Exhibit 1.1
EXECUTION COPY
CASCADE NATURAL GAS CORPORATION
$30,000,000
5.25% INSURED QUARTERLY NOTES DUE FEBRUARY 1,
2035
Underwriting Agreement
January 20, 2005
Edward D. Jones &
Co., L.P.
12555 Manchester Road
St. Louis, Missouri 63131
Ladies and Gentlemen:
Cascade
Natural Gas Corporation, a Washington corporation (the “
Company”
),
hereby confirms its agreement with Edward D. Jones & Co., L.P. (the “
Underwriter
”) as follows:
1.
Purchase
and Sale
. Upon the basis of the
representations and warranties herein contained, and subject to the terms and
conditions herein set forth, the Company agrees to sell to the Underwriter, and
the Underwriter agrees, at the time and place herein specified, to purchase
from the Company, at a purchase price of 96.85% of the principal amount
thereof, $30,000,000 principal amount of the Company’s 5.25% Insured Quarterly Notes
Due February 1, 2035 (the “
Securities”
)
having the terms set forth in the Prospectus (as defined in Section 2(b)
hereof). The Securities will be issued
pursuant to an Indenture dated as of August 1, 1992 (as amended and
supplemented and as to be supplemented by the Second Supplemental Indenture, to
be dated as of January 25, 2005, establishing the terms of the Securities (together,
the “
Indenture”
) between the Company and
The Bank of New York, as trustee (the “
Trustee”
). Payment
of the regularly scheduled principal of and interest on the Securities when due
will be guaranteed by a financial guaranty insurance policy in substantially
the form of Appendix B to the Prospectus (the “
Financial
Guaranty Insurance Policy”
) to be issued by MBIA Insurance
Corporation (the “
Insurer”
) simultaneously with
the delivery of the Securities.
2.
Representations
and Warranties of Company
. The
Company represents and warrants to, and covenants and agrees with, the
Underwriter that:
(a)
Filing of Registration Statement and any Preliminary Prospectus with
SEC
.
The
Company meets the requirements for use of Form S-3 under the Securities Act of
1933, as amended (the “
1933 Act”
),
and has filed with the Securities and Exchange Commission (the “
SEC”
) the Registration Statement (as
defined below) and each Preliminary Prospectus (as defined below) relating to
the Securities, if any, required to be filed pursuant to Rule 424 under the
1933 Act; the Registration Statement has been declared effective by the SEC
under the 1933
Act and meets the
requirements set forth in paragraph (a)(1)(ix) or (a)(1)(x) of Rule 415 under
the 1933 Act and complies in all other material respects with such Rule 415;
and, prior to the offer and sale of the Securities, $110 million aggregate
offering price of Securities remains unsold under the Registration Statement. No stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued under the 1933
Act and no proceedings for that purpose have been instituted or threatened by
the SEC, and any request on the part of the SEC for additional information has
been complied with by the Company. For
purposes of this Agreement, the following terms used herein shall have the
following meanings: (i) “
Registration Statement”
shall mean
the registration statement on Form S-3 (No. 333-69516) filed by the Company
with the SEC for the registration under the 1933 Act of certain securities of
the Company, including the Securities, as amended and supplemented to the date
of this Agreement and including the exhibits thereto, and shall be deemed to
include the Incorporated Documents (as defined below) as of the date hereof;
(ii) “
Incorporated Documents”
shall
mean the documents filed by the Company with the SEC under the Securities
Exchange Act of 1934, as amended (the “
1934 Act”
),
that are, or are deemed to be, incorporated by reference in the Registration
Statement, the Preliminary Prospectus or the Prospectus pursuant to
Item 12 of Form S-3 under the 1933 Act; (iii) “
Preliminary
Prospectus”
shall mean (A) any prospectus included in the
Registration Statement prior to the initial Effective Date (as defined below),
or (B) any supplement to the prospectus included in the Registration Statement
at the initial Effective Date, as such prospectus may be amended or
supplemented as of the date thereof, used in connection with the offering and
sale of the Securities (other than making confirmations of sales of the
Securities) filed with the SEC pursuant to Rule 424 under the 1933 Act, and
shall in each case be deemed to include the Incorporated Documents; and (iv) “
Effective Date”
shall mean the later
of (i) the date or time that the Registration Statement or any post-effective
amendment thereto was declared effective by the SEC under the 1933 Act and (ii)
the date that the Company’s most recent Annual Report on Form 10-K was filed by
the Company with the SEC. For purposes
of this Agreement, the words “amend,” “amendment,” “amended,” “supplement” or “supplemented”
with respect to the Registration Statement or the Prospectus shall mean (i)
amendments or supplements to the Registration Statement or the Prospectus and
(ii) Incorporated Documents, in each case filed with the SEC or sent to
prospective purchasers of the Securities after the date of this Agreement and
prior to the completion of the distribution of the Securities;
provided, however
, that any supplement to the Prospectus
filed with the SEC pursuant to Rule 424(b) under the 1933 Act with respect to
an offering of securities of the Company other than the Securities shall not be
deemed to be a supplement to, or a part of, the Prospectus.
(b)
Registration Statement; Prospectus; Incorporated Documents
.
(i) The
Registration Statement, at the Effective Date, any Preliminary Prospectus, at
the time it was filed with the SEC pursuant to Rule 424(b) under the 1933 Act
and when delivered to you for your use in marketing the Securities, and the
Prospectus, at the time it is filed with the SEC pursuant to Rule 424(b) under
the 1933 Act and when delivered to you for your use in making confirmations of
sales of the Securities, complied and will comply, as the case may be, in all
material respects with the applicable requirements of the 1933 Act, the Trust
Indenture Act of 1939, as amended (the
1939 Act
),
and, in each case, the rules and regulations of the SEC thereunder; (ii) the
Registration Statement, at the Effective Date, did not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the
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statements therein not
misleading; (iii) the Prospectus, at the time it is filed with the SEC pursuant
to Rule 424(b) under the 1933 Act, when delivered to you for your use in making
confirmations of sales of the Securities and at the Closing Date (as defined
herein), will not and any Preliminary Prospectus, at the time it was filed with
the SEC pursuant to Rule 424(b) under the 1933 Act and when delivered to you
for your use in marketing the Securities, did not include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and (iv) each Incorporated Document, at the time it was
or is filed with the SEC pursuant to the 1934 Act, complied and will comply, as
the case may be, in all material respects with the applicable requirements of
the 1934 Act and the rules and regulations of the SEC thereunder and, at such
times, did not contain and will not contain, as the case may be, an untrue
statement of a material fact and did not omit and will not omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however
, that, in the case of clauses (i), (ii)
and (iii) above, the Company makes no representation
or warranty as
to (x) information furnished in writing to the Company by the Underwriter
expressly for use in the Prospectus, which for purposes of this Agreement shall
be deemed to consist solely of (1)
the statements with
respect to the delivery of the Securities in the last paragraph on the cover
page of
the Prospectus
, and
(2) the statements in the first sentence of the second paragraph, the
second and third sentences of the third paragraph and the fifth paragraph, in
each case, under the caption “Underwriting” in the Prospectus Supplement (as
defined herein) (collectively, the “
Underwriter Information
”)
or (y) that part of the Registration Statement which shall constitute the
Statement of Eligibility and Qualification of the Trustee on Form T-1 under the
1939 Act.
For
purposes of this Agreement, “
Prospectus”
shall mean the prospectus included in the Registration Statement at the initial
Effective Date, as such prospectus may be amended or supplemented (including by
the Incorporated Documents) as of the date hereof, including by a supplement
thereto specifying the terms of the Securities and the plan of distribution
thereof (the “
Prospectus Supplement”
), as
first filed with the SEC pursuant to Rule 424(b) under the 1933 Act.
(c)
Indenture
. The Indenture has been duly qualified under
the 1939 Act, has been duly authorized, executed and delivered by the Company
and, assuming due authorization, execution and delivery of the Indenture by the
Trustee, will constitute a valid and binding instrument of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization
and other similar laws relating to or affecting creditors’ rights generally,
(ii) general equitable principles (whether considered in a proceeding in equity
or at law) and (iii) requirements of reasonableness, good faith and fair
dealing (such exceptions, collectively, the “
Exceptions
”);
and the Indenture will conform to the description thereof contained in the
Prospectus.
(d)
Securities
. The Securities have been duly authorized and,
at the Closing Date, will have been duly executed by the Company, and, when
authenticated in the manner provided for in the Indenture, issued and delivered
against payment therefor pursuant to this Agreement, will constitute valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, except as may be limited by the Exceptions, and
will be entitled to the benefits of the Indenture; and the Securities will
conform to the description thereof contained in the Prospectus.
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(e)
Agreement
. This Agreement has been duly authorized,
executed and delivered by the Company.
(f)
Due
Incorporation and Qualification; Subsidiaries
. The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State of Washington,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus and to execute and deliver,
and perform its obligations under, this Agreement, the Indenture and the
Securities; the Company is duly qualified as a foreign corporation to transact
business and is validly existing in each jurisdiction in which it owns or
leases substantial properties or in which the conduct of its business requires
such qualification, except where the failure to so qualify or be validly
existing would not have a material adverse effect on the financial condition of
the Company and its subsidiaries taken as a whole; and the only subsidiaries of the Company are
subsidiaries which, considered in the aggregate as a single subsidiary, do not
constitute a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X.
(g)
Material
Changes
. Neither the Company nor any
of its subsidiaries has sustained, since the date of the most recent audited financial
statements included or incorporated by reference in the Prospectus, any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth
in the Prospectus; and, since the respective dates as of which information is
given in the Prospectus, there have not been any changes in the capital stock
or long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial position,
stockholders’ equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth in the Prospectus.
(h)
No
Conflicts; Oregon Commission Order in Full Force and Effect; No Consents
Required
. The offering and sale of
the Securities and the compliance by the Company with all of the provisions of
the Securities, the Indenture and this Agreement, and the consummation of the
transactions herein and therein contemplated, will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Company’s or any of its subsidiaries’ articles of incorporation or bylaws, each
as amended (collectively, the “
Organizational Documents”
),
or any statute, rule, regulation or other law, or any order or judgment, of any
court or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their respective properties; the Public
Utility Commission of Oregon has issued its final order (the “
Oregon Commission Order”
)
authorizing the issuance and sale of the Securities by the Company and such
Oregon Commission Order is in full force and effect and not the subject of any
appeal or other proceeding and is sufficient to authorize the transactions
contemplated by this Agreement; and no other filing with, or consent,
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approval, authorization,
order, registration or qualification of, any court or governmental agency or
body having jurisdiction over the Company or any of its properties is required
for the issuance and sale of the Securities or the consummation by the Company
of the transactions contemplated by this Agreement and the Indenture, except
such as have been made or obtained under the 1933 Act and the 1939 Act, such
has been made with the Washington Utilities and Transportation Commission and
such filings, consents, approvals, authorizations, orders, registrations or
qualifications as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Securities by the
Underwriter.
(i)
Capital
Stock
. The Company has an authorized
capitalization as set forth in the Prospectus and all of the issued shares of
capital stock of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable; and all the issued shares of capital
stock of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or claims.
(j)
No
Defaults
. The Company and its
subsidiaries are not in violation of the Organizational Documents or in default
in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject.
(k)
Litigation
. Other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the Company or
any of its subsidiaries is the subject that, if determined adversely to the
Company or that subsidiary, would individually or in the aggregate have a
material adverse effect on the current or future consolidated financial position,
stockholders’ equity or results of operations of the Company and its
subsidiaries taken as a whole, and, to the best of the Company’s knowledge, no
such proceedings are threatened or contemplated.
(l)
Financial
Statements
. The consolidated
financial statements incorporated by reference in the Registration Statement
and the Prospectus, together with the related schedules and notes, present
fairly the financial condition of the Company and its consolidated subsidiaries
at the dates indicated and the consolidated
statements of income and comprehensive income, shareholders’ equity and cash
flows of the Company and its consolidated subsidiaries for the periods
therein specified; said financial statements have been prepared in conformity
with U.S. generally accepted accounting principles (“
GAAP”
)
applied on a consistent basis throughout the periods involved. The supporting schedules, if any,
incorporated by reference in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The selected financial data and the summary
financial information included or incorporated by reference in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included or
incorporated by reference in the Registration Statement.
5
(m)
Sarbanes-Oxley
Act
. The Company is, to its
knowledge, in compliance in all material respects with the applicable
provisions of the Sarbanes-Oxley Act of 2002 that are effective and the rules
and regulations of the SEC that have been adopted and are effective thereunder.
(n)
Independent
Public Accountants
. Deloitte &
Touche LLP (the “
Accountants”
), who have audited
certain financial statements of the Company incorporated by reference in the
Registration Statement and the Prospectus, are independent registered public
accountants as required by the 1933 Act and the rules and regulations of the
SEC thereunder.
3.
Offering;
Delivery of Securities
.
(a)
Offering
. The Underwriter has advised the Company that the
Underwriter proposes to make a public offering of the Securities as soon after
the effectiveness of this Agreement as in the Underwriter’s judgment is advisable.
The Underwriter has further advised the Company that the Underwriter will offer
the Securities to the public at the initial public offering price specified in
the Prospectus plus accrued interest thereon, if any, from the Closing Date to
the date of delivery of the Securities.
(b)
Delivery
of Securities
. Delivery of the
Securities to the Underwriter, against payment of the purchase price therefor
in immediately available funds by wire transfer, shall be made prior to 1:00
P.M., New York City time, on January 25, 2005 in book-entry form through
the facilities of The Depository Trust Company, New York, New York (“
DTC”
), or at such other time and
date as may be agreed upon in writing by the Company and the Underwriter. Delivery of the documents required by Section 5
hereof with respect to the Securities shall be made at such time and date at
the offices of Pillsbury Winthrop LLP (“
Underwriter’s Counsel”
),
New York, New York, or at such other location as may be agreed upon in writing
by the Company and the Underwriter. For
purposes of this Agreement, “
Closing Date”
shall mean the hour and date of such delivery and payment.
The Securities shall be issued in the form of a global
certificate registered in the name of “Cede & Co.,” as nominee of DTC. For the purpose of expediting the Underwriter’s
checking of the Securities, the Company agrees to make the Securities available
to the Underwriter for such purpose at the offices of DTC (or a custodian
thereof) in New York, New York, not later than 1:00 P.M., New York City time,
on the business day preceding the Closing Date or at such other time and place
as may be agreed upon by the Company and the Underwriter.
4.
Covenants
of Company
. The Company covenants
and agrees with the Underwriter that:
(a)
Filing
of Prospectus
. The Company will
promptly transmit copies of the Prospectus, and any amendments or supplements
thereto, to the SEC for filing pursuant to Rule 424(b) under the 1933 Act.
