Exhibit 10.7


[DATE]


 




	
  [Name]

  
	
  [Title]

  
	
  Cascade Natural Gas Corporation

  
	
  P.O. Box 24464

  
	
  Seattle, WA 98124

  






 


Dear Ms./Mr. [name]:


 


Cascade Natural Gas Corporation (referred to
as the “Company”) considers your continued employment as a member of its key
management team to be essential to the best interests of the Company and its
shareholders.  The Company recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control may arise and that the attendant uncertainty may result in
the departure or distraction of key management personnel to the detriment of
the Company and its shareholders. 
Accordingly, the Board of Directors of the Company (the “Board”) has
determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the Company’s management
without distraction from the possibility of a change in control of the Company.


 


In order to induce you to remain in the
employ of the Company, this letter Agreement, which has been approved by the
Board, sets forth the severance compensation which the Company agrees will be
provided to you in the event your employment with the Company is terminated
subsequent to a “change in control” of the Company under the circumstances
described below.


 


1.                                      Agreement
to Provide Services; Right to Terminate; Confidentiality.


 


a.                                       Termination Prior to Certain Offers.  Except as otherwise provided in paragraph b
below or in any written employment agreement between you and Company, the Company
or you may terminate your employment at any time, subject to the Company
providing the severance compensation, if any, required under the specific
conditions of the termination.


 


b.                                       Termination Subsequent to Certain Offers.  In the event a tender offer or exchange offer
is made by a Person (as hereinafter defined) for more than 30 percent of the
combined voting power of the Company’s outstanding securities ordinarily having
the right to vote at elections of directors (“Voting Securities”) including shares
of common stock of the Company (the “Company Shares”), or in the event an offer
is made by a Person to purchase substantially all of the Company’s business
assets, you agree that you will not leave the employ of the Company (other than
as a result of Disability as such term is hereinafter defined) and will render
services to the Company in the capacity in which you then serve until such
tender offer, exchange offer, or asset purchase offer has been abandoned or
terminated or a change in control of the Company, as defined in Section 3
hereof, has occurred, and the Company agrees that it will not terminate your
employment during such period unless it shall provide you with the severance
benefits set forth in Section 5 hereof. 
For purposes of this Agreement, the term





















 


“Person” shall mean and include any individual, corporation,
partnership, group, association, or other “person,” as such term is used in Section 14(d) of
the Securities Exchange Act of 1934 (the “Exchange Act”), other than the
Company or any employee benefit plan(s) sponsored by the Company.


 


c.                                       Confidentiality.  You acknowledge that by reason of the
capacity in which you have been employed, (A) you have financial
information regarding the Company which has not been publicly disclosed and which
is confidential to the Company, and (B) disclosure of such financial
information could cause irreparable harm to the Company.  You agree that you will not disclose, without
prior written consent of the Company, any financial information regarding the Company
which has not been publicly disclosed by the Company.


 


2.                                      Term of Agreement.  This Agreement shall commence on the date
hereof and shall continue in effect until December 31, 2006, unless
terminated earlier under b.ii.


 


a.                                       This
Agreement shall be extended as follows:


 


i.                                          The term of
the Agreement shall automatically be extended for one additional year unless
either you or the Company give notice at least 30 days before the end of any
calendar year that the agreement will not be extended.


 


ii.                                       The term of the
Agreement (as extended under i.) shall be extended by an additional 36 months,
if a change in control of the Company (as defined in Section 3) occurs.


 


b.                                       This
Agreement shall terminate when the first of the following occurs:


 


i.                                          The Agreement’s
normal term, as extended under a, expires.


 


ii.                                       Either you or
the Company terminate your employment before a change in control of the
Company.


 


3.                                      Change in Control.  For purposes of this Agreement, a “change in
control” of the Company shall mean:


 


a.                                       A
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A as in effect on the
date hereof pursuant to the Exchange Act; provided that, such a change in
control shall be deemed to have occurred only at such time as any Person
acquires, directly or indirectly, actual economic beneficial ownership (as
opposed to “beneficial ownership” as defined in Rule 1 3d-3 under the
Exchange Act), of 30 percent or more of the combined voting power of the Company’s
Voting Securities;


 


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b.                                       During
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company’s shareholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period;


 


c.                                       There
shall be consummated (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which Company Shares would be converted into cash, securities, or other
property, or (B) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company; or


 


d.                                       Approval
by the shareholders of the Company of any plan or proposal for the liquidation
or dissolution of the Company.


