Document:

Exhibit
10.1

 

* 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 $60,000, 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 1.20 to 1.

 

Section
4.3       Indebtedness Capitalization Ratio.  Maintain at all times an
Indebtedness Capitalization Ratio of not greater than 0.65 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

  	
   

  	
  0.1250%

  	
   

  
	
  Pricing Level II

  	
   

  	
  0.1250%

  	
   

  
	
  Pricing Level III

  	
   

  	
  0.1750%

  	
   

  
	
  Pricing Level IV

  	
   

  	
  0.2250%

  	
   

  

 

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%

  	
   

  	
  0.6000%

  	
   

  
	
  Pricing Level II

  	
   

  	
  0%

  	
   

  	
  0.7500%

  	
   

  
	
  Pricing Level III

  	
   

  	
  0%

  	
   

  	
  0.9000%

  	
   

  
	
  Pricing Level IV

  	
   

  	
  0%

  	
   

  	
  1.0500%

  	
   

  

 

“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 SecretaryExhibit 10(g)

 

UNSECURED REVOLVING LINE
OF CREDIT LOAN AGREEMENT

(FOR BANK HOLDING
COMPANY)

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No.

  	
   

  	
  Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  2,000,000.00

  	
   

  	
  April 21, 2005

  	
   

  	
  May 1, 2007

  	
   

  	
   

  	
   

  	
   

  	
   

  
											

 

References above are for Lender’s use
only and do not constitute any part of the terms and provisions of this
Revolving Line of Credit Loan Agreement.

 

	
  Borrower:

  	
  Frederick County
  Bancorp, Inc.

  	
   

  	
  Lender:

  	
  Atlantic Central Bankers Bank

  
	
   

  	
  P.O. Box 1100

  	
   

  	
   

  	
  1400 Market Street

  
	
   

  	
  Frederick, MD 21702-0100

  	
   

  	
   

  	
  P.O. Box 1109

  
	
   

  	
   

  	
   

  	
   

  	
  Camp Hill, PA 17001-1109

  

 

 

This UNSECURED REVOLVING LINE
OF CREDIT  LOAN AGREEMENT
made this 21st day of April 2005 by and between:

 

1.0          PARTIES

 

1.1           ATLANTIC CENTRAL BANKERS BANK, a state
banking institution organized and existing under the laws of the Commonwealth
of Pennsylvania, with its principal place of business at 1400 Market Street,
P.O. Box 1109, Camp Hill, Commonwealth of Pennsylvania 17001-1109; and

 

1.2           FREDERICK COUNTY BANCORP, INC., a
corporation organized and existing under the laws of the State of Maryland,
with its principal place of business at 30 North Market Street, P.O. Box
1100, Frederick, State of Maryland 21702-0100.

 

2.0          BACKGROUND

 

2.1           Borrower has requested that Lender extend
to Borrower a credit facility in the form of a Revolving Line of Credit not to
exceed $2,000,000.00 for a period
of time expiring on the Termination Date.

 

2.2           Lender
has agreed to extend to Borrower a credit facility in the form of a Revolving
Line of Credit not to exceed $2,000,000.00 for a period
of time expiring on the Termination Date, upon and subject to the terms,
provisions, covenants and conditions set forth in this Revolving Line of Credit
Loan Agreement, in the Revolving Line of Credit Promissory Note for
$2,000,000.00, all dated even date herewith.

 

2.3           Borrower
has on this date executed, as obligor, a Revolving Line of Credit Promissory
Note for $2,000,000.00 in favor of Lender, as obligee.

 

 

3.0          AGREEMENT

 

NOW, THEREFORE, in
consideration of the mutual promises and covenants contained hereinafter and
intending to be legally bound hereby, the parties hereto agree as follows:

 

3.1           DEFINITIONS.  The
following words, terms and/or phrases shall have the following meanings and
definitions for purposes of this Revolving Line of Credit Loan Agreement:

 

	
  TERMS

  	
   

  	
  DEFINITION

  
	
   

  	
   

  	
   

  
	
  “Borrower”

  	
   

  	
  Frederick County
  Bancorp, Inc., its successors and assigns.