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(b)
Copies
of Registration Statement and Prospectus; Notice of Stop Orders
. The Company will deliver or make available to
the Underwriter and to Underwriter’s Counsel (i) one conformed copy of the
Registration Statement as originally filed, including copies of exhibits thereto
(other than any exhibits incorporated by reference therein), (ii) conformed
copies of any amendments and supplements to the Registration Statement,
including conformed copies of the Incorporated Documents (other than exhibits
thereto), and (iii) a conformed copy of each consent and certificate included
or incorporated by reference in, or filed as an exhibit to, the Registration
Statement as so amended and supplemented; the Company will deliver to the
Underwriter as soon as practicable after the date of this Agreement as many
copies of the Prospectus as the Underwriter may reasonably request for the
purposes contemplated by the 1933 Act; the Company will promptly advise the
Underwriter of the issuance of any stop order under the 1933 Act with respect
to the Registration Statement (as amended or supplemented) or the institution
of any proceedings therefor, or the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, of which the Company shall have received notice or
otherwise have knowledge prior to the completion of the distribution of the
Securities; and the Company will use its best efforts to prevent the issuance
of any such stop order and, if issued, to secure the prompt removal thereof.
(c)
Filing
of Amendments or Supplements
. During
the period when a prospectus relating to any of the Securities is required to
be delivered under the 1933 Act by you or any dealer, the Company will not file
any amendment or supplement to the Registration Statement, the Prospectus (or
any other prospectus relating to the Securities filed pursuant to Rule 424(b)
under the 1933 Act that differs from the Prospectus as filed pursuant to such
Rule 424(b)) or any Incorporated Document to which you or Underwriter’s Counsel
shall reasonably object.
(d)
Compliance
with 1933 Act
. During the period
when a prospectus relating to any of the Securities is required to be delivered
under the 1933 Act by the Underwriter or any dealer, the Company will comply,
at its own expense, with all requirements imposed by the 1933 Act, as now and
hereafter amended, and by the rules and regulations of the SEC thereunder, as
from time to time in force, so far as necessary to permit the continuance of
sales of or dealing in the Securities during such period in accordance with the
provisions hereof and as contemplated by the Prospectus.
(e)
Certain
Events and Amendments or Supplements
.
If, during the period when a prospectus relating to any of the
Securities is required to be delivered under the 1933 Act by the Underwriter or
any dealer, (i) any event relating to or affecting the Company or of which the
Underwriter shall advise the Company in writing shall occur as a result of
which, in the Underwriter’s opinion or in the opinion of the Company, the
Prospectus as then amended or supplemented would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading or (ii) it shall be necessary to amend or supplement the
Registration Statement or the Prospectus to comply with the 1933 Act, the 1934
Act or the 1939 Act or the rules and regulations of the SEC thereunder, the Company
will forthwith at its expense prepare and furnish to the Underwriter a
reasonable number of copies of such
7
amendment or supplement
that will correct such statement or omission or effect such compliance.
(f)
Blue
Sky Qualifications
. During the
period when a prospectus relating to any of the Securities is required to be
delivered under the 1933 Act by the Underwriter or any dealer, the Company will
furnish such proper information as may be lawfully required and otherwise
cooperate in qualifying the Securities for offer and sale under the securities
or blue sky laws of such jurisdictions as the Underwriter may reasonably
designate and will file and make in each year such statements or reports as are
or may be reasonably required by the laws of such jurisdictions;
provided, however
, that the Company shall not be required to
qualify as a foreign corporation, qualify as a dealer in securities or file a
general consent to service of process under the laws of any jurisdiction.
(g)
Earning
Statement
. In accordance with Rule
158 under the 1933 Act, the Company will make generally available to its
security holders and to holders of the Securities, as soon as practicable, an
earning statement (which need not be audited) in reasonable detail covering the
12 months beginning not later than the first day of the month next succeeding
the month in which occurred the effective date (within the meaning of Rule 158
under the 1933 Act) of the Registration Statement.
(h)
Exchange
Act Documents; Ratings Notification
.
During the period when a prospectus relating to any of the Securities is
required to be delivered under the 1933 Act by the Underwriter or any dealer,
the Company will file promptly all documents required to be filed with the SEC
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act; and the
Company will promptly notify the Underwriter of any written notice given to the
Company by any “nationally recognized statistical rating organization” within
the meaning of Rule 436(g)(2) under the 1933 Act (a “
Rating
Agency”
) of any decrease in any rating of any securities of the
Company, any intended decrease in any such rating or of any intended change in
any such rating that does not indicate the direction of the possible change of
any such rating, in each case by any such Rating Agency.
(i)
No
Issuance Period
. During the period
beginning from the date of this Agreement and continuing to and including the
earlier of (i) the termination of trading restrictions on the Securities, as
determined by the Underwriter, and (ii) 30 days after the Closing Date, the
Company will not, without the Underwriter’s prior written consent, offer for
sale, sell or enter into any agreement to sell, or otherwise dispose of, any
debt securities of the Company, except for the Securities.
(j)
Payment
of Expenses
. Whether or not any sale
of the Securities is consummated, the Company will pay or cause to be paid the
following: (i) the fees, disbursements
and expenses of Hillis Clark Martin & Peterson, P.S., counsel for the
Company (“
Company Counsel”
), and the Accountants
in connection with the registration of the Securities under the 1933 Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments or supplements thereto and the mailing and delivering of copies
thereof to the Underwriter and any dealers; (ii) the cost of printing or
producing this Agreement, the Indenture, any blue sky
8
memorandum, closing
documents (including any compilations thereof) and other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 4(f)
hereof, including the fees and disbursements of Underwriter’s Counsel in
connection with such qualification and in connection with any such blue sky
memorandum; (iv) any fees charged by a Rating Agency for rating the Securities;
(v) any filing fees incident to, and the fees and disbursements of Underwriter’s
Counsel in connection with, any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the
cost of preparing the Securities; (vii) the fees and disbursements of the
Trustee and any agent of the Trustee and the fees and disbursements of their
counsel in connection with the Indenture and the Securities; (viii) the premium
with respect to, and any other fees and expenses in connection with, the
Financial Guaranty Insurance Policy; and (ix) all other costs and expenses
incident to the performance of the Company’s obligations hereunder that are not
otherwise specifically provided for in this Section 4(j); but, if for any
other reason the Securities are not delivered by or on behalf of the Company as
provided herein (other than due to a default by the Underwriter), the Company
will reimburse the Underwriter for all of its out-of-pocket expenses, including
fees and disbursements of Underwriter’s Counsel, reasonably incurred by the
Underwriter in making preparations for the purchase, sale and delivery of the
Securities, but the Company shall then be under no further liability to the
Underwriter with respect to the Securities except as provided in this Section 4(j)
and Section 6 hereof. It is
understood that, except as provided in this Section 4(j) and Section 6
hereof, the Underwriter will pay all of its own costs and expenses, including
the fees of Underwriter’s Counsel and any advertising expenses in connection
with any offers it may make.
5.
Conditions
to Underwriter’s Obligations
. The
Underwriter’s obligations under this Agreement shall be subject to the
condition that all representations and warranties of the Company contained in
this Agreement are, at and as of the Closing Date, true and correct, the
condition that the Company shall have performed all of its obligations hereunder
on or prior to the Closing Date and the following additional conditions:
(a)
Filing
of Prospectus with SEC; No Stop Order; Oregon Commission Order in Full Force
and Effect
. The Prospectus, and any
supplements thereto, shall have been filed with the SEC within the time period
prescribed for such filing by Rule 424(b) under the 1933 Act and in accordance
with Section 4(a) hereof; all requests for additional information on the
part of the SEC shall have been complied with to the Underwriter’s reasonable
satisfaction; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the SEC; and the Oregon
Commission Order shall be in full force and effect and not the subject of any
appeal or any other proceeding and such order shall not have been amended or
modified to include conditions or restrictions which the Underwriter in good
faith determines to be unduly burdensome.
(b)
Opinion
of Underwriter’s Counsel
. At the
Closing Date, Underwriter’s Counsel shall have furnished to the Underwriter an
opinion, dated the Closing Date, with respect to such matters as the
Underwriter may reasonably request, and Underwriter’s Counsel shall have
received such documents and information as it may reasonably request to enable
it to pass
9
upon such matters In rendering such opinion, such counsel (A)
may rely as to matters involving the application of the laws of the State of
Washington upon the opinion of Company Counsel rendered pursuant to Section 5(c)
hereof and (B) may rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials.
(c)
Opinion
of Company Counsel
. At the Closing
Date, Company Counsel shall have furnished to the Underwriter an opinion, dated
the Closing Date, in form and substance satisfactory to the Underwriter, to the
effect that:
(i)
the
Company has been duly incorporated and is validly existing as a corporation
under the laws of the State of Washington, with power and authority (corporate
and other) to own its properties and conduct its business as described in the
Prospectus and to execute and deliver, and perform its obligations under, this
Agreement, the Indenture and the Securities; the Company is duly qualified as a
foreign corporation to transact business and is validly existing in each
jurisdiction in which it owns or leases substantial properties or in which the
conduct of its business requires such qualification, except where the failure
to so qualify or be validly existing would not have a material adverse effect
on the financial condition of the Company and its subsidiaries taken as a whole;
(ii)
to
the best of such counsel’s knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject that, if determined adversely
to the Company or that subsidiary, would individually or in the aggregate have
a material adverse effect on the current or future consolidated financial
position, stockholders’ equity or results of operations of the Company and its
subsidiaries taken as a whole, and, to the best of such counsel’s knowledge, no
such proceedings are threatened or contemplated;
(iii)
the Company has an
authorized capitalization as set forth in the Prospectus and all of the issued
shares of capital stock of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable; and all of the issued shares
of capital stock of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear, to such counsel’s knowledge, of all
liens, encumbrances, equities or claims;
(iv)
this
Agreement has been duly authorized, executed and delivered by the Company;
(v)
the
Securities have been duly authorized and executed by the Company and, when
authenticated in the manner provided for in the Indenture, and issued and
delivered against payment therefor pursuant to this Agreement, will constitute
valid and legally binding obligations of the Company enforceable against the
Company in accordance with their terms, except as may be limited by the
Exceptions, and will be
10
entitled
to the benefits of the Indenture; and the Securities conform to the description
thereof in the Prospectus;
(vi)
the
Indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding instrument of the Company enforceable
against the Company in accordance with its terms, except as may be limited by
the Exceptions; the Indenture conforms to the description thereof in the
Prospectus; and, to such counsel’s knowledge, the Indenture has been duly
qualified under the 1939 Act;
(vii)
the issuance and sale of the
Securities and the compliance by the Company with all of the provisions of the
Securities, the Indenture and this Agreement, and the consummation of the
transactions herein and therein contemplated, will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation of the
provisions of the Organizational Documents or any statute, rule, regulation or
other law, or any order or judgment known to such counsel, of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties;
(viii)
the Oregon Commission Order is
in full force and effect and not the subject of any appeal or other proceeding
and is sufficient to permit the Company to enter into and perform the
transactions contemplated by this Agreement, the Securities and the Indenture;
and no other filing with, or consent, approval, authorization, order,
registration or qualification of, any court or governmental agency or body
having jurisdiction over the Company or any of its properties is required for
the issuance and sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement and the Indenture, except such
as have been made or obtained under the 1933 Act and the 1939 Act, such has
been made with the Washington Utilities and Transportation Commission and such
filings, consents, approvals, authorizations, orders, registrations or
qualifications as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Securities by the
Underwriter; and
(ix)
the
Registration Statement, at the Effective Date, and the Prospectus, at the time
it was filed with the SEC pursuant to Rule 424(b) under the 1933 Act (except in
each case as to financial statements and other financial and statistical data
contained or incorporated by reference therein, upon which such counsel need
not pass), complied as to form in all material respects with the requirements
of the 1933 Act and the 1939 Act and the respective rules and regulations of
the SEC thereunder; each Incorporated Document as originally filed pursuant to
the 1934 Act (except as to financial statements and other financial and
statistical data contained or incorporated by reference therein, upon which
such counsel need not pass) complied as to form when so filed in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC
11
thereunder;
the Registration Statement has become, and on the Closing Date is, effective
under the 1933 Act and, to the best of such counsel’s knowledge, no proceedings
for a stop order with respect thereto are threatened or pending under Section 8
of the 1933 Act; and nothing has come to the attention of such counsel that has
caused it to believe that the Registration Statement (except as to financial
statements and other financial and statistical data contained or incorporated
by reference therein, upon which such counsel need not pass), at the Effective
Date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (except as to financial
statements and other financial and statistical data contained or incorporated
by reference therein, upon which such counsel need not pass), at the time it
was filed with the SEC pursuant to Rule 424(b) under the 1933 Act or on the
Closing Date, included or includes any untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel (A) may rely
as to matters involving the application of the laws of the State of New York,
upon the opinion of Underwriter’s Counsel rendered pursuant to Section 5(b)
hereof, (B) may rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials, (C)
may state that, for purposes of such opinion, it is only expert on (x) the laws
of the State of Washington, (y) solely to the extent set forth therein with
respect to paragraph (viii) above, the laws of the State of Oregon and (z) the
laws of the United States of America and (D) need not pass upon any information
contained or incorporated by reference in the Registration Statement or the
Prospectus relating to the Insurer, the Financial Guaranty Insurance Policy or
DTC.
(d)
Letter
of Accountants
. On the date of this
Agreement, and at the Closing Date, the Accountants shall have furnished to the
Underwriter letters, dated the date of this Agreement and the Closing Date,
respectively, in form and substance satisfactory to the Underwriter, confirming
that they are independent registered accountants within the meaning of the 1933
Act and the rules and regulations of the SEC thereunder with respect to the
Company and its subsidiaries and stating in effect that:
(i)
in
the opinion of the Accountants, the consolidated financial statements and
schedules included or incorporated by reference in the Prospectus and audited
by them comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1934 Act and the respective
rules and regulations of the SEC thereunder; and
(ii)
on
the basis of a reading of the unaudited consolidated financial statements
included or incorporated by reference in the Prospectus and the latest
available interim unaudited consolidated financial statements of the Company,
the performance of the procedures specified by the Public Company Accounting
Oversight Board (United States) for a review of any such financial statements
as described in Statement on Auditing Standards No. 100, inquiries of officials
of the Company responsible for financial and accounting matters and a reading
of the minutes of meetings of the
12
stockholders
and the Board of Directors of the Company and the Audit Committee thereof
through a specified date not more than five days prior to the date of the
applicable letter, nothing came to the attention of the Accountants that caused
them to believe that: (A) any material
modification should be made to the unaudited consolidated financial statements
included or incorporated by reference in the Prospectus for them to be in
conformity with generally accepted accounting principles or any such financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act or the 1934 Act and the
respective rules and regulations of the SEC thereunder; (B) for the period from
the date of the latest consolidated financial statements included or
incorporated by reference in the Prospectus through the date of the most recent
available consolidated financial statements of the Company, there were any
decreases, as
compared to the corresponding period in the preceding year, in consolidated
operating revenues or in the total or per-share amounts of net income;
or (C) at the date of the most recent available financial statements of the
Company and at a subsequent date not more than five days prior to the date of
such letter, there was any change in the capital stock, increase in long-term debt, or decrease in
stockholders’ equity of the Company as compared with the amounts shown
in the most recent consolidated balance sheet included or incorporated by
reference in the Prospectus, except in all instances for changes or decreases
that the Prospectus discloses have occurred or may occur, or for changes or
decreases that are described in such letter that are reasonably satisfactory to
the Underwriter.
