Exhibit
10.35


 










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


 


 


AMENDED AND RESTATED LOAN AGREEMENT


 


 


Between


 


 


CASCADE NATURAL GAS CORPORATION


 


as Borrower


 


 


and


 


 


U.S. BANK NATIONAL ASSOCIATION


 


as Lender


 


 


Dated as of September 30, 2004


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE 1 THE CREDIT

  	
   

  
	
   

  	
   

  
	
   

  	
  Section 1.1

  	
  Agreement to Lend

  	
   

  
	
   

  	
  Section 1.2

  	
  Manner of Borrowing

  	
   

  
	
   

  	
  Section 1.3

  	
  Maturity

  	
   

  
	
   

  	
  Section 1.4

  	
  Interest.

  	
   

  
	
   

  	
  Section 1.5

  	
  Promissory Note

  	
   

  
	
   

  	
  Section 1.6

  	
  Manner of Payments.

  	
   

  
	
   

  	
  Section 1.7

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 CONDITIONS OF LENDING.

  	
   

  
	
   

  	
   

  
	
   

  	
  Section 2.1

  	
  The Initial Loan

  	
   

  
	
   

  	
  (a)

  	
  Loan Documents

  	
   

  
	
   

  	
  (b)

  	
  Corporate Authority

  	
   

  
	
   

  	
  (c)

  	
  Legal Opinion

  	
   

  
	
   

  	
  (d)

  	
  Fees

  	
   

  
	
   

  	
  Section 2.2

  	
  Each Loan

  	
   

  
	
   

  	
  (a)

  	
  Notice of Borrowing

  	
   

  
	
   

  	
  (b)

  	
  Defaults, Etc

  	
   

  
	
   

  	
  (c)

  	
  Material Adverse Change

  	
   

  
	
   

  	
  (d)

  	
  Other Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 REPRESENTATIONS AND WARRANTIES.

  	
   

  
	
   

  	
   

  
	
   

  	
  Section 3.1

  	
  Corporate Existence and Power

  	
   

  
	
   

  	
  Section 3.2

  	
  Corporate Authorization

  	
   

  
	
   

  	
  Section 3.3

  	
  Government Approvals, Etc

  	
   

  
	
   

  	
  Section 3.4

  	
  Binding Obligations, Etc

  	
   

  
	
   

  	
  Section 3.5

  	
  Litigation

  	
   

  
	
   

  	
  Section 3.6

  	
  Financial Condition

  	
   

  
	
   

  	
  Section 3.7

  	
  Title and Liens

  	
   

  
	
   

  	
  Section 3.8

  	
  Taxes

  	
   

  
	
   

  	
  Section 3.9

  	
  Other Agreements

  	
   

  
	
   

  	
  Section 3.10

  	
  ERISA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4 AFFIRMATIVE COVENANTS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.1

  	
  Use of Proceeds

  	
   

  
	
   

  	
  Section 4.2

  	
  Fixed Charge Coverage Ratio

  	
   

  
	
   

  	
  Section 4.3

  	
  Indebtedness Capitalization Ratio

  	
   

  
	
   

  	
  Section 4.4

  	
  Payments

  	
   

  
	
   

  	
  Section 4.5

  	
  Preservation of Corporate Existence, Etc

  	
   

  
	
   

  	
  Section 4.6

  	
  Visitation Rights

  	
   

  
	
   

  	
  Section 4.7

  	
  Keeping of Books and Records

  	
   

  
					



 


i





















 


	
   

  	
  Section 4.8

  	
  Maintenance of Property, Etc

  	
   

  
	
   

  	
  Section 4.9

  	
  Compliance with Laws, Etc

  	
   

  
	
   

  	
  Section 4.10

  	
  Other Obligations

  	
   

  
	
   

  	
  Section 4.11

  	
  Insurance

  	
   

  
	
   

  	
  Section 4.12

  	
  Financial Information

  	
   

  
	
   

  	
  Section 4.13

  	
  Notification

  	
   

  
	
   

  	
  Section 4.14

  	
  Additional Payments; Additional Acts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5 NEGATIVE COVENANTS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.1

  	
  Dividends, Purchase of Stock, Etc

  	
   

  
	
   

  	
  Section 5.2

  	
  Liquidation, Merger, Sale of Assets

  	
   

  
	
   

  	
  Section 5.3

  	
  Indebtedness

  	
   

  
	
   

  	
  Section 5.4

  	
  Guaranties, Etc

  	
   

  
	
   

  	
  Section 5.5

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 EVENTS OF DEFAULT.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 6.1

  	
  Events of Default Defined

  	
   

  
	
   

  	
  (a)

  	
  Payment Default

  	
   

  
	
   

  	
  (b)

  	
  Breach of Warranty

  	
   

  
	
   

  	
  (c)

  	
  Breach of Certain Covenants

  	
   

  
	
   

  	
  (d)

  	
  Breach of Other Covenant

  	
   

  
	
   

  	
  (e)

  	
  Cross-default

  	
   

  
	
   

  	
  (f)

  	
  Voluntary Bankruptcy, Etc

  	
   

  
	
   

  	
  (g)

  	
  Involuntary Bankruptcy, Etc

  	
   

  
	
   

  	
  (h)

  	
  Insolvency, Etc

  	
   

  
	
   

  	
  (i)

  	
  Judgment

  	
   

  
	
   

  	
  (j)

  	
  Involuntary Liens

  	
   

  
	
   

  	
  (k)

  	
  ERISA

  	
   

  
	
   

  	
  Section 6.2

  	
  Consequences of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7 MISCELLANEOUS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.1

  	
  No Waiver; Remedies Cumulative

  	
   

  
	
   

