**EXHIBIT10.30**

 

**CONFORMEDCOPY**

 

**THE CASCADE NATURAL GAS CORPORATION**

 

**EXECUTIVE SUPPLEMENTAL RETIREMENTINCOME PLAN**

 

As Amended andRestatedas of January 1, 1996and Further Amended throughAmendment No. 2

 

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**TABLE OF CONTENTS**

 
| PURPOSE                                                    |                                                   |
|------------------------------------------------------------|--------------------------------------------------------|
|                                                       |                                                   |
| ARTICLE 1. DEFINITIONS                                |                                                   |
|                                                       |                                                   |
| 1.1                                                        | “Board”                                      |   |
| 1.2                                                        | “Committee”                                  |   |
| 1.3                                                        | “Company”                                    |   |
| 1.4                                                        | “Effective Date”                             |   |
| 1.5                                                        | “Final Monthly Compensation”                 |   |
| 1.6                                                        | “Lump Sum”                                   |   |
| 1.7                                                        | “Normal Retirement Date”                     |   |
| 1.8                                                        | “Participant”                                |   |
| 1.9                                                        | “Plan”                                       |   |
| 1.10                                                       | “Primary Social Security Benefit”            |   |
| 1.11                                                       | “Retirement Plan”                            |   |
| 1.12                                                       | “Surviving Beneficiary”                      |   |
| 1.13                                                       | “Total and Permanent Disability”             |   |
|                                                       |                                                   |   |
| ARTICLE 2. PARTICIPATION                              |                                                   |
|                                                       |                                                   |   |
| ARTICLE 3. RIGHT TO RECEIVE  BENEFITS                 |                                                   |
|                                                       |                                                   |   |
| 3.1                                                        | Normal Retirement Supplemental Income                  |   |
| 3.2                                                        | Early or Disability Retirement Supplemental  Income    |   |
| 3.3                                                        | Death Benefits                                         |   |
| 3.4                                                        | Beneficiary of Death Benefits                          |   |
| 3.5                                                        | Vested Benefits                                        |   |
| 3.6                                                        | Forfeiture or Suspension of Benefits                   |   |
| 3.7                                                        | Retirement Benefits in the  Event of Change in Control |   |
| 3.8                                                        | Limitations on Certain Excess Payments                 |   |
|                                                       |                                                   |   |
| ARTICLE 4. PAYMENT OF BENEFITS                        |                                                   |
|                                                       |                                                   |   |
| 4.1                                                        | Form                                                   |   |
| 4.2                                                        | Source                                                 |   |
| 4.3                                                        | Key Man Insurance                                      |   |
| 4.4                                                        | Physical Examination                                   |   |
|                                                       |                                                   |   |
| ARTICLE 5. ADMINISTRATION,  AMENDMENT AND TERMINATION |                                                   |
|                                                       |                                                   |   |
| 5.1                                                        | Committee                                              |   |

 

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| 5.2                                | Company Functions          |   |
|------------------------------------|----------------------------|--------|
| 5.3                                | Amendment and Termination  |   |
|                               |                       |   |
| ARTICLE 6. GENERAL PROVISIONS |                       |
|                               |                       |   |
| 6.1                                | No Effect on Employment    |   |
| 6.2                                | Legally Binding            |   |
| 6.3                                | No Transfer of Benefits    |   |
| 6.4                                | Disclosure to Participants |   |
| 6.5                                | Adoption                   |   |
|                               |                       |   |
| APPENDIX A                         |                       |
|                               |                       |   |
| APPENDIX B                         |                       |

 

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**CASCADE NATURAL GAS CORPORATION**

 

**EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN**

 

PURPOSE

 

Cascade Natural GasCorporation established this Executive Supplemental Retirement Income Planeffective July 1, 1983, to promote the best interests of the Company byenabling the Company (a) to attract to its key management positions persons ofoutstanding ability, and (b) to retain in its employ those persons ofoutstanding competence who occupy key executive positions and who in the pastcontributed and who continue in the future to contribute materially to thesuccess of the business by their ability, ingenuity and industry.  The Plan was amended and restated effectiveJanuary 1, 1987, to clarify the provisions regarding death benefits andagain effective May 1, 1989, to reflect changes to early retirementbenefits, to clarify provisions regarding the vested benefits, spousalbenefits, and benefits in the event of change in control and to limit certainexcess payments.  The Plan is beingamended and restated to incorporate amendments to the May 1, 1989restatement and to provide additional benefits in the event of certain changesin control of the Company.  Theprovisions of this Amended and Restated Plan supersede those of the priorversion of the Plan as of the Effective Date.

 

# ARTICLE 1.

 

# DEFINITIONS

 

In construing the Plan,the following words and phrases shall have the following meanings unless adifferent meaning is plainly required by the content:

 

1.1           “Board”means the Board of Directors of the Company as constituted from time to time.

 

1.2           “Committee”means the Pension Committee of the Board.

 

1.3           “Company”means Cascade Natural Gas Corporation, a Washington corporation.

 

1.4           “Effective Date”of the Amended Plan is January 1, 1996, except as follows:

 

(a)          The changes in 2.2 relating to thedate on which participation begins shall apply only to a Participant who is anemployee on or after January 1, 1996.

