Exhibit 10.35

 

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* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

AMENDED AND RESTATED LOAN AGREEMENT

 

 

Between

 

 

CASCADE NATURAL GAS CORPORATION

 

as Borrower

 

 

and

 

 

U.S. BANK NATIONAL ASSOCIATION

 

as Lender

 

 

Dated as of September 30, 2004

 

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TABLE OF CONTENTS

 

ARTICLE 1 THE CREDIT

 

 

 

 

Section 1.1

Agreement to Lend

 

 

Section 1.2

Manner of Borrowing

 

 

Section 1.3

Maturity

 

 

Section 1.4

Interest.

 

 

Section 1.5

Promissory Note

 

 

Section 1.6

Manner of Payments.

 

 

Section 1.7

Fees

 

 

 

 

 

ARTICLE 2 CONDITIONS OF LENDING.

 

 

 

 

Section 2.1

The Initial Loan

 

 

(a)

Loan Documents

 

 

(b)

Corporate Authority

 

 

(c)

Legal Opinion

 

 

(d)

Fees

 

 

Section 2.2

Each Loan

 

 

(a)

Notice of Borrowing

 

 

(b)

Defaults, Etc

 

 

(c)

Material Adverse Change

 

 

(d)

Other Information

 

 

 

 

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES.

 

 

 

 

Section 3.1

Corporate Existence and Power

 

 

Section 3.2

Corporate Authorization

 

 

Section 3.3

Government Approvals, Etc

 

 

Section 3.4

Binding Obligations, Etc

 

 

Section 3.5

Litigation

 

 

Section 3.6

Financial Condition

 

 

Section 3.7

Title and Liens

 

 

Section 3.8

Taxes

 

 

Section 3.9

Other Agreements

 

 

Section 3.10

ERISA

 

 

 

 

 

ARTICLE 4 AFFIRMATIVE COVENANTS.

 

 

 

 

 

Section 4.1

Use of Proceeds

 

 

Section 4.2

Fixed Charge Coverage Ratio

 

 

Section 4.3

Indebtedness Capitalization Ratio

 

 

Section 4.4

Payments

 

 

Section 4.5

Preservation of Corporate Existence, Etc

 

 

Section 4.6

Visitation Rights

 

 

Section 4.7

Keeping of Books and Records

 

 

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Section 4.8

Maintenance of Property, Etc

 

 

Section 4.9

Compliance with Laws, Etc

 

 

Section 4.10

Other Obligations

 

 

Section 4.11

Insurance

 

 

Section 4.12

Financial Information

 

 

Section 4.13

Notification

 

 

Section 4.14

Additional Payments; Additional Acts

 

 

 

 

 

ARTICLE 5 NEGATIVE COVENANTS.

 

 

 

 

 

Section 5.1

Dividends, Purchase of Stock, Etc

 

 

Section 5.2

Liquidation, Merger, Sale of Assets

 

 

Section 5.3

Indebtedness

 

 

Section 5.4

Guaranties, Etc

 

 

Section 5.5

Liens

 

 

 

 

 

ARTICLE 6 EVENTS OF DEFAULT.

 

 

 

 

 

Section 6.1

Events of Default Defined

 

 

(a)

Payment Default

 

 

(b)

Breach of Warranty

 

 

(c)

Breach of Certain Covenants

 

 

(d)

Breach of Other Covenant

 

 

(e)

Cross-default

 

 

(f)

Voluntary Bankruptcy, Etc

 

 

(g)

Involuntary Bankruptcy, Etc

 

 

(h)

Insolvency, Etc

 

 

(i)

Judgment

 

 

(j)

Involuntary Liens

 

 

(k)

ERISA

 

 

Section 6.2

Consequences of Default

 

 

 

 

 

ARTICLE 7 MISCELLANEOUS.

 

 

 

 

 

Section 7.1

No Waiver; Remedies Cumulative

 

 

Section 7.2

Governing Law

 

 

Section 7.3

Consent to Jurisdiction

 

 

Section 7.4

Notices

 

 

Section 7.5

Assignment

 

 

Section 7.6

Severability

 

 

Section 7.7

Conditions Not Fulfilled

 

 

Section 7.8

Entire Agreement; Amendment

 

 

Section 7.9

Headings

 

 

Section 7.10

Construction

 

 

 

 

 

ARTICLE 8 DEFINITIONS.

 

 

 

 

 

Section 8.1

Certain Defined Terms

 

 

Section 8.2

Other Accounting Terms

 

 

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EXHIBITS

 

 

 

 

 

Exhibit A  -   Promissory Note

 

Exhibit B  -   Opinion of Borrower’s Counsel

 

 

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AMENDED AND RESTATED LOAN AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AGREEMENT is made as of September 30, 2004 (this
“Agreement”) between Cascade Natural Gas Corporation (the “Borrower”), as
borrower, and U.S. Bank National Association (the “Lender”), as lender.  This
Agreement amends and restates that certain Loan Agreement dated as of December
10, 1999, as amended.

 

ARTICLE 1
THE CREDIT

 

Section 1.1       Agreement to Lend.  Lender agrees on the terms and conditions
of this Agreement to make loans (“Loans”) to Borrower during the period
beginning on the date of this Agreement and ending October 1, 2007 (the
“Commitment Period”) in the aggregate principal sum of $60,000,000 (the
“Commitment”).

 

Section 1.2       Manner of Borrowing.  Borrower shall give Lender notice, which
may be given by either facsimile transmission, electronic mail or telephone
(followed by a confirmation by facsimile or electronic mail within two (2)
days), of each borrowing before 3:30 p.m. Pacific Time on any Business Day if
the Loan will be a Prime Rate Loan and at least two New York banking days before
the date of borrowing if the Loan will be a LIBOR Rate Loan.  Each notice shall
specify the date of borrowing (which shall be a Business Day) and the amount of
the Loan.  If Borrower wishes to make an interest rate election allowed by
Section 1.4, the notice of borrowing shall also contain the information called
for by Section 1.4.  Every notice of borrowing shall be irrevocable and shall
constitute a representation and warranty by Borrower that as of the date of the
notice the statements in Article 3 are true and correct and no Default has
occurred and is continuing.  Subject to the conditions set forth in Article 2,
Lender will disburse the Loan by crediting the proceeds to the checking account
maintained by Borrower with Lender.

 

Section 1.3       Maturity.  Borrower shall repay to Lender the entire
outstanding balance of principal, interest and fees on the last day of the
Commitment Period, October 1, 2007, or such earlier day on which the Commitment
is terminated.

 

Section 1.4       Interest.

