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                                                                    Exhibit 3.1
March 25, 1996

Restated Articles of Incorporation
of Cascade Natural Gas Corporation

    We, the undersigned, RALPH E. BOYD and LARRY C. ROSOK, President and 
Secretary respectively, of Cascade Natural Gas Corporation do hereby on 
behalf of said Corporation restate in a single document the entire text of 
its Articles of Incorporation, as previously amended, supplemented or 
restated to the date hereof:

ARTICLE I

The name of this Corporation shall be Cascade Natural Gas Corporation.

ARTICLE II

The objects and purposes for which this Corporation is formed are and shall 
be as follows:

1.   To manufacture, produce, buy, sell, transport and in all other respects 
dispose of and deal in all forms and types of natural and/or manufactured 
gas, oil, petroleum and all forms and types of residual products thereof; to 
supply natural and/or manufactured gas and/or related petroleum products for 
lights, heating, power and all other domestic and industrial uses, and to 
furnish the same to public or private consumers both within and without the 
State of Washington; to construct pipelines for the transportation of natural 
and/or manufactured gas and other petroleum products and to buy, operate, 
lease and sell the same; to acquire, construct, erect, lay down, maintain, 
enlarge, alter, work and use all lands, buildings, easements, pipelines, 
machinery, plants, stocks, motors, fittings, meters, other apparatus 
materials and things and to supply all materials, products and things that 
may be necessary, incident or convenient in connection with the production, 
transportation, use, storage, regulation, measurement, supply and 
distribution of any of the products of the Company; to engage in the 
transportation of natural and/or manufactured gas, oil, petroleum and related 
products, either produced by this Corporation or other persons or 
corporations by means of pipelines, railroads, boats, barges, or other 
conveyances and to lease or sublease all or any part thereof to or from other 
persons or corporations for the like purpose; to acquire by purchase or 
otherwise, or by the right of exercise of eminent domain, rights-of-way for 
natural and/or manufactured gas or other petroleum products pipelines and to 
construct and maintain such pipelines for the carriage and transportation of 
such products on its own behalf and hire; to buy, acquire, sell, retain, deal 
in or otherwise dispose of, natural gas and other petroleum properties and 
interest and any right, title or interest therein; to carry on such other 
business pertaining to natural and manufactured gas, oil, petroleum and 
similar products as may be found necessary or desirable or such as is 
generally engaged in by a corporation of this kind and to do all other acts 
and things required to be done in connection therewith, either within or 
without 

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the State of Washington, U.S.A.

2.   To manufacture, purchase or otherwise acquire, own, mortgage, pledge, 
sell, assign and transfer, or otherwise dispose of, to invest, trade, deal in 
and deal with, goods, wares and merchandise and real and personal property of 
every class and description.

3.   To acquire by purchase, assignment or otherwise, letters patent of the 
United States and the Territorial and other rights and licenses which may be 
of value or advantage in the carrying out of the above mentioned objects, and 
to dispose of the same by sale, license, assignment or otherwise.

4.   To acquire, and pay for in cash, stock or bonds of this Corporation, or 
otherwise, the good will, rights, assets and property, and to undertake or 
assume the whole or any part of the obligations or liabilities of any person, 
firm, association or corporation.

5.   To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge 
or otherwise dispose of shares of the capital stock of, or any bonds, 
securities or evidence of indebtedness created by any other corporation or 
corporations organized under the laws of this State, or any other state, 
country, nation or government, and while the owner thereof to exercise all 
rights, powers and privileges of ownership.

6.   To issue bonds, debentures, or obligations of this Corporation from time 
to time, for any of the objects or purposes of the Corporation, and to secure 
the same by mortgage, pledge, deed of trust, or otherwise.

7.   To have one or more officers; to carry on all or any of its operations 
and business and without restriction or limit as to amount, to purchase or 
otherwise acquire, own, hold, mortgage, sell, convey or otherwise dispose of 
real and personal property of every class and description, in any of the 
states, districts, territories or colonies of the United States, and in any 
and all foreign countries, subject to the laws of such states, district, 
territory, colony or country.

8.   To carry on in general any other business in connection with the 
foregoing, whether manufacturing or otherwise, and to have and exercise all 
the powers conferred by the laws of Washington upon corporations and to do 
any or all of the things thereinbefore set forth to the same extent as 
natural persons might or could do.

9.   The foregoing clauses shall be construed both as objects and powers, and 
it is specifically provided that the foregoing enumeration of specific powers 
shall not be held to limit or restrict in any manner the powers of this 
Corporation.

ARTICLE III

The time of the existence of this Corporation shall be perpetual.

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ARTICLE IV

The office and principal place of business of this Corporation shall be 222 
Fairview Avenue North, Seattle, King County, Washington 98109.

ARTICLE V

The capital of this Corporation shall consist of a total of sixteen million 
ninety-six thousand five hundred sixty, (16,096,560) shares, divided into 
ninety six thousand five hundred sixty (96,560) shares of 55CENTS Cumulative 
Preferred Stock, without nominal or par value (hereinafter referred to as 
"Preferred Stock"), one million (1,000,000) shares of Preferred Stock, with a 
par value of $1.00 per share (hereinafter referred to as the "$1.00 Preferred 
Stock"), and fifteen million (15,000,000) shares of Common Voting Stock with 
a par value of $1.00 per share (hereinafter referred to as "Common Stock").

The designations, preferences, privileges, voting power, restrictions, and 
qualifications of shares of each class of stock are as follows:

1.   The 55CENTS Preferred Stock consists of - 0 -shares of Series A,31,500 
shares of Series B and 65,060 shares of Series C. All shares of all series of 
55CENTS Preferred Stock are alike in every particular, except as to the dates 
from which dividends commenced to accrue and the commencement of the period 
for establishment of sinking funds for redemption of shares, and all shares 
of 55CENTS Preferred Stock are of equal rank and have the same powers, 
preferences and rights, and are subject to the same qualifications, 
limitations, and restrictions, without distinction between the shares of 
different series thereof.

2.   The holders of the 55CENTS Preferred Stock shall be entitled to receive, 
when and as declared by the Board of Directors, dividends from the surplus or 
net profits of the Corporation at the rate of 55CENTS per annum and no more, 
payable quarterly on the first days of February, May, August, and November. 
Such dividends shall be paid to or set apart for the holders of 55CENTS 
Preferred Stock before any Common Stock of the Corporation or any other class 
of securities of the Corporation junior to the 55CENTS Preferred Stock as to 
dividends or assets ("Other Securities") shall be purchased, retired, or 
otherwise acquired for valuable consideration by the Corporation or any 
dividends shall be paid upon, or set apart for any of the Common Stock or 
Other Securities of the Corporation, and shall be cumulative, so that if in 
any quarterly dividend period, the dividend installment computed at the rate 
of 55CENTS per share per annum shall not have been paid upon or set apart for 
the 55CENTS Preferred Stock, the deficiency (without interest) shall be fully 
paid or set apart for payment before any Common Stock or Other Securities of 
the Corporation shall be purchased, retired, or otherwise acquired for 
valuable consideration by the Corporation or any dividends shall be paid 
upon, or set apart for the Common Stock or Other Securities.

3.  In the event of voluntary liquidation, dissolution, or winding up of the 
Corporation, the holders of the 55CENTS Preferred Stock shall be entitled, 
after the debts of the 

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Corporation shall have been paid, to receive out of the assets remaining, the 
then current redemption or call price per share thereof, determined in 
accordance with the provisions hereinbelow concerning optional redemption of 
55CENTS Preferred Stock, together with all dividends thereon accrued or in 
arrears, whether or not earned or declared, before any payment is made or 
assets set apart for the payment to the holders of the Common Stock or Other 
Securities, and shall be entitled to no further payments or distribution. In 
the event of the involuntary liquidation, dissolution, or winding up of the 
Corporation, the holders of the 55CENTS Preferred Stock shall be entitled, 
after the debts of the Corporation shall have been paid, to receive out of 
the assets remaining, $10.00 per share, together with all dividends thereon 
accrued or in arrears, whether or not earned or declared, before any payment 
is made or assets set apart for payment to the holders of the Common Stock or 
Other Securities, and shall be entitled to no further payments or 
distribution. If the assets remaining after payment of the corporate debts be 
insufficient to pay the full amounts as hereinabove provided, such assets as 
remain shall be divided among the holders of 55CENTS Preferred Stock in 
proportion to the number of shares of 55CENTS Preferred Stock held.

4.  The Corporation may, at any time and from time to time, at the option of 
the Board of Directors, unless prevented from doing so by law or by 
applicable restrictive provisions herein, or in any mortgage or deed of trust 
or loan agreement of the Corporation, redeem the whole or any part of the 
outstanding 55CENTS Preferred Stock on any dividend payment date after the 
issuance thereof, upon not less than 30 days' previous notice to the holders 
of record of the 55CENTS Preferred Stock to be redeemed, at a redemption or 
call price for each share thereof equal to the sum of Ten Dollars ($10.00) 
plus all dividends accrued or in arrears thereon, plus a premium of Ten Cents 
(10CENTS) per share as to shares of Series C. No premium shall be payable on 
redemption with respect to redemption of shares of Series A or shares of 
Series B, at any time, or with respect to shares of Series C redeemed after 
June 25, 1994; provided, however, that if such redemption is effected with 
funds set apart for the 55CENTS Preferred Stock redemption sinking fund as 
provided herein, then the same may be effected at a price per share equal to 
the sum of Ten Dollars ($10.00) plus all dividends accrued or in arrears 
thereon and without the payment of any premium. If less than all the shares 
of 55CENTS Preferred Stock are to be redeemed, the shares to be redeemed 
shall be selected in such manner as the Board of Directors may determine. No 
shares of 55CENTS Preferred Stock shall be purchased, redeemed, or otherwise 
acquired for a valuable consideration unless full cumulative dividends on the 
55CENTS Preferred Stock for all past quarterly dividend periods shall have 
been paid, or declared and a sum sufficient for the payment thereof set 
apart. The holders of shares of 55CENTS Preferred Stock called for redemption 
shall not, from and after the date fixed in such notice for the redemption of 
such stock, possess or exercise any rights as stockholders of the Corporation 
except the right to receive from the Corporation the redemption price of such 
shares together with all unpaid accrued dividends thereon, without interest, 
upon the surrender thereof, unless default shall be made by the Corporation 
in providing funds at the time and place specified in such notice for payment 
of the redemption price.