  
	
   

  	
   

  	
   

  
	
  “Commitment Amount”

  	
   

  	
  $2,000,000.00

  
	
   

  	
   

  	
   

  
	
  “Commitment Period”

  	
   

  	
  From the date of this
  Loan Agreement until Termination Date.

  
	
   

  	
   

  	
   

  
	
  “Event of Default”

  	
   

  	
  As set forth and
  defined in Paragraph 9 of the Note.

  
	
   

  	
   

  	
   

  
	
  “GAAP”

  	
   

  	
  Generally Accepted
  Accounting Principles.

  
	
   

  	
   

  	
   

  
	
  “Indebtedness”

  	
   

  	
  All monetary and
  financial obligations, liabilities and indebtedness of Borrower, whether
  direct, indirect, matured, unmatured, presently existing or hereafter,
  created, absolute, contingent or non-contingent, liquidated or unliquidated,
  secured or unsecured and/or joint and/or several or arising of any leases.

  
	
   

  	
   

  	
   

  
	
  “Laws”

  	
   

  	
  All ordinances,
  statutes, rules, rulings, regulations, orders, decisions, injunctions, writs
  or decrees of any federal, state and/or local government or political
  subdivision, agency, bureau, body, authority, department or commission
  thereof, or quasi-government corporation created by Congress or any state legislature
  or any federal and/or state court.

  
	
   

  	
   

  	
   

  
	
  “Lender”

  	
   

  	
  Atlantic Central
  Bankers Bank, its successors and assigns.

  
	
   

  	
   

  	
   

  
	
  “Liabilities”

  	
   

  	
  All Indebtedness that,
  in accordance with GAAP, consistently applied, shall be classified as
  liabilities on a balance sheet of the Borrower.

  
	
   

  	
   

  	
   

  
	
  “Loan Agreement”

  	
   

  	
  The Unsecured Revolving
  Line of Credit Loan Agreement by and between Borrower and Lender dated even
  date herewith.

  
	
   

  	
   

  	
   

  
	
  “Obligations”

  and/or “Obligations of

  Borrower” and/or “Borrower’s

  Obligations”

  	
   

  	
  The covenants,
  commitments, undertakings and promises of the Borrower to Lender:

  (A)  To pay the principal, interest and late
  charges, if any, due on the Note in accordance with the terms thereof;

  (B)  Set
  forth in this Loan Agreement and Note;

  (C)  To pay
  all of Lender’s expenses and costs, including the reasonable fees and
  expenses of its counsel as provided for and set forth in this Loan Agreement
  and Note; and

  (D)  All
  Indebtedness to Lender.

  
	
   

  	
   

  	
   

  
	
  “Persons”

  	
   

  	
  Any individual,
  corporation, general or limited partnership, association, joint-stock
  company, trust, limited liability company, limited liability partnership,
  unincorporated association, joint venture, or any type of limited liability
  entity, any state or federal court or state, federal and/or local government
  or political subdivision or agency, bureau, department, body or authority or
  commission thereof, or quasi-government corporation created by Congress or
  any state legislature.

  

 

2

 

	
  “Records”

  	
   

  	
  Any and all
  correspondence, memoranda, tapes, discs, papers, book and other documents, or
  transcribed information of any type or medium, whether in hard copy or stored
  electronically and whether expressed in ordinary electronic machine or other
  language including but not limited to all accounting and financial
  information, books and records and all accounting and financial data and
  information contained therein.

  
	
   

  	
   

  	
   

  
	
  “Revolving Line of
  Credit”

  	
   

  	
  The loans and advances
  of Lender to Borrower during the Commitment Period, not to exceed at any one
  time the Commitment Amount, pursuant to and subject to the terms, provisions,
  covenants and conditions of this Loan Agreement and Note , which loans and
  advances are evidenced by the Note.

