Exhibit
10.5


 


AGREEMENT
REGARDING


SUPPLEMENTAL
RETIREMENT BENEFITS


 


This agreement is being entered into between
David W. Stevens (“Executive”) and Cascade Natural Gas Corporation (“Cascade”)
to document their agreement with respect to supplemental retirement benefits.


 


A.            Executive
and Cascade entered into an employment agreement date March 3, 2005 (the “Employment
Agreement”).


 


B.            Section 4.4
of the Employment Agreement provides that Cascade will provide Executive the
opportunity to participate in a supplemental deferred compensation plan that
will be anticipated, using reasonable assumptions concerning the rate of
investment returns, to provide Executive with replacement pay at retirement
equal to 55 percent of his average base salary at normal retirement age 65 with
15 years of service, under the Employment Agreement, after taking into account
Social Security retirement benefits and any retirement benefits payable to
Executive under any qualified or nonqualified retirement plan sponsored by
Cascade or by Executive’s prior employer.


 


C.            Cascade
is adopting a new executive deferred compensation plan that will credit to an
account for Executive a net contribution amount as well as a rate of investment
return based on elections made by Executive.


 


D.            The
new plan will not provide a guaranteed level of retirement income because it
will provide benefits based on the rate at which net contribution amounts and
investment earnings are credited to Executive’s account and,  as a result, it is possible that the
value of the account may provide more or less than 55 percent of Executive’s
average base salary.


 


E.             Actuaries
retained by Cascade have produced the attached schedule of net
contribution amounts to be credited to Executive’s account that will reasonably
be expected, based on the assumptions set out in the schedule, to provide the
targeted rate of replacement pay.


 


In consideration of the premises, the parties
agree as follows:


 


1.             Net
contributions to the account under the deferred compensation plan that are in accordance
with the attached schedule will satisfy Cascade’s obligations to Executive
under section 4.4 of the Employment Agreement.


 


2.             Cascade
shall have no liability to Executive under section 4.4 of the Employment
Agreement other than to credit contributions to the Executive’s account under
the plan at the rates set forth in the attached schedule during the term
of Executive’s employment with Cascade.


 


	
  CASCADE NATURAL GAS CORPORATION

  	
  EXECUTIVE

  
	
   

  	
   

  
	
  By 

  	
  /s/ Larry L.
  Pinnt

  	
   

  	
  /s/ David W.
  Stevens

  	
   

  
	
  Title 

  	
  Chairman

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Executed:

  	
  January 11, 2006

  
	
  Executed:

  	
  January 11, 2006

  	
   

  	
   

  	
   

  
										



 





















 


Cascade Natural Gas


Executive Defined Contribution Plan Benefit Projection


 


Input Data for David Stevens as of October 1, 2005


 


	
  Hire Age:

  	
   

  	
  46

  	
   

  	
  Current Annual Base Pay (excluding bonus):

  	
   

  	
  $

  	
  400,000

  	
   

  
	
  Current Age:

  	
   

  	
  46

  	
   

  	
  Future Pay Increases:

  	
   

  	
  4.00

  	
  %

  
	
  Retirement
  Age:

  	
   

  	
  65

  	
   

  	
  Pre-Ret DC Investment Return:

  	
   

  	
  6.50

  	
  %(1)

  
	
  Service at
  Retirement:

  	
   

  	
  19

  	
   

  	
  Post-Ret DC Investment Return:

  	
   

  	
  5.50

  	
  %(2)

  
	
  Assumed
  Bonus %:

  	
   

  	
  27

  	
  %(4)

  	
  401(k) Annual Deferral (% of Qualified
  Pay):

  	
   

  	
  6.00

  	
  %(3)

  
	
  Personal Tax
  Rate:

  	
   

  	
  35

  	
  %

  	
  Assumed Future Profit Sharing Contribution:

  	
   

  	
  2.00

  	
  %

  
	
  Corporate
  Tax Rate:

  	
   

  	
  36.5

  	
  %

  	
   

  	
   

  	
   

  	
   

  



 


Benefit Development for David
Stevens


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Prior Er

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Qualified
  

  	
   

  	
   

  	
   

  	
  Prior Er
  

  	
   

  	
  SERP
  &

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Plan

  	
   

  	
  Prior Er
  CB 

  	
   

  	
  Qual DC

  	
   

  	
  401(k) 

  	
   

  	
  CNG 

  	
   

  	
   

  	
   

  	
  CNG 

  	
   

  	
  CNG 

  	
   

  	
   

  	
   

  
	
