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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 18, 1996
_____________
CASCADE NATURAL GAS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Washington
(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-7196
(COMMISSION FILE NO.)
91-0599090
(IRS EMPLOYER IDENTIFICATION NO.)
222 Fairview Avenue North
Seattle, Washington 98109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(206) 624-3900
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
This report on Form 8-K is being filed to include as exhibits an
updated description of the registrant's common stock and related preferred
stock purchase rights and the registrant's restated articles of incorporation
and restated bylaws as recently amended.
(a) Financial Statements.
None
(b) Pro Forma Financial Information.
None
(c) Exhibits.
The exhibits hereto are listed in the Exhibit Index which
immediately precedes the exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CASCADE NATURAL GAS CORPORATION
(Registrant)
By /s/J.D. Wessling
J.D. Wessling
Vice President-Finance,
Chief Financial Officer
Dated: July 18, 1996
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EXHIBIT INDEX
No. Description
- -- -----------
3.1 Restated Articles of Incorporation of Cascade Natural Gas
Corporation as amended through March 28, 1996
3.2 Restated Bylaws of Cascade Natural Gas Corporation
99 Description of Common Stock and Related Preferred Stock Purchase
Rights of Cascade Natural Gas Corporation
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EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF CASCADE NATURAL GAS CORPORATION
We, the undersigned, RALPH E. BOYD and LARRY C. ROSOK, President and
Secretary respectively, of Cascade Natural Gas Corporation do hereby on behalf
of said Corporation restate in a single document the entire text of its
Articles of Incorporation, as previously amended, supplemented or restated to
the date hereof:
ARTICLE I
The name of this Corporation shall be Cascade Natural Gas Corporation.
ARTICLE II
The objects and purposes for which this Corporation is formed are and shall be
as follows:
1. To manufacture, produce, buy, sell, transport and in all other respects
dispose of and deal in all forms and types of natural and/or manufactured gas,
oil, petroleum and all forms and types of residual products thereof; supply
natural and/or manufactured gas and/or related petroleum products for lights,
heating, power and all other domestic and industrial uses, and to furnish the
same to public or private consumers both within and without the State of
Washington; to construct pipelines for the transportation of natural and/or
manufactured gas and other petroleum products and to buy, operate, lease and
sell the same; to acquire, construct, erect, lay down, maintain, enlarge,
alter, work and use all lands, buildings, easements, pipelines, machinery,
plants, stocks, motors, fittings, meters, other apparatus materials and things
and to supply all materials, products and things that may be necessary,
incident or convenient in connection with the production, transportation, use,
storage, regulation, measurement, supply and distribution of any of the
products of the Company; to engage in the transportation of natural and/or
manufactured gas, oil, petroleum and related products, either produced by this
Corporation or other persons or corporations by means of pipelines, railroads,
boats, barges, or other conveyances and to lease or sublease all or any part
thereof to or from other persons or corporations for the like purpose; to
acquire by purchase or otherwise, or by the right of exercise of eminent
domain, rights-of-way for natural and/or manufactured gas or other petroleum
products pipelines and to construct and maintain such pipelines for the
carriage and transportation of such products on its own behalf and hire; to
buy, acquire, sell, retain, deal in or otherwise dispose of, natural gas and
other petroleum properties and interest and any right, title or interest
therein; to carry on such other business pertaining to natural and
manufactured gas, oil, petroleum and similar products as may be found
necessary or desirable or such as is generally engaged in by a corporation of
this kind and to do all other acts and things required to be done in
connection therewith, either within or without the State of Washington, U.S.A.
2. To manufacture, purchase or otherwise acquire, own, mortgage, pledge,
sell, assign and transfer, or otherwise dispose of, to invest, trade, deal in
and deal with, goods, wares and merchandise and real and personal property of
every class and description.
3. To acquire by purchase, assignment or otherwise, letters patent of the
United States and the Territorial and other rights and licenses which may be
of value or advantage in the carrying out of the above mentioned objects, and
to dispose of the same by sale, license, assignment or otherwise.
4. To acquire, and pay for in cash, stock or bonds of this Corporation, or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
5. To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or
otherwise dispose of shares of the capital stock of, or any bonds, securities
or evidence of indebtedness created by any other corporation or corporations
organized under the laws of this State, or any other state, country, nation or
government, and while the owner thereof to exercise all rights, powers and
privileges of ownership.
6. To issue bonds, debentures, or obligations of this Corporation from time
to time, for any of the objects or purposes of the Corporation, and to secure
the same by mortgage, pledge, deed of trust, or otherwise.
7. To have one or more officers; to carry on all or any of its operations
and business and without restriction or limit as to amount, to purchase or
otherwise acquire, own, hold, mortgage, sell, convey or otherwise dispose of
real and personal property of every class and description, in any of the
states, districts, territories or colonies of the United States, and in any
and all foreign countries, subject to the laws of such states, district,
territory, colony or country.
8. To carry on in general any other business in connection with the
foregoing, whether manufacturing or otherwise, and to have and exercise all
the powers conferred by the laws of Washington upon corporations and to do any
or all of the things thereinbefore set forth to the same extent as natural
persons might or could do.
9. The foregoing clauses shall be construed both as objects and powers, and
it is specifically provided that the foregoing enumeration of specific powers
shall not be held to limit or restrict in any manner the powers of this
Corporation.
ARTICLE III
The time of the existence of this Corporation shall be perpetual.
ARTICLE IV
The office and principal place of business of this Corporation shall be
222 Fairview Avenue North, Seattle, King County, Washington 98109.
ARTICLE V
The capital of this Corporation shall consist of a total of sixteen million
ninety-six thousand five hundred sixty, (16,096,560) shares, divided into
ninety six thousand five hundred sixty (96,560) shares of 55 cents Cumulative
Preferred Stock, without nominal or par value (hereinafter referred to as
"Preferred Stock"), one million (1,000,000) shares of Preferred Stock, with a
par value of $1.00 per share (hereinafter referred to as the "$1.00 Preferred
Stock"), and fifteen million (15,000,000) shares of Common Voting Stock with a
par value of $1.00 per share (hereinafter referred to as "Common Stock").
The designations, preferences, privileges, voting power, restrictions, and
qualifications of shares of each class of stock are as follows:
1. The 55 cent Preferred Stock consists of -0- shares of Series A, 31,500
shares of Series B and 65,060 shares of Series C. All shares of all series of
55 cent Preferred Stock are alike in every particular, except as to the dates
from which dividends commenced to accrue and the commencement of the period
for establishment of sinking funds for redemption of shares, and all shares of
55 cent Preferred Stock are of equal rank and have the same powers,
preferences and rights, and are subject to the same qualifications,
limitations and restrictions, without distinction between the shares of
different series thereof.
2. The holders of the 55 cent Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, dividends from the surplus or
net profits of the Corporation at the rate of 55 cents per annum and no more,
payable quarterly on the first days of February, May, August, and November.
Such dividends shall be paid to or set apart for the holders of 55 cent
Preferred Stock before any Common Stock of the Corporation or any other class
of securities of the Corporation junior to the 55 cent Preferred Stock as to
dividends or assets ("Other Securities") shall be purchased, retired, or
otherwise acquired for valuable consideration by the Corporation or any
dividends shall be paid upon, or set apart for any of the Common Stock or
Other Securities of the Corporation, and shall be cumulative, so that if in
any quarterly dividend period, the dividend installment computed at the rate
of 55 cents per share per annum shall not have been paid upon or set apart for
the 55 cent Preferred Stock, the deficiency (without interest) shall be fully
paid or set apart for payment before any Common Stock or Other Securities of
the Corporation shall be purchased, retired, or otherwise acquired for
valuable consideration by the Corporation or any dividends shall be paid upon,
or set apart for the Common Stock or Other Securities.
3. In the event of voluntary liquidation, dissolution, or winding up of the
Corporation, the holders of the 55 cent Preferred Stock shall be entitled,
after the debts of the Corporation shall have been paid, to receive out of the
assets remaining, the then current redemption or call price per share thereof,
determined in accordance with the provisions hereinbelow concerning optional
redemption of 55 cent Preferred Stock, together with all dividends thereon
accrued or in arrears, whether or not earned or declared, before any payment
is made or assets set apart for the payment to the holders of the Common Stock
or Other Securities, and shall be entitled to no further payments or
distribution. In the event of the involuntary liquidation, dissolution, or
winding up of the Corporation, the holders of the 55 cent Preferred Stock
shall be entitled, after the debts of the Corporation shall have been paid, to
receive out of the assets remaining, $10.00 per share, together with all
dividends thereon accrued or in arrears, whether or not earned or declared,
before any payment is made or assets set apart for payment to the holders of
the Common Stock or Other Securities, and shall be entitled to no further
payments or distribution. If the assets remaining after payment of the
corporate debts be insufficient to pay the full amounts as hereinabove
provided, such assets as remain shall be divided among the holders of 55 cent
Preferred Stock in proportion to the number of shares of 55 cent Preferred
Stock held.
4. The Corporation may, at any time and from time to time, at the option of
the Board of Directors, unless prevented from doing so by law or by applicable
restrictive provisions herein, or in any mortgage or deed of trust or loan
agreement of the Corporation, redeem the whole or any part of the outstanding
55 cent Preferred Stock on any dividend payment date after the issuance
thereof, upon not less than 30 days' previous notice to the holders of record
of the 55 cent Preferred Stock to be redeemed, at a redemption or call price
for each share thereof equal to the sum of Ten Dollars ($10.00) plus all
dividends accrued or in arrears thereon, plus a premium of Ten Cents (.10) per
share as to shares of Series C. No premium shall be payable on redemption
with respect to redemption of shares of Series A or shares of Series B, at any
time, or with respect to shares of Series C redeemed after June 25, 1994;
provided, however, that if such redemption is effected with funds set apart
for the 55 cent Preferred Stock redemption sinking fund as provided herein,
then the same may be effected at a price per share equal to the sum of Ten
Dollars ($10.00) plus all dividends accrued or in arrears thereon and without
the payment of any premium. If less than all the shares of 55 cent Preferred
Stock are to be redeemed, the shares to be redeemed shall be selected in such
manner as the Board of Directors may determine. No shares of 55 cent
Preferred Stock shall be purchased, redeemed, or otherwise acquired for a
valuable consideration unless full cumulative dividends on the 55 cent
Preferred Stock for all past quarterly dividend periods shall have been paid,
or declared and a sum sufficient for the payment thereof set apart. The
holders of shares of 55 cent Preferred Stock called for redemption shall not,
from and after the date fixed in such notice for the redemption of such stock,
possess or exercise any rights as stockholders of the Corporation except the
right to receive from the Corporation the redemption price of such shares
together with all unpaid accrued dividends thereon, without interest, upon the
surrender thereof, unless default shall be made by the Corporation in
providing funds at the time and place specified in such notice for payment of
the redemption price.
5. While any shares of 55 cent Preferred Stock remain outstanding, within
each twelve (12) month period ending November 1, the Corporation, unless
prevented from doing so by law or by applicable restrictive provisions herein
or in any mortgage or deed of trust or loan agreement of the Corporation,
shall establish a sinking fund out of surplus or may establish a sinking fund
out of capital, and shall acquire therewith, either by the redemption thereof
or by the purchase thereof in such manner as the Board of Directors may
determine from time to time at not exceeding the sinking fund redemption price
thereof, and shall retire not less than the lesser of 17,948 shares of Series
A, 10,500 shares of Series B, and 14,500 shares of Series C or all remaining
shares of each series, respectively, of 55 cent Preferred Stock.
Provided, however, that if the Corporation shall be prevented by law or by
applicable restrictive provisions herein, or in any mortgage or deed of trust
or loan agreement of the Corporation, or for any other reason, from acquiring
during any twelve (12) month period the number of shares of 55 cent Preferred
Stock which, in the absence of such restriction it would be required to
acquire during such period, the aggregate deficit shall be made good in the
first succeeding twelve (12) month period in which the Corporation shall not
be prevented by such restrictions from retiring shares of 55 cent Preferred
Stock. Any shares of 55 cent Preferred Stock which in any such twelve (12)
month period are redeemed by the Corporation at the optional redemption price
hereinabove set forth, or are purchased by the Corporation but not applied to
meet the Corporation's sinking fund obligation for such twelve month periods
may be credited on the amount required to be acquired in any one or more of
the next following twelve (12) month periods which the Corporation may
designate. Shares of 55 cent Preferred Stock of the Corporation redeemed or
purchased shall not be reissued. So long as any share of 55 cent Preferred
Stock shall remain outstanding, no dividends, whether in cash, stock, or
otherwise, shall be paid or declared or any distribution be made with respect
to the Common Stock or Other Securities, nor shall any Common Stock or Other
Securities be purchased, retired or otherwise acquired for a valuable
consideration by the Corporation unless on or before the preceding November 1,
the Corporation shall have acquired the number of shares of 55 cent Preferred
Stock required to have been acquired by such date.