 

(b)         The changes in crediting of service forvesting under 3.5(c) shall apply on May 1, 1996 only with respect to a Participantwho is an employee on or after that date.

 

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(c)           Theadditional severance benefits provided under 3.7(i) shall be effectiveMay 1, 1996.

 

1.5           “FinalMonthly Compensation” means the greater of the following:

 

(a)           One-twelfth (1/12) of the highestannual salary paid to a Participant during any of the five calendar yearspreceding the Participant’s retirement under this Plan; or

 

(b)           The rate of monthly salary payable tothe Participant in the last full month prior to the Participant’s retirementunder this Plan.

 

1.6           “Lump Sum”means a single payment representing all unpaid installments determined under3.3(g).

 

1.7           “Normal RetirementDate” means the first day of the month next following the Participant’ssixty-fifth (65th) birthday.

 

1.8           “Participant”means an employee who has fulfilled and continues to fulfill all requirementsfor participation.  The initialdesignation of Participants shall be all executive officers of the Companyelected by the Board of Directors (not including “Assistant” officerpositions).

 

1.9           “Plan” meansthe Executive Supplemental Retirement Income Plan as set out in this agreement,as amended from time to time.

 

1.10         “Primary SocialSecurity Benefit” means the estimated monthly primary old age insuranceamount which a Participant could expect to receive commencing on the first dayof the month following the Participant’s 65th birthday or later terminationdate under the federal Social Security Act as in effect on the Participant’sNormal Retirement Date or Termination Date, whichever occurs first.  In making the estimate, it will be assumedthat

 

(a)          The covered earnings of a Participantretiring on or after his Normal Retirement Date for the calendar year prior tohis retirement will be twelve (12) times his Final Monthly Compensation,subject to the limit in (c). Furthermore, the Participant’s covered earnings for each prior year willbe based on the assumption that the Participant received six percent (6%)annual increases in his compensation on the first day of January of eachyear, subject to the limit in (c).

 

(b)         The covered earnings of a Participantwhose employment terminates for any reason prior to his Normal Retirement Datewill be twelve (12) times his Final Monthly Compensation, subject to the limitin (c) and determined as of the date the Participant’s employment terminates,for the calendar year in which the Participant’s employment terminates and foreach calendar year up to and including his Normal Retirement Date.  Furthermore, the Participant’s coveredearnings for each prior year will be subject to the limit in (c) and based on

 

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the assumption that the Participant received six percent (6%) annualincreases in his compensation on the first day of January of each year.

 

(c)           Coveredearnings of a Participant for any year shall not exceed the compensation andbenefit base in effect at the beginning of the year as determined underSection 230 of the Social Security Act.

 

1.11         “Retirement Plan”means the Retirement Plan for Employees of Cascade Natural Gas Corporation, asamended from time to time.

 

1.12         “Surviving Beneficiary”means the beneficiary or beneficiaries determined pursuant to Section 3.4.

 

1.13         “Total andPermanent Disability” means a disability that is presumably permanent andwhich prevents the Participant from rendering the services required by him inhis employment by the Company.

 

1.14         “Years of Benefit Service” hasthe meaning set forth in the Retirement Plan.

 

1.15         “Years of Eligibility Service”has the meaning set forth in the Retirement Plan.

 

# ARTICLE 2.

 

# PARTICIPATION

 

2.1           Participation shall be limited to keyexecutive employees designated by the Board as eligible.  Eligible employees may be designated by nameor by class of employee.

 

2.2           Participation in the plan shall starton the first day of the calendar month that coincides with or immediatelyfollows the date on which the employee becomes eligible to participate under2.1.

 

(a)           Thedate on which participation begins shall be known as the “Entry Date.”

 

(b)           Participationshall continue until the first of the following occurs:

 

(1)           The individual ceases to be a memberof a class of employee designated as eligible to participate.

 

(2)           The Board terminates the individual’seligibility.

 

(3)           The individual’s employmentterminates for any reason.

 

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(c)           Discontinuingparticipation shall not affect a Participant’s rights to any vested accrued benefitsunder the Plan, subject to 3.6.

 

2.3           No employee shall be eligible toparticipate in the plan after September 30, 2003.

 

# ARTICLE 3.

 

# RIGHT TO RECEIVE BENEFITS

 

Each qualifiedParticipant or his beneficiary shall have the right to receive, and the Companyshall pay, supplemental benefits as provided in this Article 3.

 

3.1           NormalRetirement Supplemental Income. Upon retirement at or after his Normal Retirement Date, a Participantshall receive a monthly pension for life equal to the vested portion of theNormal Retirement Benefit under (a):

 

(a)           TheNormal Retirement Benefit shall equal seventy percent (70%) of theParticipant’s Final Monthly Compensation less the sum of the following:

 

(1)           his monthly retirement income fromthe Retirement Plan (computed as a single life annuity); and

 

(2)           one-twelfth (1/12) of his annualPrimary Social Security Benefit (computed on the date he actually retireswithout regard to any subsequent cost of living adjustments).

 

(b)           Vestingshall be determined under 3.5.

 

(c)           Benefitsshall cease to accrue after September 30, 2003.  The accrued benefit of any Participant shall be computed as ifthe Participant terminated employment on the earlier of September 30, 2003or the date as of which employment actually ended.

 

3.2           Early orDisability Retirement Supplemental Income. Early retirement benefits and disability benefits shall be payable asfollows.