5.     While any shares of 55CENTS Preferred Stock remain outstanding, within 
each twelve 

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(12) month period ending November 1, the Corporation, unless prevented from 
doing so by law or by applicable restrictive provisions herein or in any 
mortgage or deed of trust or loan agreement of the Corporation, shall 
establish a sinking fund out of surplus or may establish a sinking fund out 
of capital, and shall acquire therewith, either by the redemption thereof or 
by the purchase thereof in such manner as the Board of Directors may 
determine from time to time at not exceeding the sinking fund redemption 
price thereof, and shall retire not less than the lesser of 17,948 shares of 
Series A, 10,500 shares of Series B, and 14,500 shares of Series C or all 
remaining shares of each series, respectively, of 55CENTS Preferred Stock.

Provided, however, that if the Corporation shall be prevented by law or by 
applicable restrictive provisions herein, or in any mortgage or deed of trust 
or loan agreement of the Corporation, or for any other reason, from acquiring 
during any twelve (12) month period the number of shares of 55CENTS Preferred 
Stock which, in the absence of such restriction it would be required to 
acquire during such period, the aggregate deficit shall be made good in the 
first succeeding twelve (12) month period in which the Corporation shall not 
be prevented by such restrictions from retiring shares of 55CENTS Preferred 
Stock. Any shares of 55CENTS Preferred Stock which in any such twelve (12) 
month period are redeemed by the Corporation at the optional redemption price 
hereinabove set forth, or are purchased by the Corporation but not applied to 
meet the Corporation's sinking fund obligation for such twelve month periods 
may be credited on the amount required to be acquired in any one or more of 
the next following twelve (12) month periods which the Corporation may 
designate. Shares of 55CENTS Preferred Stock of the Corporation redeemed or 
purchased shall not be reissued. So long as any share of 55CENTS Preferred 
Stock shall remain outstanding, no dividends, whether in cash, stock, or 
otherwise, shall be paid or declared or any distribution be made with respect 
to the Common Stock or Other Securities, nor shall any Common Stock or Other 
Securities be purchased, retired or otherwise acquired for a valuable 
consideration by the Corporation unless on or before the preceding November 
1, the Corporation shall have acquired the number of shares of 55CENTS 
Preferred Stock required to have been acquired by such date.

6.   Except as otherwise provided herein or as otherwise made mandatory by 
law, the holders of the 55CENTS Preferred Stock shall have no right to vote 
for the election of directors or for any other purpose and shall not be 
entitled receive notice of any meeting of stockholders and all voting rights 
shall be vested exclusively in the holders of the Common Stock and, to the 
extent applicable, holders of Other Securities. If and whenever six full 
quarterly dividends on 55CENTS Preferred Stock shall be unpaid, then the 
holders of the 55CENTS Preferred Stock shall be entitled, voting separately 
as a class and to the exclusion of the holders of the Common Stock and Other 
Securities, to vote for the election of three of the directors of the 
Corporation until all arrears and dividends on the 55CENTS Preferred Stock 
shall have been paid in full, and thereupon the voting right for the election 
of three directors shall be divested from the holders of the 55CENTS 
Preferred Stock and revested in the holders of the Common Stock and, to the 
extent applicable, holders of Other Securities, subject to revesting in the 
event of each and every other subsequent such default. While any 55CENTS 
Preferred Stock is outstanding, the Corporation, without first obtaining the 

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consent, by the affirmative vote at a meeting called for that purpose, of the 
holders of at least two thirds of the total number of shares of 55CENTS 
Preferred Stock then outstanding, shall not:

     a.   Increase the authorized number of shares of 55CENTS Preferred Stock 
or authorize or issue any stock having priority or preference over, or 
ranking on a parity with, the 55CENTS Preferred Stock as to dividends or 
assets; or  

     b.   Amend the provisions hereof so as to affect adversely any of the 
preferences or other rights hereby given to the 55CENTS Preferred Stock; or   
  

     c.   Merge or consolidate with or into any other corporation or 
corporations or sell or transfer all or substantially all of its assets as an 
entity.

7.   After full cumulative dividends have been paid or declared and set apart 
for payment upon issued and outstanding 55CENTS Preferred Stock, as 
hereinabove provided, and after the provisions herein or as established by 
the Board of Directors with respect to any sinking fund for redemption of 
55CENTS Preferred Stock have been complied with, holders of the Common Stock 
or Other Securities shall be entitled to receive such further dividends as 
may from time to time be declared by the Board of Directors of the 
Corporation out of any remaining surplus or net profits. The term "full 
cumulative dividend" whenever used in this article with reference to the 
55CENTS Preferred Stock of any series shall be deemed to mean (whether or not 
in any dividend period or any part thereof in respect of which such term is 
used there shall have been surplus or net profits of the Corporation legally 
available for the payment of such dividends) that amount which shall be equal 
to cumulative dividends at the prescribed rate to date from the date of 
cumulation for such series (including an amount equal to a dividend at such 
rate for the elapsed portion of the current dividend period) less, in each 
case, the amount of all cumulative dividends paid or deemed paid, upon the 
55CENTS Preferred Stock. The term "date of cumulation" as used in this 
article with respect to 55CENTS Preferred Stock of any series means the date 
on which the dividend period during which shares of 55CENTS Preferred Stock 
of such series are first issued shall begin or the date on which such shares 
are first issued when such issue is made on a date on which a dividend period 
begins.

8.   A consolidation, reorganization, or merger of the Corporation with any 
other corporation or corporations shall not be considered a dissolution, 
liquidation, or winding up of the Corporation within the meaning of such 
terms as used herein.

9.   The $1.00 Preferred Stock may be issued from time to time in one or more 
series in any manner permitted by law and the provisions of these Restated 
Articles of Incorporation of the Corporation, as determined from time to time 
by the Board of Directors and stated in the resolution or resolutions 
providing for the issuance thereof, prior to the issuance of any shares 
thereof. The Board of Directors shall have the authority to fix and 
determine, subject to the provisions of this Article V, the rights and 
preferences of the shares of any series so established. Unless otherwise 
provided in the resolution or

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resolutions establishing a series of shares of $1.00 Preferred Stock, prior to
the issue of any shares of a series so established or to be established, the
Board of Directors may, by resolution, amend the relative rights and preferences
of the shares of such series, and, after the issue of shares of a series whose
number has been designated by the Board of Directors, the resolution or
resolutions establishing the series may be amended by the Board of Directors to
decrease (but not below the number of shares of such series then outstanding)
the number of shares of that series.

The 7.85% Preferred Stock, $1.00 par value was authorized by the Board of 
Directors on December 20,1991. The rights and preferences of the 7.85% 
Preferred Stock are attached as Exhibit A.

The Series Z Junior Participating Preferred Stock, $1.00 par value, was 
authorized by the Board of Directors on March 19, 1993. The rights and 
preferences of the Series Z Preferred Stock are attached as Exhibit B.

ARTICLE VI

The amount of paid-in capital with which this Corporation shall begin to do 
business shall be Five Hundred Dollars ($500.00) payable in cash or other 
property taken at a fair valuation.

ARTICLE VII

The directors shall be nine (9) in number, but the number of directors may be 
increased to any number not exceeding eleven (11) or decreased to any number 
not less than three (3) at any annual meeting of the shareholders, or at any 
special meeting of the shareholders called for that purpose, or by a 
two-thirds vote of the then directors of the Corporation at any regular 
meeting of the directors, or at any special meeting of the directors called 
for that purpose.

The names and post office addresses of the directors of the Corporation in 
office at the time of the adoption of these Restated Articles and on the date 
hereof, who shall serve until the 1992 Annual Meeting of Shareholders, and 
until their successors are elected and qualify are as follows:  

      Donald E. Bennett        222 Fairview Avenue No.  
                             Seattle, Washington 98109     

      Melvin C. Clapp          222 Fairview Avenue No.
                             Seattle, Washington 98109 

      Brooks G. Ragen          Suite 4300 
                             999 Third Avenue
                             Seattle, Washington 98104

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     Howard L. Hubbard         5320 N.W. Edgebrook Place
                             Portland, Oregon 97229-1974

     W. Brian Matsuyama        222 Fairview Avenue No.
                             Seattle, Washington 98109

     Andrew V. Smith           1600 Bell Plaza, Room 1802
                             Seattle, Washington 98191

     Mary A. Williams          1234 McGilvra Boulevard E.
                             Seattle, Washington 98112

     David A. Ederer          4919 N.E. Laurel Crest Lane
                             Seattle, Washington 98105

     Carl Burnham, Jr.        P. O. Box S
                             Ontario, Oregon 97914

ARTICLE VIII

The Board of Directors of this Corporation shall have the authority to make 
and alter By-Laws not inconsistent with the law or with the Articles of 
Incorporation and subject to the power of the shareholders to change or 
repeal such By-Laws.

ARTICLE IX

Except as may be otherwise provided by law, or by applicable restrictive 
provisions of Article V hereof, as amended, or any mortgage, deed of trust or 
loan agreement of the Corporation, the shares of stock of this Corporation, 
whether Preferred or Common, may be issued by it from time to time without 
the consent of any holder of any share thereof, in such manner, or amount of 
shares of each said class of stock, and for such consideration in labor, 
services, money or property, as from time to time may be fixed and determined 
by the Board of Directors of this Corporation, and, except as so restricted, 
the right, power and authority of said Board of Directors from time to time 
so to authorize and order the issuance by this Corporation of the said shares 
of each class of said stock and such number or amount of shares and for such 
consideration in labor, services, money or property as from time to time said 
Board of Directors may fix and determine, is hereby absolutely reserved to 
said Board of Directors.