6. Except as otherwise provided herein or as otherwise made mandatory by
law, the holders of the 55 cent Preferred Stock shall have no right to vote
for the election of directors or for any other purpose and shall not be
entitled receive notice of any meeting of stockholders and all voting rights
shall be vested exclusively in the holders of the Common Stock and, to the
extent applicable, holders of Other Securities. If and whenever six full
quarterly dividends on 55 cent Preferred Stock shall be unpaid, then the
holders of the 55 cent Preferred Stock shall be entitled, voting separately as
a class and to the exclusion of the holders of the Common Stock and Other
Securities, to vote for the election of three of the directors of the
Corporation until all arrears and dividends on the 55 cent Preferred Stock
shall have been paid in full, and thereupon the voting right for the election
of three directors shall be divested from the holders of the 55 cent Preferred
Stock and revested in the holders of the Common Stock and, to the extent
applicable, holders of Other Securities, subject to revesting in the event of
each and every other subsequent such default. While any 55 cent Preferred
Stock is outstanding, the Corporation, without first obtaining the consent, by
the affirmative vote at a meeting called for that purpose, of the holders of
at least two thirds of the total number of shares of 55 cent Preferred Stock
then outstanding, shall not:
a. Increase the authorized number of shares of 55 cent Preferred Stock
or authorize or issue any stock having priority or preference over, or
ranking on a parity with, the 55 cent Preferred Stock as to dividends or
assets; or
b. Amend the provisions hereof so as to affect adversely any of the
preferences or other rights hereby given to the 55 cent Preferred Stock;
or
c. Merge or consolidate with or into any other corporation or
corporations or sell or transfer all or substantially all of its assets
as an entity.
7. After full cumulative dividends have been paid or declared and set apart
for payment upon issued and outstanding 55 cent Preferred Stock, as
hereinabove provided, and after the provisions herein or as established by the
Board of Directors with respect to any sinking fund for redemption of 55 cent
Preferred Stock have been complied with, holders of the Common Stock or Other
Securities shall be entitled to receive such further dividends as may from
time to time be declared by the Board of Directors of the Corporation out of
any remaining surplus or net profits. The term "full cumulative dividend"
whenever used in this article with reference to the 55 cent Preferred Stock of
any series shall be deemed to mean (whether or not in any dividend period or
any part thereof in respect of which such term is used there shall have been
surplus or net profits of the Corporation legally available for the payment of
such dividends) that amount which shall be equal to cumulative dividends at
the prescribed rate to date from the date of cumulation for such series
(including an amount equal to a dividend at such rate for the elapsed portion
of the current dividend period) less, in each case, the amount of all
cumulative dividends paid or deemed paid, upon the 55 cent Preferred Stock.
The term "date of cumulation" as used in this article with respect to 55 cent
Preferred Stock of any series means the date on which the dividend period
during which shares of 55 cent Preferred Stock of such series are first issued
shall begin or the date on which such shares are first issued when such issue
is made on a date on which a dividend period begins.
8. A consolidation, reorganization, or merger of the Corporation with any
other corporation or corporations shall not be considered a dissolution,
liquidation, or winding up of the Corporation within the meaning of such terms
as used herein.
9. The $1.00 Preferred Stock may be issued from time to time in one or more
series in any manner permitted by law and the provisions of these Restated
Articles of Incorporation of the Corporation, as determined from time to time
by the Board of Directors and stated in the resolution or resolutions
providing for the issuance thereof, prior to the issuance of any shares
thereof. The Board of Directors shall have the authority to fix and
determine, subject to the provisions of this Article V, the rights and
preferences of the shares of any series so established. Unless otherwise
provided in the resolution or resolutions establishing a series of shares of
$1.00 Preferred Stock, prior to the issue of any shares of a series so
established or to be established, the Board of Directors may, by resolution,
amend the relative rights and preferences of the shares of such series, and
after the issue of shares of a series whose number has been designated by the
Board of Directors, the resolution or resolutions establishing the series may
be amended by the Board of Directors to decrease (but not below the number of
shares of such series then outstanding) the number of shares of that series.
The 7.85% Preferred Stock, $1.00 par value was authorized by the Board of
Directors on December 20, 1991. The rights and preferences of the 7.85%
Preferred Stock are attached as Exhibit A.
The Series Z Junior Participating Preferred Stock, $1.00 par value, was
authorized by the Board of Directors on March 19, 1993. The rights and
preferences of the Series Z Preferred Stock are attached as Exhibit B.
ARTICLE VI
The amount of paid-in capital with which this Corporation shall begin to do
business shall be Five Hundred Dollars ($500.00) payable in cash or other
property taken at a fair valuation.
ARTICLE VII
The directors shall be nine (9) in number, but the number of directors may be
increased to any number not exceeding eleven (11) or decreased to any number
not less than three (3) at any annual meeting of the shareholders, or at any
special meeting of the shareholders called for that purpose, or by a
two-thirds vote of the then directors of the Corporation at any regular
meeting of the directors, or at any special meeting of the directors called
for that purpose.
The names and post office addresses of the directors of the Corporation in
office at the time of the adoption of these Restated Articles and on the date
hereof, who shall serve until the 1996 Annual Meeting of Shareholders, and
until their successors are elected and qualify are as follows:
Carl Burnham, Jr. P.O. Box S
Ontario, Oregon 97914
Melvin C. Clapp 3608 S.W. 328th Street
Federal Way, Washington 98023
David A. Ederer 4919 N.E. Laurel Crest Lane
Seattle, Washington 98105
Howard L. Hubbard 5320 N.W. Edgebrook Place
Portland, Oregon 97229-1974
W. Brian Matsuyama 222 Fairview Avenue No.
Seattle, Washington 98109
Larry L. Pinnt 15306 N.E. 190th
Woodinville, Washington 98072
Brooks G. Ragen Suite 4300
999 Third Avenue
Seattle, Washington 98104
Andrew V. Smith 1600 Bell Plaza, Room 1802
Seattle, Washington 98191
Mary A. Williams 1234 McGilvra Boulevard E.
Seattle, Washington 98112
ARTICLE VIII
The Board of Directors of this Corporation shall have the authority to make
and alter By-Laws not inconsistent with the law or with the Articles of
Incorporation and subject to the power of the shareholders to change or repeal
such By-Laws.
ARTICLE IX
Except as may be otherwise provided by law, or by applicable restrictive
provisions of Article V hereof, as amended, or any mortgage, deed of trust or
loan agreement of the Corporation, the shares of stock of this Corporation,
whether Preferred or Common, may be issued by it from time to time without the
consent of any holder of any share thereof, in such manner, or amount of
shares of each said class of stock, and for such consideration in labor,
services, money or property, as from time to time may be fixed and determined
by the Board of Directors of this Corporation, and, except as so restricted,
the right, power and authority of said Board of Directors from time to time so
to authorize and order the issuance by this Corporation of the said shares of
each class of said stock and such number or amount of shares and for such
consideration in labor, services, money or property as from time to time said
Board of Directors may fix and determine, is hereby absolutely reserved to
said Board of Directors.
No holder of shares of the capital stock of any class of this Corporation
shall have any preemptive or preferential right of subscription to any shares
of any class of stock of this Corporation, whether now or hereafter
authorized, or to any obligations convertible into stock of this Corporation,
which may be issued or sold, nor any right of subscription other than such, if
any, as the Board of Directors in its discretion may from time to time
determine and at such price as the Board of Directors from time to time may
fix.
Payment or delivery to, or receipt by this Corporation of such consideration
as may be fixed and determined by the Board of Directors for the issuance of
any share or shares of its capital stock, as hereinbefore provided, shall
operate and be construed, deemed and held: (a) to discharge, release and
satisfy fully and absolutely all liability to the Corporation and/or to its
creditors now or at any time hereafter existing, of any subscriber for and/or
holder of any such share or shares so authorized to be issued in any way on
account of, founded upon, or arising out of any subscription for and/or
purchase of, and/or issuance of such share or shares, and (b) to constitute
such share or shares fully paid stock of the Corporation.
ARTICLE X
LIMITATION ON DIRECTOR LIABILITY
To the fullest extent permitted by Washington law at the time this Article
becomes effective or as may thereafter be in effect, a director of this
Corporation shall not be liable to this Corporation or its shareholders for
the monetary damages for his or her conduct as a director. Any amendment to
or repeal of this Article X shall not adversely affect any right of a director
of this Corporation hereunder with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS
To the fullest extent permitted by Washington law at the time this Article
becomes effective or as may be thereafter in effect, this Corporation is
authorized to indemnify any director of this Corporation. The Board of
Directors shall be entitled to determine the terms of such indemnification,
including advance of expenses, and to give effect thereto through the adoption
of By-Laws, approval of agreements, or by any other manner approved by the
Board of Directors. Any amendment to or repeal of this Article XI shall not
adversely affect any right of a director of this Corporation hereunder with
respect to any right to indemnification that arises prior to such amendment or
repeal.
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ARTICLE XII
BUSINESS COMBINATIONS/FAIR PRICE PROVISIONS
A. The following definitions shall apply for purposes of this Article XII:
1. The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Securities Exchange
Act of 1934 and the rules and regulations thereunder (the "Act") (or any
subsequent provisions replacing such Act, rules, or regulations) as in effect
on March 24, 1992 (the term "registrant" in said Rule 12b-2 meaning in this
case the Corporation).
2. The term "Beneficially Own," when used with respect to a person's
interest in shares of capital stock, shall mean that said person has or shares
(or has the right to acquire under any option, warrant, conversion right or
other right), directly or indirectly, the power to vote, the power to dispose
of, the power to direct the voting or disposition of, or the right to enjoy
the economic benefits of such shares.
3. The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation or a Subsidiary of the Corporation with or
into an Interested Shareholder (or an Affiliate or Associate of an Interested
Shareholder) or any merger of an Interested Shareholder (or an Affiliate or
Associate of an Interested Shareholder) into the Corporation or a Subsidiary
of the Corporation, (b) any sale, lease, exchange, transfer, encumbrance or
other disposition of Substantial Assets either of the Corporation (including
without limitation any securities of a Subsidiary) or of a Subsidiary of the
Corporation, to an Interested Shareholder (or an Affiliate or Associate of an
Interested Shareholder), (c) the issuance of any securities of the Corporation
or a Subsidiary of the Corporation to an Interested Shareholder (or an
Affiliate or Associate of an Interested Shareholder), (d) any
reclassification, exchange of shares or other recapitalization that would have
the effect of increasing the proportion of shares of Common Stock or other
capital stock of the Corporation or a Subsidiary of the Corporation
Beneficially Owned by an Interested Shareholder, or (e) any agreement,
contract, or other arrangement providing for any of the foregoing
transactions.
4. The term "Continuing Director" shall mean a director who was a
member of the Board of Directors of the Corporation immediately prior to the
time that the Interested Shareholder involved in a Business Combination became
an Interested Shareholder and who is not the Interested Shareholder or an
Affiliate or Associate of the Interested Shareholder.
5. "Fair Market Value" means (a) in the case of cash, the amount of
such cash; (b) in the case of stock, the highest closing sale price during the
30-day period immediately preceding the date in question of a share of such
stock on the composite tape for New York Stock Exchange Listed Stocks, or, if
such stock is not quoted on the composite tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on the principal
United States securities exchange registered under the Act on which such stock
is listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any similar system
then in use, or if no quotations are available, the fair market value on the
date in question of a share of such stock as determined by a majority of the
Continuing Directors in good faith; and (c) in the case of property other than
cash or stock, the fair market value of such property on the date in question
as determined in good faith by a majority of the Continuing Directors.
6. The term "Interested Shareholder" shall mean any person (other than
the Corporation or any Subsidiary and other than any profit-sharing, employee
stock ownership or other employee benefit plan of the Corporation or any
Subsidiary or any trustee of or fiduciary with respect to any such plan when
acting in such capacity) who is or has announced or publicly disclosed a plan
or intention to become the beneficial owner of Common Stock representing ten
percent (10%) or more of the votes entitled to be cast by the holders of all
then outstanding shares of Common Stock.
7. The term "person" shall mean any individual, firm, company, or
other entity and shall include any group comprised of any person and any other
person with whom such person or any Affiliate or Associate of such person has
any agreement, arrangement, or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting, or disposing of Common Stock.
8. The term "Subsidiary" means any company of which a majority of any
class of equity security is Beneficially Owned by the Corporation; provided,
however, that for the purposes of the definition of Interested Shareholder set
forth in paragraph 6 of this section A, the term "Subsidiary" shall mean only
a company of which a majority of each class of equity security is Beneficially
Owned by the Corporation.
9. The term "Substantial Assets" shall mean assets with a Fair Market
Value in excess of five percent (5%) of the total assets of the Corporation as
reported in the consolidated financial statements of the Corporation as of the
end of its most recent fiscal year ending prior to the time the determination
is made.