 

(a)           TheBoard may approve applications for early retirement under the Plan for thefollowing:

 

(1)           A Participant with at least 2 Yearsof Eligibility Service who has either attained age 55 or suffered a total andpermanent disability.

 

(2)           A Participant whose benefits havefully vested under 3.5.

 

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(b)           Applicationsunder (a) shall state whether the Participant wishes benefits to begin atNormal Retirement Date or the date the Participant actually retires.

 

(c)           TheParticipant’s monthly retirement income from the Retirement Plan shall be thesingle life annuity that begins on the Participant’s Normal Retirement Date towhich the Participant would be entitled if he had attained his NormalRetirement Date on the date his employment by the Company terminated.

 

(d)           TheParticipant’s Final Monthly Compensation shall be determined as of the time theParticipant’s employment by the Company ends.

 

(e)           TheParticipant’s Primary Social Security Benefit shall be computed as provided inSection 1.10(a)(2) and shall constitute an offset in computing theParticipant’s Supplemental Retirement Income as provided in subparagraph (b)(2)of Section 3.1 whether or not the Participant’s Social Security benefitshave commenced.  If the Participant isnot eligible to receive Social Security benefits when payment of hissupplemental retirement under this Plan begins, the Board may, in its solediscretion, agree to pay the Participant an additional sum equal to one-twelfth(1/12th) of the Participant’s annual Primary Social Security Benefit reduced asprovided by Section 202(q) of the Social Security Act for payment atage 62.  Such additional paymentsshall terminate with the payment due in the month of the Participant’s 62ndbirthday.

 

(f)            Ifthe Participant’s supplemental payments start prior to his Normal RetirementDate, then, subject to paragraph (g) below, the amount of each monthly paymentshall be reduced using the same percentages as apply in determining aParticipant’s monthly early retirement income under the Retirement Plan as setforth in Table C to said Retirement Plan. A copy of Table C is attached as Appendix A to this Agreement.

 

(g)           Noreduction under paragraph (f) will be required if either of the followingapplies:

 

(1)           On the date the Participant retires,the sum of the Participant’s age plus the number of whole Years of BenefitService after 1989 and Years of Past and Future Service prior to 1990 that arecredited to the Participant under the Retirement Plan equals or exceeds 90.

 

(2)           The Board has designated theParticipant as eligible to retire early without actuarial reduction of benefits.  Such designations may be made at any timewithout need for an application by the Participant.

 

3.3           Death Benefits.  The Plan shall pay a death benefit to thesurviving spouse of a Qualifying Participant and to the designated beneficiary,if the surviving spouse is not the designated beneficiary.  The death benefit payable to the survivingspouse shall consist of the Spousal Benefit, plus, if the surviving spouse isthe designated beneficiary, the Guaranteed

 

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Benefit.  The death benefit payable to a designatedbeneficiary who is not the surviving spouse shall consist only of theGuaranteed Benefit.

 

(a)           AQualifying Participant is any of the following:

 

(1)           A Participant who dies while stillemployed by the Company.

 

(2)           A Participant who dies after theBoard has approved payment of benefits under Section 3.2 but beforepayment of benefits begins.

 

(3)           A Participant who dies after paymentof benefits has begun.

 

(b)           Indetermining whether payments to a Participant have begun or whether theGuaranteed Payment Period has begun or ended, payments shall be deemed to havebeen made in any month in which a payment would otherwise have been made if theamount of the reductions under paragraph 3.1(b) did not equal or exceed theamount determined under paragraph 3.1(a).

 

(c)           TheGuaranteed Payment Period shall be a period of 120 months that begins on thefollowing dates:

 

(1)           If the Participant dies while stillemployed by the Company or after the Board has approved payment of benefitsunder Section 3.2 but before payment of benefits begins, the GuaranteedPayment Period shall begin on the first day of the month following the date theParticipant dies.

 

(2)           If the Participant dies after paymentof benefits under Sections 3.1 or 3.2 has begun, the Guaranteed Payment Periodshall begin with the first month in which payments are made (or deemed to havebeen made) to the Participant.

 

(d)           TheGuaranteed Benefit shall be a payment for each month that remains in the GuaranteedPayment Period when the Participant dies determined as follows:

 

(1)           Subject to subparagraph (3), ifpayments to the Participant have begun when the Participant dies, theGuaranteed Benefit shall be the monthly amount payable during the month beforethe Participant’s death.

 

(2)           Subject to subparagraph (3),  if the Participant dies before paymentsunder Sections 3.1 or 3.2 have begun, the Guaranteed Benefit shall be thegreater of -

 

•                                          Themonthly payment that would have been made to the Participant if the Participanthad attained Normal

 

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Retirement Date andpayments under Section 3.1 had begun on the day before the Participantdied.

 

•                                          Themonthly pre-retirement death benefit, if any, in Appendix B to this plan.

 

(3)           The Guaranteed Benefit shall bereduced by the Spousal Benefit as follows:

 

•                                          Thereduction shall be determined by subtracting the monthly Spousal Benefit fromthe monthly Guaranteed Benefit.

 

•                                          Ifthe Participant’s spouse dies after payment of the Guaranteed Benefit hasbegun, the amount of the Guaranteed Benefit shall not be adjusted to reflectthe discontinuance of the Spousal Benefit.