No holder of shares of the capital stock of any class of this Corporation 
shall have any preemptive or preferential right of subscription to any shares 
of any class of stock of this Corporation, whether now or hereafter 
authorized, or to any obligations convertible into stock of this Corporation, 
which may be issued or sold, nor any right of subscription other than such, 
if any, as the Board of Directors in its discretion may from time to time 

<PAGE>

determine and at such price as the Board of Directors from time to time may 
fix. 

Payment or delivery to, or receipt by this Corporation of such consideration 
as may be fixed and determined by the Board of Directors for the issuance of 
any share or shares of its capital stock, as hereinbefore provided, shall 
operate and be construed, deemed and held: (a) to discharge, release and 
satisfy fully and absolutely all liability to the Corporation and/or to its 
creditors now or at any time hereafter existing, of any subscriber for and/or 
holder of any such share or shares so authorized to be issued  in any way on 
account of, founded upon, or arising out of any subscription for and/or 
purchase of, and/or issuance of such share or shares, and (b) to constitute 
such share or shares fully paid stock of the Corporation.

ARTICLE X

LIMITATION ON DIRECTOR LIABILITY

To the fullest extent permitted by Washington law at the time this Article 
becomes effective or as may thereafter be in effect, a director of this 
Corporation shall not be liable to this Corporation or its shareholders for 
the monetary damages for his or her conduct as a director. Any amendment to 
or repeal of this Article X shall not adversely affect any right of a 
director of this Corporation hereunder with respect to any acts or omissions 
of such director occurring prior to such amendment or repeal.

ARTICLE XI

INDEMNIFICATION OF DIRECTORS

To the fullest extent permitted by Washington law at the time this
Article becomes effective or as may be thereafter in effect, this Corporation is
authorized to indemnify any director of this Corporation. The Board of Directors
shall be entitled to determine the terms of such indemnification, including
advance of expenses, and to give effect thereto through the adoption of By-Laws,
approval of agreements, or by any other manner approved by the Board of
Directors. Any amendment to or repeal of this Article XI shall not adversely
affect any right of a director of this Corporation hereunder with respect to any
right to indemnification that arises prior to such amendment or repeal.

ARTICLE XII

BUSINESS COMBINATIONS / FAIR PRICE PROVISIONS

A.     The following definitions shall apply for purposes of this Article XII:

     1.   The terms "Affiliate"and "Associate" shall have the respective 
meanings ascribed to such terms in Rule 12b-2 under the Securities Exchange 
Act of 1934 and the rules and regulations thereunder (the"Act") (or any 
subsequent provisions replacing such Act, rules, or regulations) as in effect 
on March 24, 1992 (the term "registrant" in said

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Rule 12b-2 meaning in this case the Corporation). 

     2.   The term "Beneficially Own," when used with respect to a person's 
interest in shares of capital stock, shall mean that said person has or 
shares (or has the right to acquire under any option, warrant, conversion 
right or other right), directly or indirectly, the power to vote, the power 
to dispose of, the power to direct the voting or disposition of, or the right 
to enjoy the economic benefits of such shares.

     3.   The term "Business Combination" shall mean (a) any merger or 
consolidation of the Corporation or a Subsidiary of the Corporation with or 
into an Interested Shareholder (or an Affiliate or Associate of an Interested 
Shareholder) or any merger of an Interested Shareholder (or an Affiliate or 
Associate of an Interested Shareholder) into the Corporation or a Subsidiary 
of the Corporation, (b) any sale, lease, exchange, transfer, encumbrance or 
other disposition of Substantial Assets either of the Corporation (including 
without limitation any securities of a Subsidiary) or of a Subsidiary of the 
Corporation, to an Interested Shareholder (or an Affiliate or Associate of an 
Interested Shareholder), (c) the issuance of any securities of the 
Corporation or a Subsidiary of the Corporation to an Interested Shareholder 
(or an Affiliate or Associate of an Interested Shareholder), (d) any 
reclassification, exchange of shares or other recapitalization that would 
have the effect of increasing the proportion of shares of Common Stock or 
other capital stock of the Corporation or a Subsidiary of the Corporation 
Beneficially Owned by an Interested Shareholder, or (e) any agreement, 
contract, or other arrangement providing for any of the foregoing 
transactions. 

     4.   The term "Continuing Director" shall mean a director who was a 
member of the Board of Directors of the Corporation immediately prior to the 
time that the Interested Shareholder involved in a Business Combination 
became an Interested Shareholder and who is not the Interested Shareholder or 
an Affiliate or Associate of the Interested Shareholder.   

     5.   "Fair Market Value" means (a) in the case of cash, the
amount of such cash; (b) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question of a share
of such stock on the composite tape for New York Stock Exchange Listed Stocks,
or, if such stock is not quoted on the composite tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the Act on which such stock
is listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any similar system then in use, or
if no quotations are available, the fair market value on the date in question of
a share of such stock as determined by a majority of the Continuing Directors in
good faith; and (c) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined in good
faith by a majority of the Continuing Directors.  

     6.   The term "Interested Shareholder" shall mean any person (other than 
the

<PAGE>

Corporation or any Subsidiary and other than any profit-sharing, employee stock
ownership or other employee benefit plan of the Corporation or any Subsidiary or
any trustee of or fiduciary with respect to any such plan when acting in such
capacity) who is or has announced or publicly disclosed a plan or intention to
become the beneficial owner of Common Stock representing ten percent (10%) or
more of the votes entitled to be cast by the holders of all then outstanding
shares of Common Stock.  

7.   The term "person" shall mean any individual, firm, company, or other 
entity and shall include any group comprised of any person and any other 
person with whom such person or any Affiliate or Associate of such person has 
any agreement, arrangement, or understanding, directly or indirectly, for the 
purpose of acquiring, holding, voting, or disposing of Common Stock.

   8.   The term "Subsidiary" means any company of which a majority of any 
class of equity security is Beneficially Owned by the Corporation; provided, 
however, that for the purposes of the definition of Interested Shareholder 
set forth in paragraph 6 of this section A, the term "Subsidiary" shall mean 
only a company of which a majority of each class of equity security is 
Beneficially Owned by the Corporation.

   9.   The term "Substantial Assets" shall mean assets with a Fair Market 
Value in excess of five percent (5%) of the total assets of the Corporation 
as reported in the consolidated financial statements of the Corporation as of 
the end of its most recent fiscal year ending prior to the time the 
determination is made.

B.  In addition to any vote or approval required by law, any Business 
Combination shall require the affirmative vote of the holders of not less 
than eighty percent (80%) of the outstanding shares of capital stock of the 
Corporation which are not Beneficially Owned by the Interested Shareholder 
and its Affiliates or Associates involved in the Business Combination; 
provided, however, that such eighty percent (80%) voting requirement shall 
not apply if:

    1.   The Business Combination is a merger, consolidation or exchange of 
shares involving the Corporation which provides for the conversion of the 
shares of Common Stock of the Corporation into cash, securities or other 
property with a Fair Market Value per share of Common Stock not less than the 
highest per share consideration (appropriately adjusted for stock splits, 
stock dividends and other like charges) paid or given by the Interested 
Shareholder and any of its Affiliates or Associates for any of their shares 
of Common Stock; or

    2.   The Business Combination was approved by the Board of Directors of 
the Corporation; provided that a majority of the Board of Directors consisted 
of Continuing Directors and at least two-thirds of the Continuing Directors 
voted to approve the Business Combination.

C.    The provisions set forth in this Article XII may not be repealed or 
amended in any 

<PAGE>

respect unless such repeal or amendment is approved by the affirmative vote 
of the holders of not less than eighty percent (80%) of the outstanding 
shares of capital stock of the Corporation which are not Beneficially Owned 
by an Interested Shareholder.

Restated Articles of Incorporation of Cascade Natural Gas Corporation, are 
herein executed in duplicate by said Corporation, pursuant to the provisions 
of RCW 23B.10.070, and correctly set forth without change the corresponding 
provisions of the Articles of Incorporation as previously stated and amended 
and supersede the original Articles of Incorporation and all amendments to 
said Articles of Incorporation of Cascade Natural Gas Corporation.

IN WITNESS WHEREOF, the undersigned officers of Cascade Natural Gas 
Corporation have hereby executed in duplicate these Restated Articles of 
Incorporation, and have hereunto set their hands this 25th day of March, 1996.

                                       CASCADE NATURAL GAS CORPORATION


                              By                        
                                  Ralph E. Boyd, President                   
                              
                              By                     
                                  Larry C. Rosok, Secretary


<PAGE>

Exhibit A

CASCADE NATURAL GAS CORPORATION
STATEMENT OF RIGHTS AND PREFERENCES
OF THE 7.85% CUMULATIVE PREFERRED STOCK

1.  Preference.

The preferences of each share of 7.85% Preferred with respect to dividend 
payments and distributions of the Corporation's assets upon voluntary or 
involuntary liquidation, dissolution or winding up of the Corporation shall 
be equal to the preferences of every other share of 7.85% Preferred from time 
to time outstanding in every respect and, except for Priority Stock and 
Parity Stock, prior in right to such preferences of all other equity 
Securities of the Corporation, whether now or hereafter authorized.

2.  Voting Rights.

The Holders of 7.85% Preferred shall not, by virtue of their ownership 
thereof, be entitled to vote upon any matter except as otherwise provided 
herein or by law.