 


4.                                      Termination Following Change in Control.  If, and only if, your employment with the
Company should be terminated by you or the Company within 36 months from the
date of occurrence of any event constituting a change in control of the Company
(it being recognized that more than one such event may occur, in which case the
36-month period shall run from the date of occurrence of each such event), you
shall be entitled to the benefits provided in Section 5c hereof unless
such termination is because of your death, Disability or Retirement or is
effected by the Company for Cause, or is effected by you other than for “Good
Reason” as defined in paragraph 4c, “Retirement” as defined in paragraph 4c or “Disability”
as defined in paragraph 5a.  Provided,
however, that:


 


a.                                       Disability.  The Company may terminate this Agreement if
you fail to attend to your regularly assigned duties at the Company on a full-time
basis for a period of one hundred eighty (180) consecutive days on account of
Disability as defined in Section 5a, and within 30 days after written
notice of termination is given you have not returned to the full-time
performance of your duties.


 


b.                                       Cause.  The Company may terminate your employment for
Cause.  For the purposes of this
Agreement, the Company shall have “Cause” to terminate your employment
hereunder if, and only if, (A) you shall commit an act of fraud,
embezzlement, or theft constituting a felony, (B) you become liable to the
Company for acts or omissions involving intentional misconduct or a knowing
violation of law, (C) you engage in any transaction relating to the
Company from which you personally receive a benefit in money, property, or
services to which you are not legally entitled or (D) you willfully and
continuously fail to perform substantially your reasonably assigned duties with
the Company consistent with those duties assigned to you prior to the Change in
Control after a demand for substantial performance is delivered to you by the
Chief Executive Officer of the Company which specifically identifies the manner
in which you have not substantially performed your duties..  Notwithstanding the foregoing, you shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the Board at a
meeting of the Board


 


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called and held for the purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of conduct
constituting Cause as defined above and specifying the particulars thereof in
detail.


 


c.                                       Good Reason.  Termination by you of your employment for “Good
Reason” shall mean termination based on:


 


i.                                          a change in
your status or position(s) with the Company, which, in your reasonable
judgment, does not represent either a substantially similar position or a
promotion from your status or position(s) as in effect immediately prior to the
change in control, or a change in your duties or responsibilities which, in
your reasonable judgment, is inconsistent with such status or positions), or
any removal of you from or any failure to reappoint or reelect you to such
positions) or to substantially similar or superior positions), except in
connection with the termination of your employment for Cause, Retirement (as
defined in paragraph 4c) or Disability (as defined in paragraph 5a), or as a
result of your death or by you other than for Good Reason;


 


ii.                                       a reduction by
the Company in your base salary as in effect immediately prior to the change in
control;


 


iii.                                    unless by reason of
a change in law, the failure by the Company to continue in effect any “Plan”
(as hereinafter defined) in which you are participating at the time of the
change in control of the Company (or Plans providing you with at least
substantially similar benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in effect at the time of the
change in control, or the taking of any action, or the failure to act, by the
Company which would adversely affect your continued participation in any of such
Plans on at least as favorable a basis to you as is the case on the date of the
change in control or which would materially reduce your benefits in the future
under any of such Plans or deprive you of any material benefit enjoyed by you
at the time of the change in control;


 


iv.                                   the failure by the
Company to provide and credit you with the number of paid vacation days to
which you are then entitled in accordance with the Company’s normal vacation
policy as in effect immediately prior to the change in control;


 


v.                                      the Company’s
requiring you to be based outside the Seattle metropolitan area except for
required travel on the Company’s business to an extent substantially consistent
with the business travel obligations which you undertook on behalf of the Company
prior to the change in control;


 


vi.                                   the failure by the
Company to obtain from any successor the assent to this Agreement contemplated
by Section 8 hereof;


 


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vii.                                any purported
termination by the Company of your employment which is not effected pursuant to
a Notice of Termination satisfying the requirements of this Agreement; and for
purposes of this Agreement, no such purported termination shall be effective;
or


 


viii.                             any refusal by the Company
to continue to allow you to attend to matters or engage in activities not
directly related to the business of the Company which, prior to the change in
control, you were permitted by the Board to attend to or engage in.


 


For purposes of this Agreement, “Plan” shall
mean any compensation plan such as an incentive or stock option or restricted
stock plan or any employee benefit plan such as a thrift, pension, profit
sharing, medical, disability, accident, life insurance plan, or a relocation
plan or policy or any other plan, program, or policy of the Company intended to
benefit employees; and “Retirement” shall mean termination of your employment
by you or by the Company on or after your 65th birthday.  Notwithstanding the foregoing, none of the
events described in clauses (i) through (viii) of this paragraph 4c
shall constitute Good Reason unless the Executive shall have notified the
Company in writing describing the events which constitute Good Reason and then
only if the Company shall have failed to cure such event within thirty (30)
days after the Company’s receipt of such written notice.


 


d.                                       Notice of Termination.  Any notice of any termination of your
employment shall be communicated by written Notice of Termination to the other
party hereto.  For purposes of this Agreement,
a “Notice of Termination” of your employment by Company shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.