B. In addition to any vote or approval required by law, any Business
Combination shall require the affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding shares of capital stock of the
Corporation which are not Beneficially Owned by the Interested Shareholder and
its Affiliates or Associates involved in the Business Combination; provided,
however, that such eighty percent (80%) voting requirement shall not apply if:
1. The Business Combination is a merger, consolidation or exchange of
shares involving the Corporation which provides for the conversion of the
shares of Common Stock of the Corporation into cash, securities or other
property with a Fair Market Value per share of Common Stock not less than the
highest per share consideration (appropriately adjusted for stock splits,
stock dividends and other like charges) paid or given by the Interested
Shareholder and any of its Affiliates or Associates for any of their shares of
Common Stock; or
2. The Business Combination was approved by the Board of Directors of
the Corporation; provided that a majority of the Board of Directors consisted
of Continuing Directors and at least two-thirds of the Continuing Directors
voted to approve the Business Combination.
C. The provisions set forth in this Article XII may not be repealed or
amended in any respect unless such repeal or amendment is approved by the
affirmative vote of the holders of not less than eighty percent (80%) of the
outstanding shares of capital stock of the Corporation which are not
Beneficially Owned by an Interested Shareholder.
Restated Articles of Incorporation of Cascade Natural Gas Corporation, are
herein executed in duplicate by said Corporation, pursuant to the provisions
of RCW 23B.10.070, and correctly set forth without change the corresponding
provisions of the Articles of Incorporation as previously stated and amended
and supersede the original Articles of Incorporation and all amendments to
said Articles of Incorporation of Cascade Natural Gas Corporation.
<PAGE>
IN WITNESS WHEREOF, the undersigned officers of Cascade Natural Gas
Corporation have hereby executed in duplicate these Restated Articles of
Incorporation, and have hereunto set their hands this 28th day of March, 1996.
CASCADE NATURAL GAS CORPORATION
By /s/Ralph E. Boyd
Ralph E. Boyd
President
By /s/Larry C. Rosok
Larry C. Rosok
Secretary
<PAGE>
Exhibit A
CASCADE NATURAL GAS CORPORATION
STATEMENT OF RIGHTS AND PREFERENCES
OF THE 7.85% CUMULATIVE PREFERRED STOCK
1. Preference.
The preferences of each share of 7.85% Preferred with respect to dividend
payments and distributions of the Corporation's assets upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation shall be
equal to the preferences of every other share of 7.85% Preferred from time to
time outstanding in every respect and, except for Priority Stock and Parity
Stock, prior in right to such preferences of all other equity Securities of
the Corporation, whether now or hereafter authorized.
2. Voting Rights.
The Holders of 7.85% Preferred shall not, by virtue of their ownership
thereof, be entitled to vote upon any matter except as otherwise provided
herein or by law.
3. Liquidation Rights.
If the Corporation shall be voluntarily or involuntarily liquidated, dissolved
or wound up, at any time when any 7.85% Preferred shall be outstanding, each
then outstanding share of 7.85% Preferred shall entitle the Holder thereof to
a preference against the Property of the Corporation available for
distribution to the Holders of the Corporation's equity Securities equal to
the sum of $100 plus an amount equal to all unpaid dividends accrued on such
share to the date of payment of such preference, whether or not earned,
whether or not funds of the Corporation are legally available for the payment
of dividends and whether or not such dividends have been declared by the Board
(the "Liquidation Amount"); provided, however, that if liquidation,
dissolution or winding up occurs within 120 days subsequent to an issuance of
Excess Preferred, the Liquidation Amount, in lieu of the amount set forth
above, shall instead be the amount that would be payable pursuant to Section
6.A(ii) hereof if the 7.85% Preferred were redeemed pursuant to that Section.
All of the preferential amounts to be paid to the Holders of 7.85% Preferred
in connection with the liquidation, dissolution or winding up of the
Corporation as provided in this Section 3 shall be paid or set apart for
payment in cash (a) after the payment or setting apart for payment of all
preferential amounts to be paid or set apart for payment with respect to
Priority Stock, whether now or hereafter authorized, (b) simultaneously with
preferential amounts to be paid or set apart for payment with respect to
Parity Stock, whether now or hereafter authorized, and (c) before the payment
or setting apart for payment of any amount with respect to Junior Stock,
whether now or hereafter authorized, or the distribution of any Property of
the Corporation other than cash with respect to such Junior Stock. A
consolidation, reorganization or merger of the Corporation with any other
corporation or corporations shall not be considered a dissolution, liquidation
or winding up of the Corporation within the meaning of such terms as used
herein.
4. Dividends.
Commencing on the date of issuance, so long as any 7.85% Preferred shall be
outstanding, each Holder of outstanding 7.85% Preferred shall be entitled to
receive dividends in cash at the rate of $7.85 per annum per share thereof,
out of any funds legally available therefor, payable on the first day of
February, May, August and November of each year as and when declared by the
Board. Such dividends shall be cumulative on each such share from the date of
issuance thereof, whether or not earned, whether or not funds of the
Corporation are legally available for the payment of dividends, and whether or
not declared by the Board, so that if the full dividends in respect of any
previous quarterly dividend period shall not have been paid on the 7.85%
Preferred at the time outstanding, whether or not earned, whether or not funds
of the Corporation are legally available for the payment of dividends, and
whether or not declared by the Board, the deficiency shall be fully paid on or
declared and set apart for such shares (without interest) before any dividend
or other distribution shall be paid on or declared or set apart for any other
equity Securities of the Corporation, whether now or hereafter authorized,
other than dividends on Parity Stock paid, declared or set apart in the manner
permitted by Section 12(E) hereof, or dividends on Priority Stock, and before
any redemption, retirement, purchase or other acquisition of any other equity
Securities of the Corporation, whether now or hereafter authorized, other than
a redemption, retirement, purchase or other acquisition of Parity Stock made
in the manner permitted by Section 12(E) hereof or a redemption, retirement,
purchase or other acquisition of Priority Stock.
5. Mandatory Redemption.
The Corporation shall make a mandatory redemption in cash of all outstanding
shares of the 7.85% Preferred on November 1, 1999, in accordance with the
procedures set forth in this Section 5 and in Section 7 hereof, at a
redemption price equal to the Liquidation Amount.
The Corporation shall mail a notice ("Mandatory Redemption Notice") not later
than September 15, 1999, of a redemption pursuant to this Section 5 to each
Holder of 7.85% Preferred by registered or certified mail, postage prepaid, to
such Holder's address as shown on the books and records of the Corporation.
The Notice shall state (i) the Redemption Date, which is November 1, 1999, and
(ii) the redemption price, accompanied by the calculation of such price set
out in reasonable detail.
6. Redemption at the Option of the Holder.
A. Optional Redemption. Notwithstanding any other provision contained
herein, after the occurrence of a Redemption Event, each Holder of outstanding
7.85% Preferred shall have the right, in accordance with the procedures set
forth in this Section 6 and in Section 7 hereof, to require the Corporation to
redeem all shares of 7.85% Preferred held by such Holder for the following
price:
(i) if the Redemption Event is a Ratings Downgrade, Dividend or
Redemption Shortfall or Restrictive Arrangement, at a price per
share equal to the Liquidation Amount;
(ii) if the Redemption Event is Excess Preferred, at a price per
share as set forth below, together with an amount equal to
dividends accrued and unpaid thereon to the date of payment,
whether or not earned, whether or not funds of the Corporation are
legally available for the payment of dividends, and whether or not
declared by the Board:
<PAGE>
If the Redemption Event Occurs Price
During the Twelve Months Ended Per Share
------------------------------ ---------
December 31, 1992......................... $107.85
December 31, 1993......................... $106.73
December 31, 1994......................... $105.61
December 31, 1995......................... $104.49
December 31, 1996......................... $103.36
December 31, 1997......................... $102.24
December 31, 1998......................... $101.12
December 31, 1999......................... $100.00
B. Form of Optional Redemption Notice. Within 7 days after the occurrence
of a Redemption Event, the Corporation shall mail a notice ("Optional
Redemption Notice") to each Holder of 7.85% Preferred by registered or
certified mail, postage prepaid, to such Holder's address as shown on the
books and records of the Corporation. The Notice shall state that a
Redemption Event has occurred, describe the Redemption Event in reasonable
detail, and offer to redeem all shares of 7.85% Preferred owned by such Holder
at the appropriate price, as set forth in Section 6.A hereof. The Notice
shall also state (i) the Redemption Date, which shall be a date not less than
30 nor more than 90 days after the date of the Optional Redemption Notice, and
(ii) the redemption price, accompanied by the calculation of such price set
out in reasonable detail. The Notice shall request that such Holder notify
the Corporation in writing not more than 20 days after such Holder receives
the Notice whether or not such Holder elects to have the Corporation redeem
all of the shares of 7.85% Preferred held by such Holder at the redemption
price. The Notice shall also inform such Holder that failure to respond to
the redemption offer within such 20 day period shall be deemed to be a
rejection of the offer. Redemptions made pursuant to Section 6 hereof shall
be of all and not a part of the shares of 7.85% Preferred held by a Holder,
and no Holder shall be entitled to cause such Holder's shares of 7.85%
Preferred to be redeemed unless all nominees and Affiliates of such Holder, if
any, which are Holders of shares of 7.85% Preferred have elected to have the
Corporation redeem all shares of 7.85% Preferred held by them.
7. Provisions Applicable to All Redemptions.
A. Manner of Redemption. On the Redemption Date, the Corporation
shall pay in cash to each Holder of 7.85% Preferred with respect to each
share of 7.85% Preferred held by such Holder an amount equal to the
redemption price in effect on the Redemption Date, such payment to be
made by Fedwire transfer of immediately available funds or by certified
or official bank check transmitted to such Holder by registered or
certified mail, postage prepaid, to such Holder's address as shown on the
books and records of the Corporation.
B. Effect of Payment. If on the Redemption Date funds necessary for
the redemption of all the 7.85% Preferred then outstanding, if the
redemption occurs pursuant to Section 5 hereof, or funds necessary for
the redemption of the 7.85% Preferred then held by Holders electing to
have such shares redeemed, if the redemption occurs pursuant to Section 6
hereof, shall have been paid as provided for in Section 7.A hereof, then
from and after the Redemption Date, the shares of 7.85% Preferred with
respect to which such payment has been made shall be deemed to be
redeemed, and the Holders of such shares of 7.85% Preferred shall cease
to be Stockholders of the Corporation with respect to such shares of
7.85% Preferred, and shall have no rights with respect thereto from and
after the Redemption Date. Surrender of the certificate or certificates
evidencing 7.85% Preferred shall not be required in connection with the
redemption thereof.
C. No Reissuance of 7.85% Preferred. All shares of 7.85% Preferred
redeemed as hereinabove required shall be retired and canceled and shall
not be reissued; provided, however, that each such share, after being
retired and canceled, shall be restored to the status of an authorized
but unissued share of Preferred Stock without designation as to series
and may thereafter be issued as a share of Preferred Stock not designated
7.85% Preferred.
8. Limitation on Additional Issuance of Preference Stock.
Subject to the terms and conditions of this Statement of Rights and
Preferences the Corporation may from time to time authorize and issue
additional shares of Preference Stock unless Earnings Available for Payment of
Interest Charges and Dividends for the twelve consecutive calendar months
immediately preceding the calendar month in which such Stock is issued is less
than 150% of the aggregate of (i) all interest paid or accrued on Indebtedness
of the Corporation during the twelve consecutive calendar months immediately
preceding the calendar month in which such Stock is issued, plus (ii) the
dividends paid or accrued on all shares of all classes and series of
Preference Stock during the twelve consecutive calendar months immediately
preceding the calendar month in which such Stock is issued, for such purpose
treating such Stock as having been outstanding throughout such twelve-month
period (the "Dividend Coverage Test"). Prior to authorizing or issuing any
additional shares of Preference Stock, the Chief Financial Officer or
Treasurer of the Corporation shall certify that the Dividend Coverage Test has
been met as of the date of issuance of the additional shares of Preference
Stock, and such certification shall be sent to each Holder of 7.85% Preferred,
by registered or certified mail, postage prepaid, to such Holder's address as
shown on the books and records of the Corporation.