3.  Liquidation Rights.

If the Corporation shall be voluntarily or involuntarily liquidated, 
dissolved or wound up, at any time when any 7.85% Preferred shall be 
outstanding, each then outstanding share of 7.85% Preferred shall entitle the 
Holder thereof to a preference against the Property of the Corporation 
available for distribution to the Holders of the Corporation's equity 
Securities equal to the sum of $100 plus an amount equal to all unpaid 
dividends accrued on such share to the date of payment of such preference, 
whether or not earned, whether or not funds of the Corporation are legally 
available for the payment of dividends and whether or not such dividends have 
been declared by the Board (the "Liquidation Amount"); provided, however, 
that if liquidation, dissolution or winding up occurs within 120 days 
subsequent to an issuance of Excess Preferred, the Liquidation Amount, in 
lieu of the amount set forth above, shall instead be the amount that would be 
payable pursuant to Section 6.A(ii) hereof if the 7.85% Preferred were 
redeemed pursuant to that Section.

All of the preferential amounts to be paid to the Holders of 7.85% Preferred 
in connection with the liquidation, dissolution or winding up of the 
Corporation as provided in this Section 3 shall be paid or set apart for 
payment in cash (a) after the payment or setting apart for payment of all 
preferential amounts to be paid or set apart for payment with respect to 
Priority Stock, whether now or hereafter authorized, (b) simultaneously with 
preferential amounts to be paid or set apart for payment with respect to 
Parity Stock,

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whether now or hereafter authorized, and (c) before the payment or
setting apart for payment of any amount with respect to Junior Stock, whether
now or hereafter authorized, or the distribution of any Property of the
Corporation other than cash with respect to such Junior Stock. A consolidation,
reorganization or merger of the Corporation with any other corporation or
corporations shall not be considered a dissolution, liquidation or winding up of
the Corporation within the meaning of such terms as used herein.

4.    Dividends.

Commencing on the date of issuance, so long as any 7.85% Preferred shall be 
outstanding, each Holder of outstanding 7.85% Preferred shall be entitled to 
receive dividends in cash at the rate of $7.85 per annum per share thereof, 
out of any funds legally available therefor, payable on the first day of 
February, May, August and November of each year as and when declared by the 
Board. Such dividends shall be cumulative on each such share from the date of 
issuance thereof, whether or not earned, whether or not funds of the 
Corporation are legally available for the payment of dividends, and whether 
or not declared by the Board, so that if the full dividends in respect of any 
previous quarterly dividend period shall not have been paid on the 7.85% 
Preferred at the time outstanding, whether or not earned, whether or not 
funds of the Corporation are legally available for the payment of dividends, 
and whether or not declared by the Board, the deficiency shall be fully paid 
on or declared and set apart for such shares (without interest) before any 
dividend or other distribution shall be paid on or declared or set apart for 
any other equity Securities of the Corporation, whether now or hereafter 
authorized, other than dividends on Parity Stock paid, declared or set apart 
in the manner permitted by Section 12(E) hereof, or dividends on Priority 
Stock, and before any redemption, retirement, purchase or other acquisition 
of any other equity Securities of the Corporation, whether now or hereafter 
authorized, other than a redemption, retirement, purchase or other 
acquisition of Parity Stock made in the manner permitted by Section 12(E) 
hereof or a redemption, retirement, purchase or other acquisition of Priority 
Stock.

5.     Mandatory Redemption.

The Corporation shall make a mandatory redemption in cash of all outstanding 
shares of the 7.85% Preferred on November 1, 1999, in accordance with the 
procedures set forth in this Section 5 and in Section 7 hereof, at a 
redemption price equal to the Liquidation Amount.

The Corporation shall mail a notice ("Mandatory Redemption Notice") not later 
than September 15, 1999 of a redemption pursuant to this Section 5 to each 
Holder of 7.85% Preferred by registered or certified mail, postage prepaid, 
to such Holder's address as shown on the books and records of the 
Corporation. The Notice shall state (i) the Redemption Date, which is 
November 1, 1999, and (ii) the redemption price, accompanied by the 
calculation of such price set out in reasonable detail.


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6.     Redemption at the Option of the Holder.

A.     Optional Redemption. Notwithstanding any other provision contained 
herein, after the occurrence of a Redemption Event, each Holder of 
outstanding 7.85% Preferred shall have the right, in accordance with the 
procedures set forth in this Section 6 and in Section 7 hereof, to require 
the Corporation to redeem all shares of 7.85% Preferred held by such Holder 
for the following price:

(i)     if the Redemption Event is a Ratings Downgrade, Dividend or 
Redemption Shortfall or Restrictive Arrangement, at a price per share equal 
to the Liquidation Amount;

(ii)    if the Redemption Event is Excess Preferred, at a price per share
as set forth below, together with an amount equal to dividends accrued and
unpaid thereon to the date of payment, whether or not earned, whether or not
funds of the Corporation are legally available for the payment of dividends, and
whether or not declared by the Board:

                  If the Redemption Event Occurs
Price             
                  During the Twelve Months Ended

Per Share   
    
        December 31, 1992  $107.85
        December 31, 1993  $106.73
        December 31, 1994  $105.61
        December 31, 1995  $104.49
        December 31, 1996  $103.36
        December 31, 1997  $102.24
        December 31, 1998  $101.12
        December 31, 1999  $100.00


B.    Form of Optional Redemption Notice. Within 7 days after the occurrence 
of a Redemption Event, the Corporation shall mail a notice ("Optional 
Redemption Notice") to each Holder of 7.85% Preferred by registered or 
certified mail, postage prepaid, to such Holder's address as shown on the 
books and records of the Corporation. The Notice shall state that a 
Redemption Event has occurred, describe the Redemption Event in reasonable 
detail, and offer to redeem all shares of 7.85% Preferred owned by such 
Holder at the appropriate price, as set forth in Section 6.A hereof. The 
Notice shall also state (i) the Redemption Date, which shall be a date not 
less than 30 nor more than 90 days after the date of the Optional Redemption 
Notice, and (ii) the redemption price, accompanied by the calculation of such 
price set out in reasonable detail. The Notice shall request that such Holder 
notify the Corporation in writing not more than 20 days after such Holder 
receives the Notice whether or not such Holder elects to have the Corporation 
redeem all of the shares of 7.85% Preferred held by such Holder at the 
redemption price. The Notice shall also inform such Holder that failure to 
respond to the redemption offer within such 20 day

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period shall be deemed to be a rejection of the offer. Redemptions made 
pursuant to Section 6 hereof shall be of all and not a part of the shares of 
7.85% Preferred held by a Holder, and no Holder shall be entitled to cause 
such Holder's shares of 7.85% Preferred to be redeemed unless all nominees 
and Affiliates of such Holder, if any, which are Holders of shares of 7.85% 
Preferred have elected to have the Corporation redeem all shares of 7.85% 
Preferred held by them.

7.     Provisions Applicable to All Redemptions.

A.     Manner of Redemption. On the Redemption Date, the Corporation shall 
pay in cash to each Holder of 7.85% Preferred with respect to each share of 
7.85% Preferred held by such Holder an amount equal to the redemption price 
in effect on the Redemption Date, such payment to be made by Fedwire transfer 
of immediately available funds or by certified or official bank check 
transmitted to such Holder by registered or certified mail, postage prepaid, 
to such Holder's address as shown on the books and records of the Corporation.

B. Effect of Payment. If on the Redemption Date funds necessary for the 
redemption of all the 7.85% Preferred then outstanding, if the redemption 
occurs pursuant to Section 5 hereof, or funds necessary for the redemption of 
the 7.85% Preferred then held by Holders electing to have such shares 
redeemed, if the redemption occurs pursuant to Section 6 hereof, shall have 
been paid as provided for in Section 7.A hereof, then from and after the 
Redemption Date, the shares of 7.85% Preferred with respect to which such 
payment has been made shall be deemed to be redeemed, and the Holders of such 
shares of 7.85% Preferred shall cease to be Stockholders of the Corporation 
with respect to such shares of 7.85% Preferred, and shall have no rights with 
respect thereto from and after the Redemption Date. Surrender of the 
certificate or certificates evidencing 7.85% Preferred shall not be required 
in connection with the redemption thereof.

C. No Reissuance of 7.85% Preferred. All shares of 7.85% Preferred redeemed 
as hereinabove required shall be retired and cancelled and shall not be 
reissued; provided, however, that each such share, after being retired and 
cancelled, shall be restored to the status of an authorized but unissued 
share of Preferred Stock without designation as to series and may thereafter 
be issued as a share of Preferred Stock not designated 7.85% Preferred.

8.  Limitation on Additional Issuance of Preference Stock.

Subject to the terms and conditions of this Statement of Rights and 
Preferences the Corporation may from time to time authorize and issue 
additional shares of Preference Stock unless Earnings Available for Payment 
of Interest Charges and Dividends for the twelve consecutive calendar months 
immediately preceding the calendar month in which such Stock is issued is 
less than 150% of the aggregate of (i) all interest paid or accrued on 
Indebtedness of the Corporation during the twelve consecutive calendar months 
immediately preceding the calendar month in which such Stock is issued, plus 
(ii) the

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dividends paid or accrued on all shares of all classes and series of 
Preference Stock during the twelve consecutive calendar months immediately 
preceding the calendar month in which such Stock is issued, for such purpose 
treating such Stock as having been outstanding throughout such twelve-month 
period (the "Dividend Coverage Test"). Prior to authorizing or issuing any 
additional shares of Preference Stock, the Chief Financial Officer or 
Treasurer of the Corporation shall certify that the Dividend Coverage Test 
has been met as of the date of issuance of the additional shares of 
Preference Stock, and such certification shall be sent to each Holder of 
7.85% Preferred, by registered or certified mail, postage prepaid, to such 
Holder's address as shown on the books and records of the Corporation.