  BOY

  	
   

  	
  Total

  	
   

  	
   

  	
   

  	
  Limited

  	
   

  	
  (now
  IRA)

  	
   

  	
  (now
  IRA)

  	
   

  	
  Shadow
  After-

  	
   

  	
  Match

  	
   

  	
  CNG
  Match 

  	
   

  	
  Other DC

  	
   

  	
  Other DC

  	
   

  	
  BOY

  	
   

  
	
  Age

  	
   

  	
  Comp

  	
   

  	
  Base Pay

  	
   

  	
  Comp

  	
   

  	
  Acct EOY

  	
   

  	
  Acct EOY

  	
   

  	
  Tax Acct
  EOY

  	
   

  	
  Cont.

  	
   

  	
  Acct EOY

  	
   

  	
  Cont.

  	
   

  	
  Acct EOY

  	
   

  	
  Service

  	
   

  
	
  45

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  244,121

  	
   

  	
  156,662

  	
   

  	
  738,057

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  46

  	
   

  	
  508,000

  	
   

  	
  400,000

  	
   

  	
  210,000

  	
   

  	
  259,988

  	
   

  	
  166,845

  	
   

  	
  769,240

  	
   

  	
  0

  	
  (6) 

  	
  0

  	
   

  	
  0

  	
  (6)

  	
  0

  	
   

  	
  0.5

  	
   

  
	
  47

  	
   

  	
  528,320

  	
   

  	
  416,000

  	
   

  	
  215,000

  	
   

  	
  276,888

  	
   

  	
  177,690

  	
   

  	
  801,740

  	
   

  	
  6,450

  	
   

  	
  6,656

  	
   

  	
  12,900

  	
   

  	
  13,313

  	
   

  	
  1.5

  	
   

  
	
  48

  	
   

  	
  549,453

  	
   

  	
  432,640

  	
   

  	
  220,000

  	
   

  	
  294,885

  	
   

  	
  189,240

  	
   

  	
  835,614

  	
   

  	
  6,600

  	
   

  	
  13,900

  	
   

  	
  13,200

  	
   

  	
  27,800

  	
   

  	
  2.5

  	
   

  
	
  49

  	
   

  	
  571,431

  	
   

  	
  449,946

  	
   

  	
  225,000

  	
   

  	
  314,053

  	
   

  	
  201,541

  	
   

  	
  870,919

  	
   

  	
  6,750

  	
   

  	
  21,770

  	
   

  	
  13,500

  	
   

  	
  43,539

  	
   

  	
  3.5

  	
   

  
	
  50

  	
   

  	
  594,288

  	
   

  	
  467,943

  	
   

  	
  235,000

  	
   

  	
  334,466

  	
   

  	
  214,641

  	
   

  	
  907,715

  	
   

  	
  7,050

  	
   

  	
  30,460

  	
   

  	
  14,100

  	
   

  	
  60,920

  	
   

  	
  4.5

  	
   

  
	
  51

  	
   

  	
  618,060

  	
   

  	
  486,661

  	
   

  	
  240,000

  	
   

  	
  356,207

  	
   

  	
  228,593

  	
   

  	
  946,066

  	
   

  	
  7,200

  	
   

  	
  39,870

  	
   

  	
  14,400

  	
   

  	
  79,741

  	
   

  	
  5.5

  	
   

  
	
  52

  	
   

  	
  642,782

  	
   

  	
  506,128

  	
   

  	
  245,000

  	
   

  	
  379,380

  	
   

  	
  243,451

  	
   

  	
  986,037

  	
   

  	
  7,350

  	
   

  	
  50,047

  	
   

  	
  14,700

  	
   

  	
  100,094

  	
   

  	
  6.5

  	
   

  
	
  53

  	
   

  	
  668,493

  	
   

  	
  526,373

  	
   

  	
  250,000

  	
   

  	
  404,018

  	
   

  	
  259,275

  	
   

  	
  1,027,697

  	
   

  	
  7,500

  	
   

  	
  61,040

  	
   

  	
  15,000

  	
   

  	
  122,080

  	
   

  	
  7.5

  	
   

  
	
  54

  	
   

  	
  695,233

  	
   

  	
  547,428

  	
   

  	
  255,000

  	
   

  	
  430,280

  	
   

  	
  276,128

  	
   

  	
  1,071,117

  	
   

  	
  7,650

  	
   

  	
  72,902

  	
   

  	
  15,300

  	
   

  	
  145,805

  	
   

  	
  8.5

  	
   

  
	
  55

  	
   