 

•                                          Ifthe Guaranteed Benefit is paid in a single lump sum, the lump sum shall bebased on the reduced monthly payment.

 

(4)           The Guaranteed Benefit shall bepayable beginning with the first day of the month following the date theParticipant dies.

 

(5)           No Guaranteed Benefit shall bepayable after the Guaranteed Payment Period.

####  

### (e)           The Spousal Benefit shall be amonthly payment as follows:

###  

#### (1)           Themonthly payment shall be equal to one-half of -

####  

•                                          Ifpayments to the Participant (other than payments under section 3.7(b)(1))have begun when the Participant dies, the monthly amount payable during themonth before the Participant’s death;

 

•                                          Ifthe Participant dies before payments under Sections 3.1 or 3.2 or afterpayments under section 3.7(b)(1) have begun, the monthly amount that wouldhave been paid to the Participant if the Participant had attained Normal RetirementDate and payment under Section 3.1 had begun on the day before theParticipant died.

 

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(2)           The benefit shall be payable to theParticipant’s spouse for life beginning with the first day of the monthfollowing the date the Participant dies and shall be determined afterapplication of the rule in subparagraph (d)(3).

 

(3)           No Spousal Benefit shall be payableif the Participant dies without a surviving spouse.  The existence and identity of the Participant’s spouse shall bedetermined as of the date the Participant dies.

 

(f)            TheCommittee may, in its discretion, do the following:

 

(1)           Combine the monthly payments underthe Guaranteed Benefit or the Spousal Benefits into a single annual payment foras long as payments are due.

 

(2)           Pay the Guaranteed Benefit in asingle lump sum.

 

(g)           Thelump sum value of the Guaranteed Benefit shall be determined using an interestrate of six percent (6%) per year, compounded annually, and the UP-1984mortality table.

 

(h)           Ifthe primary beneficiary designated under Section 3.4 dies before theGuaranteed Benefit has been completely paid, then, the balance of theGuaranteed Benefit shall be paid to any contingent beneficiaries designated bythe Participant under Section 3.4. If no contingent beneficiary has been designated, a prior designationhas been revoked without substitution, or no contingent beneficiary survivesthe primary beneficiary, then the unpaid balance of the Guaranteed Benefitshall be paid as provided in paragraph 3.4(c).

 

(i)            Thissupplemental death benefit shall be in addition to any death benefit providedby any other Company-sponsored plan or insurance program.

 

3.4           Beneficiary ofDeath Benefits.  Each Participantshall designate on a form to be furnished by the Company a beneficiary orbeneficiaries of any Guaranteed Benefits that become payable on account of hisdeath.  The primary beneficiary of amarried Participant shall be his spouse unless the spouse consents in writingto the designation of another primary beneficiary.  Any such beneficiary designation may be revoked or changed byfiling a new designation with the Company. The designation last filed with the Company shall control.  The revocation of a beneficiary designationshall not require the consent of any beneficiary.  When a Participant dies, the Company shall distribute theParticipant’s Guaranteed Benefit in accordance with the beneficiary designationlast filed with the Company by the Participant, or, in the event no beneficiarydesignation has been filed, in accordance with paragraph c. below.  Payment of a deceased Participant’sGuaranteed Benefit as provided in this Section 3.4 shall completelydischarge the Company and the Committee.

 

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(a)           Designationof the Participant’s spouse as a beneficiary shall be deemed revoked upon theentry of a decree of divorce or legal separation.

 

(b)           Iftwo or more beneficiaries are designated and one or more of them fails tosurvive the deceased Participant, but one or more of the other beneficiaries dosurvive the Participant, then any remaining Guaranteed Benefit shall bedistributed to the surviving beneficiaries unless otherwise expressly stated inthe designation form.

 

(c)           Ifno beneficiary has been designated, a prior designation has been revokedwithout substitution or no beneficiary survives the deceased Participant, thenany Guaranteed Benefit shall be paid to the following in the order named:

 

(1)           The Participant’s spouse at date ofdeath;

 

(2)           The Participant’s children and issueof deceased children, perstirpes (lawful issue and adopted);

 

(3)           Parents of the Participant;

 

(4)           Brothers and sisters of theParticipant;

 

(5)           The Participant’s estate.

 

(d)           Distributionto beneficiaries or others who are minors or incompetent persons may be made,at the discretion of the Committee, (1) directly to such minor, (2) to thelegal guardian or trustee of such person’s estate, or (3) to the naturalguardian or person having custody of and caring for such person.  Distributions to such persons shall be madein accordance with such of the methods of distribution as the Committee shallselect.  The Company shall not berequired to see to the application of the sums so distributed and the receiptby any such persons shall discharge the Company and the Committee of anyfurther obligation or liability with respect to such payment.

 

3.5           Vested Benefits.

 

(a)           AParticipant’s right to benefits under this Plan shall become vested andnonforfeitable when the first of the following events occurs:

 

(1)           The 365th day immediately prior tothe Participant’s Normal Retirement Date;

 

(2)           The Participant dies;

 

(3)           The Board approves Early orDisability Retirement Supplemental Income benefits pursuant toSection 3.2;

 

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(4)           The Participant attains age 55 and,if the Participant’s employment ends before October 1, 2003, theParticipant completes 5 years of participation.