 

(a)       Borrower shall pay all accrued interest on the Loans at monthly
intervals commencing October 1, 2004, and continuing on the last day of each
succeeding month during the Commitment Period, except that Borrower shall pay
all accrued interest (i) on LIBOR Rate Loans, on the last day of each LIBOR Rate
Loan, (ii) on LIBOR Rate Loans with terms longer than three months, on the last
day of the third month of each such LIBOR Rate Loan; and (iii) on demand after a
Default.

 

(b)      Interest on each Loan hereunder shall accrue at one of the following
per annum rates selected by Borrower (i) upon notice to Lender, the Applicable
Margin plus the prime rate announced by Lender from time to time, as and when
such rate changes (a “Prime Rate Loan”); or (ii) upon a minimum of two New York
Banking Days prior notice, the Applicable Margin plus the 1, 2, 3 or 6 month
LIBOR rate quoted by Lender from Telerate Page

 

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3750 or any successor thereto (which shall be the LIBOR rate in effect two New
York Banking Days prior to commencement of the advance), adjusted for any
reserve requirement and any subsequent costs arising from a change in government
regulation (a “LIBOR Rate Loan”).  The LIBOR rate quoted by Lender for any Loan
Period (as defined below) of less than 1 month shall be the 1 month LIBOR rate. 
The term “New York Banking Day” means any day (other than a Saturday or Sunday)
on which commercial banks are open for business in New York, New York.  The term
“Money Markets” refers to one or more wholesale funding markets available to and
selected by Lender, including negotiable certificates of deposit, commercial
paper, eurodollar deposits, bank notes, federal funds, interest rate swaps or
others.  In the event Borrower does not timely select another interest rate
option at least two New York Banking Days before the end of the Loan Period for
a LIBOR Rate Loan, Lender may at any time after the end of the Loan Period
convert the LIBOR Rate Loan to a Prime Rate Loan, but until such conversion, the
funds advanced under the LIBOR Rate Loan shall continue to accrue interest at
the same rate as the interest rate in effect for such LIBOR Rate Loan prior to
the end of the Loan Period.  The term “Loan Period” means the period commencing
on the advance date of the applicable LIBOR Rate Loan and ending on the
numerically corresponding day 1, 2, or 3 weeks thereafter as selected by
Borrower, or 1, 2, 3 or 6 months thereafter matching the interest rate term
selected by Borrower; provided, however, (a) if any Loan Period would otherwise
end on a day which is not a New York Banking Day, then the Loan Period shall end
on the next succeeding New York Banking Day unless the next succeeding New York
Banking Day falls in another calendar month, in which case the Loan Period shall
end on the immediately preceding New York Banking Day; or (b) if any Loan Period
begins on the last New York Banking Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of the Loan Period), then the Loan Period shall end on the last New York Banking
Day of the calendar month at the end of such Loan Period.  No LIBOR Rate Loan
may extend beyond the last day of the Commitment Period.   In any event, if the
Loan Period for a LIBOR Rate Loan should happen to extend beyond the last day of
the Commitment Period, such loan must be prepaid on the last day of the
Commitment Period.  Lender’s internal records of applicable interest rates shall
be determinative in the absence of manifest error.  Each LIBOR Rate Loan shall
be in a minimum principal amount of  $100,000 in multiples of $100,000
thereafter.  If a LIBOR Rate Loan is prepaid prior to the end of the Loan
Period, as defined above, for such loan, whether voluntarily or because
prepayment is required due to this Note maturing or due to acceleration of this
Note upon default or otherwise, Borrower agrees to pay all of Lender’s costs,
expenses and Interest Differential (as determined by Lender) incurred as a
result of such prepayment.  The term “Interest Differential” shall mean that sum
equal to the greater of zero or the financial loss incurred by Lender resulting
from prepayment, calculated as the difference between the amount of interest
Lender would have earned (from like investments in the Money Markets as of the
first day of the LIBOR Rate Loan) had prepayment not occurred and the interest
Lender will actually earn (from like investments in the Money Markets as of the
date of prepayment) as a result of the redeployment of funds from the
prepayment.  Because of the short-term nature of this facility, Borrower agrees
that the Interest Differential shall not be discounted to its present value. 
Any prepayment of a LIBOR Rate Loan shall be in an amount equal to the remaining
entire principal balance of such loan.

 

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Section 1.5       Promissory Note.  The Loans shall be evidenced by and
repayable with interest in accordance with a promissory note of Borrower payable
to the order of Lender in substantially the form of Exhibit A and in the
principal amount of the Commitment (the “Note”).

 

Section 1.6       Manner of Payments.

 

(a)       All payments and prepayments of principal and interest on the Loans
and all other amounts payable by Borrower under the Loan Documents shall be made
by paying the same in Dollars in immediately available funds, on the date on
which such payment or prepayment shall become due.

 

(b)      Borrower hereby authorizes Lender to automatically deduct the amount of
all principal and interest payments from account number [*] at Lender.  If there
are insufficient funds in the account to pay the automatic deduction in full,
Lender may allow the account to become overdrawn, or Lender may reverse the
automatic deduction.  Borrower will pay all the fees on the account which result
from the automatic deductions, including any overdraft and non-sufficient funds
charges.  If for any reason Lender does not charge the account for a payment, or
if an automatic payment is reversed, the payment shall still be due according to
the terms of this Agreement.

 

(c)       All computations of interest and fees shall be made on the basis of a
year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable.

 

(d)      Any payment made by Borrower shall be applied, first, against fees,
expenses and indemnities due under the Loan Documents; second, against interest
due on amounts in default, if any; third, against interest due on amounts not in
default; and fourth against principal.

 

Section 1.7       Fees.  Borrower agrees to pay to Lender (a) a loan fee in the
amount of [*], payable upon the execution hereof; and (b) a commitment fee
computed daily at the rate of the Applicable Fee Percentage per annum on the
unused portion of the Commitment, and payable at quarterly intervals in arrears
commencing January 1, 2005, and continuing on the first day of each calendar
quarter thereafter and also on the last day of the Commitment Period or such
earlier day on which the Commitment is terminated.

 

ARTICLE 2
CONDITIONS OF LENDING.

 

Section 2.1       The Initial Loan.  The obligation of Lender to make the
initial Loan is subject to fulfillment of the following conditions.

 

(a)       Loan Documents.  Lender shall have received the Loan Documents, each
duly executed and delivered.