9. Contingent Voting Rights.
If at any time any Voting Right Event shall occur, each outstanding share of
7.85% Preferred shall entitle the Holder thereof to one vote and each
outstanding share, if any, of Parity Stock then entitled to vote for the
election of directors shall entitle the Holder thereof to that number of votes
per such share as is calculated by dividing the original issue price of such
share by 100, and the Holders of 7.85% Preferred and the Holders of such
Parity Stock shall as a class be entitled to elect three directors of the
Corporation and the Holders of other equity Securities of the Corporation then
entitled to vote for the election of directors shall be entitled to elect the
remaining members of the Board. At such time as the Voting Right event which
gave rise to the exercise of the voting rights provided for in this Section 9
has been cured by waiver, payment or otherwise, and all other events creating
a Voting Right Event, if any, shall have been cured by waiver, payment or
otherwise, the right of the Holders of 7.85% Preferred and such Parity Stock
so to vote as provided in this Section 9 shall cease, subject to renewal from
time to time upon the same terms and conditions. Notwithstanding anything
herein to the contrary, the Holders of 7.85% Preferred and Parity Stock shall
not have the aforesaid voting rights at any time that the Holders of Senior
Preferred have elected three directors to the Board pursuant to Article V,
Section 6 of the Restated Articles of Incorporation; provided, however, that
at such time as either the right to elect directors by the Holders of Senior
Preferred ceases or the Holders of Senior Preferred shall decline to elect
three directors to the Board, if a Voting Right Event is then in existence the
Holders of 7.85% Preferred and Parity Stock shall be entitled to exercise the
rights contained in this Section 9, and provided, further, that if at any time
that a Voting Right Event is in existence the Holders of Senior Preferred have
elected one or two directors to the Board pursuant to such Article V,
Section 6, the Holders of 7.85% Preferred and Parity Stock shall be entitled
to elect a number of directors to the Board equal to the difference between
three and the number of directors elected by the Holders of Senior Preferred,
subject to removal if the Holders of Senior Preferred thereafter seek to fully
exercise their right to elect directors.
At any time after the voting power to elect members of the Board shall have
become vested in the Holders of 7.85% Preferred as provided in this Section 9,
either alone or as a class with the Holders of Parity Stock then entitled to
vote for the election of directors, if any, the Secretary of the Corporation
may, and, upon the written request of the record Holders of that number of
outstanding shares of 7.85% Preferred which equal, in the aggregate, to at
least twenty percent of the number of shares of 7.85% Preferred then
outstanding, addressed to him at the principal office of the Corporation
shall, call a special meeting of the Holders of 7.85% Preferred and the
Holders of such Parity Stock, to be held at the principal office of the
Corporation and upon not more than fifteen days notice. If such meeting shall
not be so called within five days after personal service of the request, or
within ten days after mailing of the same by registered or certified mail,
postage prepaid, within the United States of America, then the record Holders
of that number of outstanding shares of 7.85% Preferred which equal, in the
aggregate, at least ten percent of the number of shares of 7.85% Preferred
then outstanding may designate in writing one of their number to call such
meeting, and the Person so designated may call such meeting at the place above
provided and upon not less than ten days notice and for that purpose shall
have access to the stock books of the Corporation. The Persons elected as
directors by the Holders of 7.85% Preferred and the Holders of such Parity
Stock at such meeting and the Persons so elected as directors at each
subsequent annual meeting of the Corporation's stockholders, together with
such individuals, if any, as may from time to time be elected as directors by
the Holders of the other equity Securities of the Corporation then entitled to
vote for the election of directors, shall constitute the duly elected
directors of the Corporation. Any vacancy which shall arise for any reason
with respect to a director elected by the Holders of such Parity Stock and the
Holders of 7.85% Preferred shall be filled by action of the remaining
directors so elected, or if there be none, by the Holders of Parity Stock
entitled to vote for the election of directors at the time that such vacancy
arises, if any, and the Holders of 7.85% Preferred at a meeting called in the
manner set forth hereinabove and voting in the manner set forth hereinabove.
Whenever the voting power of the Holders of 7.85% Preferred has ceased as
hereinabove in this Section 9 is provided, the term of office of the Persons,
if any, who are at the time directors of the Corporation who were elected by
the Holders of 7.85% Preferred and the Holders of Parity Stock in accordance
with the preceding provisions of this Section 9 shall terminate.
10. Restricted Payment Limitation.
If at any time any Restricting Event shall occur, the Corporation shall not
declare or make any Restricted Payments. At the time such Restricting Event
has been cured by waiver, payment or otherwise, and all other events creating
a Restricting Event, if any, shall have been cured by waiver, payment or
otherwise, the prohibition provided for in this Section 10 shall cease,
subject to renewal from time to time upon the same terms and conditions.
11. Pre-emptive Rights.
The Holders of 7.85% Preferred shall not have any pre-emptive rights upon the
issuance or sale of shares of Stock of the Corporation of any class or series,
whether now or hereafter authorized, or any Securities exchangeable for or
convertible into such Stock.
12. Protective Provisions.
As long as any shares of 7.85% Preferred are outstanding, the Corporation
shall not, without the approval by the vote or written consent of the Holders
of not less than 66-2/3% (or more if required by law or such other amount as
is stated herein) of the outstanding shares of 7.85% Preferred:
(A) Amend or repeal any provision of, or add any provision to, the
Restated Articles of Incorporation or By-Laws if such action would alter
or change the 7.85% Preferred or the powers, preferences, rights,
qualifications, limitations and/or restrictions of the 7.85% Preferred;
(B) Amend or repeal any provision of, or add any provision to, this
Statement of Rights and Preferences (except that the approval of the
Holders of not less than 100% of the outstanding shares of 7.85%
Preferred shall be required for amendments, repeals or additions
affecting the dividend rate of the 7.85% Preferred, cumulation of the
dividend of the 7.85% Preferred, the mandatory redemption of all then
outstanding shares of 7.85% Preferred on November 1, 1999 at the
redemption price stated in Section 5 hereof, or the redemption of 7.85%
Preferred at the option of a Holder due to a Redemption Event at the
redemption prices set forth in Section 6.A hereof):
(C) Issue any shares of Senior Preferred or reclassify any shares of
any Security into shares of Senior Preferred;
(D) Issue any shares of Priority Stock other than Senior Preferred or
reclassify any shares of any Security into shares of Priority Stock other
than Senior Preferred if the effect of such issuance or reclassification
would be to increase the stated value, as reflected in the Corporation's
capital account, of all outstanding Priority Stock, or the aggregate
preference payable upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation with respect to all
outstanding Priority Stock, to an amount in excess of $2,400,000
(including issuances or reclassifications of any shares of Priority Stock
pursuant to a consolidation or merger of the Corporation with any Person,
calculated on a pro forma basis combining the consolidated or merged
entities (other than a merger with another corporation in which the
Corporation is the surviving corporation which does not result in any
reclassification or change--other than a change in par value, or from par
value to no par value, or from no par value to par value--of outstanding
shares of the Corporation's Stock of any class or series, whether now or
hereafter authorized)); provided, however, that if the Corporation
proposes to issue any shares of Stock that the Board deems to be
Preference Stock but that the Holders of not less than a majority of the
outstanding shares of 7.85% Preferred deem to be Priority Stock, then
such Holders shall notify the Corporation of their determination,
specifying the particular terms of such shares they believe cause such
shares to be Priority Stock, pursuant to the procedures set forth in
Section 13 hereof, and if the Corporation, by action of the Board, amends
this Statement of Rights and Preferences to incorporate such particular
terms then, subject to the approval of the Holders of not less than a
majority of the outstanding shares of 7.85% Preferred of the text of such
amendment to this Statement of Rights and Preferences, which shall not be
unreasonably withheld, the proposed issue of Stock may be issued, except
that, unless approved by the Holders of not less than 100% of the
outstanding shares of 7.85% Preferred, no substitution shall be made with
respect to the dividend rate of the 7.85% Preferred, cumulation of the
dividend of the 7.85% Preferred, the mandatory redemption of all then
outstanding shares of 7.85% Preferred on November 1, 1999 at the
redemption price stated in Section 5 hereof, or the redemption of 7.85%
Preferred at the option of a Holder due to a Redemption Event at the
redemption prices set forth in Section 6.A hereof;
(E) Make any payments to the Holders of, or with respect to any, Parity
Stock, by means of dividends or mandatory redemption payments,
(1) unless all such payments and all payments in connection with
optional redemptions pursuant to Section 6 hereof then due on the
7.85% Preferred have been made in full, or
(2) if any such payment or any payment in connection with
optional redemptions pursuant to Section 6 hereof is then due on
the 7.85% Preferred but has not been made in full, or if any such
payment is then due on Parity Stock but has not been made in full,
unless partial payments are made on the 7.85% Preferred and on
Parity Stock so that, with respect to each of the 7.85% Preferred
and Parity Stock, such partial payments are identical fractions of
the amounts then due;
(F) Make any optional redemptions of any Parity Stock, unless, in each
such case,
(1) all redemptions of 7.85% Preferred required to be made
pursuant to Section 5 or 6 hereof to the date of such optional
redemption of Parity Stock have been made, and
(2) all dividends accrued on the 7.85% Preferred payable thereon
to the date of such optional redemption of Parity Stock, whether or
not earned or declared, whether or not funds are legally available
for the payment of dividends and whether or not declared by the
Board, have been paid in full; or
(G) Consolidate or merge with any other Person unless immediately
following the consummation of such consolidation or merger the
Corporation, on a pro forma basis combining the consolidated or merged
entities, would be able to issue at least one share of Preference Stock
in addition to all then outstanding Preference Stock without violation of
the Dividend Coverage Test.
13. Substitution Procedures Pursuant to Section 12.D hereof.
In the event the Corporation proposes to issue any additional shares of
Preference Stock, the Corporation shall send a written notice to each Holder
of 7.85% Preferred by certified or registered mail, postage prepaid, to such
Holder's address as shown on the books and records of the Corporation, at
least 30 days prior to the proposed issuance of the additional shares of
Preference Stock. The notice shall set forth in reasonable detail the powers,
preferences, rights, qualifications, limitations and/or restrictions of the
Preference Stock proposed to be issued. If the Holders of not less than a
majority of the outstanding shares of 7.85% Preferred deem such shares to be
Priority Stock they shall so notify the Corporation in written notices sent to
the Corporation at its principal office, or such other place as may be
designated in the notice sent by the Corporation pursuant to this Section 13,
by certified or registered mail, postage prepaid, within 20 days after
transmittal by the Corporation of its notice, such notices sent by such
Holders to specify which particular terms of such shares they believe cause
such shares to be Priority Stock, and the Corporation thereupon shall either
(i) by action of the Board amend this Statement of Rights and Preferences
(subject to the provisions of Section 12.D hereof and to the approval of the
Holders of not less than a majority of the outstanding shares of 7.85%
Preferred of the text of such amendment, which shall not be unreasonably
withheld) to incorporate such particular terms and, within 10 days after
notice of such approval is received at the place specified above, to file an
amendment to the Statement of Rights and Preferences pertaining to the 7.85%
Preferred setting forth such amendment of this Statement of Rights and
Preferences with the Secretary of State of Washington, or (ii) not so amend
this Statement of Rights and Preferences and not issue the proposed additional
shares of Stock. Within 45 days after transmittal by the Corporation of its
notice, the Corporation shall notify all Holders of outstanding shares of
7.85% Preferred of the action taken by a notice sent to each such Holder by
certified or registered mail, postage prepaid, to such Holder's address as
shown on the books and records of the Corporation, and if such action is as
set forth in clause (i), such notice shall be accompanied by a copy of the
amendment to the Statement of Rights and Preferences of the 7.85% Preferred
certified by the Secretary of State of Washington as having been filed.
14. Covenant Regarding Redemption.
Following the issuance of the first share of 7.85% Preferred pursuant to this
Statement of Rights and Preferences, the Corporation will not, and will not
permit any Subsidiary to, become a party to or bound by any indenture,
agreement, instrument, Indebtedness, charter provision or security, under the
terms of or pursuant to which the Corporation's obligation to redeem any of
the 7.85% Preferred pursuant to Sections 5 or 6 hereof will in any way be
restricted or eliminated, nor will the Corporation modify or amend or permit
any Subsidiary to modify or amend any such indenture, agreement, instrument,
Indebtedness, charter provision or security existing at the time of such
issuance to add any provision restricting or eliminating such obligation or to
make any such provision contained therein more restrictive.
15. Definitions.
The following definitions shall apply for the purposes of this Statement of
Rights and Preferences:
"Affiliate" shall mean as to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such
Person. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of any Person, whether through the ownership
of voting securities or by contract or otherwise.
"Board" shall mean the Board of Directors of the Corporation.
"By-Laws" shall mean the By-Laws of the Corporation, as amended.
"Common" shall mean the Corporation's Common Stock, par value $1.00 per
share, and any Stock into which such Common Stock may hereafter be
changed.
"Corporation" shall mean Cascade Natural Gas Corporation.
"Dividend Coverage Test" is defined in Section 7 hereof.
"Dividend or Redemption Shortfall" shall mean that the funds available to
the Corporation as of the close of business on each December 31 on which
any shares of 7.85% Preferred are outstanding for the payment of
dividends on and the redemption of all then outstanding shares of 7.85%
Preferred, Priority Stock and Parity Stock under the terms of any then
outstanding indenture, agreement, instrument, security or Indebtedness of
or binding upon the Corporation or any Subsidiary are less than the
aggregate of (i) the amount of all dividends that, by the respective
terms of such Stock, will be payable or will accrue on such Stock as
dividends between such date and November 1, 1999, plus (ii) the greatest
amount (whether due to premiums payable upon redemption or otherwise)
that, by the respective terms of such Stock, may be payable to redeem
such Stock on or prior to November 1, 1999 (other than redemptions at the
option of the Corporation). The computation of the amount of funds so
available shall be made by the Chief Financial Officer or Treasurer of
the Corporation, and a written statement setting forth such computation
in reasonable detail shall be sent by April 10 of the immediately
succeeding year to each Holder of 7.85% Preferred by certified or
registered mail, postage prepaid, at the Holder's address as shown on the
books and records of the Corporation.
