mutually agreed upon terms
and conditions.
3. REGULATORY AUTHORIZATIONS
On or before September 1, 1993, CHMI shall apply for a short
term, Energy Removal Certificate from the British Columbia
Ministry of Energy, Mines and Petroleum Resources ("B.C.
Ministry") and a gas export license from the National Energy
Board ("NEB"), both for a term extending from November 1,
1993 through to October 31, 1995. Cascade shall apply for a
short term import authorization from the United States
Department of Energy, Office of Fossil Energy ("DOE") for a
term extending from November 1, 1993 through to October 31,
1995. Each party shall bear all of the expenses associated
with the authorizations for which they are responsible for;
provided however, that each party shall assist the other in
whatever manner is appropriate in order to ensure that all
such approvals are granted. Both parties agree to seek
renewal of these authorizations as required to ensure short
term regulatory approval over the term of this agreement.
4. DAILY CONTRACT QUANTITY
The maximum daily quantity of gas ("DCQ") which Cascade may
request CHMI to deliver shall be that volume of gas which is
required to yield 10,000 MMBtu of gas per day at the Point
of Delivery.
Upon the mutual agreement of both parties, the DCQ of this
agreement may be increased, effective November 1 of any
contract year to that volume of gas which is required to
yield 15,000 MMBtu of gas per day at the Point of Delivery.
Both parties agree to make such election to increase the DCQ
pursuant to the foregoing at a date no later than June 1 of
the preceding contract year.
5. POINT OF DELIVERY
The Point of Delivery shall be the point of interconnection
of Westcoast Energy Inc. ("Westcoast") and Northwest
Pipeline Corporation ("Northwest") on the international
border near Huntingdon, B.C. and Sumas, Washington. The
alternate Point of Delivery shall be the point of
interconnection between Westcoast and Cascade located near
Huntingdon, British Columbia and Sumas, Washington.
6. CONTRACT PRICE
The amount which Cascade shall pay to CHMI for gas delivered
by CHMI in each month shall consist of four components:
(i) Westcoast Demand Charge
(ii) Commodity Charge
(iii) Fuel Gas Charge
(iv) Reservation Fee Charge.
The Westcoast Demand Charge will consist of the net
Westcoast charges, which are approved by the NEB, from time
to time, which are associated with the demand portion of
Westcoast's tolls for the firm gathering, processing,
liquids recovery and transportation of gas, sourced from
wells which are upstream of the Rigel Energy Corporation
("Rigel") Buckinghorse and Westcoast Pine River Processing
Plants and transported to the Point of Delivery.
Such amounts will be based upon two separate gas streams.
Currently the Westcoast Demand Charges for the gas sourced
from the Buckinghorse Plant would consist of the sum of the
following components:
i) 151.0 103m3 x Deemed Shrinkage 7% x Westcoast
Demand Toll ($/103m3/month) for Firm Raw Gas
Gathering Service;
ii) 141.0 103m3 x Westcoast Demand Toll ($/103m3/month)
for Firm Treatment Service assuming a deemed 7%
acid gas percentage of raw gas;
iii) 141.0 103m3 x Westcoast Demand Toll ($103m3/month)
for Firm Transportation - Northern Long Haul;
Demand Charges for gas sourced from the Pine River gas plant
would consist of the following components:
i) 165.0 103m3 x Deemed Shrinkage 18% x Westcoast
Demand Toll ($/103m3/month) for Firm Raw Gas
Gathering Service;
ii) 140.0 103m3 x Westcoast Demand Toll ($/103m3/month)
for Firm Treatment Service assuming a deemed 15%
acid gas percentage of raw gas;
iii) 140.0 103m3 x Westcoast Demand Toll ($103m3/month)
for Firm Transportation - T-North Short Haul;
The Demand Charge common to both gas streams is as follows:
280.1 103m3 x Westcoast Demand Toll ($103m3/month)
for Firm Transportation - Southern - Export
Delivery.
Should the DCQ be increased as set out in Item #4, the
Westcoast Demand Charges will be adjusted accordingly.