 

(b)       Corporate Authority.  Lender shall have received in form and substance
satisfactory to it (i) a certified copy of a resolution adopted by the board of
directors of Borrower

 

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authorizing the execution, delivery and performance of the Loan Documents and
the borrowing hereunder, (ii) evidence of the authority and specimen signatures
of the persons who have signed this Agreement and who will sign the other Loan
Documents on behalf of Borrower, and (iii) such other evidence of corporate
authority as Lender shall reasonably require.

 

(c)       Legal Opinion.  Lender shall have received in writing the legal
opinion, addressed to Lender and satisfactory to it in form and substance, of
counsel for Borrower, who shall be selected by Borrower and approved by Lender,
substantially in the form of Exhibit B, and as to such other matters as Lender
may reasonably request.

 

(d)       Fees.  Borrower shall have paid Lender, all fees due Lender pursuant
to Section 1.7 and all costs and expenses incurred in connection with the
negotiation, preparation and execution of this Agreement and all other Loan
Documents, including, without limitation, all accounting, appraisal, and report
preparation fees or expenses, all attorneys’ fees and legal expenses, and
search, recording, filing and other documentation fees.

 

Section 2.2       Each Loan.  The obligation of Lender to make any Loan is
subject to fulfillment of the following conditions.

 

(a)       Notice of Borrowing.  Lender shall have received due notice of
borrowing pursuant to Section 1.2.

 

(b)       Defaults, Etc.  At the date of the Loan no Default shall have occurred
and be continuing or will occur as a result of the making of the Loan and the
representations of Borrower in Article 3 shall be true on and as of such date
with the same force and effect as if made on and as of such date.

 

(c)       Material Adverse Change.  Since June 30, 2004, there shall not have
been any material adverse change with respect to the financial condition of
Borrower and there shall not be any other event or circumstance which gives
Lender reasonable grounds to conclude that Borrower may not or will not be able
to perform or observe (in the normal course) its obligations under this
Agreement or under any of the other Loan Documents.

 

(d)       Other Information.  Lender shall have received such other statements,
opinions, certificates, documents and information as it may reasonably request
with respect to the matters contemplated by the Loan Documents.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants to Lender as follows:

 

Section 3.1       Corporate Existence and Power.  Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of
Washington, is qualified to do business in each other jurisdiction where the
conduct of its business or the ownership of its properties requires such
qualification, and has full corporate power, authority and legal right to carry
on its business as presently conducted, to own and operate its properties and
assets, and to execute, deliver and perform the Loan Documents.

 

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Section 3.2       Corporate Authorization.  The execution, delivery and
performance by Borrower of the Loan Documents and any borrowing hereunder have
been duly authorized by all necessary corporate action of Borrower, do not
require any shareholder approval or the approval or consent of any trustee or
the holders of any Indebtedness of Borrower, do not contravene any law,
regulation, rule or order binding on it or its articles of incorporation or
bylaws and do not contravene the provisions of or constitute a default under any
indenture, mortgage, contract or other agreement or instrument to which Borrower
is a party or by which Borrower or any of its properties may be bound or
affected.

 

Section 3.3       Government Approvals, Etc.  No Government Approval or filing
or registration with any Governmental Authority is required for the making and
performance by Borrower of the Loan Documents or in connection with any of the
transactions contemplated thereby.

 

Section 3.4       Binding Obligations, Etc.  This Agreement has been duly
executed and delivered by Borrower and constitutes, and each of the other Loan
Documents when duly executed and delivered will constitute, the legal, valid and
binding obligation of Borrower enforceable against Borrower in accordance with
their respective terms.

 

Section 3.5       Litigation.  There are no actions, proceedings,
investigations, or claims against or affecting Borrower now pending before any
court, arbitrator or Governmental Authority (nor to the knowledge of Borrower
has any thereof been threatened nor does any basis exist therefor) which if
determined adversely to Borrower would be likely to have a material adverse
effect on the financial condition or operations of Borrower, or to result in a
judgment or order against Borrower (in excess of insurance coverage) for more
than $250,000 in any one case or $1,000,000 in the aggregate, except as
reflected in the financial statements referred to in Section 3.6 or otherwise
previously disclosed to Lender in writing.

 

Section 3.6       Financial Condition.  The balance sheet of Borrower as at June
30, 2004, and the related statements of income and cash flows of Borrower for
the fiscal quarter then ended, copies of which have been furnished to Lender,
fairly present the financial condition of Borrower as at such date and the
results of operations of Borrower for the period then ended, all in accordance
with GAAP.  Borrower did not have on such date any material contingent
liabilities, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in that balance sheet and in the notes to those
financial statements and since that date there has been no material adverse
change in the financial condition or operations of Borrower.

 

Section 3.7       Title and Liens.  Borrower has good and marketable title to
each of the properties and assets reflected in its balance sheet referred to in
Section 3.6 except such as have been since sold or otherwise disposed of in the
ordinary course of business.  No assets or revenues of Borrower are subject to
any Lien except as required or permitted by this Agreement or disclosed in the
balance sheet referred to in Section 3.6 or otherwise previously disclosed to
Lender in writing.  All properties of Borrower and Borrower’s use thereof comply
with applicable zoning and use restrictions and with applicable laws and
regulations relating to the environment.

 

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Section 3.8       Taxes.  Borrower has filed all tax returns and reports
required of it, has paid all Taxes which are due and payable, and has provided
adequate reserves for payment of any Tax whose payment is being contested.  The
charges, accruals and reserves on the books of Borrower in respect of Taxes for
all fiscal periods to date are accurate and there are no questions or disputes
between Borrower and any Governmental Authority with respect to any Taxes except
as disclosed in the balance sheet referred to in Section 3.6 or otherwise
previously disclosed to Lender in writing.

 

Section 3.9       Other Agreements.  Borrower is not in material breach of or
default under any agreement to which it is a party or which is binding on it or
any of its assets.

 

Section 3.10     ERISA.  Since the effective date of ERISA, no Plan or trust
thereunder has been terminated, has engaged in any “prohibited transactions” (as
defined in ERISA), or has incurred any “accumulated funding deficiency” (as
defined in ERISA) whether or not waived, and there has been no “reportable
event” (as defined in ERISA) with respect to any Plan.

 

ARTICLE 4
AFFIRMATIVE COVENANTS.

 

So long as Lender shall have any Commitment hereunder and until payment in full
of the Loans and performance of all other obligations of Borrower under the Loan
Documents, Borrower agrees to do all of the following unless Lender shall
otherwise consent in writing.

 

Section 4.1       Use of Proceeds.  Use the proceeds of the Loans exclusively
for general corporate purposes, including interim financing of Borrower’s
capital budget and working capital needs.