"Earnings Available for Payment of Interest Charges and Dividends" for
any period shall mean the lesser of (i) the maximum amount available for
the payment of dividends on and the redemption of Preference Stock
imposed by the terms of any indenture, agreement, instrument, security,
or Indebtedness of or binding upon the Corporation or any Subsidiary, or
(ii) the income before interest charges and income taxes of the
Corporation, determined in accordance with generally accepted accounting
principles. In calculating the amount described in clause (ii), no
adjustment shall be made for (a) profits or losses from sales of Property
carried in plant or investment accounts of the Corporation or any
Subsidiary, or from the reacquisition of any Securities, or taxes on, in
respect of, or measured by such profits or losses, (b) charges for the
elimination, retirement or amortization of utility plant adjustment or
acquisition accounts or other intangibles, (c) gains from non-utility
operations, (d) the write-up of assets, (e) extraordinary gains or
(f) adjustments to earned surplus (including tax adjustments required by
generally accepted accounting principles) applicable to any prior period.
"Excess Preferred" means that the Corporation has issued shares of
Priority Stock or Parity Stock following the issuance of the first share
of 7.85% Preferred pursuant to this Statement of Rights and Preferences,
and, by virtue of any indenture, agreement, instrument, security or
Indebtedness of or binding upon the Corporation or any Subsidiary in
existence or outstanding as of the date of the issuance of such Priority
Stock or Parity Stock, the funds available to the Corporation as of the
date of issuance of such shares of Priority Stock or Parity Stock for the
payment of dividends on and the redemption of all then outstanding shares
of Preference Stock, including, without limitation, the 7.85% Preferred,
are less than the aggregate of (i) the amount of all dividends that, by
the respective terms of such Preference Stock, will be payable or will
accrue on such Preference Stock as dividends between such date of
issuance and November 1, 1999, plus (ii) the greatest amount (whether due
to premiums payable upon redemption or otherwise) that, by the respective
terms of such Stock, may be payable to redeem such Stock on or prior to
November 1, 1999 (other than redemptions at the option of the
Corporation). The computation of the amount of funds so available shall
be made by the Chief Financial Officer or Treasurer of the Corporation as
of the date of each issuance of Priority Stock or Parity Stock following
the issuance of the first share of 7.85% Preferred pursuant to this
Statement of Rights and Preferences, and a written statement setting
forth such computation in reasonable detail shall be sent within ten days
after the date of each such issuance by certified or registered mail,
postage prepaid, at the Holder's address as shown on the books and
records of the Corporation.
"Holders" shall mean the Persons who shall, from time to time, own,
of record or beneficially, any Security. The term "Holder" shall
mean one of the Holders.
"Indebtedness" of any corporation, shall mean the principal of (and
premium, if any) and unpaid interest on:
(i) indebtedness which is for money borrowed from others;
(ii) indebtedness guaranteed, directly or indirectly, in any
manner by such corporation, or in effect guaranteed, directly
or indirectly, by such corporation through an agreement,
contingent or otherwise, to supply funds to or in any other
manner invest in the debtor or to purchase indebtedness, or
to purchase Property or services primarily for the purpose of
enabling the debtor to make payment of the indebtedness or of
assuring the owner of the indebtedness against loss;
(iii) all indebtedness secured by any mortgage, lien, pledge,
charge or other encumbrance upon Property owned by such
corporation, even if such corporation does not in any manner
become liable for the payment of such indebtedness;
(iv) all indebtedness of such corporation created or arising
under any conditional sale, lease or other title retention
agreement with respect to Property acquired by such
corporation even though the rights and remedies of the seller,
lessor or lender under such agreement or lease in the event of
default are limited to repossession or sale of such Property;
and
(v) renewals, extensions and refundings of any such
indebtedness.
"Junior Stock" shall mean any shares of any class of Stock of the
Corporation having preference or priority as to dividends or
Property junior to any such preference or priority of the 7.85%
Preferred, or any voting right with respect to the election of
directors which, if exercised, would not restrict or eliminate any
such voting right of the 7.85% Preferred, and any instrument or
Security convertible into or exchangeable for Junior Stock.
"Liquidation Amount" is defined in Section 3 hereof.
"Mandatory Redemption Notice" is defined in Section 5 hereof.
"Optional Redemption Notice" is defined in Section 6.B hereof.
"Parity Stock" shall mean any shares of any class of Stock of the
Corporation having any preference or priority as to dividends or
Property on a parity with any such preference or priority of the
7.85% Preferred, or any voting right with respect to the election of
directors which, if exercised, would be on a parity with any such
voting right of the 7.85% Preferred, and any instrument or Security
convertible into or exchangeable for Parity Stock.
"Person" shall mean any individual, partnership, corporation, trust,
unincorporated organization or governmental organization or any
agency or political subdivision thereof.
"Preference Stock" shall mean any class or series of Stock of the
Corporation having any preference or priority as to dividends or
Property senior to any such preference or priority of the Common and
any instrument or Security convertible into or exchangeable for
Preference Stock.
"Preferred Stock" is defined in the recitals hereof.
"Priority Stock" shall mean any shares of any class of Stock of the
Corporation having any preference or priority as to dividends or
Property senior to any such preference or priority of the 7.85%
Preferred, or any voting right with respect to the election of
directors which, if exercised, would restrict or eliminate any such
voting right of the 7.85% Preferred, and any instrument or Security
convertible into or exchangeable for Parity Stock. Priority Stock
includes but is not limited to Senior Preferred.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Ratings Downgrade" shall mean that as a result of any exchange of
Stock, consolidation or merger of the Corporation (other than a
merger with another corporation in which the Corporation is the
surviving corporation and which does not result in any
reclassification or change--other than a change in par value, or
from par value to no par value, or from no par value to par value--
of outstanding shares of the Corporation's Stock of any class or
series, whether now or hereafter authorized), the rating on any
debenture, note or bond of the Corporation outstanding immediately
following the consummation of such exchange of Stock, consolidation
or merger is reduced to below Baa3 by Moody's Investors Service Inc.
or below BBB- by Standard and Poor's Corporation. A Ratings
Downgrade shall be deemed to occur on the day either of the two
rating agencies notifies the Corporation of the aforementioned
reduction.
"Redemption Date" shall mean November 1, 1999, in the case of mandatory
redemption pursuant to Section 5 hereof, or a date which is not less than
30 nor more than 90 days after the date of the Optional Redemption
Notice, in the case of redemption at the option of a Holder pursuant to
Section 6 hereof.
"Redemption Event" means either a Ratings Downgrade, a Dividend or
Redemption Shortfall, Excess Preferred, or a Restrictive Arrangement.
"Redemption Notice" shall mean either the Mandatory Redemption Notice,
the Optional Redemption Notice, or both.
"Restated Articles of Incorporation" shall mean the restated articles of
incorporation of the Corporation, as amended.
"Restricted Payment" shall mean:
(i) any payment of cash dividends on any of the Corporation's
Stock other than the 7.85% Preferred, Priority Stock or Parity
Stock;
(ii) any purchase, redemption or retirement of any of the
Corporation's Stock other than the 7.85% Preferred, Priority Stock
or Parity Stock made directly or indirectly by the Corporation or
through any Subsidiary; and
(iii) any other cash distribution made directly or indirectly by
the Corporation or through any Subsidiary in respect of the
Corporation's Stock other than 7.85% Preferred, Priority Stock or
Parity Stock.
"Restricting Event" shall mean the following:
(i) failure to set aside and pay in full, on any date specified
in Section 4 hereof, the amount therein specified to the Holders of
the 7.85% Preferred;
(ii) failure to set aside and pay in full, on any Redemption Date,
the amount required to be paid on that date, pursuant to Section 5
or Section 6 hereof, to redeem shares of 7.85% Preferred in
accordance with the provisions of such Sections; or
(iii) violation by the Corporation of any provision of Sections 8,
12 or 14 hereof.
"Restrictive Arrangements" shall mean that the Corporation or any
Subsidiary, following the issuance of the first share of 7.85% Preferred
pursuant to this Statement of Rights and Preferences, becomes a party to,
bound by or issues any indenture, agreement, instrument, security or
Indebtedness, or modifies or amends any indenture, agreement, instrument,
security or Indebtedness of or binding upon the Corporation or any
Subsidiary existing at the time of the issuance of the first share of
7.85% Preferred pursuant to this Statement of Rights and Preferences and,
as of the date of any such action following such issuance, by virtue of
any such indenture, agreement, instrument, security and Indebtedness then
in existence or outstanding, the funds available to the Corporation for
the payment of dividends on and the redemption of all shares of
Preference Stock, including, without limitation, the 7.85% Preferred
outstanding on the date of any such action, are less than the aggregate
of (i) the amount of all dividends that, by the respective terms of such
Stock, will be payable or will accrue on such Stock as dividends between
such date and November 1, 1999, plus (ii) the greatest amount (whether
due to premiums payable upon redemption or otherwise) that, by the
respective terms of such Stock, may be payable to redeem such Stock on or
prior to November 1, 1999 (other than redemptions at the option of the
Corporation). The computation of the amount of funds so available shall
be made by the Chief Financial Officer or Treasurer of the Corporation,
and a written statement setting forth such computation in reasonable
detail shall be sent within ten days after such effective date to each
Holder of 7.85% Preferred by certified or registered mail, postage
prepaid, at the Holder's address as shown on the books and records of the
Corporation.
"Securities" shall mean any debt or equity securities of the Corporation,
whether now or hereafter authorized, and any instrument convertible into
or exchangeable for Securities or a Security. "Security" shall mean one
of the Securities.
"Senior Preferred" shall mean the Corporation's 55 cent Cumulative
Preferred Stock, without nominal or par value, Series A, B and C.
"7.85% Preferred" shall mean 60,000 shares of $1.00 Preferred Stock
designated as 7.85% Cumulative Preferred Stock.
"Stock" shall include any and all shares, interests or other equivalents
(however designated) of, or participations in, corporate stock.
"Subsidiary" shall mean any corporation at least 50% of whose outstanding
voting stock shall at the time be owned by the Corporation or by one or
more Subsidiaries of the Corporation or by the Corporation and one or
more Subsidiaries of the Corporation.
"Voting Right Event" shall mean failure to set aside and pay in full on
six or more of the dates specified in Section 4 hereof, consecutively,
the amounts therein specified to the Holders of the 7.85% Preferred,
until such date as all accrued unpaid dividends on the outstanding 7.85%
Preferred have been paid in full.
<PAGE>
Exhibit B
CASCADE NATURAL GAS CORPORATION
STATEMENT OF RIGHTS AND PREFERENCES OF THE
SERIES Z JUNIOR PARTICIPATING PREFERRED STOCK, $1.00 PAR VALUE
Section 1. Designation and Amount. There shall be a series of
Preferred Stock of the Corporation which shall be designated as "Series Z
Junior Participating Preferred Stock, $1.00 par value" (the "Series Z
Preferred Stock"), and the number of shares constituting such series shall be
110,000. Such number of shares may be increased or decreased by Articles of
Amendment adopted by the Board of Directors without shareholder action;
provided, however, that no decrease shall reduce the number of shares of
Series Z Preferred Stock to a number less than the shares outstanding plus the
number of shares issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by the
Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
Series Z Preferred Stock with respect to dividends, the holders of shares of
Series Z Preferred Stock, in preference to the holders of shares of Common
Stock, $1.00 par value ("Common Stock") of the Corporation and of any other
junior stock which may be outstanding, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, (i) quarterly dividends payable in cash on the last day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series Z Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 per share
($.01 per one one-hundredth of a share), or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends declared on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series Z Preferred Stock, and (ii) subject to the
provision for adjustment hereinafter set forth, quarterly distributions
(payable in kind) on each Quarterly Dividend Payment Date in an amount per
share equal to 100 times the aggregate per share amount of all noncash
dividends or other distributions (other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock, by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or with respect to the
first Quarterly Dividend Payment Date since the first issuance of any share or
fraction of a share of Series Z Preferred Stock. In the event the Corporation
shall at any time after March 19, 1993 (the "Rights Declaration Date"),
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of shares of Series Z Preferred Stock are entitled under clauses
(i)(b) or (ii) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior
to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series Z Preferred Stock as provided in Section 2(A) immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share ($.01 per one one-
hundredth of a share) on the Series Z Preferred Stock shall nevertheless be
payable, out of funds legally available for such purpose, on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series Z Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series Z
Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Series Z Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall cumulate
but shall not bear interest. Dividends paid on the shares of Series Z
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series Z Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 30
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series Z
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series Z Preferred Stock shall entitle the holder thereof
to 100 votes (and each one one-hundredth of a share of Series Z Preferred
Stock shall entitle the holder thereof to one vote) on all matters submitted
to a vote of the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes
per share to which holders of shares of Series Z Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided in the Articles of Incorporation
or in this amendment thereof or by law, the holders of shares of Series Z
Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of the shareholders of the
Corporation.