9.    Contingent Voting Rights.

If at any time any Voting Right Event shall occur, each outstanding share of 
7.85% Preferred shall entitle the Holder thereof to one vote and each 
outstanding share, if any, of Parity Stock then entitled to vote for the 
election of directors shall entitle the Holder thereof to that number of 
votes per such share as is calculated by dividing the original issue price of 
such share by 100, and the Holders of 7.85% Preferred and the Holders of such 
Parity Stock shall as a class be entitled to elect three directors of the 
Corporation, and the Holders of other equity Securities of the Corporation 
then entitled to vote for the election of directors shall be entitled to 
elect the remaining members of the Board. At such time as the Voting Right 
Event which gave rise to the exercise of the voting rights provided for in 
this Section 9 has been cured by waiver, payment or otherwise, and all other 
events creating a Voting Right Event, if any, shall have been cured by 
waiver, payment or otherwise, the right of the Holders of 7.85% Preferred and 
such Parity Stock so to vote as provided in this Section 9 shall cease, 
subject to renewal from time to time upon the same terms and conditions. 
Notwithstanding anything herein to the contrary, the Holders of 7.85% 
Preferred and Parity Stock shall not have the aforesaid voting rights at any 
time that the Holders of Senior Preferred have elected three directors to the 
Board pursuant to Article V, Section 6 of the Restated Articles of 
Incorporation; provided, however, that at such time as either the right to 
elect directors by the Holders of Senior Preferred ceases or the Holders of 
Senior Preferred shall decline to elect three directors to the Board, if a 
Voting Right Event is then in existence the Holders of 7.85% Preferred and 
Parity Stock shall be entitled to exercise the rights contained in this 
Section 9, and provided, further, that if at any time that a Voting Right 
Event is in existence the Holders of Senior Preferred have elected one or two 
directors to the Board pursuant to such Article V, Section 6, the Holders of 
7.85% Preferred and Parity Stock shall be entitled to elect a number of 
directors to the Board equal to the difference between three and the number 
of directors elected by the Holders of Senior Preferred, subject to removal 
if the Holders of Senior Preferred thereafter seek to fully exercise their 
right to elect directors.

At any time after the voting power to elect members of the Board
shall have become vested in the Holders of 7.85% Preferred as provided in this
Section 9, either alone or as a class with the Holders of Parity Stock then
entitled to vote for the election of directors, if any, the Secretary of the
Corporation may, and, upon the written request of the record

<PAGE>

Holders of that number of outstanding shares of 7.85% Preferred which equal, 
in the aggregate, to at least twenty percent of the number of shares of 7.85% 
Preferred then outstanding, addressed to him at the principal office of the 
Corporation shall, call a special meeting of the Holders of 7.85% Preferred 
and the Holders of such Parity Stock, to be held at the principal office of 
the Corporation and upon not more than fifteen days notice. If such meeting 
shall not be so called within five days after personal service of the 
request, or within ten days after mailing of the same by registered or 
certified mail, postage prepaid, within the United States of America, then 
the record Holders of that number of outstanding shares of 7.85% Preferred 
which equal, in the aggregate, at least ten percent of the number of shares 
of 7.85% Preferred then outstanding may designate in writing one of their 
number to call such meeting, and the Person so designated may call such 
meeting at the place above provided and upon not less than ten days notice 
and for that purpose shall have access to the stock books of the Corporation. 
The Persons elected as directors by the Holders of 7.85% Preferred and the 
Holders of such Parity Stock at such meeting and the Persons so elected as 
directors at each subsequent annual meeting of the Corporation's 
stockholders, together with such individuals, if any, as may from time to 
time be elected as directors by the Holders of the other equity Securities of 
the Corporation then entitled to vote for the election of directors, shall 
constitute the duly elected directors of the Corporation. Any vacancy which 
shall arise for any reason with respect to a director elected by the Holders 
of such Parity Stock and the Holders of 7.85% Preferred shall be filled by 
action of the remaining directors so elected, or if there be none, by the 
Holders of Parity Stock entitled to vote for the election of directors at the 
time that such vacancy arises, if any, and the Holders of 7.85% Preferred at 
a meeting called in the manner set forth hereinabove and voting in the manner 
set forth hereinabove.

Whenever the voting power of the Holders of 7.85% Preferred has ceased as 
hereinabove in this Section 9 is provided, the term of office of the Persons, 
if any, who are at the time directors of the Corporation who were elected by 
the Holders of 7.85% Preferred and the Holders of Parity Stock in accordance 
with the preceding provisions of this Section 9 shall terminate.

10.    Restricted Payment Limitation.

If at any time any Restricting Event shall occur, the Corporation shall not 
declare or make any Restricted Payments. At the time such Restricting Event 
has been cured by waiver, payment or otherwise, and all other events creating 
a Restricting Event, if any, shall have been cured by waiver, payment or 
otherwise, the prohibition provided for in this Section 10 shall cease, 
subject to renewal from time to time upon the same terms and conditions.

11.    Pre-emptive Rights.

The Holders of 7.85% Preferred shall not have any pre-emptive rights upon the 
issuance or sale of shares of Stock of the Corporation of any class or 
series, whether now or hereafter authorized, or any Securities exchangeable 
for or convertible into such Stock.


<PAGE>

12.    Protective Provisions.

As long as any shares of 7.85% Preferred are outstanding, the
Corporation shall not, without the approval by the vote or written consent of
the Holders of not less than 66-2/3% (or more if required by law or such other
amount as is stated herein) of the outstanding shares of 7.85% Preferred:

(A)    Amend or repeal any provision of, or add any provision to, the 
Restated Articles of Incorporation or By-Laws if such action would alter or 
change the 7.85% Preferred or the powers, preferences, rights, 
qualifications, limitations and/or restrictions of the 7.85% Preferred;

(B)    Amend or repeal any provision of, or add any provision to, this 
Statement of Rights and Preferences (except that the approval of the Holders 
of not less than 100% of the outstanding shares of 7.85% Preferred shall be 
required for amendments, repeals or additions affecting the dividend rate of 
the 7.85% Preferred, cumulation of the dividend of the 7.85% Preferred, the 
mandatory redemption of all then outstanding shares of 7.85% Preferred on 
November 1, 1999 at the redemption price stated in Section 5 hereof, or the 
redemption of 7.85% Preferred at the option of a Holder due to a Redemption 
Event at the redemption prices set forth in Section 6.A hereof):

(C)    Issue any shares of Senior Preferred or reclassify any shares of any 
Security into shares of Senior Preferred;

(D)    Issue any shares of Priority Stock other than Senior Preferred or 
reclassify any shares of any Security into shares of Priority Stock other 
than Senior Preferred if the effect of such issuance or reclassification 
would be to increase the stated value, as reflected in the Corporation's 
capital account, of all outstanding Priority Stock, or the aggregate 
preference payable upon the voluntary or involuntary liquidation, dissolution 
or winding up of the Corporation with respect to all outstanding Priority 
Stock, to an amount in excess of $2,400,000 (including issuances or 
reclassifications of any shares of Priority Stock pursuant to a consolidation 
or merger of the Corporation with any Person, calculated on a pro forma basis 
combining the consolidated or merged entities (other than a merger with 
another corporation in which the Corporation is the surviving corporation 
which does not result in any reclassification or change -- other than a 
change in par value, or from par value to no par value, or from no par value 
to par value -- of outstanding shares of the Corporation's Stock of any class 
or series, whether now or hereafter authorized)); provided, however, that if 
the Corporation proposes to issue any shares of Stock that the Board deems to 
be Preference Stock but that the Holders of not less than  a majority of the 
outstanding shares of 7.85% Preferred deem to be Priority Stock, then such 
Holders shall notify the Corporation of their determination, specifying the 
particular terms of such shares they believe cause such shares to be Priority 
Stock, pursuant to the procedures set forth in Section 13 hereof, and if the 
Corporation, by action of the Board, amends this Statement of Rights and 
Preferences to incorporate such particular terms then, subject to the 
approval of the Holders of not less than a majority of the outstanding

<PAGE>

shares of 7.85% Preferred of the text of such amendment to this Statement 
of Rights and Preferences, which shall not be unreasonably withheld, the 
proposed issue of Stock may be issued, except that, unless approved by the 
Holders of not less than 100% of the outstanding shares of 7.85% Preferred, 
no substitution shall be made with respect to the dividend rate of the 
7.85% Preferred, cumulation of the dividend of the 7.85% Preferred,
the mandatory redemption of all then outstanding shares of 7.85% Preferred on
November 1, 1999 at the redemption price stated in Section 5 hereof, or the
redemption of 7.85% Preferred at the option of a Holder due to a Redemption
Event at the redemption prices set forth in Section 6.A hereof;

(E)     Make any payments to the Holders of, or with respect to any, Parity 
Stock, by means of dividends or mandatory redemption payments,

(1)     unless all such payments and all payments in connection with optional 
redemptions pursuant to Section 6 hereof then due on the 7.85% Preferred have 
been made in full, or

(2)     if any such payment or any payment in connection with optional 
redemptions pursuant to Section 6 hereof is then due on the 7.85% Preferred 
but has not been made in full, or if any such payment is then due on Parity 
Stock but has not been made in full, unless partial payments are made on the 
7.85% Preferred and on Parity Stock so that, with respect to each of the 
7.85% Preferred and Parity Stock, such partial payments are identical 
fractions of the amounts then due;

(F)     Make any optional redemptions of any Parity Stock, unless, in each 
such case,

(1)     all redemptions of 7.85% Preferred required to be made pursuant to 
Section 5 or 6 hereof to the date of such optional redemption of Parity Stock 
have been made, and

(2)     all dividends accrued on the 7.85% Preferred payable thereon to the 
date of such optional redemption of Parity Stock, whether or not earned or 
declared, whether or not funds are legally available for the payment of 
dividends, and whether or not declared by the Board, have been paid in full; 
or

(G)     Consolidate or merge with any other Person unless immediately 
following the consummation of such consolidation or merger the Corporation, 
on a pro forma basis combining the consolidated or merged entities, would be 
able to issue at least one share of Preference Stock in addition to all then 
outstanding Preference Stock without violation of the Dividend Coverage Test.