 

Section 4.2       Fixed Charge Coverage Ratio.  Maintain a Fixed Charge Coverage
Ratio of greater than [*] to 1.

 

Section 4.3       Indebtedness Capitalization Ratio.  Maintain at all times an
Indebtedness Capitalization Ratio of not greater than [*] to 1.00.

 

Section 4.4       Payments.  Pay the principal of and interest on the Loans in
accordance with the terms of this Agreement and will pay when due all other
amounts payable by Borrower under the Loan Documents.

 

Section 4.5       Preservation of Corporate Existence, Etc.  Preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation and qualify and remain qualified as a foreign
corporation in each jurisdiction where such qualification is necessary or
advisable in view of the business and operations of Borrower or the ownership of
its properties.

 

Section 4.6       Visitation Rights.  Permit Lender at any reasonable time, and
from time to time, to examine and make copies of and abstracts from the records
and books of account of and to visit the properties of Borrower and to discuss
the affairs, finances and accounts of Borrower with any of its officers or
directors.

 

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Section 4.7       Keeping of Books and Records.  Keep adequate records and books
of account in which complete entries will be made, in accordance with GAAP,
reflecting all financial transactions of Borrower.

 

Section 4.8       Maintenance of Property, Etc.  Maintain and preserve all of
its properties in good working order and condition, ordinary wear and tear
excepted, and from time to time make all needed repairs, renewals or
replacements so that the efficiency of such properties shall be fully maintained
and preserved.

 

Section 4.9       Compliance with Laws, Etc.  Comply in all material respects
with all laws, regulations, rules, and orders of Governmental Authorities
applicable to Borrower or to its operations or property, except any thereof
whose validity is being contested in good faith by appropriate proceedings upon
stay of execution of the enforcement thereof.

 

Section 4.10     Other Obligations.  Pay and discharge before the same shall
become delinquent all Indebtedness, Taxes and other obligations for which
Borrower is liable or to which its income or property is subject and all claims
for labor and materials or supplies which, if unpaid, might become by law a lien
upon assets of Borrower, except any thereof whose validity or amount is being
contested in good faith by Borrower in appropriate proceedings with provision
having been made to the satisfaction of Lender for the payment thereof in the
event the contest is determined adversely to Borrower.

 

Section 4.11     Insurance.  Keep in force upon all properties and operations of
Borrower policies of insurance carried with responsible companies in such
amounts and covering all such risks as shall be customary in the industry and
satisfactory to Lender.  Borrower will on request furnish to Lender certificates
of insurance or duplicate policies evidencing such coverage.

 

Section 4.12     Financial Information.  Deliver to Lender:

 

(a)       as soon as available and in any event within 90 days after the end of
each fiscal year of Borrower, the consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income and cash flows of Borrower and its Subsidiaries for such
year, accompanied by the audit report thereon by independent certified public
accountants selected by Borrower and approved by Lender (which reports shall be
prepared in accordance with GAAP and shall not be qualified by reason of
restricted or limited examination of any material portion of Borrower’s records
and shall contain no disclaimer of opinion or adverse opinion except such as
Lender in its sole discretion determines to be immaterial), together with the
certificate of such accountants that as of the close of such fiscal year
Borrower was in compliance with the provisions of Sections 4.2 and 4.3 hereof;

 

(b)      within 45 days after the end of the first three fiscal quarters and
within 90 days after the close of each fiscal year of Borrower, a Compliance
Certificate signed by the chief financial officer of Borrower stating that as of
the close of such period no Default had occurred and was continuing and
demonstrating Borrower’s compliance as at that date with the provisions of
Sections 4.2 and 4.3;

 

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(c)       as soon as available, all reports sent by Borrower to its shareholders
and all quarterly and annual reports filed by Borrower with the Securities and
Exchange Commission; and

 

(d)      all other statements, reports and other information as Lender may
reasonably request concerning the financial condition and business affairs of
Borrower.

 

Section 4.13     Notification.  Promptly after learning thereof, notify Lender
of (a) any action, proceeding, investigation or claim against or affecting
Borrower instituted before any court, arbitrator or Governmental Authority or,
to Borrower’s knowledge threatened to be instituted, which if determined
adversely to Borrower would be likely to have a material adverse effect on the
financial condition or operations of Borrower, or to result in a judgment or
order against Borrower (in excess of insurance coverage) for more than $250,000
or, when combined with all other pending or threatened claims, more than
$1,000,000; (b) any substantial dispute between Borrower and any Governmental
Authority; (c) any labor controversy which has resulted in or, to Borrower’s
knowledge, threatens to result in a strike which would materially affect the
business operations of Borrower; (d) any “reportable event” (as defined in
ERISA) with respect to any Plan; and (e) the occurrence of any Default.

 

Section 4.14     Additional Payments; Additional Acts.  From time to time,
(a) pay or reimburse Lender on request for all expenses, including legal fees,
actually incurred by Lender in connection with the preparation of the Loan
Documents and the making of the Loans or the enforcement by judicial proceedings
or otherwise of any of the rights of Lender under the Loan Documents; (b) obtain
and promptly furnish to Lender evidence of all such Government Approvals as may
be required to enable Borrower to comply with its obligations under the Loan
Documents; and (c) execute and deliver all such instruments (such as Uniform
Commercial Code continuation statements) and perform all such other acts as
Lender may reasonably request to carry out the transactions contemplated by the
Loan Documents.

 

ARTICLE 5
NEGATIVE COVENANTS.

 

So long as Lender shall have any Commitment hereunder and until payment in full
of the Loans and performance of all other obligations of Borrower under the Loan
Documents, Borrower agrees that Borrower and its Subsidiaries will not do any of
the following unless Lender shall otherwise consent in writing, which consent
shall not be unreasonably withheld.

 

Section 5.1       Dividends, Purchase of Stock, Etc.  Declare or pay any
dividend on any shares of any class of its Stock or apply any assets to the
purchase, redemption or other retirement of, or set aside any sum for the
payment of any dividends on or for the purchase, redemption or other retirement
of, or make any other distribution by reduction of capital or otherwise in
respect of, any shares of any class of Stock of Borrower or its Subsidiaries if
a Default shall have occurred and be continuing or will occur as a result.

 

Section 5.2       Liquidation, Merger, Sale of Assets.  Liquidate or dissolve or
enter into any merger, consolidation, joint venture, partnership or other
combination other than one which the Borrower is the surviving entity, nor sell,
lease, or dispose of all or any substantial portion of

 

8

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its business (excepting sales of goods in the ordinary course of business),
whereby the book value of all assets sold would exceed five percent (5%) of the
total assets of Borrower and its Subsidiaries on a consolidated basis at the end
of the preceding fiscal year computed in accordance with GAAP.