(C) Except as otherwise provided in the Articles of Incorporation
or in this amendment thereof or by law, holders of Series Z Preferred Stock
shall have no special voting rights and their consent shall not be required
for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series Z Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series Z Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series Z Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series Z Preferred Stock, except dividends paid ratably on the
Series Z Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series Z Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series Z Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series Z Preferred Stock, or any share of stock ranking on
a parity with the Series Z Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Section 4(A),
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series Z Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. The Corporation shall take all such action as is necessary so that
all such shares shall after their cancellation become authorized but unissued
shares of Preferred Stock, without designation as to series, and may be
reissued as part of a new series of Preferred Stock to be created by Articles
of Amendment adopted by the Board of Directors without shareholder action,
subject to the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (A) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series Z
Preferred Stock, unless, prior thereto, the holders of shares of Series Z
Preferred Stock shall have received the higher of (i) $1.00 per share ($.01
per one one-hundredth of a share), plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of Common Stock; nor shall any
distribution be made (B) to the holders of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the
Series Z Preferred Stock, except distributions made ratably on the Series Z
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time after the Rights Declaration Date declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Series Z Preferred Stock are entitled under clause (A)(ii) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, or otherwise changed,
then in any such case the shares of Series Z Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any time
after the Rights Declaration Date declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect
to the exchange or change of shares of Series Z Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series Z Preferred Stock
shall not be redeemable. Notwithstanding the foregoing, the Corporation may
acquire shares of Series Z Preferred Stock in any other manner permitted by
law, the Articles of Incorporation or this amendment thereof.
Section 9. Rank. Unless otherwise provided in the Articles of
Incorporation or an amendment thereof relating to a subsequent series of
Preferred Stock of the Corporation, the Series Z Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock, including,
without limitation, the Corporation's 55 cent Preferred Stock and 7.85%
Preferred Stock referred to in Article V of the Articles of Incorporation, as
to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up, and senior to the Common Stock of the Corporation.
Section 10. Amendment. The Articles of Incorporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series Z Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least a
majority of the outstanding shares of Series Z Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series Z Preferred Stock may be
issued in one-hundredths of a share or other fractions of a share which shall
entitled the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series Z Preferred Stock.
<PAGE>
EXHIBIT 3.2
RESTATED BYLAWS
OF
CASCADE NATURAL GAS CORPORATION
ARTICLE I - OFFICES
Sec. 1. The principal office shall be in the City of Seattle, County of
King, State of Washington.
Sec. 2. The corporation may also have offices at such other places as the
board of directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - SEAL
Sec. 1. The corporation seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words, "Corporate Seal,
Washington." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III - SHAREHOLDERS' MEETINGS
Sec. 1. Meetings of the shareholders may be held within or without the
State of Washington. The annual meeting of shareholders shall be held at a
place and time on a day designated by the board of directors not less than
sixty days nor more than one hundred eighty days after January 1 of each year,
when they shall elect by a plurality vote, by ballot, a board of directors,
and transact such other business as may properly be brought before the
meeting. In the election of directors, every shareholder of record shall have
the right to multiply the number of votes to which he or she may be entitled
by the number of directors to be elected, and he or she may cast all such
votes for one candidate or distribute them among any two or more candidates.
Sec. 2. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person, or represented by proxy, shall be
requisite to, and shall constitute, a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided by
law, by the Articles of Incorporation or by these bylaws. If, however, such
majority shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the requisite amount of
voting stock shall be present, except that any meeting at which directors are
to be elected shall be adjourned only from day to day until such directors
have been elected. At such adjourned meeting at which the requisite amount of
voting stock shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
Sec. 3. The shareholders present at a duly organized meeting can continue
to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Sec. 4. At each meeting of the shareholders every shareholder having the
right to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing subscribed by such shareholder and bearing a date not
more than eleven months prior to said meeting, unless said instrument provides
for a longer period, not exceeding three years (unless said proxy is coupled
with an interest). The revocation of a proxy shall not be effective until
notice thereof has been given to the secretary. Each shareholder shall have
one vote for each share of capital stock registered in his or her name on the
books of the corporation. The vote for directors, and, upon the demand of any
shareholder, the vote upon any question before the meeting, shall be by
ballot. All elections shall be had and all questions decided by a plurality
vote except where a greater vote is required by law.
Sec. 5. A complete list of the shareholders entitled to vote at the
ensuing election, arranged in alphabetical order, with the residence of each,
and the number of voting shares held by each, shall be prepared by the
secretary and filed in the registered office of the corporation, at least ten
days before every election, and shall at all times during the usual hours for
business, and during the whole time of said election, be open to the
examination of any shareholder.
Sec. 6. Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called at any time by the
chairman of the board, president, secretary or board of directors. If more
than eighteen months are allowed to elapse without the annual shareholders'
meeting being held, any shareholder may call such meeting to be held at the
registered office of the corporation. At any time, upon written request of
any director, or of any shareholder or shareholders holding in the aggregate
one-fifth of the voting power of all shareholders, it shall be the duty of the
secretary to call a special meeting of shareholders to be held at the
registered office at such time as the secretary may fix, not less than ten nor
more than thirty-five days after the receipt of said request, and if the
secretary shall neglect or refuse to issue such call, the director or
shareholder or shareholders making the request may do so. Such request shall
state the purpose or purposes of the proposed meeting.
Sec. 7. (a) Written notice stating the place, day and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (or in the case of an
amendment to the Articles of Incorporation, a plan of merger or share
exchange, a proposed sale, lease exchange, or other disposition of all or
substantially all of the assets of the corporation other than in the usual or
regular course of business, or the dissolution of the corporation, twenty) nor
more than seventy days before the date of the meeting, either personally or by
mail, by or at the direction of the chairman, the president, the secretary, or
the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail addressed to the
shareholder at his or her address as it appears on the stock transfer books of
the corporation, with postage thereon prepaid.
(b) A shareholder may waive any notice required by law or these
bylaws before or after the date and time of the meeting that is the subject of
the notice, and such waiver shall be equivalent to giving such notice. Waiver
of notice of a meeting of shareholders shall be effective upon receipt of a
written waiver by the corporation.
Sec. 8. Nominations for the election of directors may be made by the board
of directors, the nominating committee of the board of directors, or by any
shareholder entitled to vote in the election of directors. However, any
shareholder entitled to vote in the election of directors may nominate one or
more persons for election as directors at a meeting only if written notice of
the shareholder's intent to make the nomination or nominations has been given,
either by personal delivery or by United States mail, postage prepaid, to the
secretary of the corporation not later than (i) with respect to an election to
be held at an annual meeting of shareholders, on the date established for
nominations in the proxy statement of the corporation, or if no such date is
established one hundred twenty days in advance of such meeting, and (ii) with
respect to an election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day following the
date of which notice of such meeting is first mailed to the shareholders of
the corporation. Each such notice shall set forth: (a) the name and address
of the shareholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the shareholder is a holder
of record of stock of the corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person
or persons specified in the notice; (c) a description of all arrangements or
understandings between the shareholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholders; (d) such other information
regarding each nominee proposed by such shareholder as would have been
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, by the board of directors or the nominating
committee of the board of directors; and (e) the written consent of each
nominee to serve as a director of the corporation if so elected. The chairman
of the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
Sec. 9. Tabulation of votes for election of directors shall be conducted
by an inspector or judge, who may or may not be a stockholder, appointed by
the presiding officer of the meeting. The inspector or judge shall certify to
the returns in writing. No person who is a candidate for the office of
director shall be an inspector or judge.
ARTICLE IV - DIRECTORS
Sec. 1. The property and business of this corporation shall be managed by
its board of directors, nine in number, but the number of directors may be
decreased to any number not less than three at any annual meeting of the
shareholders, or at any special meeting of the shareholders called for that
purpose, or by a two-thirds vote of the then directors of the company at any
regular meeting of such directors, or at any special meeting of said directors
called for that purpose.
Sec. 2. The number of directors of said corporation may likewise be
increased in the same manner as they may be decreased, from three to not more
than eleven directors.
Sec. 3. The directors shall be elected at the annual meeting of the
shareholders, and each director shall be elected to serve until his or her
successor shall be elected and shall qualify.
Sec. 4. The entire board of directors or any individual director may, at
any special meeting of the shareholders called for that purpose in the manner
provided by Section 6 of Article III hereof, be removed from office by a vote
of shareholders holding a majority of the outstanding shares entitled to a
vote at an election of directors. In case the board or any one or more
directors be so removed, new directors may be elected at the same meeting. No
individual director shall be removed in case the votes of a sufficient number
of shares are cast against the resolution for his or her removal which, if
cumulatively voted at an election of the whole board, would be sufficient to
elect one or more directors.
Sec. 5. In addition to the powers and authorities by these bylaws
expressly conferred upon them, the board may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these bylaws directed or required to be
exercised or done by the shareholders.
Sec. 6. In addition to reimbursement for reasonable expenses incurred in
attending meetings or otherwise in connection with attention to the affairs of
the corporation and in addition to remuneration as a member of any committee
of the board of directors, each director as such shall be entitled to receive
such remuneration as may be fixed from time to time by the board of directors.
Sec. 7. (a) The board of directors shall meet at a time and place, as
fixed by resolution of the board of directors, on the same date as the annual
meeting of shareholders of the corporation for the purpose of organization or
otherwise, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute a meeting if it is held
following the adjournment of the annual meeting of shareholders; provided, a
majority of the whole board shall be present.
(b) Regular meetings of the board of directors may be held at
such place, whether in this state or elsewhere, as a majority of the directors
may from time to time appoint.
(c) Regular meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meetings. Special
meetings of the board of directors must be preceded by at least two days'
notice of the date, time, and place of the meeting.
(d) A director may waive any notice required by law or these
bylaws before or after the date and time of the meeting that is the subject of
the notice, and such waiver shall be equivalent to giving such notice. Waiver
of notice shall be effective upon receipt of a written waiver by the
corporation.
Sec. 8. If the office of any director or directors becomes vacant by
reason of death, resignation, retirement, disqualification, removal from
office or otherwise, a majority of all of the remaining directors, though less
than a quorum, shall elect a successor or successors, who shall hold office
for the unexpired term of his or her predecessor in office and until his or
her successor is elected by the shareholders who may make such election at the
next annual meeting of the shareholders, or at any special meeting called for
that purpose and held prior thereto.
ARTICLE V - OFFICERS
Sec. 1. The officers of the corporation shall be chosen by the board of
directors, and shall be a chairman of the board, a president, an executive
vice president, one or more vice presidents, a secretary, a treasurer, and if
appointed, one or more assistant secretaries and assistant treasurers, such
assistants to have such powers and duties of the secretary and treasurer,
respectively, as shall from time to time be assigned to them by the board of
directors.
Sec. 2. The board of directors, at its first meeting after each annual
meeting of shareholders, shall choose a chairman of the board from their own
number, and a president, an executive vice president, and one or more vice
presidents, a secretary, and a treasurer who need not be members of the board.
Sec. 3. The board may appoint such other officers, vice presidents,
assistant secretaries, assistant treasurers, managers and agents as shall be
deemed necessary by it, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time
to time by the board.
Sec. 4. The board of directors shall by resolution fix the salaries and
the manner and time of payment thereof of all of the officers of this
corporation.
Sec. 5. Any officer, manager or agent elected or appointed by the board of
directors may be removed at any time by the affirmative vote of a majority of
the whole board of directors, whenever in their judgment the best interest of
the corporation will be served thereby, such removal, however, to be without
prejudice to the contract rights, if any, of the person so removed.
Sec. 6. If any office becomes vacant for any reason, the vacancy shall be
filled by the board of directors.
Sec. 7. The chairman of the board shall be the chief executive officer of
the corporation; he or she shall, if present, preside at all meetings of the
shareholders and directors; he or she shall have general and active management
of the business of the corporation, under the direction of the board of
directors, and shall see that all orders and resolutions of the board are
carried into effect.
Sec. 8. The president shall, in the absence or disability of the chairman,
perform the duties and exercise the powers of the chairman, and shall perform
such other duties as the board of directors shall prescribe.
Sec. 9. The executive vice president shall, in the absence or disability
of the president, perform the duties and exercise the powers of the president,
and shall perform such other duties as the board of directors shall prescribe.
Sec. 10. (a) The secretary shall personally or with the assistance of
others, prepare and keep minutes of meetings of the board of directors and
shareholders, authenticate all records of the corporation, attest all
certificates of stock in the name of the corporation, and keep a record of the
issuance of certificates of stock and stock transfers. The secretary shall
give, or cause to be given notice of all meetings of the shareholders and of
the board of directors, and shall perform such other duties as may be
prescribed by the board of directors. The secretary shall keep in safe
custody the seal of the corporation, and affix the same to any instrument
requiring it.