 


e.                                       Date of Termination.  “Date of Termination” shall be determined as
follows and shall be subject to the dispute resolution provisions of item (v):


 


i.                                          If your
employment is to be terminated for Disability, your Date of Termination shall
be the date that is thirty (30) days after Notice of Termination is given,
provided that you have not returned to the performance of your duties on a
full-time basis during such thirty (30) day period.


 


ii.                                       If your
employment is to be terminated by you or by the Company for any reason other
than Disability or Cause, your Date of Termination shall be the date that is
specified in the Notice of Termination, which shall be no earlier than thirty
(30) days after the date on which Notice of Termination is given; provided that
if termination is by you for Good Reason, the circumstances giving rise to Good
Reason have not been fully corrected by the specified date.


 


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iii.                                    The Date of
Termination can be earlier than the date specified in the Notice if the party
receiving the Notice of Termination has agreed to an earlier date either in
advance of, or after receiving such Notice of Termination.


 


iv.                                   If your employment
is to be terminated for Cause, your Date of Termination shall be the date on
which a Notice of Termination is given.


 


v.                                      If the Company
gives you a Notice of Termination and you notify the Company, in writing,
within 30 days that a bona fide dispute exists concerning the termination, and
that you wish to continue in the full-time employment of the Company while such
dispute is resolved, then the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written agreement of the
parties or by a final judgment, order, or decree of a court of competent
jurisdiction (the time for appeal there from having expired and no appeal
having been perfected).  The term of this
Agreement shall be extended until the Date of Termination as determined under
the prior sentence.


 


5.                                      Compensation Following Change in Control.  Following the date of occurrence of any event
constituting a change of control, you shall be entitled to compensation from
the Company as set forth below, subject to the terms and conditions of Section 4.


 


a.                                       Disability.  During any period that you fail to perform
your duties hereunder as a result of Disability, you shall continue to receive
your full base salary at the rate then in effect for the term of this
Agreement.  Thereafter, your benefits
shall be determined in accordance with the Company’s long-term disability
income insurance plan.  If Company’s long-term
disability income insurance plan is terminated following a change in control,
the Company shall substitute such a plan with substantially similar benefits
applicable to you.  Disability means
either of the following:


 


i.                                          You are
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or to last for a continuous period of at least 12 months.


 


ii.                                       You are, by
reason of any medically determinable physical or mental impairment that can be
expected to result in your death or to last for a continuous period of at least
12 months, receiving income replacement benefits for a period of at least 3
months under an accident and health plan covering the Company’s employees.


 


b.                                       Termination for Cause or Without Good Reason.  If paragraph 5a does not apply and your
employment shall be terminated on account of death, or by the Company for
Cause, or by you other than for Good Reason, the Company shall pay you your
full base salary through the Date of Termination at the rate in effect as of
the 


 


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time of such termination and the Company shall have no further
obligations to you under this Agreement.


 


c.                                       Other Termination, Including Termination With
Good Reason.  If your
employment with the Company terminates within 36 months after the last event
that constitutes a Change in Control under Section 3 (whether by you or
the Company), other than (A) because of your death, Disability or
Retirement, or (B) for Cause or other than for Good Reason, then the
Company shall pay to you, subject to paragraph (iv) and Section 6,
within 30 days following the Date of Termination or, in the case of payments
under paragraph iii, on demand, the following amounts (the “Severance Payments”):


 


i.                                          your full
base salary through the Date of Termination at the higher of (a) the rate
in effect on the date the change in control occurs, or (b) the rate in
effect as of the time of such termination;


 


ii.                                       in lieu of any
other severance benefits to which you may be entitled for periods subsequent to
the Date of Termination an amount payable in a single lump sum equal to the
product of (a) the sum of your annual base salary, at the rate in effect
on the date the change in control occurs, plus the average annual incentive
compensation (if any) paid to you in respect of the two fiscal years prior to
the fiscal year in which the change in control occurs, multiplied by (b) the
number 2 (but subject to
adjustment as provided in Section 11); and


 


iii.                                    on demand, and
subject to paragraph iv., all legal fees and expenses incurred by you as a
result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement); provided
however that


 


iv.                                   if any portion of
the payments to be made pursuant to this Section 5 would not be deductible
by the Company as “excess parachute payments” under Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”), the payment to you
pursuant to Subsection (ii), above, shall be reduced so that no portion of
the payments made pursuant to this Section 5 would be “excess parachute
payments” within the meaning of the Code, it being the Company’s intent that
you receive the maximum amount to which you are entitled, but that no portion
of the payments to you be subject to income tax treatment as an “excess
parachute payment” under the Code. 
Determinations whether the payments would be “excess parachute payments”
and the amount of reduction which avoids the resulting adverse income tax
treatment shall be made in writing by recognized tax counsel selected by the
Company and reasonably acceptable to you.