Such letter shall also
cover such other matters as the Underwriter shall reasonably request, including
but not limited to the Company’s “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” contained in the Company’s
financial statements included or incorporated by reference in the Prospectus
and any other information of an accounting or financial nature included or
incorporated by reference therein that is derived from the accounting records
of the Company.
(e)
No
Material Changes
. (i) Neither the Company nor any of its
subsidiaries shall have sustained, since the date of the most recent audited
consolidated financial statements included or incorporated by reference in the
Prospectus, any loss or interference with their business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth in the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus, there shall not have been any change in
the capital stock or long-term debt of the Company or any of its subsidiaries
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position, stockholders’
equity or results of operations of the Company and its subsidiaries taken as a
whole, otherwise than as set forth in the Prospectus, the effect of which, in
any such case described in clause (i) or (ii), is in the Underwriter’s judgment
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities on the terms and in
the manner contemplated in the Prospectus.
(f)
Ratings;
No Downgrading of Ratings or Credit Review
.
Moody’s Investors Service, Inc. and Standard & Poor’s shall have
publicly assigned to the Securities ratings of Aaa and AAA, respectively, which
ratings shall be in full force and effect at the
13
Closing Date; and, on or
after the date of this Agreement, (i) no downgrading, withdrawal or suspension
shall have occurred in the rating accorded any of the Company’s securities by
any Rating Agency and (ii) no Rating Agency shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Company’s securities.
(g)
Nonoccurrence
of Certain Events
. On or after the
date of this Agreement, there shall not have occurred any of the following: (i)
a suspension or material limitation in trading in securities generally by the
SEC, any national securities exchange or The Nasdaq Stock Market; (ii) a
suspension or material limitation in trading in the Company’s securities by the
SEC, any national securities exchange or The Nasdaq Stock Market; (iii) a
general moratorium on commercial banking activities declared by Federal or New
York State authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States; or
(iv) any material adverse change in the financial markets in the United States
or any outbreak or escalation of hostilities or other international or national
calamity or crisis, in each case, involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this clause (iv), in the Underwriter’s judgment,
makes it impracticable or inadvisable to proceed with the public offering or
the delivery of the Securities on the terms and in the manner contemplated in
the Prospectus.
(h)
Officers’
Certificate
. At the Closing Date,
the Company shall have furnished or caused to be furnished to the Underwriter a
certificate of the Chairman of the Board or the President of the Company and
the principal financial or accounting officer of the Company satisfactory to
the Underwriter as to the accuracy of the representations and warranties of the
Company herein on and as of the Closing Date, as to the performance by the
Company of all of its obligations hereunder to be performed on or prior to the
Closing Date, as to the matters set forth in Sections 5(a) and 5(e) hereof and
as to such other matters as the Underwriter may reasonably request.
(i)
Effectiveness
of Financial Guaranty Insurance Policy; Opinion of Insurer’s Counsel
. At the Closing Date, the Financial Guaranty
Insurance Policy shall have been duly authorized, executed and delivered by the
Insurer to the Trustee and shall be in full force and effect and the
Underwriter shall have received an opinion of counsel for the Insurer, dated
the Closing Date, substantially to the following effect:
(i)
the
Insurer is a stock insurance corporation, duly incorporated and validly
existing under the laws of the State of New York. The Insurer is validly licensed and authorized
to issue the Financial Guaranty Insurance Policy and perform its obligations
under the Financial Guaranty Insurance Policy in accordance with the terms
thereof, under the laws of the State of New York;
(ii)
the
execution and delivery by the Insurer of the Financial Guaranty Insurance
Policy are within the corporate power of the Insurer, and each has been
authorized by all necessary corporate action on the part of the Insurer; the
Financial Guaranty Insurance Policy has been duly executed and is the legal,
valid
14
and
binding obligation of the Insurer enforceable in accordance with its terms,
except that the enforcement of the Financial Guaranty Insurance Policy may be
limited by laws relating to bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws affecting creditors’ rights generally and
by general principles of equity (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(iii)
the Insurer is
authorized to deliver the Reimbursement and Indemnity Agreement dated as of January 24,
2005 between the Insurer and the Company (the “Insurance Agreement”) and,
assuming due execution by the other parties thereto, the Insurance Agreement
will be duly executed and (assuming the due authorization, execution and
delivery of the other parties thereto) will be the valid and binding obligation
of the Insurer enforceable in accordance with its terms, except that the
enforcement of the Insurance Agreement may be limited by laws relating to
bankruptcy, insolvency, reorganization, moratorium, receivership and other
similar laws affecting creditors’ rights generally and by general principles of
equity (regardless of whether the enforcement of such remedies is considered in
a proceeding in equity or at law);
(iv)
no
consent, approval, authorization or order of any state or federal court or
governmental agency or body is required on the part of the Insurer the lack of
which would adversely affect the validity or enforceability of the Financial
Guaranty Insurance Policy; to the extent failure to comply with applicable
legal requirements would adversely affect validity or enforceability of the
Financial Guaranty Insurance Policy, the Financial Guaranty Insurance Policy
form has been filed with, and approved by, all governmental authorities having
jurisdiction over the Insurer in connection with such Financial Guaranty
Insurance Policy;
(v)
the
execution and delivery of the Insurance Agreement and the Financial Guaranty
Insurance Policy, and the compliance with the terms and provisions thereof,
will not conflict with, result in a breach of or constitute a default under any
of the terms, provisions or conditions of the charter or bylaws of the Insurer,
to the extent such conflict, breach or default would materially and adversely
affect the Insurer’s ability to perform its obligations under the Financial
Guaranty Insurance Policy;
(vi)
to
the extent the Financial Guaranty Insurance Policy constitutes a security
within the meaning of Section 2(1) of the Securities Act of 1933, as
amended (the “Act”), it is a security that is exempt from the registration
requirements of the Act; and
(vii)
the information set forth
under the caption “The Financial Guaranty Insurance Policy and MBIA” in the
Prospectus Supplement insofar as such information constitutes a description of
the Financial Guaranty Insurance Policy, accurately summarizes the Financial
Guaranty Insurance Policy.
15
In
case any of the conditions specified above in this Section 5 shall not
have been fulfilled, this Agreement may be terminated by the Underwriter upon
mailing or otherwise delivering written notice thereof to the Company. Any such termination shall be without
liability of either party to the other party except as otherwise provided in Section 4(j)
hereof and except for any liability under Section 6 hereof.
6.
Indemnification
and Contribution
(a)
Indemnification
by Company
. The Company will
indemnify the Underwriter and hold the Underwriter harmless for and against any
losses, damages or liabilities to which the Underwriter may become subject,
under the 1933 Act or otherwise, insofar as such losses, damages or liabilities
(or actions or claims in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement, the Prospectus or any other
prospectus relating to the Securities or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Underwriter for any
legal or other expenses incurred by the Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred (including such losses, damages, liabilities or expenses to the extent
of the aggregate amount paid in settlement of any such action or claim,
provided that (subject to Section 6(c) hereof) any such settlement is
effected with the written consent of the Company);
provided,
however,
that the Company shall not be liable in any such case to
the extent that any such loss, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement, the
Prospectus or any other prospectus relating to the Securities or any such
amendment or supplement thereto in reliance upon and in conformity with the
Underwriter Information.
(b)
Indemnification
by the Underwriter
. The Underwriter
will indemnify and hold harmless the Company for and against any losses,
damages or liabilities to which the Company may become subject, under the 1933
Act or otherwise, insofar as such losses, damages or liabilities (or actions or
claims in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus or any other prospectus
relating to the Securities or any amendment or supplement thereto, or arise out
of are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement, the
Prospectus or any other prospectus relating to the Securities or any such
amendment or supplement, in reliance upon and in conformity with the
Underwriter Information, and will reimburse the Company for any legal or other
expenses incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred (including such losses,
damages, liabilities or expenses to the extent of the aggregate amount paid in
settlement of any such action or claim, provided that (subject to Section 6(c)
hereof) any such settlement is effected with the Underwriter’s written
consent).
16
(c)
General
. Promptly after receipt by an indemnified
party under Section 6(a) or 6(b) hereof of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under Section 6(a) or 6(b) hereof,
notify such indemnifying party in writing of the commencement thereof, but the
failure so to notify such indemnifying party shall not relieve such
indemnifying party from any liability except to the extent that it has been
prejudiced in any material respect by such failure or from any liability that
it may have to any such indemnified party otherwise than under Section 6(a)
or 6(b) hereof. In case any such action
shall be brought against any such indemnified party and it shall notify such
indemnifying party of the commencement thereof, such indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party under Section 6(a) or (b) hereof
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of such
indemnified party, be counsel to such indemnifying party), and, after notice
from such indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party under Section 6(a) or 6(b) hereof for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. If at
any time such indemnified party shall have requested such indemnifying party
under Section 6(a) or 6(b) hereof to reimburse such indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 6(a) or
(b) hereof effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of such
request for reimbursement, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request for
reimbursement prior to the date of such settlement. No such indemnifying party shall, without the
written consent of such indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not such indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (A) includes an unconditional release of such indemnified party from
all liability arising out of such action or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any such indemnified party.
In no event shall such indemnifying parties be liable for the fees and
expenses of more than one counsel, including any local counsel, for all such
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(d)
Contribution
. If the indemnification provided for in this Section 6
is unavailable to or insufficient to indemnify or hold harmless an indemnified
party under Section 6(a) or 6(b) hereof in respect of any losses, damages
or liabilities (or actions or claims in respect thereof) referred to therein,
then each indemnifying party under Section 6(a) or 6(b) hereof shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, damages or liabilities (or actions or claims in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriter on
17
the other hand from the
offering of the Securities. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if such indemnified party failed to give the notice
required under Section 6(c) hereof and such indemnifying party was
prejudiced in a material respect by such failure, then each such indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the Underwriter
on the other hand in connection with the statements or omissions that resulted
in such losses, damages or liabilities (or actions or claims in respect
thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriter on the other hand shall be deemed to be in
the same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions the Underwriter received. The relative fault of the Company on the one
hand and the Underwriter on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriter and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by
pro rata
allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to above in this Section 6(d).
The amount paid or payable by such an indemnified party as a result of
the losses, damages or liabilities (or actions or claims in respect thereof)
referred to above in this Section 6(d) shall be deemed to include any
legal or other expenses incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d),
the Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by the
Underwriter and distributed to the public were offered to the public exceeds
the amount of any damages that the Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e)
Scope
of Obligations
. The obligations of
the Company under this Section 6 shall be in addition to any liability
that the Company may otherwise have and shall extend, upon the same terms and
conditions, to each officer, director, employee, agent or other representative
and to each person, if any, who controls the Underwriter within the meaning of Section 15
of the 1933 Act and Section 20 of the 1934 Act; and the Underwriter’s
obligations under this Section 6 shall be in addition to any liability
that the Underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company who signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act and Section 20 of
the 1934 Act.
7.
Representations,
Warranties and Agreements to Survive Delivery
. The respective indemnities, agreements,
representations, warranties and other statements of the Company and the
Underwriter, as set forth in this Agreement or made by or on behalf of the
Company or the Underwriter, respectively, pursuant to this Agreement, shall
remain in full force and effect,
18
regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriter, any of the Underwriter’s officers, directors, employees,
agents or other representatives or controlling persons, or the Company, any
officer or director of the Company who signed the Registration Statement or any
controlling person of the Company, and shall survive delivery of and payment
for the Securities.
8.
Notices
. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the Underwriter shall be directed
to Edward D. Jones & Co., L.P. at the address set forth on the first page
of this Agreement, attention of Bill Hizar – Investment Banking; and notices to
the Company shall be directed to Cascade Natural Gas Corporation, 222 Fairview
Avenue North, Seattle, Washington 98109, attention of J.D. Wessling, Chief
Financial Officer.
9.
Miscellaneous
. The rights and duties of the parties to this
Agreement shall, pursuant to New York General Obligations Law Section 5-1401,
be governed by the law of the State of New York. This Agreement shall be binding upon, and
inure solely to the benefit of, the Company and the Underwriter except to the
extent provided in Section 6(e) hereof, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No person who purchases any of the Securities
from the Underwriter shall be deemed a successor or assign by reason merely of
such purchase. This Agreement may be
executed by any one or more of the parties hereto in any number of
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same
instrument. The word “or” shall not be
exclusive, and all references in this Agreement to the words “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a
whole and not to any particular Section or subdivision hereof, and the
captions to such Sections and subdivisions are for convenience only and shall
not affect the construction hereof.
19
If the
foregoing is in accordance with your understanding, please sign and return to
the Company the enclosed duplicate hereof, whereupon this Agreement will become
a binding agreement between the Company and the Underwriter in accordance with
its terms.
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Very truly
yours,
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CASCADE
NATURAL GAS CORPORATION
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By:
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/s/ J.D.
Wessling
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Name: J.D.
Wessling
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Title: Chief
Financial Officer
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Accepted as of
the date hereof:
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EDWARD
D. JONES & CO., L.P.
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By:
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/s/ T. William
Hizar, Jr.
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Name: T. William
Hizar, Jr.
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Title: Principal
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20
Exhibit 4.1
CASCADE
NATURAL GAS CORPORATION
TO
THE
BANK OF NEW YORK, as Trustee
SECOND
SUPPLEMENTAL INDENTURE
Dated
as of January 25, 2005
Supplemental
to Indenture Dated as of August 1, 1992
SECOND SUPPLEMENTAL
INDENTURE, dated as of January 25, 2005, between Cascade Natural Gas
Corporation, a corporation duly organized and existing under the laws of the
state of Washington (herein called the “Company”), having its principal office
at 222 Fairview Avenue North, Seattle, Washington 98109, and The Bank
of New York, a New York banking corporation, as Trustee (herein called the “Trustee”),
having its principal corporate trust office at 101 Barclay Street, New
York, New York 10286.