 

Section 5.3       Indebtedness.  Create, incur or become liable for any
Indebtedness except (a) the Loans, (b) existing Indebtedness reflected on the
balance sheet referred to in Section 3.6 or otherwise previously disclosed to
Lender in writing (except any renewal or extension of such Indebtedness or any
portion thereof to a date on or before the final maturity of any Loans), and
(c) Indebtedness incurred by Borrower in the ordinary course of business;
provided that no such Indebtedness shall be incurred if a Default shall have
occurred and be continuing or will occur as a result.

 

Section 5.4       Guaranties, Etc.  Assume, guarantee, endorse or otherwise
become directly or contingently liable for, nor obligated to purchase, pay or
provide funds for payment of, any obligation or Indebtedness of any other
person, except by endorsement of negotiable instruments for deposit or
collection or by similar transactions in the ordinary course of business.

 

Section 5.5       Liens.  Create, assume or suffer to exist any Lien except
(a) Liens in favor of Lender, (b) existing Liens reflected in the balance sheet
referred to in Section 3.6 or otherwise previously disclosed to Lender in
writing, (c) involuntary Liens, and (d) Liens to secure Indebtedness permitted
by Section 5.3(c) for the deferred price of property, but only if they are
limited to such property and its proceeds and do not exceed 80% of the fair
market value thereof.

 

ARTICLE 6
EVENTS OF DEFAULT.

 

Section 6.1       Events of Default Defined.  The occurrence of any of the
following events shall constitute an “Event of Default.”

 

(a)       Payment Default.  Borrower shall fail to pay for a period of 10 days
after the date when due any amount of principal of or interest on the Loans or
any other amount payable by it under the Loan Documents; or

 

(b)       Breach of Warranty.  Any representation or warranty made or deemed
made by Borrower under or in connection with the Loan Documents shall prove to
have been incorrect in any material respect when made; or

 

(c)       Breach of Certain Covenants.  Borrower shall fail to have complied
with any provision of Sections 4.2, 4.3, 4.11 or Article 5; or

 

(d)       Breach of Other Covenant.  Borrower shall fail to perform or observe
any other covenant, obligation or term of any Loan Document and such failure
shall remain unremedied for 30 days after written notice thereof shall have been
given to Borrower by Lender; or

 

(e)       Cross-default.  Borrower shall fail (i) to pay when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) any
Indebtedness

 

9

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or any interest or premium thereon of One Million Dollars ($1,000,000) or more
and such failure shall continue without waiver after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness, or (ii) to perform any term or covenant on its part to be
performed under any agreement or instrument relating to any such Indebtedness
and required to be performed and such failure shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such failure to perform is to accelerate or to permit the
acceleration of the maturity of such Indebtedness, or (iii) any such
Indebtedness shall be declared to be due and payable or required to be prepaid
(other than by regularly scheduled required prepayment) prior to the stated
maturity thereof; or

 

(f)       Voluntary Bankruptcy, Etc.  Borrower shall:  (i) file a petition
seeking relief for itself under Title 11 of the United States Code, as now
constituted or hereafter amended, or file an answer consenting to, admitting the
material allegations of or otherwise not controverting, or fail timely to
controvert a petition filed against it seeking relief under Title 11 of the
United State Code, as now constituted or hereafter amended; or (ii) file such
petition or answer with respect to relief under the provisions of any other now
existing or future applicable bankruptcy, insolvency, or other similar law of
the United States of America or any State thereof or of any other country to
jurisdiction providing for the reorganization, winding-up or liquidation of
corporations or an arrangement, composition, extension or adjustment with
creditors; or

 

(g)      Involuntary Bankruptcy, Etc.  An order for relief shall be entered
against Borrower under Title 11 of the United States Code, as now constituted or
hereafter amended, which order is not stayed; or upon the entry of an order,
judgment or decree by operation of law or by a court having jurisdiction in the
premises which is not stayed adjudging it a bankrupt or insolvent under, or
ordering relief against it under, or approving as properly filed a petition
seeking relief against it under the provisions of any other now existing or
future applicable bankruptcy, insolvency or other similar law of the United
States of America or any State thereof or of any other country or jurisdiction
providing for the reorganization, winding-up or liquidation of corporations or
any arrangement, composition, extension or adjustment with creditors; or
appointing a receiver, liquidator, assignee, sequestrator, trustee or custodian
of it or of any substantial part of its property, or ordering the
reorganization, winding-up or liquidation of its affairs; or upon the expiration
of 120 days after the filing of any involuntary petition against it seeking any
of the relief specified in Section 6.1(f) or this Section 6.1(g) without the
petition being dismissed prior to that time; or

 

(h)      Insolvency, Etc.  Borrower shall (i) make a general assignment for the
benefit of its creditors or (ii) consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, or custodian of all or
a substantial part of its property, or (iii) admit its insolvency or inability
to pay its debts generally as they become due, or (iv) fail generally to pay its
debts as they become due, or (v) take any action (or suffer any action to be
taken by its director or shareholders) looking to the dissolution or liquidation
of Borrower; or

 

(i)       Judgment.  A final judgment or order for the payment of money in
excess of $250,000 shall be rendered against Borrower and such judgment or order
shall continue unsatisfied, unvacated and unstayed pending appeal for a period
of 10 consecutive days after the entry thereof; or

 

10

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(j)       Involuntary Liens.  Any involuntary Lien in the sum of $250,000 or
more shall attach to any asset or property of Borrower which is not discharged
within 60 days after such attachment or within 30 days after notice from Lender,
whichever first occurs; or

 

(k)      ERISA.  A Plan or any trust thereunder shall be terminated (or
proceedings shall be instituted to terminate it) or shall engage in a
“prohibited transaction” (as defined in ERISA) or incur any “accumulated funding
deficiency” (as defined in ERISA) in excess of $250,000, whether or not waived;
or any Indebtedness of Borrower in excess of that amount to or with respect to a
Plan shall not be paid when due.

 

Section 6.2       Consequences of Default.  If any Event of Default shall occur
and be continuing, then in any such case and at any time thereafter so long as
any such Event of Default shall be continuing, Lender may at its option
immediately terminate the Commitment and, if any Loans shall have been made,
Lender may at its option declare the principal of and the interest on the Loans
and all other sums payable by Borrower under the Loan Documents to be
immediately due and payable, whereupon the same shall become immediately due and
payable without protest, presentment, notice or demand, all of which Borrower
expressly waives.  Upon an Event of Default, whether or not acceleration has
occurred, all unpaid principal of the Note, at Lender’s option, shall accrue
interest at a fluctuating rate per annum of 2% above the rate otherwise payable
pursuant to the terms of this Agreement.