(b) The assistant secretaries, if any, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
secretary, and shall perform such other duties as the board of directors shall
prescribe.
Sec. 11. (a) The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of the receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys, and other valuable effects in the name and to the credit of the
corporation, in such depositories as may be designated by the board of
directors.
(b) The treasurer shall disburse the funds of the corporation as
may be ordered by the board, taking proper vouchers for such disbursements,
and shall render to the president and directors, at the regular meetings of
the board, or whenever they may require it, an account of all his or her
transactions as treasurer and of the financial condition of the corporation.
(c) The treasurer shall give the corporation a bond if required
by the board of directors, in a sum, and with one or more sureties,
satisfactory to the board, for the faithful performance of the duties of his
or her office, and for the restoration to the corporation, in case of his or
her death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the corporation.
Sec. 12. In case of the absence of any officer of the corporation, or for
any reason that the board may deem sufficient, the board of directors may
delegate, for the time being, the powers or duties, or any of them, of such
officer to any other officer, or to any director.
ARTICLE VI - CONSIDERATION FOR STOCK
Sec. 1. (a) Without the consent of any holder of any share of the capital
stock of this corporation, the shares of stock of this corporation may be
issued by it from time to time in such number or amount of shares of said
stock, and for such consideration in labor or services actually performed for
the corporation, money or property, as from time to time may be fixed and
determined by the board of directors of this corporation at any annual meeting
or any special meeting called for said purpose, and the right, power and
authority of said board of directors from time to time so to authorize and
order the issuance by this corporation of the said shares of said stock, in
such number or amount of shares, and for such consideration in labor or
services actually performed for the corporation, money or property, as from
time to time said board may fix and determine, is hereby absolutely reserved
to said board of directors.
(b) Payment or delivery to, or receipt by this corporation of
such consideration as may be so fixed and determined by its board of directors
for the issuance of any share or shares of its said stock, as hereinbefore in
this Section provided, shall operate and be construed, deemed and held:
(i) to discharge, release and satisfy fully and absolutely,
all liability to this corporation and/or to its creditors
now or at any time hereafter existing, of any subscriber
for, and/or holder of any such share or shares so authorized
to be issued in any way on account of, founded upon, or
arising out of any subscription for, and/or purchase of,
and/or issuance of such share or shares, and
(ii) to constitute such share or shares fully paid stock of
this corporation.
ARTICLE VII - CERTIFICATES OF STOCK
Sec. 1. The certificates for shares of the common stock and each series of
preferred stock of the corporation shall be separately numbered and shall be
entered in the books of the corporation as they are issued. They shall
exhibit the holder's name and number of shares and shall be signed by the
president or a vice president and the treasurer or the secretary. Where,
however, such certificates are countersigned by a transfer agent and
registered by a registrar, at least one of which shall be other than the
corporation itself or an employee thereof, the signatures of such officers may
be facsimile.
Sec. 2. Shares of stock to be transferred may be transferred by
endorsement of the certificate and its surrender to the secretary for
cancellation, whereupon the new certificate shall issue to the transferee.
ARTICLE VIII - FIXING RECORD DATE
Sec. 1. For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend, the board of directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than seventy days and, in case of a
meeting of shareholders, not less than ten (or in case of an amendment to the
Articles of Incorporation, a plan of merger or share exchange, a proposed
sale, lease, exchange, or other disposition of all or substantially all of the
assets of the corporation other than in the usual or regular course of
business, or the dissolution of the corporation, twenty) days prior to the
date on which the particular action, requiring such determination of
shareholders, is to be taken.
Sec. 2. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the close of business on the day
before the date on which notice of the meeting is mailed or the date on which
the resolution of the board of directors declaring such dividend is adopted,
as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Article, such
determination shall apply to any adjournment thereof.
ARTICLE IX - REGISTERED STOCKHOLDERS
Sec. 1. The corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have
express or other notice thereof, save as expressly provided by the laws of
Washington.
ARTICLE X - LOST CERTIFICATES
Sec. 1. Any person claiming a certificate of stock to be lost or
destroyed, shall make an affidavit or affirmation of that fact and advertise
the same in such manner as the board of directors may require, and the board
of directors may, in its discretion, require the owner of the lost or
destroyed certificate, or his or her legal representative, to give the
corporation a bond, in such sum as they may direct, not exceeding double the
value of the stock, to indemnify the corporation against any claim that may be
made against it on account of the alleged loss of any such certificate. A new
certificate of the same tenor and for the same number of shares as the one
alleged to be lost or destroyed may be issued without requiring any bond,
when, in the judgment of the directors, it is proper to do so.
ARTICLE XI - CORPORATE BOOKS AND RECORDS; INSPECTION
Sec. 1. The corporation shall keep a copy of the following records at its
principal office: (a) the Articles of Incorporation or Restated Articles of
Incorporation and all amendments to them currently in effect; (b) the bylaws
or restated bylaws, and all amendments to them currently in effect; (c) the
minutes of all shareholders' meetings, and records of all actions taken by
shareholders without a meeting, for the past three years; (d) its financial
statements for the past three years, including balance sheets showing in
reasonable detail the financial condition of the corporation as of the close
of each fiscal year, and an income statement showing the results of its
operations during each fiscal year prepared on a stated basis explained
therein; (e) all written communications to shareholders generally within the
past three years; (f) a list of the names and business addresses of its
current directors and officers; (g) its most recent annual report delivered to
the Secretary of State, and (h) such other records as may be required under
Washington law.
Sec. 2. Any shareholder of the corporation may inspect and copy, during
regular business hours at the corporation's principal office, any of the
records of the corporation specified in Sec. 1 (a) through (g) of this
Article, provided the shareholder gives the corporation written notice of the
shareholder's demand at least five business days before the date on which the
shareholder wishes to inspect and copy such records.
Sec. 3. A shareholder of the corporation is entitled to inspect and copy,
during regular business hours at a reasonable location specified by the
corporation, any of the following records of the corporation provided the
shareholder gives the corporation written notice of the shareholder's demand
at least five business days before the date on which the shareholder wishes to
inspect and copy such records and the shareholder's demand is made in good
faith and for a proper purpose, the shareholder describes with reasonable
particularity the shareholder's purpose and the records the shareholder
desires to inspect, and the records are directly connected with the
shareholder's purpose: (a) excerpts from minutes of any meeting of the board
of directors, records of any meeting of the board of directors, records of any
action of a committee of the board of directors while exercising the authority
of the board of directors, minutes of the shareholders, and records of action
taken by the shareholders or the board of directors without a meeting;
(b) accounting records of the corporation; and (c) the record of shareholders.
ARTICLE XII - CHECKS
Sec. 1. All checks or demands for money and notes of the corporation shall
be signed by such officer or officers as the board of directors may from time
to time designate.
ARTICLE XIII - FISCAL YEAR
Sec. 1. The fiscal year shall begin the first day of October in each year.
ARTICLE XIV - DIVIDENDS
Sec. 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the Articles of Incorporation, may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, and shall
be paid only out of the surplus of the aggregate of the assets of the
corporation over the aggregate of its liabilities, including in the latter the
amount of its capital stock.
Sec. 2. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation.
ARTICLE XV - REPRESENTATION OF SHARES OF OTHER CORPORATIONS
Sec. 1. The chairman, the president, or the executive vice president, and
the secretary, or any assistant secretary, of the corporation are authorized
to vote, represent and exercise on behalf of the corporation all rights
incident to any and all shares of other corporations standing in the name of
the corporation. Said authority may be exercised by such officers either in
person or by proxy or power of attorney duly executed by any of said officers.
ARTICLE XVI - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sec. 1. Each person who was or is made a party or is threatened to be made
a party to or is involved (including, without limitation, as a witness) in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, formal or informal, by reason of the fact
that he or she is or was a director or officer of the corporation or, being or
having been such a director or officer, he or she is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent or in any other capacity, shall be
indemnified and held harmless by the corporation to the full extent permitted
by applicable law as then in effect, against all expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts to be paid in settlement) actually or
reasonably incurred or suffered by such person in connection therewith. Such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that no indemnification shall
be provided under this Article to any such person to the extent that such
indemnification would not be consistent with the Washington Business
Corporation Act or other applicable law as then in effect; provided further,
however, that except as provided in Sec. 2 of this Article with respect to
proceedings seeking to enforce rights to indemnification, this corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of this
corporation. The right to indemnification conferred in this Article shall be
a contract right and shall include the right to be paid by the corporation the
expense incurred in defending any such proceeding in advance of its final
disposition; provided, however, that the payment of such expenses in advance
of the final disposition of a proceeding shall be made to or on behalf of a
director or officer only upon delivery to the corporation of an undertaking,
by or on behalf of such director or officer, to repay all amounts so advanced
if it shall ultimately be determined that such director or officer is not
entitled to be indemnified under this Section or otherwise.
Sec. 2. If a claim under Sec. 1 of this Article is not paid in full by
this corporation within sixty days after a written claim has been received by
this corporation (except in the case of a claim for expenses incurred in
defending a proceeding in advance of its final disposition, in which case the
applicable period shall be twenty days) the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, to the extent successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. The
claimant shall be presumed to be entitled to indemnification hereunder upon
submission of a written claim (and, in an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition, where the required undertaking has been tendered to this
corporation), and thereafter this corporation shall have the burden of proof
to overcome the presumption that the claimant is not so entitled. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to this corporation) that the claimant has not met the standards of
conduct which make it permissible hereunder or under the Washington Business
Corporation Act for this corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on this corporation.
Neither the failure of this corporation (including its board of directors,
independent legal counsel, or its shareholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth herein or in the Washington Business Corporation Act nor an actual
determination by this corporation (including its board of directors,
independent legal counsel, or its shareholders) that the claimant is not
entitled to indemnification or to the reimbursement or advancement of expenses
shall be a defense to the action or create a presumption that the claimant is
not so entitled.
Sec. 3. The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this Article shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation, bylaws, agreement, vote of shareholders or disinterested
directors or otherwise.
Sec. 4. The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or
loss under the Washington Business Corporation Act. The corporation may enter
into contracts with any director or officer of the corporation in furtherance
of the provisions of this Article and may create a trust fund, grant a
security interest or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article.
Sec. 5. The corporation may, by action of its board of directors from time
to time, provide indemnification and pay expenses in advance of the final
disposition of a proceeding to employees and agents of the corporation with
the same scope and effect as the provisions of this Article with respect to
the indemnification and advancement of expenses of directors and officers of
the corporation or pursuant to rights granted pursuant to, or provided by, the
Washington Business Corporation Act or otherwise.
ARTICLE XVII - AMENDMENTS
Sec. 1. These bylaws may be altered or amended by the affirmative vote of
a majority of the stock issued and outstanding and entitled to vote thereat,
at any regular or special meeting of the shareholders if notice of the
proposed alteration or amendment be contained in the notice of the meeting, or
by the affirmative vote of a majority of the board of directors, subject to
the power of the shareholders to change or repeal such bylaws.
ARTICLE XVIII - MISCELLANEOUS STATUTORY RESTRICTIONS
Sec. 1. The corporation shall have the right to purchase its own shares to
the extent of unreserved and unrestricted earned or capital surplus except as
prohibited by law.
Sec. 2. No loans shall be made by the corporation to its officers or
directors unless first approved in the manner required by RCW 23B.08.700
through .08.730 or other applicable law.
ARTICLE XIX - MISCELLANEOUS PROCEDURAL PROVISIONS
Sec. 1. The rules contained in the most recent edition of Robert's
Rules of Order, Revised, shall govern all meetings of shareholders and
directors where those rules are not inconsistent with the Articles of
Incorporation, bylaws or special rules or order of the corporation.
ARTICLE XX - COMMITTEES OF THE BOARD OF DIRECTORS
Sec. 1. The board of directors may, by resolution or resolutions, passed
by a majority of the whole board, designate an executive committee of five
directors. Said committee may meet at stated times, or on notice to all by
any of their number. During the intervals between meetings of the board such
committee shall advise with and aid the officers of the corporation in all
matters concerning its interests and the management of its business, and
generally perform such other duties and exercise such powers as may be
directed or delegated by the board of directors from time to time. The board
may delegate to such committee authority to exercise all the powers of the
board, except such powers as are denied to committees under RCW 23B.08.250(5)
as such statute shall be amended from time to time.
Sec. 2. The board of directors shall designate three of their number who
are neither officers nor employees of the corporation as an audit committee.
It shall be the duty of the audit committee to:
(a) Review the financial statements with the independent
accountants prior to recommending approval by the full board.
(b) Determine the effectiveness of the audit effort through
regular meetings with the independent accountants.
(c) Determine through discussions with the independent
accountants that no restrictions were placed on the scope of the examination
or on its implementation.