 

(5)           A Change in Control of The Company(as defined in 3.7(d)) occurs.

 

(b)           Upontermination of employment for any reason other than death, the following shallapply:

 

(1)           The vested portion of theParticipant’s benefits shall begin at the Participant’s Normal Retirement Date,unless the Participant qualifies for earlier payment under 3.2 or 3.7.

 

(2)           The unvested portion of aParticipant’s benefits shall be forfeited.

 

(c)           AParticipant will be credited with a year of participation on the last day ofeach participation year under (d) that satisfies the following:

 

(6)           The Participant must complete 1,000or more hours of service (as defined in the Retirement Plan) during the year.

 

(7)           The year must begin on or after theParticipant’s Entry Date under 2.2.

 

(8)           The Participant must be employed onthe last day of the year.

(d)           Aparticipation year is a twelve-month period that begins on the Participant’sEntry Date or any anniversary of that date.

 

(e)           Prior to complete vesting under (a),a Participant’s benefits shall vest based on years of age after age 39 and yearsof employment in accordance with the following:

 

(1)           For each year of continuousemployment with the Company, three percent (3%) of the Participant’s benefitsshall vest, subject to the following:

 

•                                          TheParticipant must have been continuously employed for three years.

 

•                                          Vestingon account of continuous employment cannot exceed 50% of the Participant’sbenefits.

 

•                                          Ayear of continuous employment is completed on each anniversary of the date theParticipant was most recently hired, if the Participant is still employed onthe anniversary

 

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date.  No credit shall be given for a partial yearof continuous employment.

 

•                                          Yearsof employment before a break in the Participant’s continuous employment by theCompany shall be disregarded in determining additional vesting attributable toyears of employment since the Participant’s most recent date of hire.

 

(2)           For each complete year of age afterage 39, three percent (3%) of a Participant’s benefits shall vest, subject tothe following limitations:

 

•                                          TheParticipant must have been continuously employed by the Company for threeyears.

 

•                                          Vestingon account of years of age cannot exceed 50% of the Participant’s benefits.

 

(f)            If a Participant’s employmentterminates and the Participant is later rehired, all years of continuousemployment completed prior to the date of rehire shall be disregarded indetermining the vested portion of the Participant’s Normal Retirement Benefitunder 3.1(a) that accrues after rehire.

 

3.6           Forfeiture orSuspension of Benefits. Notwithstanding any other provision of this Plan to the contrary,supplemental benefits shall be forfeited or suspended as follows:

 

(a)           No supplemental benefits shall bepaid if the Participant is discharged from the Company for cause involvingillegal or fraudulent acts.

 

(b)           No supplemental benefits shall bepaid if the Participant commits suicide, while sane or insane, within one yearfrom the date he is enrolled under the Plan.

 

(c)           Supplemental benefit payments shallbe suspended during any period of reemployment by the Company or any otherperiod when payments under the Retirement Plan are suspended.  Notwithstanding the preceding sentence,benefits payable pursuant to Section 3.7 shall be suspended only on accountof the reemployment of the Participant by the Company.

 

## 3.7           RetirementBenefits in the Event of Change in Control.

 

(a)           A Participant’s benefits shall becomputed under this section 3.7 if the Participant’s employment isinvoluntarily terminated within 36 months after the last event constituting achange in control of the Company.

 

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(b)           Subject to 3.8, benefits under thissection shall be the sum of the following:

 

(1)           An amount equal to seventy percent(70%) of the Participant’s Final Monthly Compensation (without reduction forany benefits payable from the Retirement Plan or any Primary Social SecurityBenefit) commencing on the first day of the month following the later of theParticipant’s fifty-fifth (55th) birthday or the date on which theParticipant’s employment by the Company terminates and ending with the earlierof the Participant’s death or the payment for the month in which occurs theParticipant’s sixty-fifth (65th) birthday; plus

 

(2)           An amount for the Participant’slifetime commencing upon the first day of the month following the later of theParticipant’s sixty-fifth birthday or the date on which the Participant’semployment by the Company terminates and equal to seventy percent (70%) of theParticipant’s Final Monthly Compensation less the amounts described inparagraph b. of Section 3.1, but without reduction on account ofbenefits payable under 3.7(b)(1).

 

(3)           If the Participant’s employment isterminated involuntarily before the Participant’s fifty-fifth birthday, theseverance benefit under paragraph (i).

 

(c)           Amounts payable under (b) shall bereduced by any amounts that the Participant receives as cash compensation fromthe Company for current services as an employee or independent contractor tothe extent such amounts are subject to withholding or reportable to theInternal Revenue Service on an information return.

