AMENDED AND RESTATED LOAN AGREEMENT

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

 

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	Section 4.8		Maintenance of Property, Etc
	Section 4.9		Compliance with Laws, Etc
	Section 4.10		Other Obligations
	Section 4.11		Insurance
	Section 4.12		Financial Information
	Section 4.13		Notification
	Section 4.14		Additional Payments; Additional Acts
ARTICLE 5 NEGATIVE COVENANTS.
	Section 5.1		Dividends, Purchase of Stock, Etc
	Section 5.2		Liquidation, Merger, Sale of Assets
	Section 5.3		Indebtedness
	Section 5.4		Guaranties, Etc
	Section 5.5		Liens
ARTICLE 6 EVENTS OF DEFAULT.
	Section 6.1		Events of Default Defined
	(a)	Payment Default
	(b)	Breach of Warranty
	(c)	Breach of Certain Covenants
	(d)	Breach of Other Covenant
	(e)	Cross-default
	(f)	Voluntary Bankruptcy, Etc
	(g)	Involuntary Bankruptcy, Etc
	(h)	Insolvency, Etc
	(i)	Judgment
	(j)	Involuntary Liens
	(k)	ERISA
	Section 6.2		Consequences of Default
ARTICLE 7 MISCELLANEOUS.
	Section 7.1		No Waiver; Remedies Cumulative
	Section 7.2		Governing Law
	Section 7.3		Consent to Jurisdiction
	Section 7.4		Notices
	Section 7.5		Assignment
	Section 7.6		Severability
	Section 7.7		Conditions Not Fulfilled
	Section 7.8		Entire Agreement; Amendment
	Section 7.9		Headings
	Section 7.10		Construction
ARTICLE 8 DEFINITIONS.
	Section 8.1		Certain Defined Terms
	Section 8.2		Other Accounting Terms

 

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EXHIBITS
Exhibit A  -   Promissory Note
Exhibit B  -   Opinion of Borrower’s Counsel

 

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AMENDED AND RESTATED LOAN AGREEMENT

 

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

 

ARTICLE 1
THE CREDIT

 

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

 

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

 

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

 

Section 1.4       Interest.

 

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

 

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

 

 

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

 

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

 

Section 1.6       Manner of Payments.

 

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

 

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

 

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

 

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

 

Section 1.7       Fees.   Borrower agrees to pay to Lender (a) a loan fee in the amount of $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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants to Lender as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 4
AFFIRMATIVE COVENANTS.

 

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

 

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

 

Section 4.2       Fixed Charge Coverage Ratio.   Maintain a Fixed Charge Coverage Ratio of greater than 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.

 

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

 

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

 

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

 

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

 

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

 

Section 4.12     Financial Information .  Deliver to Lender:

 

(a)       as soon as available and in any event within 90 days after the end of each fiscal year of Borrower, the consolidated balance sheet of Borrower and its Subsidiaries as of the end of such fiscal year and the related consolidated statements of income and cash flows of Borrower and its Subsidiaries for such year, accompanied by the audit report thereon by independent certifie