(d) Inquire into the effectiveness of the corporation's financial
and accounting functions, organizations, operations and management through
discussions with the independent accountants, internal auditors and officers
of the corporation, especially those using the information.
(e) Inquire into the effectiveness of the corporation's internal
auditing methods and procedures.
(f) Report to the board of directors on the committee's
activities and recommendations.
(g) Recommend the appointment of independent accountants for the
ensuing year.
Sec. 3. The board of directors shall designate three or more of their
number to serve the corporation as a nominating and compensation committee to:
(a) Set criteria for selection of potential members of the board
of directors.
(b) Consider and recommend nominees for election to the board of
directors and make such other recommendations relating to nomination for
election to the board as the committee deems appropriate.
(c) Consider nominees for election to the board of directors
timely recommended by shareholders of the corporation and consider the
recommendation of the Chairman.
(d) Consider the recommendation of the Chairman and evaluate and
recommend to the board of directors compensation levels for all officers.
(e) Evaluate and recommend to the board of directors appropriate
board and committee fees.
Sec. 4. The board of directors, by resolution adopted by a majority of the
full board of directors, may designate one or more additional committees of
the board of directors which shall have two or more members and which shall
have such duties and exercise such powers as may be directed or delegated by
the board of directors from time to time. Vacancies in the membership of any
committee shall be filled by the board of directors. Each committee shall
keep regular minutes of its proceedings and report the same to the board of
directors when required.
<PAGE>
EXHIBIT 99
DESCRIPTION OF COMMON STOCK
AND RELATED PREFERRED
STOCK PURCHASE RIGHTS
OF CASCADE NATURAL GAS CORPORATION
General
The authorized capital stock of Cascade Natural Gas Corporation
("Cascade" or the "Company") consists of 16,096,560 shares divided into 96,560
shares of $.55 Cumulative Preferred Stock, without par value (the "$.55
Preferred Stock"), and 1,000,000 shares of Preferred Stock, $1.00 par value
(together, the "Preferred Stock"), and 15,000,000 shares of Common Voting
Stock, $1.00 par value per share (the "Common Stock").
The following statements summarize certain provisions of Cascade's
Restated Articles of Incorporation (the "Restated Articles"). Such summary
does not purport to be complete and is qualified in its entirety by reference
to the Restated Articles.
Dividends
After the payment of all preferential dividends on shares of the
Preferred Stock, holders of the Common Stock are entitled to dividends when
and as declared by the Board of Directors. The Company's bank loan agreements
contain provisions requiring maintenance of a minimum net worth.
Voting Rights
Except as described below and except as otherwise provided by law,
holders of the Common Stock have exclusive voting power and are entitled to
one vote for each share held of record. Approval of matters brought before
the shareholders requires the affirmative vote of a plurality of the shares of
Common Stock present and voting, except as otherwise required by law or by the
Restated Articles in the case of certain business combinations. The holders
of Common Stock are entitled to cumulate their votes in electing directors.
If the Company fails to pay six full quarterly dividends on the
$.55 Preferred Stock, the holders of such stock will have the right to elect,
voting as a class to the exclusion of the holders of Common Stock and holders
of other classes of Preferred Stock, three members of the Board of Directors
until all arrears and dividends have been paid in full, whereupon all voting
rights will revest in the holders of Common Stock and, to the extent
applicable, holders of other classes of Preferred Stock. In addition, the
Company, without obtaining the affirmative vote of the holders of at least
two-thirds of the shares of $.55 Preferred Stock then outstanding, may not
increase the authorized number of shares of $.55 Preferred Stock, authorize or
issue any stock having priority or preference over, or ranking on a parity
with, the $.55 Preferred Stock as to dividends or assets, amend the Restated
Articles so as to affect adversely any rights of the $.55 Preferred Stock, or
merge or consolidate with or into any other corporation or dispose of all or
substantially all of its assets. The holders of the Company's 7.85%
Cumulative Preferred Stock, $1.00 par value (the "7.85% Preferred Stock"), a
series of the Preferred Stock, $1.00 par value, have similar voting rights
with respect to the election of directors in the event of dividend arrearages;
provided that, if the holders of the $.55 Preferred Stock then have the right
to elect three directors, the holders of the 7.85% Preferred Stock may
exercise their voting rights as to the election of directors only to the
extent that the holders of the $.55 Preferred Stock have elected fewer than
three directors, such that the total number of directors elected by the
holders of the $.55 Preferred Stock and the 7.85% Preferred Stock is not more
than three. The holders of the 7.85% Preferred Stock also have approval
rights comparable to those of the $.55 Preferred Stock with respect to changes
in the rights or priority of the 7.85% Preferred Stock and certain other
extraordinary corporate events.
Liquidation Rights
In the event of any liquidation, dissolution or winding up of
Cascade, the holders of the Common Stock are entitled to receive pro rata all
assets of Cascade, if any, remaining after payment of all debt and payment to
the holders of any outstanding Preferred Stock of the full preferential
amounts fixed for such stock.
Dividend Reinvestment Plan
The Company maintains an Automatic Dividend Reinvestment Plan (the
"Plan"). All holders of Common Stock may participate in the Plan and may have
cash dividends on their shares of Common Stock automatically reinvested in
additional shares of Common Stock and may invest in additional shares of
Common Stock by making optional cash payments without the payment of brokerage
commissions or service charges. The Company may issue authorized but unissued
shares or, at its option, direct an independant agent, who acts on behalf of
participants, to purchase shares in the open market for the Plan.
Changes in Control and Business Combinations
The Restated Articles and Washington law contain certain provisions
that may have the effect of delaying or discouraging a hostile takeover of the
Company. Article XII of the Restated Articles provides that certain business
combinations involving the Company and any person who is or who has announced
a plan to become the beneficial owner of 10 percent or more of the outstanding
Common Stock (an "Interested Shareholder"), must be approved by the
affirmative vote of the holders of at least 80 percent of the outstanding
shares of the capital stock of the Company which are not owned by the
Interested Shareholder or its affiliates. The 80 percent voting requirement
does not apply in the case of a business combination which provides for
conversion of Common Stock into cash, securities or property with a fair
market value not less than the highest per share price paid by the Interested
Shareholder or its affiliates for any of their shares of Common Stock or,
under certain circumstances, if the business combination is approved by the
Board of Directors.
In addition, Chapter 23B.19 of the Washington Business Corporation
Act prohibits certain Washington corporations, including the Company, from
engaging in certain significant business transactions, such as a merger, share
exchange or consolidation, sale, exchange or mortgage of significant assets,
or termination of more than 5 percent of the employees of such a corporation,
for a period of five years following an acquiring person's acquisition of
beneficial ownership of 10 percent or more of the outstanding voting shares of
such corporation, unless the significant business transaction or the purchase
of such shares is approved in advance of the share acquisition by a majority
of the members of the board of directors of such corporation.
Preferred Stock Purchase Rights
Terms of Rights. In May 1993, the Company distributed to holders
of Common Stock rights ("Rights") to purchase shares of Series Z Junior
Participating Preferred Stock, $1.00 par value per share ("Series Z Preferred
Stock"), on the basis of one Right for each share of Common Stock pursuant to
a Rights Agreement dated March 19, 1993 (as amended June 15, 1993, the "Rights
Agreement") between the Company and The Bank of New York, as successor rights
agent (the "Rights Agent"). Until the Distribution Date (as defined below),
each outstanding share of Common Stock will be accompanied by one Right,
subject to adjustment.
The Rights may not be exercised and will be attached to and trade
with shares of Common Stock until the "Distribution Date," which will occur on
the earlier of (i) the tenth day following a public announcement that there
has been a "Share Acquisition," i.e., that a person or group (other than the
Company, any subsidiary of the Company, or their employee benefit plans, or a
person who acquires shares in a tender offer approved (sanctioned) by the
Board of Directors) has acquired or obtained the right to acquire 20% or more
of the outstanding Common Stock, and (ii) the tenth business day following the
commencement or announcement of certain offers to acquire beneficial ownership
of 30% or more of the Company's outstanding Common Stock. Following the
Distribution Date, the Rights will trade separately and, after the receipt of
all necessary regulatory approvals and the expiration of any right of
redemption, will become exercisable.
Subject to restrictions on exercisability, each Right entitles the
holder to buy from the Company one one-hundredth of a share of Series Z
Preferred Stock at a price of $85, subject to adjustment. Upon the occurrence
of a Share Acquisition, and provided that all necessary regulatory approvals
have been obtained, each Right will thereafter entitle the holder (other than
such person or group) to buy from the Company for $85 shares of Common Stock
having a market value of $170, subject to adjustment. Until a Right is
exercised, the holder of a Right will not thereby have any rights as a
shareholder of the Company, including, without limitation, the right to vote
or to receive dividends.
At any time following a Share Acquisition but before any person
becomes the beneficial owner of 50% or more of the Company's outstanding
Common Stock, the Company may at its option, subject to receipt of required
regulatory approvals, exchange all or part of the then outstanding and
exercisable Rights for Common Stock at an exchange ratio of one share of
Common Stock per Right, subject to adjustment.
The Rights will expire on the earliest of (i) March 19, 2003, (ii)
the consummation of certain transactions approved by the Company's Board of
Directors, (iii) the exchange by the Company of Common Stock for such Rights
as described in the preceding paragraph and (iv) the redemption of such Rights
by the Company as described below.
There is no assurance that all regulatory approvals for the
exercise of the Rights or the issuance of the underlying Series Z Preferred
Stock or Common Stock could be obtained in a timely fashion or at all.
Furthermore, prior to the Distribution Date, the Company may without the
consent of holders of the Rights, amend the Rights in any manner, including
amendments which result in the cancellation of the Rights. Until the tenth
day following a Share Acquisition, the Company may redeem all outstanding
Rights at a redemption price of $.01 per Right, subject to adjustment. While
the Rights are so subject to redemption, they are not exercisable.
The Rights have certain antitakover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not sanctioned by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination sanctioned
by the Board of Directors at a time when the Rights are redeemable.
The foregoing description of the Rights is subject to and qualified
by reference to the Rights Agreement dated as of March 19, 1993, and the First
Amendment to Rights Agreement dated as of June 15, 1993, which are
incorporated herein by reference.
Terms of Series Z Preferred Stock. Subject to the rights of the
holders of any shares of Preferred Stock ranking prior to the Series Z
Preferred Stock with respect to dividends, the holders of shares of Series Z
Preferred Stock, in preference to the holders of shares of Common Stock and of
any other junior stock which may be outstanding, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) quarterly dividends payable in cash on the last
day of March, June, September and December in each year (each a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series Z
Preferred Stock, in an amount per share equal to the greater of (a) $1.00 per
share ($.01 per one one-hundredth of a share), or (b) subject to adjustment to
reflect any stock split, stock dividend or similar transaction, 100 times the
aggregate per share amount of all cash dividends declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series Z Preferred Stock, and (ii)
subject to adjustment, quarterly distributions (payable in kind) on each
Quarterly Dividend Payment Date in an amount per share equal to 100 times the
aggregate per share amount of all noncash dividends or other distributions
(other than a dividend payable in shares of Common Stock, by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series Z Preferred Stock.
Accrued but unpaid dividends shall cumulate but shall not bear
interest. Dividends paid on the shares of Series Z Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Subject to adjustment, each share of Series Z Preferred Stock shall
entitle the holder thereof to 100 votes (and each one one-hundredth of a share
of Series Z Preferred Stock shall entitle the holder thereof to one vote) on
all matters submitted to a vote of the shareholders of the Company.
Except as otherwise provided by law, the holders of shares of
Series Z Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of the shareholders
of the Company.
Upon any liquidation, dissolution or winding up of the Company, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series Z Preferred Stock unless, prior thereto, the holders of shares of
Series Z Preferred Stock shall have received the higher of (i) $1.00 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, or (ii) an
aggregate amount per share, subject to adjustment, equal to 100 times the
aggregate amount to be distributed per share to holders of Common Stock; nor
shall any distribution be made to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series Z Preferred Stock, except distributions made ratably on the Series
Z Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
The shares of Series Z Preferred Stock shall not be redeemable.
Notwithstanding the foregoing, the Company may acquire shares of Series Z
Preferred Stock in any other manner permitted by law.
Unless otherwise provided in the Restated Articles or an amendment
thereof relating to a subsequent series of Preferred Stock of the Company, the
Series Z Preferred Stock shall rank junior to all other series of the
Company's Preferred Stock as to the payment of dividends and the distribution
of assets on liquidation, dissolution or winding up, and senior to the Common
Stock of the Company.
Because of the nature of the Series Z Preferred Stock's dividend,
liquidation and voting rights, the economic value of one one-hundredth of a
share of Series Z Preferred Stock that may be acquired upon the exercise of
each Right should approximate the economic value of one share of Common Stock.
The Restated Articles shall not be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series Z Preferred Stock so as to affect them adversely except with the
affirmative vote of the holders of at least a majority of the outstanding
shares of Series Z Preferred Stock, voting separately as a class.