  	
  723,042

  	
   

  	
  569,325

  	
   

  	
  265,000

  	
   

  	
  458,248

  	
   

  	
  294,077

  	
   

  	
  1,116,372

  	
   

  	
  7,950

  	
   

  	
  85,845

  	
   

  	
  15,900

  	
   

  	
  171,690

  	
   

  	
  9.5

  	
   

  
	
  56

  	
   

  	
  751,964

  	
   

  	
  592,098

  	
   

  	
  270,000

  	
   

  	
  488,034

  	
   

  	
  313,192

  	
   

  	
  1,163,539

  	
   

  	
  8,100

  	
   

  	
  99,784

  	
   

  	
  16,200

  	
   

  	
  199,569

  	
   

  	
  10.5

  	
   

  
	
  57

  	
   

  	
  782,043

  	
   

  	
  615,782

  	
   

  	
  275,000

  	
   

  	
  519,756

  	
   

  	
  333,549

  	
   

  	
  1,212,698

  	
   

  	
  8,250

  	
   

  	
  114,784

  	
   

  	
  16,500

  	
   

  	
  229,568

  	
   

  	
  11.5

  	
   

  
	
  58

  	
   

  	
  813,324

  	
   

  	
  640,413

  	
   

  	
  285,000

  	
   

  	
  553,540

  	
   

  	
  355,230

  	
   

  	
  1,263,935

  	
   

  	
  8,550

  	
   

  	
  131,069

  	
   

  	
  17,100

  	
   

  	
  262,137

  	
   

  	
  12.5

  	
   

  
	
  59

  	
   

  	
  845,857

  	
   

  	
  666,029

  	
   

  	
  290,000

  	
   

  	
  589,520

  	
   

  	
  378,320

  	
   

  	
  1,317,336

  	
   

  	
  8,700

  	
   

  	
  148,566

  	
   

  	
  17,400

  	
   

  	
  297,133

  	
   

  	
  13.5

  	
   

  
	
  60

  	
   

  	
  879,692

  	
   

  	
  692,671

  	
   

  	
  300,000

  	
   

  	
  627,839

  	
   

  	
  402,911

  	
   

  	
  1,372,994

  	
   

  	
  9,000

  	
   

  	
  167,511

  	
   

  	
  18,000

  	
   

  	
  335,022

  	
   

  	
  14.5

  	
   

  
	
  61

  	
   

  	
  914,879

  	
   

  	
  720,377

  	
   

  	
  305,000

  	
   

  	
  668,649

  	
   

  	
  429,100

  	
   

  	
  1,431,003

  	
   

  	
  9,150

  	
   

  	
  187,842

  	
   

  	
  18,300

  	
   

  	
  375,684

  	
   

  	
  15.5

  	
   

  
	
  62

  	
   

  	
  951,474

  	
   

  	
  749,192

  	
   

  	
  315,000

  	
   

  	
  712,111

  	
   

  	
  456,991

  	
   

  	
  1,491,463

  	
   

  	
  9,450

  	
   

  	
  209,804

  	
   

  	
  18,900

  	
   

  	
  419,608

  	
   

  	
  16.5

  	
   

  
	
  63

  	
   

  	
  989,533

  	
   

  	
  779,160

  	
   

  	
  320,000

  	
   

  	
  758,398

  	
   

  	
  486,696

  	
   

  	
  1,554,477

  	
   

  	
  9,600

  	
   

  	
  233,348

  	
   

  	
  19,200

  	
   

  	
  466,697

  	
   

  	
  17.5

  	
   

  
	
  64

  	
   

  	
  1,029,115

  	
   

  	
  810,327

  	
   

  	
  330,000

  	
   

  	
  807,694

  	
   

  	
  518,331

  	
   

  	
  1,620,153

  	
   

  	
  9,900

  	
   

  	
  258,733

  	
   

  	
  19,800

  	
   

  	
  517,465

  	
   

  	
  18.5

  	
   

  



 


	
   

  	
   

  	
   

  	
   

  	
  Exec 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Gross

  	
   

  	
  Exec 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Corp Tax
  on 

  	
   

  	
  Total
  Cost of 

  	
   

  
	
  BOY

  	
   

  	
  Total

  	
   

  	
  Cont

  	
   

  	
  Gross

  	
   

  	
  Exec Net

  	
   

  	
  Exec
  Acct

  	
   

  	
  Exec Inv

  	
   

  	
  Exec
  Plan

  	
   

  
	
  Age

  	
   

  	
  Comp

  	
   

  	
  Percent

  	
   

  	
  Cont.