  
	
   

  	
   

  	
   

  
	
  “Subsidiary”

  	
   

  	
  Frederick County Bank,
  it’s successors and assigns.

  
	
   

  	
   

  	
   

  
	
  “Termination Date”

  	
   

  	
  May 1, 2007 or the
  date which Lender may establish pursuant to Section 3.1 of the “Note”.

  

 

3.2           RELATED DOCUMENTS.  The terms, provisions, covenants and
conditions of the Note: (a) are incorporated into this Loan Agreement; and
(b) shall govern this Loan Agreement. All definitions of capitalized
words, phrases and/or terms set forth in the Note shall apply to words, terms
and/or phrases set forth in this Loan Agreement which are not expressly defined
in this Loan Agreement.

 

3.3           EXTENSION
OF CREDIT FACILITY.

 

3.3.1        Subject
to the terms, provisions and conditions set forth in this Loan Agreement and in
the Note, Lender hereby extends to Borrower a credit facility in the form of a
Revolving Line of Credit in the Commitment Amount, which shall be available to
Borrower during the Commitment Period.

 

3.3.2        The
obligation of Lender to make advances to Borrower on account of the Revolving
Line of Credit shall cease on the Termination Date.

 

3.4           WARRANTIES
AND REPRESENTATIONS.

 

3.4.1        List.  Borrower hereby warrants and represents
to Lender that:

 

A.            Borrower
is a corporation organized and existing under the laws of the State of
Maryland, has the lawful power to hold and own its property and is duly
qualified to do business in those states where the nature of the business
transacted by Borrower or the property owned by Borrower make such
qualification necessary; and Borrower has not, except as disclosed in writing
to Lender, changed its name.

 

B.            Subsidiary
is a corporation organized and existing under the laws of the State of Maryland
, has the lawful power to hold and own its property and is duly qualified to do
business in those states where the nature of the business transacted by
Subsidiary or the property owned by Subsidiary make such qualification
necessary; and Subsidiary has not, except as disclosed in writing to Lender,
changed its name.

 

C.            Borrower is not
presently in violation of Borrower’s charter, bylaws, any federal and/or state
laws which regulate and/or supervise the business conducted by Borrower and/or
any licenses and/or approvals issued in favor of Borrower by any federal and/or
state departments, bureaus, agencies, commissions, body, authority or
quasi-government corporations which regulate and/or supervise Borrower and/or
the business conducted by Borrower.

 

D.            Subsidiary is not presently in violation of
Subsidiary’s charter, its bylaws, any federal and/or state laws which regulate
and/or supervise the business conducted by Subsidiary and/or any licenses
and/or approvals issued in favor of Subsidiary by any federal and/or state
departments, bureaus, agencies, commissions, body, authority or
quasi-government corporations which regulate and/or supervise Subsidiary and/or
the business conducted by Subsidiary.

 

3

 

E.             Borrower
is not presently in default under any loan, extension of credit, security
agreement, lease, purchase or sales agreement or any other agreement or
contract to which Borrower is a party.

 

F.             Subsidiary
is not presently in default under any loan, extension of credit, security
agreement, lease, purchase or sales agreement or any other agreement or
contract to which Subsidiary is a party.

 

G.            The
execution of this Loan Agreement and the Note and the performance of Borrower’s
Obligations will not cause Borrower to be in default of any loan, extension of
credit, security agreement, lease, purchase or sales agreement, or any other
agreement or contract to which Borrower is a party.

 

H.            Borrower
has complied with all applicable Laws with respect to: (1) any
restrictions, specifications or other requirements pertaining to Borrower,
(2) the conduct of Borrower’s business operations; and/or (3) the
use, maintenance and operation of any of the real and personal properties owned
or leased by Borrower.