The parties recognize that Westcoast's current tolling
procedure does not require any charges to be paid to
Westcoast in respect of volumes of gas which are supplied to
Westcoast as fuel gas for the gathering, processing or
transportation of gas on Westcoast's facilities. If
Westcoast's tolling procedures change so that Westcoast does
levy a charge in respect of the volumes of gas which are
supplied as fuel gas for the gathering, processing or
transportation of gas then the components of the Westcoast
Demand Charge shall be revised to reflect such change in
toll methodology.
The Westcoast Demand Charge is payable by Cascade
notwithstanding any failure of Cascade to take gas for any
reason including by reason of a claim of an event of Force
Majeure by Cascade except as mitigated pursuant to the
following:
If Cascade claims Force Majeure then CHMI shall use its
reasonable efforts to mitigate for Cascade the portion of
the Westcoast Demand Charge which is attributable to the
quantities not taken during any month as a result of
Cascade's claim of Force Majeure. To the extent that CHMI
is successful in mitigating Cascade's losses by utilizing
the Westcoast transportation capacity which would otherwise
have been unused as a result of Cascade's claim of Force
Majeure then CHMI shall allow Cascade a credit. The amount,
if any, to be credited to Cascade in any month shall be an
amount equal to the sum of the daily usage credits for each
day in such month determined in accordance with the
following formula:
Daily Usage Credit = [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
COMMISSION]
Where A = the volume of gas expressed in 103m3
transported by CHMI on Westcoast's Zone 3
(Transportation Service Northern) and/or
Zone 4 (Transportation Service Southern) to
an alternate market on a particular day
utilizing CHMI's firm transportation capacity
which would otherwise have been used to
transport quantities of gas which would have
been purchased by Cascade on such day
pursuant to the Agreement but were not being
purchased because of a claim of Force Majeure
by Cascade; and
B = The Westcoast Demand Charge expressed in
$/103m3/month as specified in the Westcoast
toll schedules, in its tariff in effect from
time to time, which would be applicable to
the firm transportation of the volumes of gas
which are described above in "A."
For greater certainty the parties agree that CHMI shall not
be requested to give any credits to Cascade in connection
with the use of the firm transportation capacity on
Westcoast by CHMI in the event that Cascade is not taking
gas for any reason which does not directly arise out of a
claim of Force Majeure by Cascade.
The Westcoast Demand Charge will be reduced:
i) if there is failure to deliver by CHMI which
results from a non-Force Majeure event; or
ii) if there is a failure to deliver by CHMI which
results from a Force Majeure event which does not
arise in connection with any of Westcoast's
facilities.
In either such event the Westcoast Demand Charge for the
month will be reduced by an amount which is determined in
accordance with the following formula:
Amount of Reduction = [CONFIDENTIAL INFORMATION
in the Westcoast OMITTED AND FILED SEPARATELY
Demand Charge WITH THE COMMISSION]
where A = the volumes of gas, expressed in 103m3, which
were not delivered for the aforesaid reasons
B = the number of days in the month.
where the DCQ is expressed in 103m3 determined
utilizing the average heating value of gas, from time
to time, utilizing the Buckinghorse or Pine River gas
stream where appropriate and the combined average in
determining the 103m3 related to Westcoast
Transportation - Southern - Export Delivery.
The Westcoast Demand Charge may also be reduced if there is
a failure to deliver by CHMI which results from a Force
Majeure event arising in connection with any of Westcoast's
facilities. In such circumstances the Westcoast Demand
Charge payable by Cascade to Seller will be reduced by an
amount which is equal to the amount of any refund or demand
charges which CHMI or its suppliers receive from Westcoast
in connection with the gathering, processing and
transportation of gas which is to be redelivered to Cascade,
whether this refund is received in the form of a
reimbursement or permission from Westcoast allowing CHMI or
its suppliers to recognize the credit by paying an amount
that is less than the invoiced or contracted amount.