 

ARTICLE 7
MISCELLANEOUS.

 

Section 7.1       No Waiver; Remedies Cumulative.  No failure by Lender to
exercise, and no delay in exercising, any right, power or remedy under any Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or remedy under any Loan Document preclude any
other or further exercise thereof or the exercise of any other right, power, or
remedy.  The exercise of any right, power, or remedy shall in no event
constitute a cure or waiver of any Event of Default nor prejudice the right of
Lender in the exercise of any right hereunder or thereunder, unless in the
exercise of such right, all obligations of Borrower under the Loan Documents are
paid in full.  The rights and remedies provided herein and therein are
cumulative and not exclusive of any right or remedy provided by law.

 

Section 7.2       Governing Law.  The Loan Documents shall be governed by and
construed in accordance with the laws of the State of Washington (excluding its
conflict of laws rules).

 

Section 7.3       Consent to Jurisdiction.  Borrower hereby irrevocably submits
to the jurisdiction of any state or federal court sitting in Seattle, King
County, Washington, in any action or proceeding brought to enforce or otherwise
arising out of or relating to any Loan Document and irrevocably waives to the
fullest extent permitted by law any objection which it may now or hereafter have
to the laying of venue in any such action or proceeding in any such forum, and
hereby further irrevocably waives any claim that any such forum is an
inconvenient forum.  Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment or in any other manner provided by law.  Nothing herein
shall impair the right of Lender to bring any action or

 

11

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proceeding against Borrower or its property in the courts of any other
jurisdiction, and Borrower irrevocably submits to the nonexclusive jurisdiction
of the appropriate courts of the jurisdiction in which Borrower is incorporated,
sitting in any place where property or an office of Borrower is located.

 

Section 7.4       Notices.  All notices and other communications provided for in
the Loan Documents shall be in writing or (unless otherwise specified) by telex,
telegram or telephonic facsimile transmission and shall be mailed (with air mail
postage prepaid) or sent by air courier (with air freight prepaid) or delivered
to each party at the address set forth under its name on the signature page
hereof, or at such other address as shall be designated by such party in a
written notice to each other party.  Except as otherwise specified, all such
notices and communications if duly given or made shall be effective upon
receipt.

 

Section 7.5       Assignment.  This Agreement shall be binding upon and inure to
the benefit of the parties and their respective Successors and assigns, except
that Borrower may not assign or otherwise transfer all or any part of its rights
or obligations hereunder without the prior written consent of Lender, and any
such assignment or transfer purported to be made without such consent shall be
ineffective.  Lender may at any time assign or otherwise transfer all or any
part of its interest under the Loan Documents (including assignments for
security and sales of participations), and to the extent of such assignment, the
assignee shall have the same rights and benefits against Borrower and otherwise
under the Loan Documents (including the right of setoff) as if such assignee
were Lender.

 

Section 7.6       Severability.  Any provision of any Loan Document which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.  To the extent
permitted by applicable law, the parties waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

 

Section 7.7       Conditions Not Fulfilled.  If the Commitment or any portion
thereof is not borrowed owing to nonfulfillment of any condition precedent
specified in Article 2, neither Borrower nor Lender shall be responsible to the
other for any damage or loss by reason thereof, except that Borrower shall in
any event be liable to pay the fees, Taxes, and expenses for which it is
obligated hereunder.

 

Section 7.8       Entire Agreement; Amendment.  The Loan Documents comprise the
entire agreement of the parties and may not be amended or modified except by
written agreement of Borrower and Lender.  No provision of any Loan Document may
be waived except in writing and then only in the specific instance and for the
specific purpose for which given.

 

Section 7.9       Headings.  The headings of the various provisions of the Loan
Documents are for convenience of reference only, do not constitute a part
hereof, and shall not affect the meaning or construction of any provision
thereof.

 

12

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Section 7.10     Construction.  In the event of any conflict between the terms,
conditions and provisions of this Agreement and those of any other Loan
Document, the terms, conditions and provisions of this Agreement shall control.

 

ARTICLE 8
DEFINITIONS.

 

Section 8.1       Certain Defined Terms.  As used in this Agreement, the
following terms have the following meanings, which apply to both the singular
and plural forms of the terms defined:

 

“Applicable Fee Percentage” means with respect to the amount of the Commitment,
at all times during which the applicable Pricing Level set forth below is in
effect, the percentage set forth below next to such Pricing Level, subject to
the provisions set forth below:

 

Pricing Level

 

Applicable Fee Percentage

 

 

 

 

 

Pricing Level I

 

[*]

 

Pricing Level II

 

[*]

 

Pricing Level III

 

[*]

 

Pricing Level IV

 

[*]

 

 

provided that (i) changes in the Applicable Fee Percentage resulting from a
change in the Pricing Level shall become effective on the effective date of any
change in the Borrower Debt Rating by Moody’s or S&P and (ii) in the event of a
split in ratings resulting in the Borrower Debt Rating by S&P and Moody’s
falling within different Pricing Levels, the Applicable Fee Percentage shall be
the lower percentage.

 

“Applicable Margin” means with respect to the unpaid principal amount
outstanding under the Commitment, at all times during which the applicable
Pricing Level set forth below is in effect, the percentage set forth below next
to such Pricing Level:

 

Pricing Level

 

Prime Rate
Loans

 

Eurodollar Rate
Loans I

 

 

 

 

 

 

 

Pricing Level I

 

0

%

[*]

 

Pricing Level II

 

0

%

[*]

 

Pricing Level III

 

0

%

[*]

 

Pricing Level IV

 

0

%

[*]

 

 

“Borrower” means Cascade Natural Gas Corporation, a Washington corporation, and
any Successor.

 

13

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“Borrower Debt Rating” means the actual or implied senior unsecured long-term
debt rating as from time to time determined by S&P and/or Moody’s.

 

“Business Day” means a day on which banks are open for business in Seattle,
Washington.

 

 “Capital Lease Obligations” means all obligations of Borrower and its
Subsidiaries with respect to leases which, in accordance with GAAP, are required
to be capitalized on the consolidated financial statements of Borrower.

 

“Commitment” and “Commitment Period” have the meanings defined in Section 1.1.