 

I.              Borrower has the power and authority to enter
into this Loan Agreement and the Note and perform the Obligations of Borrower
and the extension by Lender to Borrower of the Revolving Line of Credit and
loans and advances made by Lender to Borrower under the Revolving Line of
Credit and/or the execution of this Loan Agreement and the Note will not
violate the charter, articles of incorporation, bylaws, any federal and/or
state Laws which regulate and/or supervise the business conducted by Borrower
and/or any licenses and/or approvals issued in favor of Borrower by any federal
and/or state departments, bureaus, 
agencies, commissions, body, authority or quasi-government corporations
which regulate and/or supervise Borrower and/or the business conducted by
Borrower.

 

J.             Borrower is not
presently a defendant in any lawsuit filed against Borrower or any counterclaim
filed against Borrower in any lawsuit filed by Borrower in which Borrower is
the plaintiff.

 

K.            Subsidiary is not
presently a defendant in any lawsuit filed against Subsidiary or any
counterclaim filed against Subsidiary in any lawsuit filed by Subsidiary in
which Subsidiary is the plaintiff.

 

L.             Borrower is not the
subject of any investigation by federal and/or state banking regulators and
Borrower is not the subject to any pending judicial, administrative and/or
state and/or federal agency order, notice, claim, litigation and/or proceeding
affecting Borrower or Borrower’s assets.

 

M.           Subsidiary is not the
subject of any investigation by federal and/or state banking regulators and
Subsidiary is not the subject to any pending judicial, administrative and/or
state and/or federal regulatory agency order, notice, claim, litigation and/or
proceeding affecting Subsidiary or Subsidiary’s assets.

 

N.            The Revolving Line of Credit provided for in
this Loan Agreement has been approved by action of the Board of Directors of
Borrower taken in accordance with Borrower’s bylaws, articles of incorporation,
charter and/or any licenses and/or approvals issued in favor of Borrower by any
federal and/or state departments, bureaus, agencies, commissions, body,
authority or quasi-government corporations which regulate and/or supervise
Borrower and/or the business conducted by Borrower.

 

O.            No consent,
approval or authorization of, or filing, registration or qualification with any
Person is required to be obtained by Borrower in connection with the execution
and delivery of this Loan Agreement and the Note or the
undertaking or performance of any Obligations hereunder; and if consents,
approvals or authorizations are required, all consents, approvals or
authorizations have been obtained on or prior to such execution and delivery of
this Loan Agreement and the Note by Borrower.

 

P.             The most
recent financial information submitted by Borrower to Lender, prior to Borrower
executing this Loan Agreement, including but not limited to the most recent
year end financial statement of Borrower, is true and correct, fairly
represents the financial condition of Borrower as of the date of said financial
information and the results of Borrower’s business operations for the period
indicated in said financial information and discloses all Indebtedness of
Borrower as of the date of said financial information and as of the date of the
most recent year end financial statement.

 

4

 

Q.            There has
been no material adverse change in the financial condition of Borrower from the
date of the most recent financial information submitted by Borrower to Lender
prior to Borrower executing this Loan Agreement.

 

R.            At the
date of this Loan Agreement, no Indebtedness has been or will be incurred other
than obligations incurred in the ordinary course of business and other than
that certain unsecured note dated January 27, 2004 in the amount of
$450,000.00 between Borrower and J. Edward Poole.

 

S.             The most
recent financial information submitted by Subsidiary to Lender, prior to
Borrower executing this Loan Agreement, including but not limited to the most
recent year end financial statement of Subsidiary, is true and correct, fairly
represents the financial condition of Subsidiary as of the date of said
financial information and the results of Subsidiary’s business operations for
the period indicated in said financial information and discloses all
Indebtedness of Subsidiary as of the date of said financial information and as
of the date of the most recent year end financial statement.

 

T.            There has
been no material adverse change in the financial condition of Subsidiary from
the date of the most recent financial information submitted by Subsidiary to
Lender prior to Borrower executing this Loan Agreement.

 

U.            Since the
date of the submission of the most recent financial information submitted by
Subsidiary to Lender prior to Borrower executing this Loan Agreement,
Subsidiary has not incurred any Indebtedness other than normal operating
obligations incurred in the ordinary course of Subsidiary’s business.