The Gas Commodity Charge is determined by multiplying the
Gas Commodity Price (expressed in $U.S. per MMBtu) in effect
from time to time, by the number of MMBtu nominated and
delivered by CHMI to Cascade in each month (the "Monthly
Sales Volume").
The Gas Commodity Price shall be calculated as being
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION] of the Index Price for "Spot Sales" of gas
delivered into the Northwest system at Sumas, Washington as
quoted in the first publication of each applicable contract
month by the publication Inside F.E.R.C. Natural Gas Market
Report plus the Westcoast Motor fuel tax (converted to
U.S./MMBtu) related to the movement of the Monthly Sales
Volume to the Point of Delivery.
If the index is not available from the Inside F.E.R.C.
publication, the Northwest Sumas Index published by Natural
Gas Week shall be substituted as an alternative.
The Fuel Gas Charge is determined by multiplying the Fuel
Gas Volume by the Gas Commodity Price. The Fuel Gas Volume
is the actual volume of fuel gas, expressed in MMBtu, as
determined by Westcoast, attributable to the transportation
of the Monthly Sales Volume from the outlet of the Rigel
Buckinghorse and Westcoast Pine River Processing Plants to
the Point of Delivery.
The Reservation Fee Charge (if any) is determined in
accordance with the following formula:
Reservation = [CONFIDENTIAL INFORMATION OMITTED AND
FILED
SEPARATELY WITH THE COMMISSION]
Fee Charge
Where A = number of days in the month
B = the volume of gas, expressed in MMBtu's,
nominated by Cascade during any month where
the nominated load factor for that same month
is less than [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE
COMMISSION].
In any month where the nominated load factor for that same
month is greater than or equal to [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] the
Reservation Fee Charge shall equal [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION].
The amount of the Reservation Fee Charge shall not be
reduced on account of any failure of Cascade to nominate for
the delivery on any day whether or not such failure was a
result of a claim of an event of Force Majeure by Cascade.
The Reservation Fee shall be equal to [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] of the Gas Commodity Price in effect from time
to time.
7. SELLER'S REPRESENTATIONS
CHMI warrants that:
i) its supply of gas will be sufficient to meet the gas
and deliverability requirements of Cascade hereunder
between November 1, 1993 and October 31, 1998;
ii) firm service agreements are in place with Westcoast
which will allow for raw gas transmission service,
treatment service, liquids recovery service,
transportation service-Northern long haul and short
haul and transportation service-Southern, in respect of
the volumes of gas to be sold hereunder until
October 31, 1998; and
iii) it shall, from time to time, apply for any necessary
short-term, Energy Removal Certificates from the B.C.
Ministry and gas export orders from the NEB which will
allow for the removal and export of gas hereunder
throughout the term.
8. BUYER'S REPRESENTATIONS
Cascade warrants that:
i) firm service transportation agreements are in place
with Northwest which will allow for the transportation
of the volumes of gas to be sold hereunder, from the
Point of Delivery to Cascade's interconnection with
Northwest, until October 31, 1998; and
ii) it shall, from time to time, apply for any necessary
short-term import authorizations from the DOE which
will allow for the importation of gas hereunder
throughout the period from November 1, 1993 to
October 31, 1998.
9. TITLE TO AND RESPONSIBILITY FOR GAS
Possession and title to the gas delivered hereunder shall
pass from CHMI to Cascade at the Point of Delivery. As
between CHMI and Cascade, CHMI shall be deemed to be in
exclusive control and possession of the gas sold hereunder
and responsible for any loss, damage or injury caused
thereby until such gas is delivered at the Point of
Delivery, at which time Cascade shall be deemed to be in
exclusive control and possession of such gas and thereafter
responsible for any loss, damage or injury caused thereby.
CHMI warrants that the gas which is to be delivered
hereunder shall be sold to Cascade free and clear of all
liens, encumbrances and adverse claims whatsoever and that
CHMI has the right to sell the gas delivered hereunder.