 

 “Consolidated Tangible Net Worth” means at any date of determination, the sum
of all amounts which would be included under shareholders’ equity on a
consolidated balance sheet of Borrower and its Subsidiaries determined in
accordance with GAAP (excluding other comprehensive income and other
comprehensive losses) less all assets of Borrower and its Subsidiaries,
determined on a consolidated basis at such date that would be classified as
intangible assets in accordance with GAAP, including, without limitation,
unamortized debt discount and expenses, unamortized organization and
reorganization expense, patents, trade or servicemarks, franchises, trade names
and goodwill.

 

“Consolidated Total Interest Bearing Debt” means at any date of determination,
total Indebtedness, which is interest bearing, of Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.

 

“Contingent Obligation” means as to Borrower or any of its Subsidiaries (the
“secondary obligor”), any obligation of such secondary obligor (i) guaranteeing
or in effect guaranteeing any return on any investment made by another, or
(ii) guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation (“primary obligation”) of any other person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such secondary obligor, whether contingent, (A) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (B) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (C) to purchase property, securities or
services primarily for the purpose of assuring the beneficiary of any such
primary obligation of the ability of the primary obligor to make payment of such
primary obligation, (D) otherwise to assure or hold harmless the beneficiary of
such primary obligation against loss in respect thereof, and (E) in respect of
the liabilities of any partnership in which such secondary obligor is a general
partner, except to the extent that such liabilities of such partnership are
nonrecourse to such secondary obligor and its separate property, provided,
however that the term “Contingent Obligation” shall not include the endorsement
of instruments for deposit or collection in the ordinary course of business. 
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or terminable, the maximum
reasonably anticipated liability in respect thereof as determined in good faith.

 

14

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“Default” means an Event of Default or other event which, with notice or lapse
of time or both, would constitute an Event of Default.

 

“Dollar” and the sign “$” each means lawful money of the United States.

 

“EBITDAR” means for the relevant period, Borrower’s earnings before cash
interest, cash Taxes, depreciation, amortization and rents.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“Event of Default” has the meaning defined in Section 6.1.

 

“Fixed Charge Coverage Ratio” means on any given date, as measured for the prior
four fiscal quarters, the ratio of:  (a) EBITDAR, minus cash income taxes paid,
minus dividends, minus Maintenance Capital Expenditures; to (b) principal
payments required to be paid on Indebtedness during the measurement period, plus
cash interest expense, plus rents.

 

“GAAP” means generally accepted accounting principles consistently applied.

 

“Government Approval” means an approval, permit, license, authorization,
certificate, or consent of any Governmental Authority.

 

“Governmental Authority” means the government of the United States or any State
or any foreign country or any political subdivision of any thereof or any
branch, department, agency, instrumentality, court, tribunal or regulatory
authority which constitutes a part or exercises any sovereign power of any of
the foregoing.

 

“Indebtedness” means, at a particular time, all items which constitute, without
duplication, (i) indebtedness for borrowed money or the deferred purchase price
of property (other than trade payables incurred in the ordinary course of
business), (ii) indebtedness evidenced by notes, bonds, debentures or similar
instruments, (iii) obligations with respect to any conditional sale or title
retention agreement, (iv) indebtedness arising under acceptance facilities and
the amount available to be drawn under all letters of credit issued for the
account of such person and, without duplication, all drafts drawn thereunder to
the extent such person shall not have reimbursed the issuer in respect of the
issuer’s payment of such drafts, (v) all liabilities secured by any Lien on any
property owned by such person even though such person has not assumed or
otherwise become liable for the payment thereof (other than carriers’,
warehousemen’s, mechanics’, repairmen’s or other like non-consensual statutory
Liens arising in the ordinary course of business), (vi) Capital Lease
Obligations, (vii) preferred Stock subject to mandatory redemption and
(viii) Contingent Obligations.

 

“Indebtedness Capitalization Ratio” means at any date of determination, the
ratio of (i) Consolidated Total Interest Bearing Debt to (ii) the sum of (x)
Consolidated Total Interest Bearing Debt, plus (y) redeemable preferred Stock, 
plus (z) Consolidated Tangible Net Worth.

 

“Lender” means U.S. Bank National Association, and any Successor.

 

15

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“LIBOR Rate Loan” has the meaning defined in Section 1.4.

 

“Lien” means, for any person, any security interest, pledge, mortgage, charge,
assignment, hypothecation, encumbrance, attachment, garnishment, execution or
other voluntary or involuntary lien upon or affecting the revenues of such
person or any real or personal property in which such person has or hereafter
acquires any interest, except (i) liens for Taxes which are not delinquent or
which remain payable without penalty or the validity or amount of which is being
contested in good faith by appropriate proceedings upon stay of execution of the
enforcement thereof; (ii) liens imposed by law (such as mechanics’ liens)
incurred in good faith in the ordinary course of business which are not
delinquent or which remain payable without penalty or the validity or amount of
which is being contested in good faith by appropriate proceedings upon stay of
execution of the enforcement thereof; and (iii) deposits or pledges under
workmen’s compensation, unemployment insurance, social security or other similar
laws or made to secure the performance of bids, tenders, contracts (except for
repayment of borrowed money), or leases, or to secure statutory obligations or
surety or appeal bonds or to secure indemnity, performance or other similar
bonds given in the ordinary course of business.

 

“Loan” means a loan made by Lender to Borrower pursuant to Article 1.

 

“Loan Document” means each of this Agreement and the Note, as either thereof
shall be from time to time modified, amended, or supplemented.

 

“Maintenance Capital Expenditures” means, for the relevant period, the required
capital expenditures necessary for Borrower to generate the existing level
of revenue and cash flow over an extended period of time. It does not include
any maintenance and expenditure requirements for expansion or revenue growth. 
Any of the following methods may be used for determining the appropriate amount
of Maintenance Capital Expenditures: (a) an estimate of Borrower’s chief
financial officer or certified public accountant, or (b) future needs for
replacement of existing machinery and equipment, or (c) the dollar amount
resulting from dividing the gross machinery and equipment dollar amount on
Borrower’s balance sheet by the “blended/weighted” useful life of the balance
sheet gross machinery and equipment; or (d) the average of the last three (3)
years actual historical (non-growth) annual expenditures for gross machinery and
equipment.

 

“Moody’s” means Moody’s Investment Service, Inc., or any successor thereto.

 

“Note” means a promissory note of Borrower substantially in the form of Exhibit
A, and any renewal or extension thereof or replacement therefor.