 

(d)           A “Change in Control” shall mean:

 

(1)           A change in control of a nature thatwould be required to be reported in response to Item 6(e) of Schedule 14Aof Regulation 14A promulgated under the Securities Exchange Act of 1934, asamended (the “Act”) or any successor thereto; provided that such a change incontrol shall be deemed to have occurred only when (i) any “person” (as suchterm is used in Sections 13(d) and 14(d) of the Act) acquires, directly orindirectly, actual economic beneficial ownership (as opposed to “beneficialownership” as defined in Rule 13d-3 under the Act) directly or indirectly, ofthirty percent (30%) or more of the combined voting power of the Company’s thenoutstanding securities ordinarily having the right to vote at election ofdirectors; or

 

(2)           During any period of two consecutiveyears, individuals who at the beginning of such period constitute the Board ofDirectors of the Company (the “Board”) cease for any reason to constitute atleast a majority thereof unless the election, or the nomination for election bythe Company’s stockholders, of each

 

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new director was approved by a vote of at leasttwo-thirds of the directors then still in office who were directors at thebeginning of the period; or

 

(3)           Any consolidation or merger of theCompany in which the Company is not the continuing or surviving corporation orpursuant to which Company shares would be converted into cash, securities, orother property; or

 

(4)           Any sale, lease, exchange or othertransfer (in one transaction or a series of related transactions) of all, orsubstantially all, of the assets of the Company; or

 

(5)           Approval by the shareholders of theCompany of any plan or proposal for the liquidation or dissolution of theCompany.

 

(e)           AParticipant’s employment shall be treated as having been involuntarilyterminated when any one or more of the following occurs:

 

(1)           The Company terminates theParticipant’s employment for any reason other than cause or the Participant’sdisability or death.

 

(2)           The Participant terminates employmentfor good reason.

 

(f)            Terminationfor cause shall mean termination for any of the following reasons, subject to(g):

 

(1)           The Participant commits an act offraud, embezzlement, or theft constituting a felony.

 

(2)           The Participant becomes liable to theCompany for acts or omissions involving intentional misconduct or a knowingviolation of law.

 

(3)           The Participant engages in anytransaction relating to the Company from which the Participant personallyreceives a benefit in money, property, or services to which the Participant isnot legally entitled.

 

(g)           Beforea Participant is terminated for cause, the following shall occur:

 

(1)           The Board shall meet to determinewhether any of the requirements for termination for cause apply to theParticipant.

 

(2)           The Company shall provide theParticipant with reasonable notice of the meeting and an opportunity forParticipant and Participant’s legal counsel to appear before the Board.

 

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(3)           75% of the entire Board mustdetermine that the Participant’s employment shall be terminated for cause.

 

(4)           The Company shall provide to theParticipant a copy of the Board’s resolution terminating the Participant’semployment for cause.

 

(h)           Terminationof employment for good reason shall mean termination for any of the followingreasons:

 

(1)           The Participant reasonably concludesthat a change in the Participant’s status or position with the Company does notrepresent a substantially similar position or a promotion before the Change inControl.

 

(2)           The Participant reasonably concludesthat a change in the Participant’s duties or responsibilities is inconsistentwith the Participant’s status and responsibilities before the Change inControl.

 

(3)           The Participant is removed from ornot reappointed or reelected to any position held before the Change in Controlor to a substantially similar or superior position, except in connection withtermination of the Participant’s employment for Cause, disability or death.

 

(4)           The Company reduces the Participant’sbase salary below the level in effect immediately prior to the Change inControl.

 

(5)           The Company fails to continue anyplan in which the Participant participates at the time of the change in controlor to provide plans providing the participant with similar benefits, except byreason of a change in law or on account of normal expiration of a plan inaccordance with its terms as in effect at the time of the Change in Control.

 

•                                          Planmeans any compensation plan (such as an incentive or stock option plan) or anyemployee benefit plan such as a thrift, pension, profit-sharing, medical,disability, accident, life insurance plan, or a relocation plan or policy, orany other plan, program, or policy of the Company intended to benefitemployees.

 

•                                          Failureto continue a plan shall include the Company’s action or failure to act thatadversely affects continued participation by the Participant in any plan on atleast as favorable a basis as prior to the Change in Control, or thatmaterially reduces the Participant’ benefits in the future or

 

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deprives the Participantof any material benefit enjoyed at the time the Change in Control occurs.

 

(6)           The Company fails to provide andcredit the Participant with the number of paid vacation days to whichParticipant was then entitled in accordance with the Company’s normal vacationpolicy as in effect immediately before the Change in Control.

 

(7)           The Company requires the Participantto be based outside the Seattle metropolitan area except for required travel onthe Company’s business to an extent consistent with the Participant’s businesstravel obligations on behalf of the Company immediately before the Change inControl.

 

(8)           The Company fails to obtain theconsent of any successor to continue this Plan.

 

(9)           The Company refuses to permit theParticipant to attend to matters or engage in activities not directly relatedto the Company’s business that the Company permitted before the Change incontrol.

 

### (i)            Severance benefit means the sum ofthe following:

 

(1)           The Participant’s full base salarythrough the date on which employment terminates at the higher of the rate ineffect on the date the change in Control occurs, or the rate in effect as ofthe time of such termination.

 

(2)           For the Severance Payment Period, amonthly amount payable on the first day of the month equal to one-twelfth(1/12) of the sum of (i) the Participant’s base annual salary at the rate ineffect when the change in control occurs, plus (ii) the average annualincentive compensation (if any) paid to the participant with respect to the twofiscal years prior to the fiscal year in which the change in control occurs.

 

(3)           The Severance Payment Period shallbegin with the month following the date of termination and end with the earlierof the 36th monthly payment or the Participant’s 55th birthday.

 

3.8           Limitations onCertain Excess Payments.

 

No payments shall be madeto a Participant under this Plan that would constitute excess parachutepayments within the meaning of Section 280G of the Internal Revenue Code.