CHMI agrees to indemnify Cascade and save it harmless from
all suits, claims, actions, debts, accounts, costs, losses,
expenses or damages arising from or out of any adverse
claims by any third party in the gas delivered hereunder
which relate to matters occurring prior to possession and
title to such gas passing to Cascade which, without limiting
the foregoing, shall include all royalties, rentals, fees
and taxes. Cascade agrees to indemnity CHMI and save it
harmless against all suits, claims, actions, debts,
accounts, costs, losses, expenses or damages arising from or
out of any adverse claims by any third party in the gas
hereunder which relate to matters occurring after possession
and title to such gas passes to Cascade.
10. SUPPLY FAILURE
The parties recognize that CHMI may supply gas to Cascade
which originates from any source. In the event that CHMI is
unable to deliver the volume of gas requested by Cascade on
any day, up to the DCQ, as a result of a non-Force Majeure
event (a "Supply Failure") then the following actions shall
occur:
i) CHMI shall use reasonable efforts to provide Cascade
with prior notice of such Supply Failure;
ii) CHMI shall employ commercially reasonable efforts to
secure supplies of gas from sources other than the CHMI
gas purchase contract; and
iii) CHMI shall suspend all interruptible gas sales to other
parties which utilize gas supply dedicated to this
agreement.
iv) in the event and to the extent that CHMI is
unsuccessful in securing other supplies of gas then:
a) Cascade shall be entitled to obtain a volume of
gas equal to CHMI's shortfall in deliveries;
provided that, Cascade shall use commercially
reasonable efforts to obtain replacement gas at
the lowest available cost considering all
circumstances. CHMI shall indemnity Cascade for
the difference, if any, between the price Cascade
actually paid for such replacement gas and the
current price hereunder; provided however, that
CHMI shall only be required to indemnify Cascade:
A) to a maximum of [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] days on which CHMI fails to
deliver the volumes requested by Cascade in
connection with any single Supply Failure;
and
B) to a maximum of [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] days, in each contract year, on
which CHMI fails to deliver the volumes
requested by Cascade in connection with all
Supply Failures during such contract year;
and
b) Cascade may, by giving notice to CHMI, within
10 days of the expiry of the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION]-day period commencing on the first day
that a Supply Failure occurs, elect to reduce the
DCQ, effective as of the date of such notice until
the end of the immediately subsequent contract
year. Cascade shall not be entitled to reduce the
DCQ by an amount which is in excess of the amount
determined in accordance with the following
formula:
Maximum Volume = A
that DCQ may be [CONFIDENTIAL INFORMATION
Reduced by OMITTED AND FILED SEPARATELY
WITH THE COMMISSION]
Where A = the volumes of gas, expressed in MMBtu,
which were nominated by Cascade during
the [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
COMMISSION]-day period but which were
not delivered by CHMI for reasons other
than as a result of a claim of Force
Majeure by CHMI.
11. EXTENDED SUPPLY FAILURE
If CHMI fails to deliver to Cascade a quantity of gas which
it is obligated to deliver and which was at least equal to
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION], for reasons other than a claim of Force
Majeure by CHMI or as a result of suspension of deliveries
pursuant to Section 16, [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION], then in addition
to any other remedies available to Cascade, Cascade may,
within thirty (30) days following the occurrence of either
such event, give notice to CHMI of Cascade's election to
terminate this Agreement on thirty (30) day's notice and
this Agreement shall terminate at the expiry of such notice
period.
12. LIMITATION ON LIABILITY
Except as specified in paragraph 10, in no event shall CHMI
or Cascade be liable to the other party for any indirect,
consequential, punitive or special damages incurred,
including, without limitation, loss of profits of income,
loss of business expectations, business interruptions, loss
of a party's contract with any third party or any damage to
third parties, except for obligations to Westcoast provided
hereunder, arising in any way out of this letter agreement
or any breach thereof.