  	
   

  	
  Cont. (5)

  	
   

  	
  EOY

  	
   

  	
  Earnings

  	
   

  	
  (Cont. +
  Tax)

  	
   

  
	
  45

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  46

  	
   

  	
  508,000

  	
   

  	
  5.25

  	
  %

  	
  21,000

  	
   

  	
  21,000

  	
  (6)

  	
  21,672

  	
   

  	
  245

  	
   

  	
  21,245

  	
   

  
	
  47

  	
   

  	
  528,320

  	
   

  	
  5.25

  	
  %

  	
  21,840

  	
   

  	
  2,490

  	
   

  	
  25,650

  	
   

  	
  543

  	
   

  	
  3,033

  	
   

  
	
  48

  	
   

  	
  549,453

  	
   

  	
  5.25

  	
  %

  	
  22,714

  	
   

  	
  2,914

  	
   

  	
  30,324

  	
   

  	
  643

  	
   

  	
  3,556

  	
   

  
	
  49

  	
   

  	
  571,431

  	
   

  	
  5.25

  	
  %

  	
  23,622

  	
   

  	
  3,372

  	
   

  	
  35,775

  	
   

  	
  759

  	
   

  	
  4,131

  	
   

  
	
  50

  	
   

  	
  594,288

  	
   

  	
  5.25

  	
  %

  	
  24,567

  	
   

  	
  3,417

  	
   

  	
  41,627

  	
   

  	
  889

  	
   

  	
  4,306

  	
   

  
	
  51

  	
   

  	
  618,060

  	
   

  	
  5.75

  	
  %

  	
  27,983

  	
   

  	
  6,383

  	
   

  	
  50,920

  	
   

  	
  1,062

  	
   

  	
  7,445

  	
   

  
	
  52

  	
   

  	
  642,782

  	
   

  	
  5.75

  	
  %

  	
  29,102

  	
   

  	
  7,052

  	
   

  	
  61,508

  	
   

  	
  1,290

  	
   

  	
  8,343

  	
   

  
	
  53

  	
   

  	
  668,493

  	
   

  	
  5.75

  	
  %

  	
  30,266

  	
   

  	
  7,766

  	
   

  	
  73,520

  	
   

  	
  1,550

  	
   

  	
  9,316

  	
   

  
	
  54

  	
   

  	
  695,233

  	
   

  	
  5.75

  	
  %

  	
  31,477

  	
   

  	
  8,527

  	
   

  	
  87,099

  	
   

  	
  1,844

  	
   

  	
  10,371

  	
   

  
	
  55

  	
   

  	
  723,042

  	
   

  	
  5.75

  	
  %

  	
  32,736

  	
   

  	
  8,886

  	
   

  	
  101,931

  	
   

  	
  2,170

  	
   

  	
  11,056

  	
   

  
	
  56

  	
   

  	
  751,964

  	
   

  	
  6.25

  	
  %

  	
  37,006

  	
   

  	
  12,706

  	
   

  	
  121,669

  	
   

  	
  2,567

  	
   

  	
  15,273

  	
   

  
	
  57

  	
   

  	
  782,043

  	
   

  	
  6.25

  	
  %

  	
  38,486

  	
   

  	
  13,736

  	
   

  	
  143,753

  	
   

  	
  3,047

  	
   

  	
  16,783

  	
   

  
	
  58

  	
   

  	
  813,324

  	
   

  	
  6.25

  	
  %

  	
  40,026

  	
   

  	
  14,376

  	
   

  	
  167,933

  	
   

  	
  3,578

  	
   

  	
  17,954

  	
   

  
	
  59

  	
   

  	
  845,857

  	
   

  	
  6.25

  	
  %

  	
  41,627

  	
   

  	
  15,527

  	
   

  	
  194,872

  	
   

  	
  4,165

  	
   

  	
  19,692

  	
   

  
	
  60

  	
   

  	
  879,692

  	
   

  	
  6.25

  	
  %

  	
  43,292

  	
   

  	
  16,292

  	
   

  	
  224,352

  	
   

  	
  4,814

  	
   

  	
  21,105

  	
   

  
	
  61

  	
   

  	
  914,879

  	
   

  	
  6.75

  	
  %

  	
  48,625

  	
   

  	
  21,175

  	
   

  	
  260,788

  	
   

  	
  5,570

  	
   

  	
  26,745

  	
   

  
	
  62

  	
   

  	
  951,474

  	
   