 


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d.                                       Related Benefits.  Unless you die or your employment is
terminated by Company for Cause, or by you other than for Good Reason, the
Company shall maintain in full force and effect for the continued benefit of
you for one year after the Date of Termination, all employee health, medical,
disability, and life insurance benefit plans and programs or arrangements in
which you were entitled to participate immediately prior to the Date of
Termination provided that your continued participation is possible under the
general terms and provisions of such plans and programs; provided, however,
that if you become eligible to participate in a benefit plan, program, or
arrangement of another employer which confers substantially similar benefits
upon you, you shall cease to receive benefits under this subparagraph in
respect of such plan, program, or arrangement. 
In the event that your participation in any such plan or program is
barred, the Company shall arrange to provide you with benefits substantially
similar to those which you are entitled to receive under such plans and
programs.


 


e.                                       No Mitigation.  You shall not be required to mitigate the
amount of any payment provided for in this Section 5 by seeking other
employment or otherwise, nor, except as expressly set forth herein, shall the
amount of any payment provided for in this Section 5 be reduced by any
compensation earned by you as a result of employment by another employer after
the Date of Termination, or otherwise.


 


6.                                      Compliance
with Section 409A of the Code. 
Payments under Section 5 shall be subject to, and this Agreement
shall be administered in a manner consistent with, the provisions of Section 409A
of the Internal Revenue Code, to the extent that section applies to any
payment under this Agreement.


 


a.                                       No
provision of this Agreement that would cause this Agreement to fail to satisfy Section 409A
shall be effective until amended to comply Section 409A.  The Company may make any such amendment
without your consent and may make such amendment retroactive to the extent
permitted by Section 409A.


 


b.                                       To
the extent Section 409A applies to any amount that is payable on account
of termination of employment and the Company determines that you are a “specified
employee” (as defined in Treasury Regulations under Section 409A of the
Code), then payment of such amount shall be delayed until six months from the
date on which your employment terminates, or if sooner, the date on which you
die.


 


c.                                       If
application of this Section 6 delays any payment required under Section 5,
then the following shall apply:


 


i.                                          The entire
amount of every delayed payment shall be made as soon as permitted under Section 6b,
together with interest at the prime rate quoted by U.S. Bank of Washington,
N.A. for the period after termination of employment during which payment was delayed.


 


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ii.                                       The Company
will, at your request, confirm in writing to any of your creditors the amount
and earliest date of payment of any amount due to you under Section 5.


 


7.                                      Notice.  For the purposes of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the first page of this Agreement,
provided that all notices to the Company shall be directed to the attention of
the Chief Executive Officer of the company with a copy to the Secretary of the
Company, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.


 


8.                                      Successors:  Binding Agreement.


 


a.                                       This
Agreement shall inure to the benefit of, and be binding upon, any corporate or
other successor or assignee of the Company which shall acquire, directly or
indirectly, by merger, consolidation or purchase, or otherwise, all or
substantially all of the business or assets of the Company.  The Company shall require any such successor,
by an agreement in form and substance satisfactory to you, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
as the Company would be required to perform if no such succession had taken
place.


 


b.                                       This
Agreement shall inure to the benefit of and be enforceable by your personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees.  If
you should die while any amount would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there is no such designee, to your estate.


 


9.                                      Miscellaneous.  No provision of this Agreement may be
modified, waived, or discharged unless such modification, waiver, or discharge
is agreed to in a writing signed by you and the Chairman of the Board or
President of the Company.  No waiver by
either party hereto at any time of any breach by the other party hereto of, or
of compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same, or at any prior or subsequent, time.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.  The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws of the State of
Washington.


 


10.                               Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.


 


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11.                               Payments During Controversy.  Notwithstanding the pendency of any dispute
or controversy, the Company will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given and continue you as
a participant in all compensation, benefit, and insurance plans in which you
were participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with paragraph (e) (v) of
Section 4.  If the Company is
determined to be the prevailing party in such dispute, amounts paid during such
controversy are not in addition to all other amounts due under this Agreement
and shall be offset against and reduce any other amounts due under this
Agreement but not below zero so that no affirmative recovery shall be obtained
from you on such account.  You shall be
entitled to sue for specific performance of your right to be paid until the
Date of Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement.


 


If this letter correctly sets forth our
agreement on the subject matter hereof, kindly sign and return to the Company
the enclosed copy of this letter, which will then constitute our agreement on
this subject.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  CASCADE
  NATURAL GAS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Chief
  Executive Officer

  



 


	
  Agreed to this                 day

  
	
  Of             ,
  2006.

  
	
   

  
	
   

  	
   

  
	
  [Name]

  



 


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