13. UNUTILIZED CAPACITY
In the event of a Supply Failure, Cascade shall have the
first right to utilize CHMI's transportation arrangements in
respect to the volumes which CHMI could not supply to
Cascade and to the extent that such utilization is permitted
by all applicable regulatory authorities and by the
providers of transportation. Should Cascade utilize the
CHMI transportation arrangements, Cascade shall assume
responsibility for all corresponding charges which are
associated with the capacity so utilized and payment shall
be made to CHMI pursuant to Section 16 of this Agreement.
In determining the charges associated with any capacity so
utilized any demand charges shall be converted to a pure
volumetric basis assuming a 100% load factor. Cascade shall
also indemnity and save harmless CHMI for any loss or
damages suffered by CHMI as a result of the utilization of
capacity pursuant to this paragraph 13.
14. NOMINATIONS
Cascade shall, on or before the 25th day of each month,
provide CHMI with a forecast of its expected nominations for
the immediately following month; provided however, that
Cascade shall have the right to change its nomination for
any day, to any quantity, including up to the DCQ and down
to zero, upon two days' advance notice to CHMI. Any gas not
nominated by Cascade shall be released to CHMI for resale to
others.
15. WESTCOAST OR NORTHWEST PENALTIES
Any penalties payable to Westcoast or Northwest for any
reason, including but not limited to a failure to purchase
gas nominated or a failure to supply gas so nominated, shall
be borne by the party causing that penalty to be incurred.
If both parties have caused the penalty to be incurred, the
penalty shall be allocated based on each party's
proportional share of the causation. Nothing in this
Section 15 waives or compromises either party's right to
contest or defend any proposed penalty assessed by Westcoast
or Northwest.
16. BILLINGS AND PAYMENTS
CHMI will present an invoice to Cascade on or before the
15th day of the month for gas delivered to Cascade during
the immediately preceding month. CHMI shall bill the
Westcoast Demand Charge and all other charges in U.S.
dollars. In ascertaining the appropriate U.S. Dollar amount
of the Westcoast Demand Charge for any month, CHMI shall
convert all Canadian Dollar charges to U.S. Dollars, based
upon the exchange rate in effect on the business day
immediately prior to the date the invoice is rendered.
Cascade shall pay all accounts in U.S. dollars. The Payment
Due Date will be the later of the 25th day of the month or
the day which is 10 days following the date that CHMI's
invoice is provided to Cascade; provided however, that
should either such date not be a business day then payment
is due on the business day immediately following such date.
Interest on late payments shall accrue at the prime interest
rate plus 2% utilizing the prime interest rate of the
Canadian Imperial Bank of Commerce, Calgary, Alberta.
Payments shall be made by wire transfer. Should any failure
of Cascade to pay continue for five days after the Payment
Due Date, then CHMI may, upon providing at least ten day's
notice to Cascade, suspend the further delivery of gas and
if such failure continues for an additional thirty days then
CHMI may elect to terminate this letter agreement. If
Cascade shall in good faith dispute all or any portion of
the amount payable, if Cascade shall pay to CHMI such
amounts as Cascade concedes to be correct, and if Cascade
shall open an interest bearing escrow account on or before
the payment due date and deposit funds into such account
equal to the amount which is in dispute, then CHMI shall not
be entitled to suspend further delivery of gas hereunder
because of such non-payment unless and until Cascade
defaults in making payments to CHMI or into the escrow
account, as the case may be. When the dispute is resolved
either by agreement or the judgment of the Courts, as the
case may be, then the funds in the escrow account shall be
paid to the party or parties in accordance with the
resolution of the dispute. Interest accumulated in the
escrow account shall also be paid to the party or parties in
the same proportions as the principal amount is to be paid
to the party or parties.