  	
  Section 7.2

  	
  Governing Law

  	
   

  
	
   

  	
  Section 7.3

  	
  Consent to Jurisdiction

  	
   

  
	
   

  	
  Section 7.4

  	
  Notices

  	
   

  
	
   

  	
  Section 7.5

  	
  Assignment

  	
   

  
	
   

  	
  Section 7.6

  	
  Severability

  	
   

  
	
   

  	
  Section 7.7

  	
  Conditions Not Fulfilled

  	
   

  
	
   

  	
  Section 7.8

  	
  Entire Agreement; Amendment

  	
   

  
	
   

  	
  Section 7.9

  	
  Headings

  	
   

  
	
   

  	
  Section 7.10

  	
  Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 DEFINITIONS.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 8.1

  	
  Certain Defined Terms

  	
   

  
	
   

  	
  Section 8.2

  	
  Other Accounting Terms

  	
   

  
					



 


ii





















 


	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A  -   Promissory
  Note

  	
   

  
	
  Exhibit B  -   Opinion
  of Borrower’s Counsel

  	
   

  



 


iii





















 


AMENDED AND RESTATED LOAN AGREEMENT


 


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


 


ARTICLE 1

THE CREDIT


 


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


 


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


 


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


 


Section
1.4       Interest.


 


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


 


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


 





















 


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


 


2





















 


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


 


Section
1.6       Manner of Payments.


 


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


 


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


 


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


 


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


 


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


 


ARTICLE 2

CONDITIONS OF LENDING.


 


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


 


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


 


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


 


3





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


ARTICLE 3

REPRESENTATIONS AND WARRANTIES.


 


Borrower represents and warrants to Lender as
follows:


 


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


 


4





















 


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


 


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


 


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


 


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


 


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


 


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


 


5





















 


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


 


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


 


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


 


ARTICLE 4

AFFIRMATIVE COVENANTS.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6





















 


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


 


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


 


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


 


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


 


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


 


Section
4.12     Financial Information.  Deliver to Lender:


 


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


 


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


 


7





















 


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


 


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


 


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


 


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


 


ARTICLE 5

NEGATIVE COVENANTS.


 


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


 


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


 


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


 


8





















 


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


 


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


 


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


 


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


 


ARTICLE 6

EVENTS OF DEFAULT.


 


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


 


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


 


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


 


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


 


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


 


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


 


9





















 


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


 


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


 


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


 


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


 


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


 


10





















 


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


 


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


 


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


 


ARTICLE 7

MISCELLANEOUS.


 


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


 


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


 


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


 


11





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


12





















 


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


 


ARTICLE 8

DEFINITIONS.


 


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


 


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


 


	
  Pricing Level

  	
   

  	
  Applicable Fee Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Pricing Level I

  	
   

  	
  [*]

  	
   

  
	
  Pricing Level II

  	
   

  	
  [*]

  	
   

  
	
  Pricing Level III

  	
   

  	
  [*]

  	
   

  
	
  Pricing Level IV

  	
   

  	
  [*]

  	
   

  



 


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


 


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


 


	
  Pricing Level

  	
   

  	
  Prime Rate

  Loans

  	
   

  	
  Eurodollar Rate

  Loans I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pricing Level I

  	
   

  	
  0

  	
  %

  	
  [*]

  	
   

  
	
  Pricing Level II

  	
   

  	
  0

  	
  %

  	
  [*]

  	
   

  
	
  Pricing Level III

  	
   

  	
  0

  	
  %

  	
  [*]

  	
   

  
	
  Pricing Level IV

  	
   

  	
  0

  	
  %

  	
  [*]

  	
   

  



 


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


 


13





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


14





















 


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


 


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


 


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


 


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


 


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


 


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


 


“GAAP”
means generally accepted accounting principles consistently applied.


 


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


 


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


 


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


 


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


 


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


 


15





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


16





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


17





















 


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


 


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


 


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


 


	
  LENDER:

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Wilfred
  C. Jack

  	
   

  
	
   

  	
  Wilfred C.
  Jack, Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  National
  Corporate Banking

  
	
   

  	
   

  	
  1420 Fifth
  Avenue, 10th Floor

  
	
   

  	
   

  	
  Seattle, WA
  98101

  
	
   

  	
   

  	
  Attn:

  	
  Wilfred C.
  Jack

  
	
   

  	
   

  	
   

  	
  Vice
  President

  
	
   

  	
  Telephone:

  	
  (206)
  344-3643

  
	
   

  	
  Telefax:

  	
  (206)
  344-3654

  
					



 


18





















 


	
  BORROWER:

  	
  CASCADE
  NATURAL GAS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ J. D.
  Wessling

  	
   

  
	
   

  	
  J. D.
  Wessling, Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Larry C.
  Rosok

  	
   

  
	
   

  	
  Larry C. Rosok, Vice President – Human Resources

  and Corporate Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  222 Fairview
  Avenue North

  
	
   

  	
   

  	
  Seattle, WA
  98109

  
	
   

  	
   

  	
  Attn:

  	
  J.D.
  Wessling

  
	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
  Telephone:

  	
  (206)
  624-3900

  
	
   

  	
  Telefax:

  	
  (206)
  624-7215

  
					



 


19





















 


Exhibit A


 


PROMISSORY NOTE


 


	
  $60,000,000.00

  	
  September 30, 2004

  



 


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


 


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


 


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


 


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


 


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


 


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


 





















 


	
   

  	
  CASCADE
  NATURAL GAS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ J. D.
  Wessling

  	
   

  
	
   

  	
  J. D.
  Wessling, Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Larry C.
  Rosok

  	
   

  
	
   

  	
  Larry C. Rosok, Vice President – Human

  Resources and Corporate Secretary