RECITALS OF THE COMPANY
The
Company and the Trustee have heretofore entered into an indenture dated as of August 1,
1992 (herein called the “Indenture”), to provide for the issuance from time to
time of the Company’s unsecured debentures, notes or other evidences of
indebtedness (herein called the “Instruments”), unlimited as to principal
amount, all as provided in the Indenture.
The Company and the Trustee have also entered into a First Supplemental
Indenture dated as of October 25, 1993, which by its terms is incorporated
in the Indenture.
Section 901
of the Indenture provides that, without the consent of any Holders, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into one or more indentures supplemental to the Indenture for the
purpose of, among other things, establishing the form or terms of Instruments
of any series as permitted by Sections 201 or 301.
The Company, pursuant to
the foregoing authority and pursuant to appropriate action of its Board of
Directors, proposes in and by this Second Supplemental Indenture to establish a
series of insured quarterly notes as hereinafter provided.
The
Company represents that all conditions and requirements necessary to make this
Second Supplemental Indenture, in the form and upon the terms hereof, a valid,
binding and legal instrument, in accordance with its terms, and for the
purposes herein expressed, have been done, performed and fulfilled, and the
execution and delivery hereof, in the form and upon the terms hereof, have been
in all respects duly authorized.
NOW, THEREFORE,
for and in consideration of the premises and the execution and delivery by the
Trustee of this Second Supplemental Indenture, it is mutually covenanted and
agreed as follows:
SECTION 1.
DEFINED TERMS
For all purposes of this
Second Supplemental Indenture, except as otherwise expressly provided or unless
the context otherwise requires, terms used herein in capitalized form and
defined in the Indenture have the meanings specified in the Indenture.
1
SECTION 2.
5.25% INSURED QUARTERLY NOTES DUE FEBRUARY 1, 2035
In accordance with Section 301
of the Indenture, the Company does hereby establish a series of debt securities
with the following terms and characteristics (the numbered clauses set forth below
correspond to the numbered subsections of Section 301 of the Indenture):
(1)
the
title of the securities of such series shall be “5.25% Insured Quarterly Notes
Due February 1, 2035” (the “Notes”); the form of the Notes shall be in
substantially the form attached hereto as Exhibit A, which form is hereby
incorporated by reference herein as if fully set forth herein;
(2)
the
initial aggregate principal amount of Notes to be authenticated and delivered
under the Indenture shall be $30,000,000 (additional Notes, without limitation
as to amount, and without the consent of the Holders of the then outstanding
Notes, may also be authenticated and delivered in the manner provided in the
Indenture);
(3)
except
as otherwise provided in the form of Note attached hereto with respect to
payment at the Stated Maturity Date (as hereinafter defined) or any redemption
thereof, interest on the Notes shall be payable to the Person or Persons in
whose names the Notes are registered at the close of business on the Regular Record
Date (as hereinafter defined) for such interest; any such interest that is not
so punctually paid or duly provided for will forthwith cease to be payable to
the Holders on such Regular Record Date and may either be paid to the Person or
Persons in whose name the Notes are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to the Holders of the Notes not less
than ten (10) nor more than fifteen (15) days prior to such Special Record
Date, or be paid in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in the Indenture;
(4)
the
principal of the Notes shall be due and payable on February 1, 2035 (the “Stated
Maturity Date”), unless redeemed or otherwise repaid prior to the Stated
Maturity Date as provided herein;
(5)
the
Notes shall bear interest at a fixed rate of 5.25% per year; interest shall
accrue on any Note from January 25, 2005 or the most recent date to which
interest has been paid or duly provided for, or, if the authentication date of
any Note is after any Regular Record Date but before the next succeeding
Interest Payment Date, from the next succeeding Interest Payment Date; the
Interest Payment Dates for the Notes shall be February 1, May 1, August 1
and November 1 of each year, with an initial Interest Payment Date of
May 1, 2005; and the Regular Record Date shall be the fifteenth calendar
day of the month immediately preceding the month in which the applicable
Interest Payment Date falls; and interest shall be calculated on the basis of a
360-day year of twelve 30-day months;
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(6)
the
corporate trust office of The Bank of New York in the Borough of Manhattan, the
City of New York, State of New York shall be the office or agency of the
Company at which the principal of and interest on the Notes shall be payable,
at which Notes may be surrendered for registration of transfer and exchange,
and at which notices and demands to or upon the Company with respect to the
Notes and the Indenture may be served;
(7)
the
Notes shall be redeemable in whole or in part, without premium, from time to
time, on or after February 1, 2010 upon not less than 30 nor more than 60
days prior written notice, at the option of the Company, at a redemption price
equal to 100% of the principal amount being redeemed plus any unpaid accrued
interest to the Redemption Date; in the event of redemption of the Notes in
part only, a new Note or Notes for the unredeemed portion will be issued in the
name or names of the Holders thereof upon the surrender thereof;
(8)
the
Notes shall be issued in global form and the depository for Notes issued in
global form shall be The Depository Trust Company (the “Depository”);
beneficial interests in Notes issued in global form may not be exchanged, in
whole or in part, for the individual securities represented thereby, except
that (a) if the Depository is at any time unwilling or unable to continue
as depository and a successor depository is not appointed within 90 days,
(b) if the Company at any time and in its sole discretion determines not
to have the Notes represented by one or more global notes, or (c) if there
shall have occurred an Event of Default with respect to the Notes, the Company
will issue individual certificate notes in exchange for the global notes;
owners of beneficial interests in such global notes will not be considered the
Holders thereof for any purpose under the Indenture, and no global note
representing a Note shall be exchangeable, except for another global note of
like denomination and tenor to be registered in the name of the Depository or
its nominee or to a successor depository or its nominee; the rights of Holders
of such global notes shall be exercised only through the Depository;
(9)
the
Company shall be obligated to redeem all or part of the Notes upon the request
of the representative of a deceased beneficial owner of Notes as and to the
extent provided therein;
(10)
the
Notes issued shall be issued in denominations of $1,000 or any amount in excess
thereof that is an integral multiple of $1,000;
(11)
not
applicable;
(12)
see
Section 4 hereof; and
(13)
the
Opinion of Counsel referred to in clause (z) of Section 401 of the
Indenture, as such Section 401 was amended by the First Supplemental
Indenture dated as of October 25, 1993 between the Company and the
Trustee, shall be based upon a change in federal income tax law after the date
of issuance of the Notes or a ruling of the Internal Revenue Service and, in
addition to what is required by such Section 401, shall be to the effect
that the Holders of the Notes will be subject to federal income tax on
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the same amounts, in the
same manner and at the same times as would have been the case but for the
discharge.
SECTION 3.
INSURANCE
PROVISIONS
The Company will enter
into a Reimbursement and Indemnity Agreement, dated as of January 25,
2005, with MBIA Insurance Corporation (“MBIA”) (as the same may be amended, the
“Reimbursement and Indemnity Agreement”) related to the Notes, whereby MBIA
will issue its financial guaranty insurance policy (the “Policy”) to insure the
regularly scheduled payments of principal of and interest on the Notes and the
full and complete payment of the redemption price upon a mandatory redemption
of the Notes at the option of the representative of a deceased beneficial owner
of the Notes. In this regard,
A.
In
the event that the Company does not intend or will be unable to make any
payment on the Notes when due, the Company is required to provide written
notice thereof to MBIA or its designee three days prior to the date such Note
payment is due.
B.
If,
as of the opening of business on any date on which a payment on the Notes is
due, the Trustee has not received payments from the Company pursuant to the
Indenture in amounts sufficient to pay all principal and interest coming due on
the Notes, the Trustee shall immediately notify MBIA or its designee by
telephone or telecopy, confirmed in writing by registered or certified mail, of
the amount of the deficiency.
C.
If
the deficiency is made up in whole or in part prior to or on the payment date,
the Trustee shall so notify MBIA or its designee.
D.
In
addition, if the Trustee has notice that any Holder of a Note has been required
to disgorge payments of principal or interest on the Notes to a trustee in
bankruptcy or creditors or others pursuant to a final judgment by a court of
competent jurisdiction that such payment constitutes an avoidable preference to
such Holder within the meaning of any applicable bankruptcy laws, then the Trustee
shall notify MBIA or its designee of such fact by telephone or telegraphic
notice, confirmed in writing by registered or certified mail.
E.
The
Trustee is hereby irrevocably designated, appointed, directed and authorized to
act as attorney-in-fact for Holders of the Notes as follows:
1.
If
and to the extent there is a deficiency in amounts required to pay interest on
the Notes, the Trustee shall (a) execute and deliver to U.S. Bank Trust
National Association, or its successors under the Policy (the “Insurance Paying
Agent”), in form satisfactory to the Insurance Paying Agent, an instrument
appointing MBIA as agent for such Holders in any legal proceeding related to
the payment of such interest and an assignment to MBIA of the claims for
interest to which such deficiency relates and which are paid by MBIA,
(b) receive as designee of the respective Holders (and not as Trustee) in
accordance with the tenor of the Policy
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payment from the
Insurance Paying Agent with respect to the claims for interest so assigned, and
(c) disburse the same to such respective Holders; and
2.
If
and to the extent of a deficiency in amounts required to pay principal of the
Notes, the Trustee shall (a) execute and deliver to the Insurance Paying
Agent in form satisfactory to the Insurance Paying Agent an instrument
appointing MBIA as agent for such Holder in any legal proceeding relating to
the payment of such principal and an assignment to MBIA of any of the Notes
surrendered to the Insurance Paying Agent of so much of the principal amount
thereof as has not previously been paid or for which moneys are not held by the
Trustee and available for such payment (but such assignment shall be delivered
only if payment from the Insurance Paying Agent is received), (b) receive
as designee of the respective Holders (and not as Trustee) in accordance with
the tenor of the Policy payment therefor from the Insurance Paying Agent, and
(c) disburse the same to such Holders.
F.
Payments
with respect to claims for interest on and principal of Notes disbursed by the
Trustee from proceeds of the Policy shall not be considered to discharge the
obligation of the Company with respect to such Notes, and MBIA shall become the
owner of such unpaid Note and claims for the interest in accordance with the
tenor of the assignment made to it under the provisions of this subsection or
otherwise.
G.
Irrespective
of whether any such assignment is executed and delivered, the Company and the
Trustee hereby agree for the benefit of MBIA that:
1.
They
recognize that to the extent MBIA makes payments, directly or indirectly (as by
paying through the Trustee), on account of principal of or interest on the
Notes, MBIA will be subrogated to the rights of such Holders to receive the
amount of such principal and interest from the Company, with interest thereon
as provided and solely from the sources stated in the Indenture and the Notes;
and
2.
They
will accordingly pay to MBIA the amount of such principal and interest (including
principal and interest recovered under subparagraph (ii) of the first
paragraph of the Policy, which principal and interest shall be deemed past due
and not to have been paid), with interest thereon as provided in the Indenture,
this Second Supplemental Indenture, and the Note, but only from the sources and
in the manner provided herein for the payment of principal of and interest on
the Notes to Holders, and will otherwise treat MBIA as the owner of such rights
to the amount of such principal and interest.
H.
In
connection with the issuance of additional Notes, the Company shall deliver to
MBIA a copy of the disclosure document, if any, circulated with respect to such
additional Notes.
I.
Copies
of any amendments made to the documents executed in connection with the
issuance of the Notes which are consented to by MBIA shall be sent to Standard
& Poor’s Corporation.
J.
MBIA
shall receive notice of the resignation or removal of the
5
Trustee and shall provide
consent to the appointment of a successor thereto.
K.
MBIA
shall receive copies of all notices required to be delivered to Holders of
Notes or to the Trustee pursuant to the Indenture and, on an annual basis,
copies of the Company’s audited financial statements. All notices required to be given to MBIA
under the Indenture shall be in writing and shall be sent by registered or
certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk,
New York 10504 Attention: Surveillance.
L.
The
Company shall not enter into any agreement nor shall it consent to or
participate in any arrangement pursuant to which Notes are tendered or
purchased for any purpose other than the redemption and cancellation or legal
defeasance of such Notes without the prior written consent of MBIA.
M.
Notwithstanding
any other provision of the Indenture, so long as MBIA is not in default under
the Policy, MBIA shall be entitled to control and direct the enforcement of all
rights and remedies with respect to the Notes (other than the right of the
representative of a deceased beneficial owner of Notes to request a redemption
of such Notes in accordance with the terms thereof).
N.
To
the extent that the Indenture or this Second Supplemental Indenture confers upon
or gives or grants to MBIA any right, remedy or claim under or by reason
hereof, MBIA is hereby explicitly recognized as being a third-party beneficiary
hereunder and may enforce any such right, remedy or claim conferred, given or
granted hereunder.
O.
In
addition, in any instance in which the consent of all or a certain percentage
of the Holders of the Notes is required under the Indenture, MBIA’s consent
will be required in addition to any such required holders’ consent, so long as
MBIA is not in default under the Policy.
SECTION 4.
EVENTS OF DEFAULT
For
purposes of the Notes, an “Event of Default” as defined in paragraphs (1)-(4)
of Section 501 of the Indenture shall be amended to read as follows:
“Event of Default”
wherever used herein with respect to the Notes means any one of the following
events:
(1)
failure
to pay any interest on the Notes when due; or
(2)
failure
to pay the principal of or premium, if any, on any Note on the Stated Maturity
Date;
(3)
failure
to perform or breach of any covenant or warranty of the Company in this
Indenture for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee, or to the Company by the Holders
of at least 33% in aggregate principal amount of
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the
Notes, a written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a “Notice of Default” hereunder; or
(4)
the
entry by a court having jurisdiction in the premises of (A) a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition by one or more Persons
other than the Company seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable Federal or
State law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or other similar official for the Company or for any substantial
part of its property, or ordering the winding up or liquidation of its affairs,
and any such decree or order for relief or any such other decree or order shall
have remained unstayed and in effect for a period of 45 consecutive days.
The provisions of
Sections 501(5) and (6) of the Indenture shall apply to the Notes as if fully
set forth herein without change.
The occurrence and
continuation of an “Event of Default” under the Reimbursement and Indemnity
Agreement shall also constitute an Event of Default with respect to the
Notes. Upon the occurrence and
continuation of an “Event of Default” under the Reimbursement and Indemnity
Agreement, MBIA may take whatever action at law or in equity that may appear
necessary or desirable, including without limitation, giving notice to the
Trustee of the occurrence of such “Event of Default”, or legal action
(1) for the specific performance of any covenant made by the Company
pursuant to the Reimbursement and Indemnity Agreement, (2) to the extent
applicable, to collect the amounts then due and thereafter to become due under
the Reimbursement and Indemnity Agreement, or (3) to enforce performance
and observance of any obligation, agreement or covenant under the Reimbursement
and Indemnity Agreement.