17. FORCE MAJEURE
If either party is rendered unable, by reason of Force
Majeure, to perform any of its obligations hereunder, such
failure shall not be deemed a default and the obligations of
both parties shall be suspended to the extent necessary
during the continuation of any inability so caused by such
Force Majeure. The term "Force Majeure" shall mean: acts
of God, including lightning, earthquakes, storms, fires,
landslides and floods; strikes, lockouts or other industrial
disturbances; sabotage, wars, blockades insurrections or
riots; breakage of or accidents to machinery, facilities or
lines of pipe; freezing of wells, delivery facilities or
lines of pipe; the laws, orders, rules, regulations or
restraints of any court or governmental authority; the
curtailment of firm transportation service on Northwest
whether or not Northwest is claiming an event of Force
Majeure; the curtailment of firm gathering, processing or
transportation service on Westcoast whether or not Westcoast
is claiming an event of Force Majeure; the failure of a
supplier of gas to CHMI to deliver gas to CHMI which is
dedicated to CHMI's performance of this agreement, which
failure is excused by any event of the character herein
defined as constituting Force Majeure; or any other causes,
not within the control of the party claiming suspension and,
which by the exercise of due diligence, such party is unable
to overcome. Neither party shall be entitled to make a
claim of Force Majeure if the failure was caused by lack of
funds. The effect of a claim of Force Majeure on the
payment of the Westcoast Demand Charge and the Reservation
Fee Charge is set out in paragraph 6.
18. CASCADE'S FORCE MAJEURE
For the purpose of this agreement, Force Majeure shall also
apply to any failure on the part of a customer of Cascade to
purchase substantial quantities of gas from Cascade as a
direct result of an event or occurrence recognized as a
Force Majeure in the rules and regulations of Cascade's
tariff.
The maximum quantity of gas for which Cascade may claim an
event of Force Majeure hereunder in respect to any such
failure shall be limited to [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION]. Prior to
invoking such Force Majeure, Cascade shall also have
suspended purchase of all interruptible gas supplies which
could be physically replaced by gas purchased under this
agreement.
19. TERMINATION IF EXTENDED FORCE MAJEURE
If either party claims an event of Force Majeure which
results in the total suspension of gas deliveries
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION], then the party not invoking Force Majeure
may, within thirty (30) days following the occurrence of
either such event, give notice to the other party of its
election to terminate this Agreement on thirty (30) days'
notice and this Agreement shall terminate at the expiry of
such notice period.
20. [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION].
21. ASSIGNABILITY
This letter agreement may be assigned by either party to an
affiliate whose performance the assignor guarantees or to
any company which may succeed by purchase, merger,
consolidation of other transfer, to substantially all of the
assignor's assets, or to a lender to the party or an
affiliate of the party. For the purpose of this letter
agreement the term "affiliate" shall mean, in regard to
either party, any person directly or indirectly controlling,
controlled by or under common control with the party; and
the term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of the person, whether through
ownership of voting securities by contract or otherwise.
Except as previously stated, neither party shall have the
right to assign this letter agreement without the prior
written consent of the other party which consent shall not
be unreasonably withheld.
22. ASSIGNMENT BY WAY OF SECURITY
The requirement in Section #21 to obtain prior written
consent from the non-assigning party shall not apply to an
assignment made by way of security for the assignor's
present or future indebtedness or liabilities (whether
contingent, direct or indirect and whether financial or
otherwise), the issue of the bonds or debentures of a
corporation or the performance of the obligations of the
assignor as guarantor under a guarantee; provided that, in
the event that the security is enforced by sale or
foreclosure, Section 21 shall apply.
23. LAW OF CONTRACT
This letter agreement shall be governed by the laws of the
State of Washington and shall exclude the United Nations
Convention on Contracts for the International Sale of Goods.
In the event legal action is brought hereunder, venue shall
be proper in the County of King, State of Washington.
24. SPECIFICATIONS, METERING OF VOLUMES, HEATING VALUES AND
CONVERSIONS
The specifications for the gas to be delivered hereunder
shall be those of Westcoast from time to time. All volumes
shall be measured as to volume, quality and heating value by
Westcoast in accordance with the provisions set out in its
tariff and these measurements shall be final and binding
upon the parties and utilized for all purposes of this
letter agreement. All conversions from Imperial units of
measurement to metric units or vice versa shall be done
utilizing the conversions utilized by Westcoast from time to
time.