13.    Substitution Procedures Pursuant to Section 12.D hereof.

In the event the Corporation proposes to issue any additional shares of 
Preference Stock, the Corporation shall send a written notice to each Holder 
of 7.85% Preferred by certified or registered mail, postage prepaid, to such 
Holder's address as shown on the books and records of the Corporation, at 
least 30 days prior to the proposed issuance of the


<PAGE>

additional shares of Preference Stock. The notice shall set forth in 
reasonable detail the powers, preferences, rights, qualifications, 
limitations and/or restrictions of the Preference Stock proposed to be 
issued. If the Holders of not less than a majority of the outstanding shares 
of 7.85% Preferred deem such shares to be Priority Stock they shall so notify 
the Corporation in written notices sent to the Corporation at its principal 
office, or such other place as may be designated in the notice sent by the 
Corporation pursuant to this Section 13, by certified or registered mail, 
postage prepaid, within 20 days after transmittal by the Corporation of its 
notice, such notices sent by such Holders to specify which particular terms 
of such shares they believe cause such shares to be Priority Stock, and the 
Corporation thereupon shall either (i) by action of the Board amend this 
Statement of Rights and Preferences (subject to the provisions of Section 
12.D hereof and to the approval of the Holders of not less than a majority of 
the outstanding shares of 7.85% Preferred of the text of such amendment, 
which shall not be unreasonably withheld) to incorporate such particular 
terms and, within 10 days after notice of such approval is received at the 
place specified above, to file an amendment to the Statement of Rights and 
Preferences pertaining to the 7.85% Preferred setting forth such amendment of 
this Statement of Rights and Preferences with the Secretary of State of 
Washington, or (ii) not so amend this Statement of Rights and Preferences and 
not issue the proposed additional shares of Stock. Within 45 days after 
transmittal by the Corporation of its notice, the Corporation shall notify 
all Holders of outstanding shares of 7.85% Preferred of the action taken by a 
notice sent to each such Holder by certified or registered mail, postage 
prepaid, to such Holder's address as shown on the books and records of the 
Corporation, and if such action is as set forth in clause (i), such notice 
shall be accompanied by a copy of the amendment to the Statement of Rights 
and Preferences of the 7.85% Preferred certified by the Secretary of State of 
Washington as having been filed.

14. Covenant Regarding Redemption.


Following the issuance of the first share of 7.85% Preferred pursuant to this 
Statement of Rights and Preferences, the Corporation will not, and will not 
permit any Subsidiary to, become a party to or bound by any indenture, 
agreement, instrument, Indebtedness, charter provision or security, under the 
terms of or pursuant to which the Corporation's obligation to redeem any of 
the 7.85% Preferred pursuant to Sections 5 or 6 hereof will in any way be 
restricted or eliminated, nor will the Corporation modify or amend or permit 
any Subsidiary to modify or amend any such indenture, agreement, instrument, 
Indebtedness, charter provision or security existing at the time of such 
issuance to add any provision restricting or eliminating such obligation or 
to make any such provision contained therein more restrictive.

15. Definitions.

The following definitions shall apply for the purposes of this
Statement of Rights and Preferences:


"Affiliate" shall mean as to any Person, any other Person directly or 
indirectly controlling,


<PAGE>

controlled by, or under common control with such Person. For purposes of this 
definition, "control" means the possession, directly or indirectly, of the 
power to direct or cause the direction of the management and policies of any 
Person, whether through the ownership of voting securities or by contract or 
otherwise.

"Board" shall mean the Board of Directors of the Corporation.

"By-Laws" shall mean the By-Laws of the Corporation, as amended.

"Common" shall mean the Corporation's Common Stock, par value $1.00 per 
share, and any Stock into which such Common Stock may hereafter be changed.

"Corporation" shall mean Cascade Natural Gas Corporation.

"Dividend Coverage Test" is defined in Section 7 hereof.

"Dividend or Redemption Shortfall" shall mean that the funds available to the 
Corporation as of the close of business on each December 31 on which any 
shares of 7.85% Preferred are outstanding for the payment of dividends on and 
the redemption of all then outstanding shares of 7.85% Preferred, Priority 
Stock and Parity Stock under the terms of any then outstanding indenture, 
agreement, instrument, security or Indebtedness of or binding upon the 
Corporation or any Subsidiary are less than the aggregate of (i) the amount 
of all dividends that, by the respective terms of such Stock, will be payable 
or will accrue on such Stock as dividends between such date and November 1, 
1999, plus (ii) the greatest amount (whether due to premiums payable upon 
redemption or otherwise) that, by the respective terms of such Stock, may be 
payable to redeem such Stock on or prior to November 1, 1999 (other than 
redemptions at the option of the Corporation). The computation of the amount 
of funds so available shall be made by the Chief Financial Officer or 
Treasurer of the Corporation, and a written statement setting forth such 
computation in reasonable detail shall be sent by April 10 of the immediately 
succeeding year to each Holder of 7.85% Preferred by certified or registered 
mail, postage prepaid, at the Holder's address as shown on the books and 
records of the Corporation.

"Earnings Available for Payment of Interest Charges and Dividends" for any 
period shall mean the lesser of (i) the maximum amount available for the 
payment of dividends on and the redemption of Preference Stock imposed by the 
terms of any indenture, agreement, instrument, security or Indebtedness of or 
binding upon the Corporation or any Subsidiary, or (ii) the income before 
interest charges and income taxes of the Corporation, determined in 
accordance with generally accepted accounting principles. In calculating the 
amount described in clause (ii), no adjustment shall be made for (a) profits 
or losses from sales of Property carried in plant or investment accounts of 
the Corporation or any Subsidiary, or from the reacquisition of any 
Securities, or taxes on, in respect of, or measured by such profits or 
losses, (b) charges for the elimination, retirement or amortization of 
utility plant adjustment or acquisition accounts or other intangibles, (c) 
gains from non-utility operations, (d) the write-up of assets, (e) 
extraordinary gains or (f)


<PAGE>

adjustments to earned surplus (including tax adjustments required by 
generally accepted accounting principles) applicable to any prior period.

"Excess Preferred" means that the Corporation has issued shares of Priority 
Stock or Parity Stock following the issuance of the first share of 7.85% 
Preferred pursuant to this Statement of Rights and Preferences, and, by 
virtue of any indenture, agreement, instrument, security or Indebtedness of 
or binding upon the Corporation or any Subsidiary in existence or outstanding 
as of the date of the issuance of such Priority Stock or Parity Stock, the 
funds available to the Corporation as of the date of issuance of such shares 
of Priority Stock or Parity Stock for the payment of dividends on and the 
redemption of all then outstanding shares of Preference Stock, including, 
without limitation, the 7.85% Preferred, are less than the aggregate of (i) 
the amount of all dividends that, by the respective terms of such Preference 
Stock, will be payable or will accrue on such Preference Stock as dividends 
between such date of issuance and November 1, 1999, plus (ii) the greatest 
amount (whether due to premiums payable upon redemption or otherwise) that, 
by the respective terms of such Stock, may be payable to redeem such Stock on 
or prior to November 1, 1999 (other than redemptions at the option of the 
Corporation). The computation of the amount of funds so available shall be 
made by the Chief Financial Officer or Treasurer of the Corporation as of the 
date of each issuance of Priority Stock or Parity Stock following the 
issuance of the first share of 7.85% Preferred pursuant to this Statement of 
Rights and Preferences, and a written statement setting forth such 
computation in reasonable detail shall be sent within ten days after the date 
of each such issuance by certified or registered mail, postage prepaid, at 
the Holder's address as shown on the books and records of the Corporation.

"Holders" shall mean the Persons who shall, from time to time, own, of record 
or beneficially, any Security. The term "Holder" shall mean one of the 
Holders.

"Indebtedness" of any corporation, shall mean the principal of (and premium, 
if any) and unpaid interest on:

(i)  indebtedness which is for money borrowed from others;

(ii) indebtedness guaranteed, directly or indirectly, in any manner by such 
corporation, or in effect guaranteed, directly or indirectly, by such 
corporation through an agreement, contingent or otherwise, to supply funds to 
or in any other manner invest in the debtor or to purchase indebtedness, or 
to purchase Property or services primarily for the purpose of enabling the 
debtor to make payment of the indebtedness or of assuring the owner of the 
indebtedness against loss;

(iii) all indebtedness secured by any mortgage, lien, pledge, charge or 
other encumbrance upon Property owned by such corporation, even if such 
corporation does not in any manner become liable for the payment of such 
indebtedness;

(iv) all indebtedness of such corporation created or arising under any 
conditional sale,


<PAGE>

lease or other title retention agreement with respect to Property acquired by 
such corporation even though the rights and remedies of the seller, lessor or 
lender under such agreement or lease in the event of default are limited to 
repossession or sale of such Property; and

(v) renewals, extensions and refundings of any such indebtedness.

"Junior Stock" shall mean any shares of any class of Stock of the Corporation 
having preference or priority as to dividends or Property junior to any such 
preference or priority of the 7.85% Preferred, or any voting right with 
respect to the election of directors which, if exercised, would not restrict 
or eliminate any such voting right of the 7.85% Preferred, and any instrument 
or Security convertible into or exchangeable for Junior Stock.

"Liquidation Amount" is defined in Section 3 hereof.

"Mandatory Redemption Notice" is defined in Section 5 hereof.

"Optional Redemption Notice" is defined in Section 6.B hereof.

"Parity Stock" shall mean any shares of any class of Stock of the Corporation 
having any preference or priority as to dividends or Property on a parity 
with any such preference or priority of the 7.85% Preferred, or any voting 
right with respect to the election of directors which, if exercised, would be 
on a parity with any such voting right of the 7.85% Preferred, and any 
instrument or Security convertible into or exchangeable for Parity Stock.

"Person" shall mean any individual, partnership, corporation, trust, 
unincorporated organization or governmental organization or any agency or 
political subdivision thereof.

"Preference Stock" shall mean any class or series of Stock of the Corporation 
having any preference or priority as to dividends or Property senior to any 
such preference or priority of the Common and any instrument or Security 
convertible into or exchangeable for Preference Stock.

"Preferred Stock" is defined in the recitals hereof.