 

(a)           Thedetermination of whether payments constitute excess parachute payments shall bemade by the Committee, with the advice of counsel.  The Committee shall

 

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notify the Participant and any other interested parties of itsdetermination which shall be final and binding on all parties.

 

(1)           The Committee shall notify theCompany and the Participant in writing of its determination within 5 businessdays after the Participant’s employment terminates.

 

(2)           The notice shall list all paymentsthat are deemed to constitute excess parachute payments and include theCommittee’s determination of the present value of each listed payment.

 

(b)           Indetermining whether payments under the Plan constitute excess parachutepayments, the Committee shall take into account any other payments ofcompensation that must be counted under Section 280G.

 

(c)           TheParticipant may, by written notice to the Committee and the Company, elect toreceive any combination of benefits to which the Participant is otherwiseentitled, that will not exceed the maximum amount that can be paid to theParticipant without resulting in excess parachute payments.

 

(d)           Ifthe Participant fails to provide timely notice of an election to receive acombination of benefits, the Committee shall determine the payments that are tobe reduced to avoid paying any excess parachute payments to the Participant.

 

ARTICLE 4.

 

PAYMENT OF BENEFITS

 

4.1           Form.  Payments to a Participant shall be mademonthly during the Participant’s lifetime. If the Participant dies before the end of the Guaranteed Payment Period,the Guaranteed Payment shall be made in monthly installments, subject toparagraph 3.3(f).

 

4.2           Source.  The commitment of the Company to paysupplemental retirement benefits under this Plan is an unsecured promise of theCompany to make the payments.  There isno asset or trust fund set aside for payment of benefits hereunder.  The Company, however, does intend to honorits obligation to pay supplemental benefits as they come due.

 

4.3           Key ManInsurance.  The Company may purchaseand own such key man life insurance as it chooses on the life of anyParticipant.  No Participant, nor hisbeneficiaries, heirs, assigns, personal representative or estate, shall haveany right to or interest in any such policy or the proceeds payable thereunderon his death.  On the death of theParticipant, the proceeds  shall be paidto the Company.

 

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4.4           Physical Examination.  Each Participant, as requested by theCompany, shall take a physical examination by a physician approved by aninsurance carrier designated by the Company. The cost of the examination shall not be borne by the Participant.  The report of such examination shall betransmitted directly from the physician to the insurance carrier designated bythe Company to establish certain costs associated with providing benefits underthis Plan.  Such examination shallremain confidential among the Participant, the physician, the insurance carrierand the Company.

 

ARTICLE 5.

 

ADMINISTRATION, AMENDMENTAND TERMINATION

 

5.1           Committee.  The Committee shall have full power andauthority to interpret, construe and administer this Plan, to adopt appropriateprocedures and to make all decisions necessary or proper to carry out the termsof the Plan.  The Committee’sinterpretation and construction of, and actions under the Plan, including anydetermination of benefit amount or designation of the person to receive supplementalpayments, shall be binding and conclusive on all persons for all purposes.  The timetable and procedure for notice ofdenial of benefit claims and for hearing on review of such denial shall be asset forth in Article XX of the Retirement Plan, and the Committee shallmake such final review and decision. The Company’s Corporate Secretary shall act as the Committee’s agent inadministering the Plan.  Neither theCompany, nor its officers, employees, directors or Committee nor any memberthereof, shall be liable to any person for any action taken or omitted inconnection with the interpretation and administration of this Plan.

 

5.2           CompanyFunctions.

 

(a)           The Company has no administrativeauthority or function and is not a plan fiduciary.

 

(b)           Except as provided in (c), allCompany functions or responsibilities shall be exercised by the chief executiveofficer of the Company, who may delegate all or any part of those functions.

 

(c)           The power to amend or terminate theplan may be exercised only by the Board of Directors of the Company, except asprovided in (d).

 

(d)           The Company’s chief executive officeror delegate may amend the Plan to make technical, administrative or editorialchanges on advice of counsel to comply with applicable law, to simplify orclarify the Plan or to adjust the amounts of pre-retirement death benefits inAppendix B.

 

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(e)           The Board of Directors of the Companyor an Employer shall have no administrative or investment authority orfunctions.  Membership on the Boardshall not, by itself, cause a person to be considered a plan fiduciary.

 

5.3           Amendmentand Termination.

 

(a)           The Company may amend this Plan atany time by written instrument.  Noamendment shall reduce any participant’s accrued benefit or the vestedpercentage of that accrued benefit, as of the date the amendment is adopted oris effective, whichever is later.

 

(b)           The Company may wholly or partlyterminate the plan at any time. Termination of the plan shall not terminate nor diminish anynonforfeitable rights or benefits accrued by any Participant or survivingbeneficiary prior to termination.

 

ARTICLE 6.

 

GENERAL PROVISIONS

 

6.1           No Effect onEmployment.  This Plan shall not bedeemed to give any Participant or other person in the employ of the Company anyright to be retained in the employment of the Company, or to interfere with theright of the Company to terminate any Participant or such other person at anytime and to treat him without regard to the effect which such treatment mighthave upon him as a Participant in the Plan.

 

6.2           Legally Binding.  The rights, privileges, benefits andobligations under this Plan are intended to be legal obligations of the Companyand binding upon the Company, its successors and assigns.