  	
  6.75

  	
  %

  	
  50,570

  	
   

  	
  22,220

  	
   

  	
  300,670

  	
   

  	
  6,447

  	
   

  	
  28,667

  	
   

  
	
  63

  	
   

  	
  989,533

  	
   

  	
  6.75

  	
  %

  	
  52,593

  	
   

  	
  23,793

  	
   

  	
  344,768

  	
   

  	
  7,411

  	
   

  	
  31,205

  	
   

  
	
  64

  	
   

  	
  1,029,115

  	
   

  	
  6.75

  	
  %

  	
  54,697

  	
   

  	
  24,997

  	
   

  	
  392,975

  	
   

  	
  8,471

  	
   

  	
  33,469

  	
   

  



 










(1)          a.                Size of fund will limit investment options.


b.              Size of fund will result in higher fees than
company pension plan.


c.               8% pension plan assumption is relatively aggressive today.


d.              Company has risk if defined benefit pension
plan fails to meet the 8% assumption.


(2)          Annuity
purchase interest assumption. Represents fixed income return rate.


(3)          Assumes
full company match. No employee contributions are counted toward the 55% of pay
target.


(4)          Short
term bonus assumption is approximately half of target.


(5)          Plan is
graduated for larger contributions in later years.


(6)          First
year exclusion from Cascade qualified plans.


 





















 


Cascade Natural Gas


Executive
Defined Contribution Plan Benefit Projection


 


Age 65 Benefit Calculation
for David Stevens


 


	
   

  	
   

  	
   

  	
  Benefit

  	
   

  	
  Pct of
  Final 

  3yr Avg

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Total Target Replacement Ratio Under Non
  Qualified Plan at Age 65

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1) Final 3 Year Average Base Salary

  	
   

  	
  779,560

  	
   

  	
   

  	
   

  
	
   

  	
  2) 55% x Final 3 Year Average Base Salary 

  	
   

  	
  428,758

  	
   

  	
  55.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Elements to Reach Target

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Social Security Benefit

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1) Projected Social Security benefit beginning at age 65

  	
   

  	
  43,772

  	
   

  	
   

  	
   

  
	
   

  	
  2) One half of Projected Social Security benefit

  	
   

  	
  21,886

  	
   

  	
  2.8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Qualified Plan Benefit

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1) CNG Match Account

  	
   

  	
  258,733

  	
   

  	
   

  	
   

  
	
   

  	
  2) CNG Other DC Accounts

  	
   

  	
  517,465

  	
   

  	
   

  	
   

  
	
   

  	
  3) Annuity Factor at age 65

  	
   

  	
  11.31327

  	
   

  	
   

  	
   

  
	
   

  	
  4) CNG Qualified Plans annual annuity at age 65

  	
   

  	
  68,610

  	
   

  	
  8.8

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Prior Employer Qualified Benefits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1) Getty single life
  annuity at age 65

  	
   

  	
  976

  	
   

  	
   

  	
   

  
	
   

  	
  2) SU 10 year certain and life annuity, converted to single life
  annuity at age 65

  	
   

  	
  1,454

  	
   

  	
   

  	
   

  
	
   

  	
  3) Cash Balance (IRA), converted to single life annuity at age 65

  	
   

  	
  71,394

  	
   

  	
   

  	
   

  
	
   

  	
  4) DC plan account, converted to single life annuity at age 65

  	
   

  	
  45,816

  	
   

  	
   

  	
   

  
	
   

  	
  5) Total annuity from prior employer qualified plans

  	
   

  	
  119,640

  	
   

  	
  15.3

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Prior Employer Non-Qualified Benefits

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1) SERP & Shadow 401(k) after-tax account balance at age 65

  	
   

  	
  1,620,153

  	
   

  	
   

  	
   

  
	
   

  	
  2) Equivalent after-tax annuity at age 65

  	
   

  	
  143,208

  	
   

  	
   

  	
   

  
	
   

  	
  3) After-tax annuity converted to equivalent pre-tax annuity (IRC 72)

  	
   

  	
  186,828

  	
   

  	
  24.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Target Executive DC Benefit Payable in Order to
  Meet Retirement Objective at Age 65

  	
   

  	
  31,794

  	
   

  	
  4.1

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Proposed Executive DC Plan Design Results

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1) Executive DC Plan account balance at age 65

  	
   

  	
  392,975

  	
   

  	
   

  	
   

  
	
   

  	
  2) Executive DC Plan annual annuity at age 65

  	
   

  	
  34,736

  	
   

  	
  4.5

  	
  %