 

V.            This Loan
Agreement and the Note, when delivered, will be
valid, binding and enforceable in accordance with their respective terms,
except as the enforceability thereof may be subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other laws relating to or
affecting creditors’ rights generally or the rights of creditors of companies
that control institutions, the deposits of which are insured by the Federal
Deposit Insurance Corporation and to the application of equitable principles
and judicial discretion in a proceeding at law or in equity.

 

W.           Except as
otherwise permitted by the provisions hereof, the Borrower has filed or caused
to be filed all federal, state and local tax returns and other reports Borrower
is required by law to file prior to the date hereof and which are material to
the conduct of Borrower’s business, and has paid or caused to be paid all
taxes, assessments and other governmental charges that are due and payable
prior to the date hereof and/or has made adequate provision for the payment of
such taxes, assessments or other charges accruing but not yet payable.  The Borrower has no knowledge of any
deficiency or additional assessment in a materially important amount in
connection with any taxes, assessments or charges for which the Borrower may be
liable.

 

X.            Except as
otherwise permitted by the provisions hereof, the Subsidiary has filed or
caused to be filed all federal, state and local tax returns and other reports
Subsidiary is required by law to file prior to the date hereof and which are
material to the conduct of Subsidiary’s business, and has paid or caused to be
paid all taxes, assessments and other governmental charges that are due and
payable prior to the date hereof and/or has made adequate provision for the payment
of such taxes, assessments or other charges accruing but not yet payable.  The Borrower has no knowledge of any
deficiency or additional assessment in a materially important amount in
connection with any taxes, assessments or charges for which Subsidiary may be
liable.

 

Y.            Any and
all Indebtedness of Borrower is set forth in the most recent financial
information submitted by Borrower prior to Borrower executing this Loan
Agreement and is described in the notes to the Borrower’s financial statements
or has otherwise been disclosed to Lender in writing.

 

Z.            Any and
all Indebtedness of Subsidiary is set forth in the most recent financial
information submitted by Borrower prior to Borrower executing this Loan
Agreement and is described in the notes to the Subsidiary’s financial
statements or has otherwise been disclosed to Lender in writing.

 

AA.        Borrower has
not made any agreement or taken any action which may cause any Person to become
entitled to a commission or finder’s fee as a result of the extension of this
Revolving Line of Credit by Lender to Borrower.

 

5

 

BB.          Intentionally
Omitted

 

3.4.2       Renewal
of Warranties and Representations.

 

Each time Lender makes a loan and/or advance to
Borrower under the Revolving Line of Credit, Borrower shall be deemed to have
renewed the warranties and representations set forth in Paragraph 3.4.1 hereof.

 

3.4.3       Survival.

 

All warranties and representations set forth in
Paragraph 3.4.1 hereof shall remain in full force and effect until all
Obligations of Borrower have been satisfied.

 

3.5          COVENANTS
OF BORROWER.

 

3.5.1       Affirmative Covenants of Borrower.

 

As long as Borrower is
obligated to Lender on the Obligations, Borrower will:

 

A.            Maintain
the corporate existence of Borrower;

 

B.            Duly pay
and discharge all taxes, assessments and government levies assessed against
and/or upon Borrower, the income of Borrower and/or the assets of Borrower
prior to the date when said taxes, assessments and/or governmental levies, if
not paid, are assessed a penalty for late and/or non-payment;

 

C.            Promptly
notify Lender of any litigation and/or arbitration which materially affects the
business operations and/or assets of Borrower and/or Subsidiary - the term
“material” shall refer to any litigation and/or arbitration filed against
Borrower and/or Subsidiary which seeks a monetary recovery against Borrower
and/or Subsidiary of or in excess of $50,000.00;

 

D.            Promptly
notify Lender of any federal and/or state governmental investigation and/or
governmental proceeding which could reasonably be expected to:
(i) substantially interfere with the normal business operations of
Borrower and/or Subsidiary; (ii) adversely affect the financial condition
and/or assets of Borrower and/or of Subsidiary; and/or (iii) result in the
seizure and/or taking control of Borrower’s business and/or Borrower’s assets
and/or Subsidiary’s business and/or Subsidiary’s assets and/or which results in
the closing and terminating of the business operations of Borrower and/or Subsidiary.