"Priority Stock" shall mean any shares of any class of Stock of the 
Corporation having any preference or priority as to dividends or Property 
senior to any such preference or priority of the 7.85% Preferred, or any 
voting right with respect to the election of directors which, if exercised, 
would restrict or eliminate any such voting right of the 7.85% Preferred, and 
any instrument or Security convertible into or exchangeable for Parity Stock. 
Priority Stock includes but is not limited to Senior Preferred.

"Property" shall mean any interest in any kind of property or asset, whether 
real, personal or mixed, or tangible or intangible.

<PAGE>


"Ratings Downgrade" shall mean that as a result of any exchange of Stock, 
consolidation or merger of the Corporation (other than a merger with another 
corporation in which the Corporation is the surviving corporation and which 
does not result in any reclassification or change -- other than a change in 
par value, or from par value to no par value, or from no par value to par 
value -- of outstanding shares of the Corporation's Stock of any class or 
series, whether now or hereafter authorized), the rating on any debenture, 
note or bond of the Corporation outstanding immediately following the 
consummation of such exchange of Stock, consolidation or merger is reduced to 
below Baa3 by Moody's Investors Service Inc. or below BBB- by Standard and 
Poor's Corporation. A Ratings Downgrade shall be deemed to occur on the day 
either of the two rating agencies notifies the Corporation of the 
aforementioned reduction.

"Redemption Date" shall mean November 1, 1999, in the case of mandatory 
redemption pursuant to Section 5 hereof, or a date which is not less than 30 
nor more than 90 days after the date of the Optional Redemption Notice, in 
the case of redemption at the option of a Holder pursuant to Section 6 hereof.

"Redemption Event" means either a Ratings Downgrade, a Dividend or Redemption 
Shortfall, Excess Preferred, or a Restrictive Arrangement.

"Redemption Notice" shall mean either the Mandatory Redemption Notice, the 
Optional Redemption Notice, or both.

"Restated Articles of Incorporation" shall mean the restated articles of 
incorporation of the Corporation, as amended.

"Restricted Payment" shall mean:

(i) any payment of cash dividends on any of the Corporation's Stock other 
than the 7.85% Preferred, Priority Stock or Parity Stock;

(ii) any purchase, redemption or retirement of any of the Corporation's Stock 
other than the 7.85% Preferred, Priority Stock or Parity Stock made directly 
or indirectly by the Corporation or through any Subsidiary; and

(iii) any other cash distribution made directly or indirectly by the 
Corporation or through any Subsidiary in respect of the Corporation's Stock 
other than 7.85% Preferred, Priority Stock or Parity Stock.

"Restricting Event" shall mean the following:

(i) failure to set aside and pay in full, on any date specified in Section 4 
hereof, the amount therein specified to the Holders of the 7.85% Preferred;

(ii) failure to set aside and pay in full, on any Redemption Date, the amount 
required to be 

<PAGE>

paid on that date, pursuant to Section 5 or Section 6 hereof, to redeem 
shares of 7.85% Preferred in accordance with the provisions of such Sections; 
or

(iii) violation by the Corporation of any provision of Sections 8, 12 or 14 
hereof.

"Restrictive Arrangements" shall mean that the Corporation or any Subsidiary, 
following the issuance of the first share of 7.85% Preferred pursuant to this 
Statement of Rights and Preferences, becomes a party to, bound by or issues 
any indenture, agreement, instrument, security or Indebtedness, or modifies 
or amends any indenture, agreement, instrument, security or Indebtedness of 
or binding upon the Corporation or any Subsidiary existing at the time of the 
issuance of the first share of 7.85% Preferred pursuant to this Statement of 
Rights and Preferences and, as of the date of any such action following such 
issuance, by virtue of any such indenture, agreement, instrument, security 
and Indebtedness then in existence or outstanding, the funds available to the 
Corporation for the payment of dividends on and the redemption of all shares 
of Preference Stock, including, without limitation, the 7.85% Preferred 
outstanding on the date of any such action, are less than the aggregate of 
(i) the amount of all dividends that, by the respective terms of such Stock, 
will be payable or will accrue on such Stock as dividends between such date 
and November 1, 1999, plus (ii) the greatest amount (whether due to premiums 
payable upon redemption or otherwise) that, by the respective terms of such 
Stock, may be payable to redeem such Stock on or prior to November 1, 1999 
(other than redemptions at the option of the Corporation). The computation of 
the amount of funds so available shall be made by the Chief Financial Officer 
or Treasurer of the Corporation, and a written statement setting forth such 
computation in reasonable detail shall be sent within ten days after such 
effective date to each Holder of 7.85% Preferred by certified or registered 
mail, postage prepaid, at the Holder's address as shown on the books and 
records of the Corporation.

"Securities" shall mean any debt or equity securities of the Corporation, 
whether now or hereafter authorized, and any instrument convertible into or 
exchangeable for Securities or a Security.

"Security" shall mean one of the Securities.

"Senior Preferred" shall mean the Corporation's 55CENTS Cumulative Preferred 
Stock, without nominal or par value, Series A, B and C.

"7.85% Preferred" shall mean 60,000 shares of $1.00 Preferred Stock 
designated as 7.85% Cumulative Preferred Stock.

"Stock" shall include any and all shares, interests or other equivalents 
(however designated) of, or participations in, corporate stock.

"Subsidiary" shall mean any corporation at least 50% of whose outstanding 
voting stock shall at the time be owned by the Corporation or by one or more 
Subsidiaries of the Corporation or by the Corporation and one or more 
Subsidiaries of the Corporation.

"Voting Right Event" shall mean failure to set aside and pay in full on six 
or more of the 


<PAGE>

dates specified in Section 4 hereof, consecutively, the amounts therein 
specified to the Holders of the 7.85% Preferred, until such date as all 
accrued unpaid dividends on the outstanding 7.85% Preferred have been paid in 
full.

Exhibit B


CASCADE NATURAL GAS CORPORATION
STATEMENT OF RIGHTS AND PREFERENCES OF THE 
SERIES Z JUNIOR PARTICIPATING PREFERRED STOCK, $1.00 PAR VALUE



     Section 1. Designation and Amount.  There shall be a series of Preferred 
Stock of the Corporation which shall be designated as "Series Z Junior 
Participating Preferred Stock, $1.00 par value" (the "Series Z Preferred 
Stock"), and the number of shares constituting such series shall be 110,000. 
Such number of shares may be increased or decreased by Articles of Amendment 
adopted by the Board of Directors without shareholder action; provided, 
however, that no decrease shall reduce the number of shares of Series Z 
Preferred Stock to a number less than the shares outstanding plus the number 
of shares issuable upon exercise of outstanding rights, options or warrants 
or upon conversion of outstanding securities issued by the Corporation.

      Section 2.  Dividends and Distributions.

      (A)  Subject to the prior and superior rights of the holders of any 
shares of any series of Preferred Stock ranking prior and superior to the 
Series Z Preferred Stock with respect to dividends, the holders of shares of 
Series Z Preferred Stock, in preference to the holders of shares of Common 
Stock, $1.00 par value ("Common Stock") of the Corporation and of any other 
junior stock which may be outstanding, shall be entitled to receive, when, as 
and if declared by the Board of Directors out of funds legally available for 
the purpose, (i) quarterly dividends payable in cash on the last day of 
March, June, September and December in each year (each such date being 
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the 
first Quarterly Dividend Payment Date after the first issuance of a share or 
fraction of a share of Series Z Preferred Stock, in an amount per share 
(rounded to the nearest cent) equal to the greater of (a) $1.00 per share 
($.01 per one one-hundredth of a share), or (b) subject to the provision for 
adjustment hereinafter set forth, 100 times the aggregate per share amount of 
all cash dividends declared on the Common Stock since the immediately 
preceding Quarterly Dividend Payment Date or, with respect to the first 
Quarterly Dividend Payment Date, since the first issuance of any share or 
fraction of a share of Series Z Preferred Stock, and (ii) subject to the 
provision for adjustment hereinafter set forth, quarterly distributions 
(payable in kind) on each Quarterly Dividend Payment Date in an amount per 
share equal to 100 times the aggregate per share amount of all noncash 
dividends or other distributions (other than a dividend payable in shares of 
Common Stock or a subdivision of the outstanding shares of Common Stock, by 
reclassification or otherwise), declared on

<PAGE>

the Common Stock since the immediately preceding Quarterly Dividend Payment 
Date, or with respect to the first Quarterly Dividend Payment Date since the 
first issuance of any share or fraction of a share of Series Z Preferred 
Stock. In the event the Corporation shall at any time after March 19, 1993 
(the "Rights Declaration Date"), declare or pay any dividend on Common Stock 
payable in shares of Common Stock, or effect a subdivision or combination or 
consolidation of the outstanding shares of Common Stock (by reclassification 
or otherwise) into a greater or lesser number of shares of Common Stock, then 
in each such case the amount to which holders of shares of Series Z Preferred 
Stock are entitled under clauses (i)(b) or (ii) of the preceding sentence 
shall be adjusted by multiplying such amount by a fraction the numerator of 
which is the number of shares of Common Stock outstanding immediately after 
such event and the denominator of which is the number of shares of Common 
Stock that were outstanding immediately prior to such event.

         (B)  The Corporation shall declare a dividend or distribution on the 
Series Z Preferred Stock as provided in Section 2(A) immediately after it 
declares a dividend or distribution on the Common Stock (other than a 
dividend payable in shares of Common Stock); provided that, in the event no 
dividend or distribution shall have been declared on the Common Stock during 
the period between any Quarterly Dividend Payment Date and the next 
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share 
($.01 per one one-hundredth of a share) on the Series Z Preferred Stock shall 
nevertheless be payable, out of funds legally available for such purpose, on 
such subsequent Quarterly Dividend Payment Date.

