Exhibit 10.3


 


April 18, 2000


 


Mr. William H. Odell

Vice President, Districts

Cascade Natural Gas Corporation

P.O. Box 24464

Seattle, WA  98124


 


Dear Mr. Odell:


 


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.  The Board
believes it important that, in the event of a proposal for transfer of control
of the Company, you be able to assess the proposal and advise the Board without
being influenced by the uncertainties of your own situation.  The Board also considers the Company’s
management one of the Company’s most valuable attributes and wishes to take
appropriate steps to preserve the management group through the uncertainties
which may attend any potential transaction involving a change in control.


 


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, 2002.


 


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.


 


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iii.            Your
benefits under the Company’s Executive Supplemental Retirement Income Plan
become fully vested.


 


PROVIDED, HOWEVER, that the benefits to the Employee provided in Section 5.c.iii
and Section 5.d shall not terminate upon vesting in Company’s Executive
Supplemental Retirement Income Plan, but shall continue to apply for a period
of three years after such vesting.


 


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;


 


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 5 hereof
unless such termination is because of your death or is effected by you other
than for “Good Reason” (as hereinafter defined).  Provided, however, that:


 


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a.             Absence Without Disability.  If you fail to attend to your regularly
assigned duties at the Company on a full-time basis for reasons other than
incapacity due to physical or mental illness, or other than due to “Disability”
as defined, and within 30 days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, the
Company may terminate this Agreement for Cause. 
“Disability” for purposes of this Agreement may be established by a
written certificate from a licensed physician.


 


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) cause as described
in paragraph 4(a) above. 
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
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 or as a result of
your death;


 


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


 


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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 7 hereof;


 


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 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.


 


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


 


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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 mean the date on
which a Notice of Termination is given; provided that 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 therefrom having expired and no appeal having been
perfected).  The term of this Agreement
shall be extended until the Date of Termination.


 


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 incapacity due to physical or mental
illness, 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.


 


b.             Termination for Cause or Without Good Reason.  If your employment shall be terminated 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 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 shall be terminated (whether by you or the
Company), other than (A) because of your death, or (B) in the
circumstances set forth in (b) above, then the Company shall pay to you,
upon 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;


 


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ii.             in
lieu of any other severance benefits to which you may be entitled for periods
subsequent to the Date of Termination an amount 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 three (but subject
to adjustment as provided in Section 10); and


 


iii.            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.


 


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.


 


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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.             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.


 


7.             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.


 


8.             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.


 


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9.             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.


 


10.          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) 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 

  	
  /s/ W. Brian
  Matsuyama

  	
   

  
	
   

  	
   

  	
  W. Brian Matsuyama, Chairman of the Board,
  President

  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed to this 23 day

  	
   

  
	
  of April, 2000.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ William H. Odell

  	
   

  	
   

  
	
  William H. Odell

  	
   

  
	
   

  	
   

  
					



 


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