SECTION 5.
INCORPORATION
IN INDENTURE
From
and after the date hereof, all provisions of this Second Supplemental Indenture
shall be deemed to be incorporated in and made a part of the Indenture; and the
Indenture and this Second Supplemental Indenture shall be read, taken, and
construed as one and the same instrument.
In the event of any inconsistency between the terms of this Second
Supplemental Indenture and the terms of the Indenture, the terms of this Second
Supplemental Indenture shall control.
SECTION 6.
GOVERNING
LAW
This
Second Supplemental Indenture shall be governed by and construed in accordance
with the laws of the State of New York.
7
SECTION 7.
EFFECTIVENESS
OF AMENDMENTS AND SUPPLEMENTS
The
amendment and supplements to the Indenture made by this Second Supplemental
Indenture shall have effect only with respect to the Notes, and shall not be
effective as to instruments of any other series previously or hereafter issued
under the Indenture.
SECTION 8.
COUNTERPARTS
This
Second Supplemental Indenture may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 9.
OTHER
SECTIONS OF INDENTURE NOT AFFECTED
All
Articles, Sections, and portions of Sections of the Indenture other than those
amended or supplemented as provided above are hereby ratified, confirmed, and
continued in full force and effect.
8
IN WITNESS WHEREOF, the
parties hereto have caused this Second Supplemental Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
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CASCADE
NATURAL GAS CORPORATION
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By
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/s/
W. Brian Matsuyama
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W. Brian Matsuyama,
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President and Chief Executive Officer
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[SEAL]
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Attest:
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/s/ Larry C. Rosok
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Name:
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Larry C. Rosok
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Title:
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Corporate Secretary
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THE
BANK OF NEW YORK
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By
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/s/
Joseph A. Lloret
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Name:
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Joseph
A. Lloret
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Its:
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Assistant
Treasurer
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[SEAL]
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Attest:
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/s/ Dorothy Miller
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Name:
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Dorothy Miller
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Title:
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Vice President
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9
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STATE OF WASHINGTON
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ss.
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COUNTY OF KING
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On
this day personally appeared before me ,
to me known to be the
of CASCADE NATURAL GAS CORPORATION, the Washington corporation that executed
the foregoing instrument, and acknowledged such instrument to be the free and
voluntary act and deed of such corporation, for the uses and purposes therein
mentioned, and on oath stated that he was duly authorized to execute such
instrument.
GIVEN
UNDER MY HAND AND OFFICIAL SEAL this
day of ,
2005.
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Printed Name
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NOTARY PUBLIC in and for the State of Washington,
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residing at
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My Commission Expires
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STATE OF NEW YORK
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}
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ss.
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COUNTY OF NEW YORK
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On
this day personally appeared before me ,
to me known to be the
of THE BANK OF NEW YORK, the New York banking corporation that executed the
foregoing instrument, and acknowledged such instrument to be the free and
voluntary act and deed of such banking corporation, for the uses and purposes
therein mentioned, and on oath stated that [he/she] was duly authorized to
execute such instrument.
GIVEN
UNDER MY HAND AND OFFICIAL SEAL this
day of ,
2005.
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Printed Name
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NOTARY PUBLIC in and for the State of New York,
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residing at
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My Commission Expires
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10
EXHIBIT A
[FORM OF 5.25% INSURED QUARTERLY NOTES DUE FEBRUARY 1, 2035]
UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE TO BE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Unless and until this
Note is exchanged in whole or in part for certificated Notes registered in the
names of the various beneficial holders hereof, as then certified to the
Company by the Depository or a successor depository, this Note may not be
transferred except as a whole by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor depository
or a nominee of such successor depository.
This instrument is a
global instrument within the meaning of the Indenture hereinafter referred to
and is registered in the name of a depository or a nominee of a
depository. This instrument is
exchangeable for instruments registered in the name of a person other than the
depository or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this instrument (other than a transfer of this
instrument as a whole by the depository to a nominee of the depository or by a
nominee of the depository to the depository or another nominee of the
depository) may be registered except in such limited circumstances.
1
CASCADE NATURAL GAS CORPORATION
5.25% Insured Quarterly Notes Due February 1, 2035
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Principal
Amount:
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$30,000,000
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Regular Record
Dates:
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Fifteenth
calendar day of the month immediately preceding the month in which the
applicable Interest Payment Date falls
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Original Issue
Date:
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January 25,
2005
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Stated Maturity
Date:
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February 1,
2035
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Interest Payment
Dates:
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Quarterly in
arrears on February 1, May 1, August 1 and November 1 of each
year, beginning May 1, 2005
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Interest Rate:
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5.25% per annum
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Authorized
Denominations:
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$1,000 or any
integral multiple thereof
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Initial
Redemption Date:
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February 1,
2010 (except with respect to redemption at the request of the representative
of a deceased beneficial owners of Notes as and to the extent set forth
herein)
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Cascade Natural Gas Corporation,
a corporation duly organized and existing under the laws of the State of
Washington (herein called the “Company”, which term includes any successor
corporation under the Indenture referred to hereinafter), for value received,
hereby promises to pay to Cede & Co., or registered assigns, the principal
sum of Thirty Million Dollars ($30,000,000) on the Stated Maturity Date
specified above, and to pay interest thereon from the Original Issue Date
specified above or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, quarterly in arrears on February 1,
May 1, August 1 and November 1 of each year, commencing
May 1, 2005, at the Interest Rate per annum specified above until the
principal hereof is paid or made available for payment and on any overdue
principal and on any overdue installment of interest. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date (other than an Interest
Payment Date that is the Stated Maturity Date or on a Redemption Date or upon
acceleration) shall, as
2
provided in such
Indenture, be paid to the Person in whose name this Note is registered at the
close of business on the Regular Record Date for such interest as specified
above next preceding such Interest Payment Date, provided that any interest
payable at the Stated Maturity Date or on any Redemption Date will be paid to
the Person to whom principal is payable.
Except as otherwise provided in the Indenture, any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Note is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Notes of this series not less than
ten (10) nor more than fifteen (15) days prior to such Special Record Date or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes for this series may
be listed, and upon such notice as may be required by such exchange, all as
more fully provided in such Indenture.
Payments of interest on this Note will include
interest accrued to but excluding the respective Interest Payment Dates. Interest payments for this Note shall be
computed and paid on the basis of a 360-day year of twelve 30-day months. If any Interest Payment Date, any Redemption
Date or the Stated Maturity Date shall not be a Business Day, payment of the
amounts due on this Note on such date may be made on the next succeeding
Business Day, as if each such payment were made on the date such payment were
due, and no interest shall accrue on such amounts for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity Date, as the
case may be, to such Business Day.
Payment of the principal of, and interest on, this
Note at the Stated Maturity Date or earlier redemption shall be paid by wire
transfer in immediately available funds (except that payment on certificated
notes shall be paid by check except in certain circumstances) upon surrender of
the Notes at the Corporate Trust Office of the Trustee or at such other office
or agency as may be designated for such purpose by the Company from time to
time. Payment of interest on this Note
shall be paid by wire transfer in immediately available funds (except that
payment on certificated notes shall be paid by check except in certain
circumstances) to the Person entitled thereto as indicated in the Instrument
Register. Payment of the principal of
and interest on this Note, as aforesaid, shall be made in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts.
3
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the “Insurer”) has issued
a policy containing the following provisions, such policy being on file at The
Bank of New York in New York, New York.
The Insurer, in consideration of the payment of the
premium and subject to the terms of the policy, hereby unconditionally and
irrevocably guarantees to any owner, as hereinafter defined, of the following
described obligations, the full and complete payment required to be made by or
on behalf of the Issuer to the Bank of New York or its successor (the “Paying
Agent”) of an amount equal to (i) the principal of (either at the stated
maturity or by any advancement of maturity pursuant to a mandatory sinking fund
payment) and interest on, the Obligations (as that term is defined below) as
such payments shall become due but shall not be so paid (except that in the
event of any acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from default or
otherwise, other than any advancement of maturity pursuant to a mandatory
sinking fund payment, the payments guaranteed hereby shall be made in such
amounts and at such times as such payments of principal would have been due had
there not been any such acceleration, unless the Insurer elects in its sole
discretion, to pay in whole or in part any principal due by reason of such
acceleration); and (ii) the
reimbursement of any such payment which is subsequently recovered from any
owner pursuant to a final judgment by a court of competent jurisdiction that
such payment constitutes an avoidable preference to such owner within the
meaning of any applicable bankruptcy law.
The amounts referred to in clauses (i) and (ii) of the preceding
sentence shall be referred to herein collectively as the “Insured Amounts.” “Obligations” shall mean:
$30,000,000
Cascade Natural Gas Corporation
5.25% Insured Quarterly Notes Due February
1,
2035
Upon receipt of telephonic or telegraphic notice, such
notice subsequently confirmed in writing by registered or certified mail, or
upon receipt of written notice by registered or certified mail, by the Insurer
from the Paying Agent or any owner of an Obligation the payment of an Insured
Amount for which is then due, that such required payment has not been made, the
Insurer on the due date of such payment or within one business day after
receipt of notice of such nonpayment, whichever is later, will make a deposit
of funds, in an account with U.S. Bank Trust National Association, in New York,
New York, or its successor, sufficient for the payment of any such Insured
Amounts which are then due. Upon
presentment and surrender of such Obligations or presentment of such other
proof of ownership of the Obligations, together with any appropriate
instruments of assignment to evidence the assignment of the Insured Amounts due
on the Obligations as are paid by the Insurer, and appropriate instruments to
effect the appointment of the Insurer as agent for such owners of the
Obligations in any legal proceeding related to payment of Insured Amounts on
the Obligations, such instruments being in a form satisfactory to U.S. Bank
Trust National Association, U.S. Bank Trust
4
National Association
shall disburse to such owners, or the Paying Agent payment of the Insured
Amounts due on such Obligations, less any amount held by the Paying Agent for
the payment of such Insured Amounts and legally available therefor. The policy does not insure against loss of
any prepayment premium which may at any time be payable with respect to any
Obligation.
As used herein, the term “owner” shall mean the
registered owner of any Obligation as indicated in the books maintained by the
Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer
or any party whose agreement with the Issuer constitutes the underlying
security for the Obligations.
Any service of process on the Insurer may be made to
the Insurer at its offices located at 113 King Street, Armonk, New York 10504
and such service of process shall be valid and binding.
The policy is non-cancellable for any reason. The premium on the policy is not refundable
for any reason including the payment prior to maturity of the Obligations.
5
E N D O R S E M E N T
Attached to Policy
No. [ ] (the “Policy”) issued by MBIA Insurance Corporation
(the “Insurer”), to the Paying Agent, as defined in the Policy issued with
respect to the Obligations.
It is further understood
that the Policy shall guarantee to the owner or holder, as defined in the
Policy, the full and complete payments required to be made by or on behalf of
the Issuer if there occurs pursuant to the terms of the Obligations any
payments in connection with the mandatory redemption of the Obligations at the
option of representatives of deceased beneficial owners of the Obligations
pursuant to Section 2 of the Second Supplemental Indenture, dated January 25,
2005, including any principal, interest or premium payments payable thereon, if
any, as and when thereby required.
The endorsement forms a
part of the Policy to which it is attached, effective on the inception date of
the Policy.
6
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR
ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has
been executed by the Trustee by manual signature of an authorized officer, this
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
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CASCADE
NATURAL GAS
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CORPORATION
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By
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W.
Brian Matsuyama,
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President
and Chief Executive Officer
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ATTEST:
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Secretary
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7
CERTIFICATE OF AUTHENTICATION
This is one of the Notes
of the series designated herein referred to in the within-mentioned Indenture.
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Dated:
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THE
BANK OF NEW YORK
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as
Trustee
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By:
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Authorized
Signatory
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8
APPENDIX A – FORM OF
REDEMPTION REQUEST
CASCADE NATURAL GAS
CORPORATION
5.25% Insured Quarterly
Notes Due February 1, 2035
(the “Notes”)
CUSIP NO. 147339AJ4
The
undersigned,
(the “Participant”), does hereby certify, pursuant to the provisions of that
certain Indenture of Trust dated as of August 1, 1992 (as supplemented,
the “Indenture”) made by Cascade Natural Gas Corporation (the “Company”) and
The Bank of New York, as Trustee (the “Trustee”), to The Depository Trust
Company (the “Depositary”), the Company and the Trustee that:
1.
[Name
of deceased Beneficial Owner] is deceased.
2.
[Name
of deceased Beneficial Owner] had a
$
interest in the above-referenced Notes.
3.
[Name
of Representative] is [Beneficial Owner’s personal representative/other person
authorized to represent the estate of the Beneficial Owner/surviving joint
tenant/surviving tenant by the entirety/trustee of a trust] of [Name of
deceased Beneficial Owner] and has delivered to the undersigned a request for
redemption in form satisfactory to the undersigned, requesting that
$
principal amount of the Notes be redeemed pursuant to the Indenture. The documents accompanying such request, all
of which are in proper form, are in all respects satisfactory to the
undersigned and the [Name of Representative] is entitled to have the Notes to
which this Request relates redeemed.
4.
The
Participant holds the interest in the Notes with respect to which this Request
for Redemption is being made on behalf of [Name of deceased Beneficial Owner].
5.
The
Participant hereby certifies that it will indemnify and hold harmless the
Depositary, the Trustee and the Company (including their respective officers,
directors, agents, attorneys and employees) against all damages, loss, cost,
expense (including reasonable attorneys’ and accountants’ fees), obligations,
claims or liability (collectively, the “Damages”) incurred by the indemnified
party or parties as a result of or in connection with the redemption of Notes
to which this Request relates. The
Participant will, at the request of the Company, forward to the Company, a copy
of the documents submitted by [Name of Representative] in support of the
request for redemption.
9
IN
WITNESS WHEREOF
, the undersigned has executed this Redemption
Request as of
,
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[PARTICIPANT NAME]
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By:
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Name:
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Title:
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10
(Reverse Side of Note)
This Note is one of a
duly authorized issue of Instruments of the Company issued and issuable in one
or more series under an Indenture, dated as of August 1, 1992 (such
Indenture, as supplemented, together with any constituent instruments
establishing the terms of particular Instruments, being herein called the “Indenture”),
of the Company to The Bank of New York, as trustee (herein called the “Trustee,”
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a more complete statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. The
acceptance of this Note shall be deemed to constitute the consent and agreement
by the Holder hereof to all of the terms and provisions of the Indenture. This Note is one of the series designated on
the face hereof as 5.25% Insured Quarterly Notes Due February 1, 2035 in
the aggregate principal amount of $30,000,000.
Capitalized terms used but not defined herein shall have the meanings
set forth in the Indenture.
