Exhibit
10.31


 


[date]


 


	
  [name]

  
	
  [title]

  
	
  Cascade Natural Gas Corporation

  
	
  P.O. Box 24464

  
	
  Seattle, WA  98124

  



 


Dear [name]:


 


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


 


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


 


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


 


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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:


 


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;


 


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


 


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


 


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


 


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


 


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


 


e.             Date of Termination.  “Date of Termination” shall 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”):


 


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


 


ii.             in lieu of any
other severance benefits to which you may be entitled for periods subsequent to
the Date of Termination an amount 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


 


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program is
barred, the Company shall arrange to provide you with benefits substantially
similar to those which you are entitled to receive under such plans and
programs.


 


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


 


6.             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


 


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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.


 


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

  	
   

  	
   

  
	
   

  	
  [name]  [title]

  



 


 


Agreed to this
               
day

of
                                     ,
2000.


 


	
   

  	
   

  
	
  [name]

  



 


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