 

E.             Maintain
and keep proper Records in accordance with GAAP, consistently applied, in which
full, true, complete and correct entries of all transactions shall be made
concerning Borrower, Borrower’s assets and the business operations of Borrower;

 

F.             Maintain
and pay for fire and extended casualty insurance on all tangible assets of
Borrower;

 

G.            Financial Reporting.

 

1.             Within one-hundred and twenty (120) days of each
fiscal year-end and annually thereafter, Borrower will provide copies of the
complete and fully audited financial statement of Borrower, prepared in
accordance with GAAP, consistently applied, and prepared by a certified public
accounting firm acceptable to Lender which year end financial statement shall
contain a balance sheet, profit and loss statement, statement of retained
earnings and statement of cash flow as well as all notes to said financial
statement; and

 

2.             Within one-hundred and twenty (120) days of each
fiscal year-end and annually thereafter, Borrower will provide copies of the
complete and fully audited financial statement of Subsidiary, prepared in
accordance with GAAP, consistently applied, and prepared by a certified public
accounting firm acceptable to Lender which year end financial statement shall
contain a balance sheet, profit and loss statement, statement of retained
earnings and statement of cash flow as well as all notes to said financial
statement;

 

6

 

3.             Within thirty (30) days of each calendar
quarter-end, Borrower will provide a copy of The Reports of Condition and
Income (Call Report) as required to be submitted to their primary regulatory
agency, for Subsidiary of Borrower.

 

H.            Borrower
will, when requested to do so, make available for inspection by duly authorized
representatives of the Lender the records of Borrower and will furnish the
Lender with any information regarding its affairs and financial condition
within a reasonable time after written request therefore;

 

I.              Use of Funds.

 

Borrower will only utilize loans
and advances made on account of the Revolving Line of Credit for short term
financing to down-stream funds to the Subsidiary and/or for working capital
and/or to partially fund the purchase of stock and/or investments in another
bank or financial institution with such purchase of stock or investment being
limited to the amount of $500,000 under this Revolving Line of Credit;

 

J.             Rating.

 

Subsidiary will at all times
maintain an adequately capitalized status as defined by FIRREA;and/or

 

K.            The
Borrower will pay, when due, (or within applicable grace periods) all
Indebtedness due Persons, except when the amount thereof is being contested in
good faith by appropriate proceedings and with adequate reserves therefore by
the Borrower for the payment of any principal (or installment thereof) of, or
interest on, any such Indebtedness.  The
Lender shall have the right, in its discretion, to pay such interest or
principal for the account of the Borrower and be reimbursed by the Borrower
therefore; and/or

 

Borrower shall cause Subsidiary to duly pay and
discharge all taxes, assessments and government levies assessed against and/or
upon Subsidiary, the income of Subsidiary and/or the assets of Subsidiary prior
to the date when said taxes, assessments and/or governmental levies, if not
paid, are assessed a penalty for late and/or non-payment.

 

Intentionally Omitted

 

3.5.2       Negative
Covenants of Borrower.

 

As long as Borrower is obligated to Lender on the
Revolving Line of Credit, Borrower will not:

 

A.            Borrow any
funds from any Persons and/or incur any additional Indebtedness other than
obligations incurred in the ordinary course of business and other than from
Lender with the exception of that certain note referenced in Section 3.4.1
R herein;

 

B.            Not grant
liens, security interests and/or encumbrances on any assets of Borrower;

 

C.            Not sell,
assign, give and/or transfer to any Persons any of the right, title and
interest of Borrower in assets of Borrower other than in the normal course of
business;

 