The Company shall have
the right, subject to the terms and conditions of the Indenture, to redeem this
Note at any time on or after February 1, 2010 at the option of the
Company, without premium or penalty, in whole or in part, from time to time, at
a Redemption Price equal to 100% of the principal amount being redeemed plus
unpaid accrued interest to the Redemption Date.
Notice of redemption
shall be given by mail to Holders of Notes, not less than 30 days nor more than
60 days prior to the date fixed for redemption, all as provided in the
Indenture. In the event of redemption of
this Note in part only, a new Note or Notes of this series, of like tenor, for
the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
Unless the Notes have
been declared due and payable prior to their maturity by reason of an Event of
Default, the Representative (as hereinafter defined) of a deceased Beneficial
Owner (as hereinafter defined) has the right to request redemption prior to
stated maturity of all or part of his or her interest in the Notes, and the
Company will redeem the same subject to the limitations that the Company will
not be obligated to redeem, during the period from the date of this offering
through and including February 1, 2006 (the “Initial Period”), and during
any twelve-month period which ends on and includes each February 1
thereafter (each such twelve-month period being hereinafter referred to as a “Subsequent
Period”), (i) on behalf of a deceased Beneficial Owner any interest in the
Notes which exceeds $25,000 principal amount (the “Individual Limitation”) or
(ii) interests in the Notes exceeding $600,000 in aggregate principal
amount (the “Annual Limitation”). A
request for redemption may be initiated by the Representative of a deceased
Beneficial Owner at any time and in any principal amount.
The Company may, at its
option, redeem interests of any deceased Beneficial Owner in the Notes in the
Initial Period or any Subsequent Period in excess of the
11
Individual Limitation. Any such redemption, to the extent that it
exceeds the Individual Limitation for any deceased Beneficial Owner, shall not
be included in the computation of the Annual Limitation for such Initial Period
or such Subsequent Period, as the case may be, or for any succeeding Subsequent
Period. The Company may, at its option,
redeem interests of deceased Beneficial Owners in the Notes, in the Initial
Period or any Subsequent Period, in an aggregate principal amount exceeding the
Annual Limitation. Any such redemption,
to the extent it exceeds the Annual Limitation, shall not reduce the Annual
Limitation for any Subsequent Period. On
any determination by the Company to redeem Notes in excess of the Individual
Limitation or the Annual Limitation, Notes so redeemed shall be redeemed in the
order of the receipt of Redemption Requests (as hereinafter defined) by the
Trustee.
A request for redemption
of an interest in the Notes may be initiated by the personal representative or
other person authorized to represent the estate of the deceased Beneficial
Owner or by a surviving joint tenant(s) or tenant(s) by the entirety or the
trustee of a trust (each, a “Representative”).
The Representative shall deliver a request to the Participant
(hereinafter defined) through whom the deceased Beneficial Owner owned such
interest, in form satisfactory to the Participant, together with evidence of
the death of the Beneficial Owner, evidence of the authority of the
Representative satisfactory to the Participant, such waivers, notices or
certificates as may be required under applicable state or federal law and such
other evidence of the right to such redemption as the Participant shall
require. The request shall specify the
principal amount of the interest in the Notes to be redeemed. The Participant shall thereupon deliver to
the Depository a request for redemption substantially in the form attached as
Appendix A hereto (a “Redemption Request”). The Depository will, on receipt thereof,
forward the same to the Trustee. The
Trustee shall maintain records with respect to Redemption Requests received by
it including date of receipt, the name of the Participant filing the Redemption
Request and the status of each such Redemption Request with respect to the
Individual Limitation and Annual Limitation.
The Trustee will immediately file each Redemption Request it receives,
together with the information regarding the eligibility thereof with respect to
the Individual Limitation and Annual Limitation with the Company. The Depository, the Trustee and the Company
may conclusively assume, without independent investigation, that the statements
contained in each Redemption Request are true and correct and shall have no
responsibility for reviewing any documents submitted to the Participant by the
Representative or for determining whether the applicable decedent is in fact
the Beneficial Owner of the interest in the Notes to be redeemed or is in fact
deceased and whether the Representative is duly authorized to request
redemption on behalf of the applicable Beneficial Owner.
Subject to the Individual
Limitation and the Annual Limitation, the Company will, after the death of any
Beneficial Owner, redeem the interest of such Beneficial Owner in the Notes on
the next Interest Payment Date occurring not less than 30 days following the
Company’s receipt of a Redemption Request from the Trustee. If Redemption Requests exceed the aggregate
principal amount of interests in Notes required to be redeemed during the
Initial Period or during any Subsequent Period, then such excess Redemption
Requests will be applied in the order received by the Trustee to successive
Subsequent Periods, regardless of the number of Subsequent Periods required
12
to redeem such interests. The Company may at any time notify the
Trustee that it will redeem, on the next Interest Payment Date occurring not
less than 30 days thereafter, all or any such lesser amount of Notes for which
Redemption Requests have been received but which are not then eligible for
redemption by reason of the Individual Limitation and the Annual
Limitation. Any Notes so redeemed shall
be redeemed in the order of receipt of Redemption Requests by the Trustee.
The price the Company
will pay for the Notes to be redeemed pursuant to a Redemption Request is 100%
of the principal amount thereof plus accrued but unpaid interest to the date of
payment. Subject to arrangements with
the Depository, payment for interests in the Notes which are to be redeemed
shall be made to the Depository upon presentation of Notes to the Trustee for
redemption in the aggregate principal amount specified in the Redemption
Requests submitted to the Trustee by the Depository which are to be fulfilled
in connection with such payment. The
principal amount of any Notes acquired or redeemed by the Company other than by
redemption at the option of any Representative of a deceased Beneficial Owner
pursuant to this Note shall not be included in the computation of either the
Individual Limitation and the Annual Limitation for the Initial Period or for
any Subsequent Period.
For purposes of this
Note, a “Beneficial Owner” means the Person who has the right to sell, transfer
or otherwise dispose of an interest in a Note and the right to receive the
proceeds therefrom, as well as the interest and principal payable to the holder
thereof. In general, a determination of
beneficial ownership in the Notes will be subject to the rules, regulations and
procedures governing the Depository and institutions that have accounts with
the Depository or a nominee thereof (“Participants”).
For purposes of this
Note, an interest in a Note held in tenancy by the entirety, joint tenancy or
by tenants in common will be deemed to be held by a single Beneficial Owner and
the death of a tenant by the entirety, joint tenant or tenant in common will be
deemed the death of a Beneficial Owner.
The death of a person who, during his lifetime, was entitled to
substantially all of the rights of a Beneficial Owner of an interest in the
Notes will be deemed the death of the Beneficial Owner, regardless of the
recordation of such interest on the records of the Participant, if such rights
can be established to the satisfaction of the Participant. Such interests shall be deemed to exist in
typical cases of nominee ownership, ownership under the Uniform Gifts to Minors
Act or the Uniform Transfers to Minors Act, community property or other similar
joint ownership arrangements, including individual retirement accounts or Keogh
[H.R. 10] plans maintained solely by or for the decedent or by or for the
decedent and any spouse, and trust and certain other arrangements where the
decedent has the right to receive all or a portion of the income and such
person has substantially all of the rights of a Beneficial Owner during such
person’s lifetime.
In the case of a
Redemption Request which is presented on behalf of a deceased beneficial owner
and which has not been fulfilled at the time the Company gives notice of its
election to redeem the Notes, the Notes which are the subject of such pending
Redemption Request shall be redeemed prior to any other Notes.
13
Any Redemption Request
may be withdrawn by the person(s) presenting the same upon delivery of a
written request for such withdrawal given by the Participant on behalf of such
person to the Depository and by the Depository to the Trustee not less than 60
days prior to the Interest Payment Date on which such Notes are eligible for
redemption.
The Company may, at its
option, purchase any Notes for which Redemption Requests have been received in
lieu of redeeming such Notes. Any Notes
so purchased by the Company shall either be reoffered for sale and sold within
180 days after the date of purchase or presented to the Trustee for redemption
and cancellation.
During such time or times
as this Note is not represented by a Global Security and is issued in
definitive form, all references in this Note to Participants and the
Depository, including the Depository’s governing rules, regulations and
procedures shall be deemed deleted, all determinations which under this Note
the Participants are required to make shall be made by the Company (including,
without limitation, determining whether the applicable decedent is in fact the
Beneficial Owner of the interest in this Note or is in fact deceased and
whether the Representative is duly authorized to request redemption on behalf
of the applicable Beneficial Owner), all Redemption Requests, to be effective,
shall be delivered by the Representative to the Trustee, with a copy to the
Company, and shall be in the form of a Redemption Request (with appropriate
changes to reflect the fact that such Redemption Request is being executed by a
Representative) and, in addition to all documents that are otherwise required
to accompany a Redemption Request, shall be accompanied by this Note.
If an Event of Default
with respect to the Notes of this series shall occur and be continuing, the
principal of and interest on the Notes of this series may be declared due and
payable in the manner, with the effect and subject to the conditions provided
in the Indenture.
The Indenture permits,
with certain exceptions as therein provided, the Trustee to enter into one or
more supplemental indentures for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, the Indenture
with the consent of the Holders of not less than a majority in principal amount
of the Outstanding Instruments of each series affected. The Indenture also contains provisions
permitting the Holders of specified percentages in principal amount of the
Instruments then Outstanding, on behalf of the Holders of all Instruments, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange therefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
As provided in the
Indenture and subject to certain limitations therein set forth, the transfer or
exchange of this Note is registrable in the Instrument Register, upon surrender
of this Note for registration of transfer or exchange at the offices of The
Bank of New York, New York City, New York or such other office or agency as may
be
14
designated by the Company
from time to time, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Instrument Registrar, duly
executed by the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of like tenor and aggregate principal amount,
will be issued to the designated transferee or transferees or to the Holder, as
the case may be. No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The Notes of this series
are issuable only in registered form, without coupons, in denominations of
$1,000, and any amount in excess thereof that is an integral multiple of
$1,000. As provided in the Indenture and
subject to certain limitations therein set forth, Notes of this series are
exchangeable for a like tenor and aggregate principal amount of Notes of this
series, of any authorized denominations, as requested by the Holder
surrendering the same, upon surrender of the Note or Notes to be exchanged at
the office or agency designated by the Company from time to time. The Company shall not be required to
(a) issue, register the transfer of or exchange Notes of this series
during a period of 15 days immediately preceding the date notice is given
identifying the serial numbers of the Notes of this series called for
redemption or (b) issue, register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
Prior to due presentment
of this Note for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name this
Note is registered as the absolute owner hereof for all purposes, whether or
not this Note be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
The Indenture and the
Notes shall be governed by and construed in accordance with the laws of the
State of New York.
15
FOR VALUE RECEIVED the undersigned
hereby sells, assigns and transfers
unto
[please insert social security or
other identifying number of assignee]
[please print or typewrite name and address of assignee]
the within Note of
CASCADE NATURAL GAS CORPORATION and does hereby irrevocably constitute and
appoint
,
Attorney, to transfer said Note on the books of the above-mentioned Company,
with full power of substitution in the premises.
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Dated:
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Notice: The
signature to this assignment must correspond with the name as written upon
the face of the Note in every particular without alteration or enlargement or
any change whatsoever.
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16
Exhibit
10.1
EXECUTION COPY
REIMBURSEMENT AND INDEMNITY AGREEMENT
between
CASCADE NATURAL GAS CORPORATION
and
MBIA INSURANCE CORPORATION
regarding
$30,000,000
Cascade
Natural Gas Corporation
5.25% Insured
Quarterly Notes (IQ Notes
SM
)
Due
February 1, 2035
Dated as of January 25, 2005
REIMBURSEMENT AND INDEMNITY AGREEMENT
THIS REIMBURSEMENT AND INDEMNITY
AGREEMENT
(this “Agreement”) dated as of January 25, 2005 is
entered into by and between
CASCADE NATURAL GAS
CORPORATION,
a corporation, duly organized under the laws of the
State of Washington, as issuer (the “Issuer”) and
MBIA INSURANCE CORPORATION
, a stock insurance corporation,
duly organized and existing under the laws of the State of New York (“MBIA”). Capitalized terms not otherwise defined shall
have the meanings ascribed thereto in Article I of this Agreement.
RECITALS:
1.
Cascade
Natural Gas Corporation (the “Issuer”) is a corporation duly organized and
existing under the laws of the State of Washington;
2.
The
Issuer intends to issue certain fixed rate notes (the “Notes”) under the
Indenture and has asked MBIA to issue a financial guaranty insurance policy
(the “Policy”) insuring certain payments of principal and interest on the Notes
without regard to any acceleration of the time of payment of the Notes;
3.
The
Notes are being issued for the purpose of repaying short-term debt;
4.
MBIA
has agreed, pursuant to the terms of the MBIA Commitment, to deliver the Policy
to the Trustee, but has required that the Issuer undertake certain obligations
hereunder in connection therewith; and
5.
This
Agreement is entered into in order to set forth certain representations,
warranties, covenants and other agreements of the Issuer and to evidence and
secure the Issuer’s obligation (a) to reimburse MBIA for any payment made
by MBIA under the Policy and as provided herein and (b) to indemnify or
reimburse MBIA for certain amounts as more fully set forth herein.
In consideration of the premises and the mutual
promises set forth below, MBIA and the Issuer agree as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, the terms
defined in this Article I shall, for all purposes of this Agreement, have
the meanings herein specified, to be equally applicable to both the singular
and plural forms of any of the terms herein defined. Capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Indenture.
“
Agreement
”
means this Reimbursement and Indemnity Agreement dated as of January 25, 2005,
including any amendments or any supplements hereto as herein permitted.
“
Assets
” means
the total amount of all assets as shown on the audited consolidated balance
sheet contained in the latest audited financial statements of the Issuer.
“
Asset Sale
”
means any asset sale other than (a) the sale or other disposition in the normal
course of business, (b) the sale of accounts receivable and other receivables, (c)
the sale of capital stock of a Subsidiary other than a Material Subsidiary; or (d)
dispositions pursuant to requirements of law or regulatory mandate or order.
“
Authorized Officer
” means, with respect to the Issuer, the
Chief Executive Officer, the Chief Financial Officer any Vice President and any
other individual authorized by the Issuer’s Articles of Incorporation or
By-Laws to perform the act or sign the document in question.
“
Business Day
” means any day other than (a) a Saturday
or Sunday, (b) a State legal holiday or (c) any day which shall be in
the city in which the Trustee, the Tender Agent, the Issuer or MBIA is located,
a legal holiday or a day on which banks in any of such cities are required or
authorized by law or other government action to close.
“
Consolidated Net Worth
”
means the total of the amounts shown on the consolidated balance sheet of the Issuer
and its consolidated subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles, as (i) the stated
value of all outstanding common stock plus (ii)
paid-in capital plus (iii) any accumulated other comprehensive income
plus (iv) any retained earnings.