 

6.3           No Transferof Benefits.  The interest of anyParticipant or beneficiary under this Plan shall not be transferred ortransferable, voluntarily or by operation of law, by assignment, anticipation,hypothecation, pledge or other encumbrance, or by garnishment, attachment,levy, seizure or other execution, or by insolvency, receivership, bankruptcy orother debtor proceeding.

 

6.4           Disclosure toParticipants.  Each Participantshall receive a copy of this Plan, a copy of any written procedures foradministering the Plan, any amendments to the Plan or procedures, and an annualstatement of benefits over the signature of the President.

 

6.5           Adoption.  As originally adopted, this Plan wasapproved by resolution of the Board of Directors at a regular meeting onJuly 27, 1983, to be effective as of July 1, 1983.  The Plan as amended and restated effectiveMay 1, 1989 was approved by resolution of the Board at a regular meetingon October 24, 1989.  The Plan asamended and restated effective January 1, 1996 was approved by resolutionof the Board at a regular meeting on April 24, 1996.

 

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1996 RESTATEMENT EXECUTEDAS FOLLOWS EFFECTIVE AS STATED IN 1.4 ABOVE:

 
| Company: |                              | CASCADE NATURAL GAS  CORPORATION      |
|----------|-----------------------------------|---------------------------------------|
|     |                              |
|     | By                                |   /s/ W. Brian Matsuyama         |   |
|     | Its                          | Chairman and Chief  Executive Officer |   |
|     |                              |
|     | Executed:  September 9, 1996 |
|          |                                   |                                       |  |  |  |  |

 

AMENDMENT NO. 1 EXECUTEDAS FOLLOWS EFFECTIVE IN PART JANUARY 1, 1997 AND IN PART JANUARY 1,1996:

 
| Company: |                          | CASCADE NATURAL GAS  CORPORATION      |
|----------|-------------------------------|---------------------------------------|
|     |                          |
|     |                          |
|     | By                            |   /s/ W. Brian Matsuyama         |   |
|     | Its                      | Chairman and Chief  Executive Officer |   |
|     |                          |
|     | Executed: June 16,  1997 |
|          |                               |                                       |  |  |  |  |

 

AMENDMENT NO. 2 EXECUTEDAS FOLLOWS EFFECTIVE SEPTEMBER  30, 2003:

 
| **COMPANY** | **Cascade  Natural Gas Corporation** |
|-------------|--------------------------------------|
|        |                                 |
|        |                                 |
|        | By                                   |   /s/ W. Brian Matsuyama |   |
|        |                                 | President and CEO |   |
|             |                                      |  |  |  |  |

 

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APPENDIX A(see Section 3.2(d))

 

Table C

 

To use this table, entercolumn 1 with the number of years, taken to be completed twelfths, bywhich the Early Retirement Date of the Participant or the date on which theParticipant is entitled to a disability benefit precedes his Normal RetirementDate.  Determine from column 2 thecorresponding percentage.

 
| **1  Number of Years** |   | **Percentage** |   |
|------------------------|--------|----------------|--------|
|                   |   |           |   |
| 0                      |   | 100.00         | %      |
|                   |   |           |   |
| 1                      |   | 89.95          |   |
|                   |   |           |   |
| 2                      |   | 81.13          |   |
|                   |   |           |   |
| 3                      |   | 73.37          |   |
|                   |   |           |   |
| 4                      |   | 66.51          |   |
|                   |   |           |   |
| 5                      |   | 60.44          |   |
|                   |   |           |   |
| 6                      |   | 55.03          |   |
|                   |   |           |   |
| 7                      |   | 50.22          |   |
|                   |   |           |   |
| 8                      |   | 45.91          |   |
|                   |   |           |   |
| 9                      |   | 42.05          |   |
|                   |   |           |   |
| 10 or more             |   | 38.57          |   |

 

This table is onlyapplicable for a Normal Retirement Date of the first day of the monthcoinciding with or next following the sixty-fifth birthday.  Any percentage which cannot be determineddirectly from the above table will be determined on an actuarial basisconsistent with the above.

 

The actuarial assumptionsused in this table are -

 
| Mortality:  UP 84   20 Female |
|-----------------------------------------|
| Interest:    6.00%       |

 

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APPENDIX B(see Section 3.3(d)(2))

 

Pre-RetirementDeath Benefits

 
| **Participant**     |   | **Monthly  Benefit Amount** |
|---------------------|--------|-----------------------------|
|                |   |                        |
| Anderson, Larry E.  |   | $                           | 5,000 |
|                |   |                        |
| Beaudry, O. LeRoy   |   | $                           | 4,500 |
|                |   |                        |
| Boyd, Ralph E.      |   | $                           | 8,000 |
|                |   |                        |
| Haug, James E.      |   | $                           | 4,500 |
|                |   |                        |
| Matsuyama, W. Brian |   | $                           | 12,000 |
|                |   |                        |
| Oberg, King C.      |   | $                           | 6,000 |
|                |   |                        |
| Rosok, Larry E.     |   | $                           | 4,000 |
|                |   |                        |
| Steele, Calvin R.   |   | $                           | 4,000 |
|                |   |                        |
| Stoltz, Jon T.      |   | $                           | 5,500 |
|                |   |                        |
| Wessling, J. D.     |   | $                           | 6,000 |

 

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