D.            Not
endorse, assume, guaranty, become surety for or otherwise become and/or remain
liable for Indebtedness of any Persons, except that Borrower may endorse
negotiable or other instruments for deposit, collection or similar transactions
in the ordinary course of business of Borrower;

 

E.             Not
engage in any sales, leases and/or transfers of assets of Borrower to any
affiliate and/or Subsidiary of Borrower other than in the ordinary course of
business; and/or

 

F.             Intentionally
Omitted

 

7

 

3.6          MISCELLANEOUS
PROVISIONS

 

3.6.1        Applicable Law.  This Loan Agreement will be governed by,
construed, interpreted and enforced in accordance with federal law and the laws
of the Commonwealth of Pennsylvania.

 

3.6.2        Choice of Venue and Jurisdiction.  Borrower consents and agrees that, at the
sole discretion of Lender, any and all legal and/or equitable proceedings
arising directly or indirectly out of or relating directly or indirectly to the
Revolving Line of Credit, this Loan Agreement and/or the Note, the enforcement
and/or to the interpretation of the Revolving Line of Credit, this Loan
Agreement and/or the Note and/or
any action or conduct taken or omitted from being taken by Lender and its
present and former officers, agents, employees, representatives, attorneys and
servants shall be maintained in the Courts of Common Pleas of Cumberland
County, Pennsylvania.  Borrower hereby
voluntarily, intelligently and knowingly consents to personal jurisdiction and
venue in favor of the Courts of Common Pleas of Cumberland County,
Pennsylvania.  Lender may file an
original counterpart or copy of this Section of this Loan Agreement with
any court as written evidence of the consent of Borrower to jurisdiction and
venue of the Court of Common Pleas of Cumberland County, Pennsylvania.

 

3.6.3        The terms and provisions of this Loan Agreement
shall be binding upon Borrower, and upon Borrower’s successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.  However, Borrower may not assign this Loan
Agreement and/or the Note or the rights and privileges set forth in this Loan
Agreement and/or the Note without the prior written consent of a duly
authorized officer of Lender.

 

3.6.4        Lender may transfer, assign and/or sell
participations in the Revolving Line of Credit, this Loan Agreement and the
Note at any time without the need to procure the consent of Borrower and
without any requirement on the part of Lender to notify Borrower.

 

3.6.5        Paragraph headings contained herein are for
descriptive purposes only and do

 

form part of the terms and provisions of this Loan Agreement.

 

3.6.6        This Loan Agreement and the Note contain all of
the terms, provisions, covenants and conditions regarding the extension by
Lender to Borrower of the Revolving Line of Credit and there are no terms,
provisions, covenants and conditions regarding the Revolving Line of Credit
which are not set forth in this Loan Agreement and the Note.

 

3.6.7        Upon the occurrence of an Event of Default in
the event Lender enforces its rights and remedies under this Loan Agreement
and/or the Note, in the event Borrower files any federal bankruptcy,
dissolution, insolvency or receivership proceeding or any federal bankruptcy,
dissolution, insolvency or receivership proceeding is filed against Borrower,
in the event of any litigation between Lender and Borrower, and/or in the event
any federal and/or state agency, bureau, department, body, authority,
commission or quasi-government corporation, which regulates Borrower and/or Borrower’s
business, seizes and/or takes control of Borrower’s business and/or Borrower’s
assets and/or closes and terminates the business operations of Borrower, Lender
shall be entitled to reasonable legal fees and costs in connection with:
(1) the enforcement of the terms and provisions of this Loan Agreement and
in the Note; (2) collection of amounts owed by Borrower to Lender pursuant
to this Loan Agreement and the Note; (3) any bankruptcy, dissolution,
insolvency or receivership proceeding filed by and/or against Borrower and/or
Subsidiary; (4) defense of any lawsuit filed against Lender by Borrower;
(5) execution against assets of Borrower; and/or (6) any action
and/or proceeding by any federal and/or state agency, bureau, department, commission,
body, authority or quasi-government corporation, which regulates the Borrower
and/or Borrower’s business and/or Subsidiary and/or Subsidiary’s business which
results in the seizure and/or taking control of Borrower’s business and/or
Borrower’s assets and/or Subsidiary’s business and/or Borrower’s business
and/or which results in the closing and terminating of the business operations
of Borrower and/or Subsidiary.  Costs and
expenses include but are not limited to Lender’s attorneys’ fees and legal
expenses whether or not there is a lawsuit, including attorneys’ fees and legal
expenses for bankruptcy, dissolution, insolvency or receivership proceedings
(and including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services as well as all
costs and expenses incurred by Lender.