 

“Plan” means an “employee benefit pension plan” (as defined in ERISA) which is
(i) maintained by Borrower or by any other member of a controlled group
(“Controlled Group”) which together with Borrower are treated as a single
employer under the Internal Revenue Code of 1986, as amended (the “Code”), or
(ii) covered by Title IV of ERISA or subject to minimum funding standards under
the Code and maintained pursuant to a collective bargaining agreement or other
multi-employer arrangement under which Borrower or any other member of a
Controlled Group is making or accruing the obligation to make contributions or
has made contributions during the preceding five plan years.

 

16

--------------------------------------------------------------------------------

 

“Pricing Level I” means any time when the Borrower Debt Rating is (i) A- or
higher by S&P or (ii) A3 or higher by Moody’s, provided, however, that in the
event that (x) the Borrower Debt Rating is not available from either S&P or
Moody’s, such rating agency shall be deemed to have assigned its lowest rating
and (y) no Borrower Debt Rating is available from either S&P or Moody’s, Pricing
Level IV shall be applicable.

 

“Pricing Level II” means any time when (i) the Borrower Debt Rating is (a) BBB
or higher by S&P or (b) Baa2 or higher by Moody’s and (ii) Pricing Level I does
not apply, provided, however, that in the event that (x) the Borrower Debt
Rating is not available from either S&P or Moody’s, such rating agency shall be
deemed to have assigned its lowest rating and (y) no Borrower Debt Rating is
available from either S&P or Moody’s, Pricing Level IV shall be applicable.

 

“Pricing Level III” means any time when (i) the Borrower Debt Rating is (a) BBB-
or higher by S&P or (b) Baa3 or higher by Moody’s and (ii) Pricing Levels I and
II do not apply, provided, however, that in the event that (x) the Borrower Debt
Rating is not available from either S&P or Moody’s, such rating agency shall be
deemed to have assigned its lowest rating and (y) no Borrower Debt Rating is
available from either S&P or Moody’s, Pricing Level IV shall be applicable.

 

“Pricing Level IV” means any time when Pricing Levels I, II and III do not
apply.

 

“Prime Rate Loan” has the meaning defined in Section 1.4.

 

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., or
any successor thereto.

 

“Stock” means any and all shares, rights, interests, participations, warrants or
other equivalents (however designated) of corporate stock.

 

“Subsidiary” means as to any person, any corporation, association, partnership,
limited liability company, joint venture or other business entity of which such
person or any Subsidiary of such person, directly or indirectly, either (i) in
respect of a corporation, owns or controls more than 50% of the outstanding
Stock having ordinary voting power to elect a majority of the board of directors
or similar managing body, irrespective of whether a class or classes shall might
have voting power by reason of the happening of any contingency, or (ii) in
respect of an association, partnership, joint venture or other business entity,
is entitled to share in more than 50% of the profits and losses, however,
determined.

 

“Successor” means, for any corporation or banking association, any successor by
merger or consolidation, or by acquisition of substantially all of the assets of
the predecessor.

 

“Tax” means for any person any tax, assessment, duty, levy, impost or other
charge imposed by any Governmental Authority on such person or on any property,
revenue, income, or franchise of such person and any interest or penalty with
respect to any of the foregoing.

 

17

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Section 8.2       Other Accounting Terms.  Except as otherwise provided herein,
accounting terms not specifically defined shall be construed, and all accounting
procedures shall be performed, in accordance with generally accepted United
States accounting principles consistently applied.

 

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers or agents thereunto duly authorized as of the date
first above written.

 

LENDER:

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

 

/s/ Wilfred C. Jack

 

 

Wilfred C. Jack, Vice President

 

 

 

Address:

National Corporate Banking

 

 

1420 Fifth Avenue, 10th Floor

 

 

Seattle, WA 98101

 

 

Attn:

Wilfred C. Jack

 

 

 

Vice President

 

Telephone:

(206) 344-3643

 

Telefax:

(206) 344-3654

 

18

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BORROWER:

CASCADE NATURAL GAS CORPORATION

 

 

 

 

 

/s/ J. D. Wessling

 

 

J. D. Wessling, Chief Financial Officer

 

 

 

 

 

/s/ Larry C. Rosok

 

 

Larry C. Rosok, Vice President – Human Resources
and Corporate Secretary

 

 

 

 

 

Address:

222 Fairview Avenue North

 

 

Seattle, WA 98109

 

 

Attn:

J.D. Wessling

 

 

 

Chief Financial Officer

 

Telephone:

(206) 624-3900

 

Telefax:

(206) 624-7215

 

19

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Exhibit A

 

PROMISSORY NOTE

 

$60,000,000.00

September 30, 2004

 

FOR VALUE RECEIVED, CASCADE NATURAL GAS CORPORATION (“Borrower”) promises to pay
to the order of U.S. BANK NATIONAL ASSOCIATION (“Lender”) the principal sum of
SIXTY MILLION AND NO/100 Dollars ($60,000,000.00) or such lesser amount as
Lender shall have advanced to borrower pursuant to the Loan Agreement between
them dated September 30, 2004 (the “Loan Agreement”).  Such amount (the “Loans”)
shall be repaid in full on October 1, 2007.

 

Borrower further promises to pay to the order of Lender interest on the unpaid
principal balance of the Loans at a per annum rate (changing daily) equal to the
applicable interest rate(s) plus the Applicable Margin.  Accrued interest shall
be payable at monthly intervals commencing September 30, 2004, or as otherwise
provided in the Loan Agreement, except that interest shall be payable on demand
after a Default.

 

All payments of principal of or interest on the Loans shall be made in
immediately available funds to Lender at 1420 Fifth Avenue, Seattle, WA 98101 or
at such other address as Lender may designate to Borrower in writing.

 

Either J.D. Wessling or such other person as J.D. Wessling may designate in
writing to Lender may request Lender to disburse Loans.  This authority shall
continue until Lender receives written notice from Borrower of the revocation or
cancellation of such authority.  Proceeds of Loans shall be deposited in
checking account No. [*] maintained by Borrower at the office of Lender
designated above.

 

This is the Note referred to in the Loan Agreement and evidences loans made
thereunder.  Capitalized terms used and not defined in this Note have the
respective meanings assigned to them in the Loan Agreement.

 

Upon occurrence of an Event of Default, the principal of and accrued interest on
the Loans shall at the option of the holder hereof become immediately due and
payable as and with the effect provided in the Loan Agreement.

 

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CASCADE NATURAL GAS CORPORATION

 

 

 

 

 

/s/ J. D. Wessling

 

 

J. D. Wessling, Chief Financial Officer

 

 

 

 

 

/s/ Larry C. Rosok

 

 

Larry C. Rosok, Vice President – Human
Resources and Corporate Secretary

 

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