25. PRICE EXCLUSIVE OF TAXES
All dollar amounts stated herein and all amounts payable by
Cascade hereunder are exclusive of any tax except the
Westcoast Motor Fuel Tax, levy or duty which may be imposed
by any Federal or Provincial legislation and which is
required to be paid or collected by CHMI which, without
limiting the generality of the foregoing shall include GST.
26. TAXES
CHMI shall pay or cause to be paid all royalties and all
business transfer, severance, sales, value added, excise,
GST and all other similar taxes, levies, assessments and
charges that are validly exigible on the gas delivered
hereunder prior to the sale of the gas hereunder at the
Point of Delivery specified in Section 5. Cascade shall pay
or cause to be paid all such taxes, levies, assessments and
charges that are validly exigible on the gas after the sale
thereof at the Point of Delivery specified in Section 5. Any
tax which is imposed at the Point of Delivery shall be borne
by that party which the legislation establishing such tax
intended to bear the incidence of such tax.
27. NONWAIVER
Except as otherwise provided herein, the failure of either
party to exercise any right granted it hereunder shall
neither impair nor be construed as a waiver of such party's
rights hereunder which are exercisable at any subsequent
time or times.
28. NOTICES
Each notice, request, demand, statement, report and bill
which will be given pursuant hereto, except for nominations
as set forth in Section 14, shall be in writing and shall
either be mailed by prepaid registered mail delivered or
sent by facsimile or telecommunications, as follows:
a) to Seller: Canadian Hydrocarbons Marketing
Inc.
Suite 1820, 144-4th Avenue S.W.
Calgary, Alberta, Canada T2P 3N4
Attn: President
Tel: (403) 221-8630
Fax: (403) 221-8643
b) to Buyer: Cascade Natural Gas Corporation
222 Fairview Avenue North
Seattle, Washington 98109
U.S.A.
Attn: Vice President, Gas Supply
Tel: (206) 624-3900
Fax: (206) 624-7215
Notwithstanding the foregoing any payments shall not be so
deemed delivered until actually received as specified in
Section 16.
29. CONFIDENTIALITY
Buyer and Seller agree that the terms of this Agreement and
any resulting transaction shall be kept strictly
confidential, except to the extent required by applicable
law, and except to the extent either Party is required to
disclose pertinent information concerning this Agreement to
suppliers, lenders, underwriters or regulators within the
normal course of business and except for the release of a
mutually agreeable summary of contract terms. If either
Party makes such disclosure, it shall advise the suppliers,
lenders, underwriters or regulators that the information
disclosed is strictly confidential.
30. FORMAL AGREEMENT
The parties agree that a mutually acceptable formal gas
sales agreement will be prepared which will be consistent
with the terms of this letter agreement and both parties
agree to act with reasonable diligence to complete the
formal agreement within 30 days hereof. However, until such
formal agreement is executed this letter agreement shall be
binding on the parties.
31. ENTIRE AGREEMENT
The terms of this letter agreement constitute the entire
agreement between the parties and supersede all prior or
contemporaneous discussions, negotiations, representations
or agreements relating to the subject matter hereof.
If this letter accurately confirms the terms of agreement between
our respective companies, then please sign below and return both
copies of this letter to our office for execution by CHMI. Upon
execution by CHMI, CHMI shall provide Cascade with one executed
copy of this letter which shall constitute an agreement between
our companies.
Yours truly,
CANADIAN HYDROCARBONS MARKETING, INC.
/s/ J.A. Thompson
J. A. Thompson
Director, Marketing & Supply
JAT/sk
ACCEPTED AND AGREED
this 3rd day of September, 1993
CASCADE NATURAL GAS CORPORATION
Per: /s/ O. LeRoy Beaudry
O. LeRoy Beaudry
Vice President, Gas Supply and
Marketing
ACCEPTED AND AGREED
this 14th day of September, 1993
CANADIAN HYDROCARBONS MARKETING INC.
Per: /s/ D. I. Andrews
D. I. Andrews
Vice President, Marketing
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