“
Debt
” means all
indebtedness of the Issuer for borrowed money evidenced by a note, bond,
debenture or similar instrument or other securities or guarantees by the Issuer
(without duplication) of any thereof, but excluding any capital lease
obligations related to or pursuant to statute, code or a like mechanism whereby
the Issuer conveys to and leases from a governmental authority real property
and/or improvements.
“Equity
” means total common
shareholders’ equity computed in accordance with GAAP.
“GAAP”
means generally accepted
accounting principles in the United States as in effect from time to time.
“
Indenture
”
means the Indenture dated as of August 1, 1992 between the Issuer and the
Trustee relating to the Notes, as amended and supplemented including as
supplemented by the First Supplemental Indenture dated as of October 25,1993
and as supplemented by the Second Supplemental Indenture dated as of January
25, 2005, each between the Issuer and the Trustee.
“
Issuance Date
”
means the date upon which the Policy is issued.
“
Issuer
”
means Cascade Nautral Gas Corporation.
“
Lien
” means any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other) charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever.
2
“
Material Subsidiary
”
means any Subsidiary with a Net Worth in excess of 20% of Consolidated Net
Worth.
“
MBIA
” means
MBIA Insurance Corporation, a New York stock insurance corporation.
“
MBIA Commitment
”
means the Revised MBIA Insurance Corporation Commitment dated January 21, 2005,
relating to the delivery of the Policy.
“
Net Worth
”
means the total of the amounts shown on the balance sheet, determined in
accordance with generally accepted accounting principles, as (i) the stated
value of all outstanding common stock plus (ii) paid-in capital plus (iii) any
accumulated other comprehensive income plus (iv) any retained earnings.
“
Notes
” means
the $30,000,000 Cascade Natural Gas Corporation Insured Quarterly Notes (IQ
Notes
SM
), Series 2005.
“
Offering Document
”
means the Prospectus Supplement dated January 20, 2005, relating to the Notes.
“
Person
” means
an individual, corporation, limited liability company, partnership, joint trust
venture, trust or incorporated organization, or a government or any agency or
political subdivision thereof.
“
Policy
” means
any Financial Guaranty Insurance Policies issued by MBIA in connection with the
Notes.
“
Prime Rate
”
means for any date of determination, the rate of interest as it is publicly
announced by Citibank, N.A. at its principal office in New York,
New York as its prime lending rate for unsecured commercial loans within
the United States (any change in such prime rate of interest to be
effective on the date such change is announced by Citibank, N.A.); provided,
however, that if Citibank, N.A. ceases to announce a prime lending rate for
unsecured commercial loans within the United States, then “Prime Rate”
shall mean the average of the prime lending rates for unsecured commercial
loans within the United States as announced by three leading commercial
banks selected by MBIA from time-to-time.
“
Property
” means
any and all property, whether real, personal tangible, intangible, or mixed, or
other assets.
“
Regulated Utility Company
”
means
a corporation (or
other entity) engaged in the transmission, distribution, or sale of natural
gas, which is regulated, or subject to regulation, by an applicable agency,
including a public service commission or public utility commission.
“
Reimbursement Rate
”
means for any date of determination, the Prime Rate plus 2%. The Reimbursement Rate shall be computed on
the basis of a year of 365 days calculating the actual number of days
elapsed. In no event shall the
Reimbursement Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
3
“
Related Documents
”
means the Notes, the Indenture, and any other transaction document or agreement
contemplated by the Notes or this Agreement.
“
Reorganization
”
means any reorganization of the Issuer or any consolidation, merger or transfer
of a substantial portion of the assets of the Issuer.
“
State
”
means the State of Washington.
“Subsidiary”
means (i) any
corporation more than 50% of the outstanding securities having ordinary voting
power of which shall at the time be owned or controlled, directly to
indirectly, by the Issuer or by one or more of its Subsidiaries or (ii) any
partnership, limited liability company, association, joint venture or similar
business organization more than 50% of the ownership interest having ordinary
voting power of which shall at the time be so owned or controlled by the Issuer.
“
Total Capitalization
”
means Equity, preferred and/or preference stock and Debt of the Issuer,
computed in accordance with GAAP.
“
Trustee
” means The
Bank of New York.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE ISSUER
The Issuer
represents and warrants to, and covenants with, MBIA that:
(a)
The
Issuer is organized and is duly established and existing under the laws of the
State.
(b)
The
Issuer has the full power and authority (corporate and other) to execute and
deliver this Agreement and to enter into the transactions contemplated by this
Agreement and the Related Documents. The
execution and delivery of this Agreement and each of the Related Documents has
been duly authorized by the Issuer, and all necessary approvals for the
execution, delivery and performance by the Issuer of this Agreement and the
Related Documents have been obtained.
(c)
The
execution and delivery of this Agreement and each of the Related Documents, the
consummation of the transactions contemplated hereby and thereby and the
fulfillment of or compliance with the terms and conditions of this Agreement
and each Related Document by the Issuer do not conflict with or result in any
material breach or violation of any of the terms, conditions or provisions of
any applicable laws, including regulations, or any material agreement or
instrument to which the Issuer is now a party or by which it is bound, or
constitutes a default under any of the foregoing which default would materially
and adversely affect the consummation of the transactions contemplated hereby
and by the terms of the Related Documents.
4
(d)
This
Agreement and each Related Document to which the Issuer is a party, when
executed and delivered by the Issuer, assuming the due authorization, execution
and delivery by the other parties thereto, constituted and will constitute the
legal, valid and binding obligations of the Issuer, enforceable against the Issuer
in accordance with their terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally, (ii) general equitable principles, (iii)
limitations on enforceability of rights to indemnification by federal or state
securities laws or regulations or (iv) public policy.
(e)
The
Issuer shall provide or cause to be provided to MBIA prior to delivery of the
Policy (i) conformed copies of this Agreement and the Related Documents
and (ii) such opinions of legal counsel and certified resolutions of the Issuer
evidencing necessary or appropriate corporate action by the Issuer, and other
documents as may reasonably be requested by MBIA, including documents
evidencing any required approvals of the transactions contemplated to be
undertaken by the Issuer under this Agreement and the Related Documents.
(f)
The
Issuer hereby makes to MBIA the same representations, warranties and the same
covenants made by the Issuer, as are set forth in each of the Related Documents
which representations, warranties and covenants, as well as the related defined
terms contained therein, are incorporated herein by this reference with the
same limitations imposed in such Related Document but with the same effect as
if each and every such representation, warranty and covenant and defined term
were set forth herein in its entirety.
Any amendment to such representations, warranties and covenants or
defined terms in any of the Related Documents and any termination, defeasance,
discharge or replacement of any of the Related Documents shall be effective to
amend, terminate, replace or discharge such representations, warranties,
covenants and defined terms of the specified documents if adopted in accordance
with their respective requirements, but shall not be effective to amend this
Agreement without the prior written consent of MBIA if such amendment,
termination, replacement or discharge shall materially adversely affect the
rights of MBIA hereunder.
(g)
The
Issuer will deliver to MBIA:
(i)
the
Issuer shall furnish to the Insurer (to the attention of the Surveillance
Department) as soon as practicable after the filing thereof, a copy of each
Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by the Issuer,
a copy of any audited financial statements of the Issuer, and any other
information reasonably requested, and during any Event of Default by the Issuer,
upon receipt by the Issuer, of an accountant’s management letter, the Issuer
will forward a copy of such management letter to MBIA;
(ii)
simultaneously
with the delivery of financial statements referred to in clause (i) above,
certificates of an Authorized Officer of the Issuer stating that (A) the Issuer
is in compliance with the provisions of Article II of this Agreement and (B)
after due inquiry there does not exist on the date of such certificate any
event of default or event which with notice or lapse of time or both would
5
constitute an Event of
Default of which the Issuer is aware or, if any event of default does exist,
stating that such event exists and setting forth the details thereof and the
action that the Issuer is taking or proposes to take with respect thereto;
(h)
The
Issuer agrees to permit MBIA, at MBIA’s expense, to examine and inspect, at any
reasonable time, upon reasonable notice, the books of record and account of the
Issuer relating to its transactions pursuant to the Indenture, and all other
records relating to its transactions pursuant to the Indenture and the Notes.
(i)
The
Issuer warrants that its obligations under this Agreement will remain
obligations of a corporation engaged principally in the sale, distribution
and/or transmission of natural gas, regulated by the Washington Utilities and
Transportation Commission, the Public Utility Commission of Oregon or the
utility regulatory body of any other state for so long as such operations and
any gas utility companies operating within the State, the State of Oregon and
any other state are generally subject to regulation.
(j)
Notwithstanding
anything to the contrary in the Indenture or any other Related Document, the Issuer
hereby agrees that it shall not consent to any acceleration of the Notes, other
than redemptions under the Indenture, without the prior written consent of
MBIA.
(k)
The
Issuer agrees not to use MBIA’s name in any public document including, without
limitation, a press release or presentation, announcement or forum without MBIA’s
prior consent; provided however, such prohibition on the use of MBIA’s name
shall not relate to the use of MBIA’s standard approved form of disclosure in
public documents issued in connection with the current Notes to be issued in
accordance with the terms of the MBIA Commitment; and provided further such
prohibition shall not apply to the use of MBIA’s name in order to comply with
public notice, public meetings or public reporting requirements.
(l)
The
Issuer will not create, incur, assume or suffer to exist any lien upon or with
respect to any of its real property, now owned or hereafter acquired, unless
the Issuer’s obligations under the Indenture have the benefit of the lien on a
parity basis.
(m)
The
Issuer will not merge with or into or consolidate with or into any other
Person, except that the Issuer may merge with any other Regulated Utility
Company,
provided
that, in each case, immediately after giving effect
thereto, (i) no event shall occur and be continuing which constitutes an Event
of Default, (ii) the Issuer shall not be liable with respect to any debt or
allow its Property to be subject to any Lien which it could not become liable
with respect to or allow its Property to become subject to under this Agreement
on the date of such transaction and (iii) the Issuer’s Net Worth shall be equal
to or greater than its Net Worth immediately prior to such merger.
(n)
The
Issuer agrees that, in the event of a Reorganization, unless otherwise
consented to by MBIA, the obligations of the Issuer under, and in respect of,
the Notes,
6
the Indenture and this
Agreement shall be assumed by, and shall become direct and primary obligations
of, a Regulated Utility Company.
(o)
The
Issuer will not sell or otherwise dispose of more than 10% of Assets calculated
with reference to all Asset Sales made by the Issuer and any Material
Subsidiaries during any twelve-month period.
(p)
The
Issuer shall not enter into any agreement nor shall it consent to or
participate in any arrangement pursuant to which Notes are tendered or
purchased, other than as permitted by the Indenture, for any purpose other than
the redemption and cancellation or legal defeasance of such Notes without the
prior written consent of MBIA.
(q)
The Issuer will maintain a minimum ratio of
Equity to Total Capitalization of 35%, tested as of the last day of each fiscal
quarter.
(r)
The
Issuer shall not amend any Related Documents without the prior written consent
of MBIA.
(s)
The
Issuer covenants that for so long as the Policy remains in effect it will not
issue secured obligations or pledge utility assets to secure any existing
obligation unless the Indenture is equally secured provided, however, that the
foregoing restriction shall not apply to Debt secured by any of the following:
(i)
mortgages
on any property existing at the time of acquisition thereof, including any
subsequent repairs, alterations and improvements thereto;
(ii)
mortgages
on property of a Person existing at the time such Person is merged into or
consolidated with the Issuer, or at the time of a sale, lease or other
disposition of the properties of such Person or a division thereof as an
entirety or substantially as an entirety to the Issuer, provided that such
mortgage as a result of such merger, consolidation, sale, lease or other
disposition is not extended to property owned by the Issuer immediately prior
thereto;
(iii)
mortgages
on property to secure all or part of the cost of acquiring, substantially
repairing or altering, constructing, developing or substantially improving such
property, or to secure indebtedness incurred to provide funds for any such
purpose or for reimbursement of funds previously expended for any such purpose,
provided such mortgages are created or assumed contemporaneously with, or
within 6 months after, such acquisition or completion of substantial repair or
alteration, construction, development or substantial improvement or within six
months thereafter pursuant to a commitment for financing arranged with a lender
or investor within such 6 month period;
(iv)
mortgages
in favor of the United States of America or any state thereof, or any
department, agency or instrumentality or political subdivision of the United
States of America or any state thereof, or for the benefit of holders of
securities issued by any such entity, to secure any Debt incurred for the
purpose
7
of financing all or any part
of the purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving the property subject to
such mortgages; or
(v)
any
extension, renewal or replacement (or successive extensions, renewals or replacements),
in whole or in part, of any mortgage referred to in the foregoing clauses (i)
to (iv), inclusive; provided, however, that the principal amount of
indebtedness secured thereby and not otherwise authorized by said clauses (i)
to (iv), inclusive, shall not exceed the principal amount of indebtedness, plus
any premium or fee payable in connection with any such extension, renewal or
replacement, so secured at the time of such extension, renewal or replacement.
ARTICLE III
AGREEMENT TO INDEMNIFY
Section 3.01
.
Indemnification.
To
the extent not prohibited by law, the Issuer shall indemnify MBIA against any
and all liability, claims, loss, costs, damages, fees of attorneys and other
expenses which MBIA may sustain or incur by reason of or in consequence of:
(a)
the
failure of the Issuer to perform or comply with the covenants or conditions of
this Agreement or any of the Related Documents;
(b)
enforcing
any covenants, conditions or legal obligations with respect to the Notes or the
transactions contemplated thereby, or under the Related Documents or this
Agreement that are required to be complied with by the Issuer, the Trustee, or
the Issuer;
(c)
any
action, proceeding (administrative, regulatory or legal) or suit threatened or
brought in connection with the Notes, the Related Documents, this Agreement or
with respect to the Issuer’s rights or obligations under the Indenture,
including all litigation or potential litigation, costs of defense and/or
settlement by MBIA of any such threatened or pending action, proceeding, suit
or judgment; or
(d)
recovering
or attempting to recover losses or expenses paid or incurred in connection with
the Notes, the Related Documents, the Policy, this Agreement or the
transactions contemplated hereby and thereby.
The Issuer agrees to reimburse MBIA immediately and
unconditionally upon demand, to the extent permitted by law, for all reasonable
expenses, including attorneys’ fees and expenses, incurred by MBIA in
connection with (i) the enforcement by MBIA of the Issuer’s obligations,
or the preservation or defense of any rights of MBIA, under the Related
Documents and any other document executed in connection with the issuance of
the Notes and (ii) any consent, amendment, waiver or other action with
respect to any Related Document, whether or not granted or approved, together
with interest on all such expenses from and including the date incurred to the
date of payment at the Reimbursement Rate.