        (C)  Dividends shall begin to accrue and be cumulative on outstanding 
shares of Series Z Preferred Stock from the Quarterly Dividend Payment Date 
next preceding the date of issue of such shares of Series Z Preferred Stock, 
unless the date of issue of such shares is prior to the record date for the 
first Quarterly Dividend Payment Date, in which case dividends on such shares 
shall begin to accrue and be cumulative from the date of issue of such 
shares, or unless the date of issue is a Quarterly Dividend Payment Date or 
is a date after the record date for the determination of holders of shares of 
Series Z Preferred Stock entitled to receive a quarterly dividend and before 
such Quarterly Dividend Payment Date, in either of which events such 
dividends shall begin to accrue and be cumulative from such Quarterly 
Dividend Payment Date. Accrued but unpaid dividends shall cumulate but shall 
not bear interest. Dividends paid on the shares of Series Z Preferred Stock 
in an amount less than the total amount of such dividends at the time accrued 
and payable on such shares shall be allocated pro rata on a share-by-share 
basis among all such shares at the time outstanding. The Board of Directors 
may fix a record date for the determination of holders of shares of Series Z 
Preferred Stock entitled to receive payment of a dividend or distribution 
declared thereon, which record date shall be not more than 30 days prior to 
the date fixed for the payment thereof.

       Section 3.  Voting Rights.  The holders of shares of Series Z
Preferred Stock shall have the following voting rights:

<PAGE>

        (A)  Subject to the provision for adjustment hereinafter set forth, 
each share of Series Z Preferred Stock shall entitle the holder thereof to 
100 votes (and each one one-hundredth of a share of Series Z Preferred Stock 
shall entitle the holder thereof to one vote) on all matters submitted to a 
vote of the shareholders of the Corporation. In the event the Corporation 
shall at any time after the Rights Declaration Date declare or pay any 
dividend on Common Stock payable in shares of Common Stock, or effect a 
subdivision or combination or consolidation of the outstanding shares of 
Common Stock (by reclassification or otherwise) into a greater or lesser 
number of shares of Common Stock, then in each such case the number of votes 
per share to which holders of shares of Series Z Preferred Stock were 
entitled immediately prior to such event shall be adjusted by multiplying 
such number by a fraction, the numerator of which is the number of shares of 
Common Stock outstanding immediately after such event and the denominator of 
which is the number of shares of Common Stock that were outstanding 
immediately prior to such event.

         (B)  Except as otherwise provided in the Articles of Incorporation 
or in this amendment thereof or by law, the holders of shares of Series Z 
Preferred Stock and the holders of shares of Common Stock shall vote together 
as one class on all matters submitted to a vote of the shareholders of the 
Corporation.

         (C)  Except as otherwise provided in the Articles of Incorporation 
or in this amendment thereof or by law, holders of Series Z Preferred Stock 
shall have no special voting rights and their consent shall not be required 
for taking any corporate action.

      Section 4.  Certain Restrictions.

       (A)  Whenever quarterly dividends or other dividends or distributions 
payable on the Series Z Preferred Stock as provided in Section 2 are in 
arrears, thereafter and until all accrued and unpaid dividends and 
distributions, whether or not declared, on shares of Series Z Preferred Stock 
outstanding shall have been paid in full, the Corporation shall not:

    (i)  declare or pay dividends on, make any other distributions on any 
shares of stock ranking junior (either as to dividends or upon liquidation, 
dissolution or winding up) to the Series Z Preferred Stock;

   (ii)  declare or pay dividends on or make any other distributions on any 
shares of stock ranking on a parity (either as to dividends or upon 
liquidation, dissolution or winding up) with the Series Z Preferred Stock, 
except dividends paid ratably on the Series Z Preferred Stock and all such 
parity stock on which dividends are payable or in arrears in proportion to 
the total amounts to which the holders of all such shares are then entitled;

   (iii)  redeem or purchase or otherwise acquire for consideration shares of 
any stock ranking junior (either as to dividends or upon liquidation, 
dissolution or winding up) with the Series Z Preferred Stock, provided that 
the Corporation may at any time redeem,


<PAGE>

purchase or otherwise acquire shares of any such junior stock in exchange for 
shares of any stock of the Corporation ranking junior (either as to dividends 
or upon dissolution, liquidation or winding up) to the Series Z Preferred 
Stock; or

  (iv)  purchase or otherwise acquire for consideration any shares of Series 
Z Preferred Stock, or any share of stock ranking on a parity with the Series 
Z Preferred Stock, except in accordance with a purchase offer made in writing 
or by publication (as determined by the Board of Directors) to all holders of 
such shares upon such terms as the Board of Directors, after consideration of 
the respective annual dividend rates and other relative rights and 
preferences of the respective series and classes, shall determine in good 
faith will result in fair and equitable treatment among the respective series 
or classes.

      (B)  The Corporation shall not permit any subsidiary of the Corporation 
to purchase or otherwise acquire for consideration any shares of stock of the 
Corporation unless the Corporation could, under Section 4(A), purchase or 
otherwise acquire such shares at such time and in such manner.

        Section 5.  Reacquired Shares.  Any shares of Series Z Preferred 
Stock purchased or otherwise acquired by the Corporation in any manner 
whatsoever shall be retired and canceled promptly after the acquisition 
thereof. The Corporation shall take all such action as is necessary so that 
all such shares shall after their cancellation become authorized but unissued 
shares of Preferred Stock, without designation as to series, and may be 
reissued as part of a new series of Preferred Stock to be created by Articles 
of Amendment adopted by the Board of Directors without shareholder action, 
subject to the conditions and restrictions on issuance set forth herein.

       Section 6. Liquidation, Dissolution or Winding Up.  Upon any 
liquidation, dissolution or winding up of the Corporation, no distribution 
shall be made (A) to the holders of shares of stock ranking junior (either as 
to dividends or upon liquidation, dissolution or winding up) to the Series Z 
Preferred Stock, unless, prior thereto, the holders of shares of Series Z 
Preferred Stock shall have received the higher of (i) $1.00 per share ($.01 
per one one-hundredth of a share), plus an amount equal to accrued and unpaid 
dividends and distributions thereon, whether or not declared, to the date of 
such payment, or (ii) an aggregate amount per share, subject to the provision 
for adjustment hereinafter set forth, equal to 100 times the aggregate amount 
to be distributed per share to holders of Common Stock; nor shall any 
distribution be made (B) to the holders of stock ranking on a parity (either 
as to dividends or upon liquidation, dissolution or winding up) with the 
Series Z Preferred Stock, except distributions made ratably on the Series Z 
Preferred Stock and all other such parity stock in proportion to the total 
amounts to which the holders of all such shares are entitled upon such 
liquidation, dissolution or winding up. In the event the Corporation shall at 
any time after the Rights Declaration Date declare or pay any dividend on 
Common Stock payable in shares of Common Stock, or effect a subdivision or 
combination or consolidation of the outstanding shares of Common Stock (by 
reclassification or otherwise) into a greater or lesser number of shares of 
Common Stock, then in each such case the aggregate amount to which holders of

<PAGE>

shares of Series Z Preferred Stock are entitled under clause (A)(ii) of the 
preceding sentence shall be adjusted by multiplying such amount by a fraction 
the numerator of which is the number of shares of Common Stock outstanding 
immediately after such event and the denominator of which is the number of 
shares of Common Stock that were outstanding immediately prior to such event.

      Section 7. Consolidation, Merger, etc.  In case the Corporation shall 
enter into any consolidation, merger, combination or other transaction in 
which the shares of Common Stock are exchanged for or changed into other 
stock or securities, cash and/or any other property, or otherwise changed, 
then in any such case the shares of Series Z Preferred Stock shall at the 
same time be similarly exchanged or changed in an amount per share (subject 
to the provision for adjustment hereinafter set forth) equal to 100 times the 
aggregate amount of stock, securities, cash and/or any other property 
(payable in kind), as the case may be, into which or for which each share of 
Common Stock is changed or exchanged. In the event the Corporation shall at 
any time after the Rights Declaration Date declare or pay any dividend on 
Common Stock payable in shares of Common Stock, or effect a subdivision or 
combination or consolidation of the outstanding shares of Common Stock (by 
reclassification or otherwise) into a greater or lesser number of shares of 
Common Stock, then in each such case the amount set forth in the preceding 
sentence with respect to the exchange or change of shares of Series Z 
Preferred Stock shall be adjusted by multiplying such amount by a fraction 
the numerator of which is the number of shares of Common Stock outstanding 
immediately after such event and the denominator of which is the number of 
shares of Common Stock that were outstanding immediately prior to such event.

         Section 8.  No Redemption.  The shares of Series Z Preferred Stock 
shall not be redeemable. Notwithstanding the foregoing, the Corporation may 
acquire shares of Series Z Preferred Stock in any other manner permitted by 
law, the Articles of Incorporation or this amendment thereof.

         Section 9.  Rank. Unless otherwise provided in the Articles of 
Incorporation or an amendment thereof relating to a subsequent series of 
Preferred Stock of the Corporation, the Series Z Preferred Stock shall rank 
junior to all other series of the Corporation's Preferred Stock, including, 
without limitation, the Corporation's 55CENTS Preferred Stock and 7.85% 
Preferred Stock referred to in Article V of the Articles of Incorporation, as 
to the payment of dividends and the distribution of assets on liquidation, 
dissolution or winding up, and senior to the Common Stock of the Corporation.

         Section 10.  Amendment.  The Articles of Incorporation shall not be 
amended in any manner which would materially alter or change the powers, 
preferences or special rights of the Series Z Preferred Stock so as to affect 
them adversely without the affirmative vote of the holders of at least a 
majority of the outstanding shares of Series Z Preferred Stock, voting 
separately as a class.

         Section 11.  Fractional Shares.  Series Z Preferred Stock may be 
issued in


<PAGE>


one-hundredths of a share or other fractions of a share which shall entitle 
the holder, in proportion to such holder's fractional shares, to exercise 
voting rights, receive dividends, participate in distributions and to have 
the benefit of all other rights of holders of Series Z Preferred Stock.