 

3.6.8        Time shall be deemed of the essence in the
performance of the Obligations, promises and covenants of Borrower set forth in
this Loan Agreement.

 

8

 

3.6.9        Severability.  The provisions of this Loan Agreement and the Note are deemed to be severable, and the invalidity or
unenforceability of any provision in this Loan Agreement and/or the Note shall not affect or impair the remaining provisions in
this Loan Agreement and the Note which
shall continue in full force and effect.

 

3.6.10      No Third Party Beneficiaries.  The rights and benefits of this Loan
Agreement and the Note shall not inure to the
benefit of any third party.

 

3.6.11      Modification.  No modification of this Loan Agreement
and/or the Note shall be binding or enforceable
unless in writing and signed by or on behalf of the party against whom
enforcement is sought.

 

3.6.12      Integration.  The Loan Agreement and the Note shall be construed as integrated and complementary of
each other, and as augmenting and not restricting Lender’s rights, powers,
remedies and security.  In the event of
any inconsistency between the terms of this Loan Agreement and the Note, the terms, which are more favorable to Lender, shall
prevail and shall govern.

 

3.6.13      Survival.  All
covenants, agreements, representations and warranties made by the Borrower in
this Loan Agreement and in the Note or made by or on its behalf in connection
with the transactions contemplated here shall be true at all times this
Agreement is in effect and shall survive the execution and delivery of this
Loan Agreement and the Note notwithstanding any investigation at any time made
by Lender or on its behalf and the making by Lender of the loans or advances to
the Borrower.  All statements contained
in any certificate, statement or other document delivered by or on behalf of
Borrower pursuant hereto or in connection with the transactions contemplated
hereunder shall be deemed representations and warranties by the Borrower.

 

3.6.14      Borrower hereby
waives all rights to trial by jury with regards to any and all issues, matters,
actions, causes of action, and/or claims sounding in contract, law, equity,
tort or otherwise,  arising directly or
indirectly out of or relating directly or indirectly to the Revolving Line of
Credit, this Loan Agreement and/or the Note, the enforcement and/or to the
interpretation of the Revolving Line of Credit, this Loan Agreement and/or the
Note and/or any action or conduct taken or omitted from being taken by Lender
and its present and former officers, agents, employees, representatives,
attorneys and servants. Lender may file an original counterpart or copy of this
section of this Loan Agreement with any court as written evidence of the
consent of Borrower to the waiver of Borrower’s right to a trial by jury.  Borrower hereby acknowledges that Borrower
has had ample opportunity to consult with counsel for Borrower concerning the
impact on Borrower’s legal rights and remedies of this waiver and Borrower
hereby voluntarily, intelligently and knowingly waives the right to a trial by
jury.

 

IN WITNESS
WHEREOF, FREDERICK COUNTY BANCORP, INC. and ATLANTIC CENTRAL BANKERS BANK have
hereunto caused their duly authorized corporate officers to execute this
UNSECURED REVOLVING LINE OF CREDIT LOAN AGREEMENT on the date first written
above, intending to be legally bound hereby.

 

 

	
   

  	
  FREDERICK COUNTY BANCORP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
  By:

  	
  /s/ Martin S. Lapera

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Martin S. Lapera, President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATLANTIC CENTRAL BANKERS BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
  By:

  	
  /s/ Bernadette M. Kibe

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Bernadette M. Kibe

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Loan Administration Officer

  	
   

  
								

 

9

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