In addition, MBIA reserves the right
8
to charge a commercially reasonable fee in connection
with its review of any such consent, amendment or waiver, whether or not
granted or approved.
An itemized statement of costs incurred by MBIA for
any of the purposes specified in this Article III shall, absent manifest
error, be prima facie evidence of the liability of the Issuer and, if the Issuer
fails to reimburse MBIA within 30 business days of receipt of such statement of
payments, interest shall be computed on such amount from the date of the
payment made by MBIA at the Reimbursement Rate.
Section 3.02
.
Survival of Indemnity.
Anything
to the contrary notwithstanding, this indemnity provision shall survive the
termination of this Agreement and shall survive until the statute of
limitations has run on any causes of action which arise from one of these
reasons and until all suits filed as a result thereof have been finally
concluded.
ARTICLE IV
PAYMENT, REIMBURSEMENT AND
OTHER RIGHTS OF MBIA
Section 4.01
.
Payment and Reimbursement Rights of MBIA
. The Issuer agrees to make the following
payments to MBIA:
(a)
On
or prior to the Issuance Date, the premium, as required to be paid pursuant to
paragraph 1 of the MBIA Commitment.
Such premium shall be nonrefundable without regard to (i) whether
MBIA makes any payment under the Policy, (ii) any other circumstances
relating to the Notes or (iii) provision being made for payment of the Notes
prior to maturity;
(b)
On
or prior to the Issuance Date, the amount required to reimburse MBIA in full
for its fees and expenses of outside counsel incurred in connection with the
transactions contemplated by this Agreement and the Related Documents;
(c)
The
reimbursement of all payments made by MBIA under the terms of the Policy or
this Agreement;
(d)
Upon receipt, to PricewaterhouseCoopers, LLP,
accountants to MBIA, the costs associated with the consent letter in the amount
of $4,000.00 to be billed directly by PricewaterhouseCoopers LLP;
(e)
Upon receipt, to Kutak Rock LLP, special
counsel to MBIA, the legal fees associated with this transaction;
(f)
All
other amounts required to be paid to MBIA by the Issuer pursuant to the terms
of this Agreement or in connection with the transactions contemplated by the Notes,
the Related Documents, this Agreement, and the Policy upon written notice from
MBIA of the amounts so owed;
(g)
Any
and all reasonable charges, fees, costs and expenses which MBIA may pay or
incur in connection with (i) the administration, enforcement, defense or
9
preservation of any
rights or security in this Agreement or any of the Related Documents,
(ii) the pursuit of any remedies thereunder or otherwise afforded by law
or equity, (iii) the violation by the Issuer of any law, rule or
regulation, or any judgment, order or decree applicable to it in connection
with, or affecting, this Agreement, any of the Related Documents or any of the
obligations hereunder or thereunder or (iv) any litigation or other
dispute in connection with this Agreement or any of the Related Documents or
the transactions contemplated hereby or thereby upon written notice from MBIA
of the amounts so owed;
(h)
Any
and all reasonable charges, fees, costs and expenses which MBIA may pay or
incur in connection with any amendment, waiver or other action with respect
thereto, or related thereto, whether or not executed or completed, upon the
tenth day following receipt of written notice from MBIA of the amounts so owed;
and
(i)
Interest
on the amounts owed in clauses (a), (b), (c), (d), (e) (f), (g) or (h), of
this Article IV
(i)
from
the date of any payment due or paid as described in clauses (a), (b), (c),(d)
or (e);
(ii)
from
the date of receipt of written notice from MBIA, as provided in clauses (f)
or (g); or
(iii)
from
the tenth day following receipt of written notice from MBIA, as provided in
clause (h),
in
each case at the Reimbursement Rate
.
If the interest provisions of this clause (i) shall result in an
effective rate of interest which, for any period, exceeds the limit of the
usury or any other laws applicable to the indebtedness created herein, then all
sums in excess of those lawfully collectible as interest for the period in
question shall, without further agreement or notice between or by any party
hereto, be applied as additional interest for any later periods of time when
amounts are outstanding hereunder to the extent that interest otherwise due
hereunder for such periods plus such additional interest would not exceed the
limit of the usury or such other laws, and any excess shall be applied upon
principal immediately upon receipt of such moneys by MBIA, with the same force
and effect as if the Issuer had specifically designated such extra sums to be
so applied and MBIA had agreed to accept such extra payment(s) as additional
interest for such later periods. In no
event shall any agreed-to or actual exaction as consideration for the
indebtedness created herein exceed the limits imposed or provided by the law
applicable to this transaction for the use or detention of money or for
forbearance in seeking its collection.
Section 4.02
.
Optional Deposits by MBIA
.
MBIA shall at any time, and from time to time, with respect to a payment
date on the Notes, have the option to deposit amounts with the Trustee for
either of the following purposes: (i) to provide funds in respect of the
payment of fees or expenses of any provider of services to the Trustee not
otherwise paid by the Issuer or (ii) to provide monies with respect to any
payment date on the Notes to the extent that without such
10
provision of funds, a claim would be required to be
made on the Policy. Any such amounts
provided by MBIA shall be reimbursable amounts as due hereunder.
ARTICLE V
SUBROGATION RIGHTS AND
SECURITY OF MBIA
Section
5.01
.
Subrogation Rights
.
To the extent of payments made and expenses incurred by MBIA in
connection with the Policy and this Agreement, MBIA shall be fully subrogated
to the Noteholders rights under the Indenture to seek payment of amounts owed
by the Issuer. The Issuer acknowledges
and agrees, that upon payment of a claim under the Policy, MBIA will be
subrogated to the rights of the Noteholders.
The Issuer will at any time, and from time to time, at the request of
MBIA execute any instrument, document or agreement, and take any other action,
that MBIA may consider necessary or desirable to effect these rights of
subrogation.
Section 5.02
.
Security
. Subject to
the security provisions of the Indenture, the Issuer agrees if, at any time the
obligations of the Issuer under the Indenture become secured, that it will
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, any and all financing statements, if applicable, and all other
further instruments as may be required by law or as shall reasonably be
requested by MBIA for the assignment, grant and transfer to MBIA of all the
Issuer’s right, title and interest in any collateral deposited with the Trustee
to secure said obligations. The Issuer
agrees that it will from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, any all financing statements,
if applicable, and any further instruments as may be required by law or as
shall reasonably be requested by MBIA for the maintenance of the security
interest described under this Article V and for the preservation and
protection of all rights of MBIA under this Article V. The parties hereto agree that with the
exception of the provisions of Article III, the covenants contained herein
shall survive the payment of the Notes and the defeasance of the Indenture and
shall be cancelled upon payment of all amounts due to the Insurer under this
Agreement.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01
.
Events of Default Described
.
The happening of any one or more of the following events shall
constitute an “Event of Default” and, upon the occurrence of any such Event of
Default, MBIA may exercise the remedies specified herein:
(a)
Failure
by the Issuer to make any payment required by Article III or IV hereof;
(b)
The
occurrence of events of bankruptcy, insolvency, reorganization, assignment or
receivership relating to the Issuer, whether voluntary or involuntary
including, without limitation, the commencement by the Issuer of a case or
proceeding under any applicable bankruptcy, insolvency, reorganization or other
similar law, consent by the Issuer to an order for relief in an involuntary
case under any such law, an
11
assignment for the
benefit of creditors or the taking of any other corporate actions in
furtherance of the foregoing;
(c)
Any
representation of or warranty by the Issuer made in Article II (a), (b), (c) or
(d) of this Agreement is untrue in any material respect when made;
(d)
Any
representation of or warranty by the Issuer made in this Agreement, other than
those in subparagraph (c) of this Section 6.01, or in the Related Documents is
untrue in any material respect;
(e)
Except
as otherwise provided in Section 6.01(a) above, the failure of the Issuer
to observe or perform in any material respect any covenant, condition or
provision of this Agreement, if such failure is not subject to cure or shall
not have been remedied or cured within 30 days after the Issuer’s receipt
of written notice thereof by MBIA;
(f)
The
occurrence and continuation of an event of default under any of the Related
Documents, if such event of default shall not have been cured or otherwise
remedied within any related cure period set forth in the applicable Related
Document;
(g)
Any
acceleration, other than redemptions under the Indenture, of the Notes without
the prior written consent of MBIA; or
(h)
Any
material provision of this Agreement or the Related Documents to which the Issuer
is a party shall at any time for any reason cease to be valid and binding,
unless by their terms they cease to be valid and binding, on the Issuer or
shall be declared to be null and void by a final, nonappealable order of a court
having competent jurisdiction, or the validity or enforceability of any thereof
shall be contested by the Issuer or any governmental agency or authority, or if
the Issuer shall deny that it has any further liability or obligation under
this Agreement or the Related Documents to which it is a party.
Section 6.02
.
Remedies
. Whenever an
Event of Default referred to in Section 6.01 hereof shall have happened
and be continuing, MBIA may take any one or more of the following remedial
steps:
(a)
Exercise
its rights of subrogation pursuant to the Indenture;
(b)
Exercise
any rights of subrogation it may have under the Policy;
(c)
Take
whatever other action at law or in equity as may appear necessary or desirable
to collect the amounts then due and thereafter to become due under this
Agreement or to enforce performance and observance of any obligation, agreement
or covenant of the Issuer under this Agreement or under any Related Document;
(d)
Demand
immediate payment of any or all amounts due under this Agreement; or
12
(e)
Pursue
any remedy it may have under any of the Related Documents or the Indenture.
Section 6.03
.
No Remedy Exclusive
.
Unless otherwise expressly provided, no remedy herein conferred upon or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under this Agreement or under any Related Document or existing at law or in
equity. No delay or omission to exercise
any right or power accruing under this Agreement or under any Related Document
upon the happening of any Event of Default set forth in Section 6.01
hereof shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient.
In order to entitle MBIA to exercise any remedy reserved to it in this
Article VI, it shall not be necessary to give any notice, other than such
notice as may be required in this Article VI.
ARTICLE VII
SETTLEMENT
MBIA shall have the exclusive right to decide and
determine whether any claim, liability, suit or judgment made or brought on the
Policy shall or shall not be paid, compromised, resisted, defended, tried or
appealed, and MBIA’s decision thereon, if made in good faith, shall be final
and binding upon the Issuer.
ARTICLE VIII
OBLIGATIONS OF THE ISSUER
ABSOLUTE
The payment obligations of the Issuer hereunder are
payable in accordance with the terms of the Indenture. The obligations of the Issuer to make
payments under this Agreement shall be absolute, unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances whatsoever, including, without limitation, the following
circumstances:
(a)
any
lack of validity or enforceability of any of the Related Documents;
(b)
any
amendment or waiver of or any consent to departure from all or any of the
Related Documents;
(c)
the
existence of any claim, setoff, defense or other right which the Issuer may
have at any time against the Trustee or any other person or entity other than
MBIA, whether in connection with this Agreement, the transactions contemplated
herein or in the Related Documents or any unrelated transactions;
(d)
any
statement or any other document presented under or in connection with the Policy
or the MBIA Commitment proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect whatsoever; or
13
(e)
payment
by MBIA under the Policy under circumstances which do not comply with the terms
of the Policy, provided, however, that such payments shall not have resulted
from negligence or willful misconduct on the part of MBIA.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01
.
Amendments, Changes and Modifications
. This Agreement may be amended, changed,
modified, altered or terminated only with the prior written approval of MBIA
and the Issuer.
Section 9.02
.
Governing Law
. This
Agreement shall be construed in accordance with the substantive laws of the
State, and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws.
Section 9.03
.
Notices
. All notices
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed as follows:
MBIA:
MBIA
Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio
Management–PCF
Telephone: (914) 273-4545
Facsimile: (914) 765-3799
Issuer:
Cascade
Natural Gas Corporation
222 Fairview Avenue
Seattle, WA 98124
Attention: Matt
McArthur, Senior Director, Finance
Telephone: (206)
381-6777
Facsimile: (206) 654-4025
Any party may, by notice given hereunder, designate
any further or different addresses to which subsequent notices, certificates or
other communications shall be sent
Section 9.04
.
Third-party Beneficiary
. MBIA shall be deemed a third-party
beneficiary of each of the Related Documents and entitled to enforce the terms
thereof as if a signatory thereto.
Section 9.05
.
Severability
. In the
event any provision of this Agreement shall be held invalid or unenforceable by
any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any other provision hereof.
Section 9.06
.
Counterparts
. This
Agreement may be executed in several counterparts, each of which shall be an
original and all of which together shall constitute but one and the same
instrument.
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Section 9.07
.
Primary Obligation
.
Payment of amounts due by the Issuer under this Agreement is a primary
obligation of the Issuer and such obligation is absolute and unconditional,
irrespective of any illegality, invalidity or unenforceability of or defect in
any provision of the Notes or of any obligations of the Issuer.
Section 9.08
.
Further Assurances and Corrective Instruments
. To the extent permitted by law, the Issuer
agrees that it will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and
such further instruments as may reasonably be required for carrying out the
intention of or facilitating the performance of this Agreement.
Section 9.09
.
No Rights Conferred on Others
. Nothing in this Agreement shall confer any
right upon any person other than MBIA and the Issuer.
Section 9.10
.
Term
. The term of this
Agreement shall commence on the date hereof and shall end on the date the Notes
and the interest thereon, and all amounts due and owing to MBIA under this
Agreement and all Related Documents and pursuant to any rights of subrogation
MBIA may have under this Agreement, the Policy, and the Indenture, are paid in
full.
Section
9.11
.
Payment
Procedure
. All payments to be made
to MBIA under this Agreement shall be made to MBIA in lawful currency of the United States
of America in immediately available funds at the notice address for MBIA as set
forth in this Agreement on the date when due.
Section 9.12
.
Conflicting Provisions
. To the extent any provisions of the Indenture
relating to the Notes conflict with the terms of this Agreement, the provisions
of this Agreement shall control for purposes of determining the rights and
obligations of the parties hereunder.
This agreement supercedes the terms of the MBIA Commitment.
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IN WITNESS WHEREOF, each of the parties hereto has
caused this Reimbursement and Indemnity Agreement to be executed in its
respective name by its duly authorized officer, all as of the date first above
written.
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MBIA INSURANCE
CORPORATION
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By
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/s/ Adam M. Carta
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Title
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Assistant
Secretary
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CASCADE NATURAL
GAS
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CORPORATION, as
Issuer
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By
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/s/ J.D.
Wessling
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Title
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Chief Financial
Officer
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Signature Page –
Reimbursement and Indemnity Agreement
Cascade Natural Gas
Corporation
5.25% Insured Quarterly Notes
Due
February 1, 2035
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