Document:

Exhibit 10.8

 

Morgan Stanley 

Private Wealth Management

14-81836

Account Number

Client Agreement

 

This Agreement governs the
Undersigned customer’s (the “Undersigned”) account at Morgan Stanley & Co.
Incorporated (“Morgan Stanley”). “You” and “your” refer to Morgan Stanley &
Co. Incorporated, its parents, subsidiaries and affiliates, wherever located.
To the extent not inconsistent with any margin agreement executed by the
Undersigned, this agreement is in addition to and supplements any such margin agreement
which shall remain in full force and effect.

 

1.     Security interest and lien

All collateral which you
may at any time be carrying for the Undersigned or which may at any time be in
your possession or control for any purpose, including safekeeping, and any
proceeds and distributions there from, shall be subject to a general lien and a
continuing, first security interest for the discharge of all obligations and
liabilities of the Undersigned to you in connection with Account Number
14-81836 and 14-A045D; irrespective of whether or not you have made advances in
connection with such securities, commodities or other property, and
irrespective of the number of accounts the Undersigned may have with you, or
whether Morgan Stanley & Co. International Limited, Morgan Stanley Japan
Ltd., Morgan Stanley Asia Ltd., Morgan Stanley Trust Company, Morgan Stanley
GMBH, Morgan Stanley Bank Luxembourg, Morgan Stanley Market Products Inc.,
Morgan Stanley Capital Group Inc., Morgan Stanley Group Inc., Morgan Stanley
& Co. Incorporated and their officers, directors, agents and/or other
employees (also collectively referred to as the “Morgan Stanley Entities”)
holds such Collateral. You and the Undersigned each acknowledge and agree that
each Morgan Stanley Entity which holds Collateral holds such Collateral for itself and also as agent and
bailee for all other Morgan Stanley Entities which are secured parties under
any Contract in connection with Account Number 14-81836 and 14-A045D. You may,
at any time at your discretion and without prior notice to the Undersigned,
use, apply, or transfer any and all securities or other property
interchangeably between Morgan Stanley Entities in connection with Account
Number 14-81836 and 14-A045D other than from Regulated Commodity Accounts. In
the event of a breach or default under this agreement, you shall have all rights
and remedies available to a secured creditor under any applicable law in
addition to the rights and remedies provided herein. All collateral delivered
to you shall be free and clear of all prior liens, claims and encumbrances, and
the Undersigned will not cause or allow any of the collateral in your
possession or control, whether now owned or hereafter acquired, to be or become
subject to any liens, security interests, mortgages or encumbrances of any
nature other than the security interest created in your favor. The Undersigned
shall execute such documents and take such other action as you shall reasonably
request in order to perfect your rights with respect to any such collateral. Alternatively,
the Undersigned appoints you as the Undersigned’s attorney-in fact to act on
the Undersigned’s behalf to sign, seal, execute, file and deliver all
documents, and do all such acts as may be required, to perfect or realize upon all
rights in the securities or other property. 

 

2.     Rights of Morgan Stanley 

You
are hereby authorized, in your discretion, (a) upon the Undersigned’s death or
breach of this agreement, (b) upon a breach, repudiation, misrepresentation or
default (howsoever characterized) by the Undersigned under any securities
contracts, commodities contracts, forward contracts, repurchase agreements,
swap agreements, howsoever any such agreement may be evidenced, including
agreements confirmed in writing by only one party thereto (this agreement, and
all such contracts and transactions in connection with Account Number 14-81836 and
14-A045D, collectively “Contracts”), (c) upon the failure by the Undersigned to
give adequate assurance of due performance as set forth in Paragraph 8 hereof,
which shall constitute a material and additional breach, repudiation,
misrepresentation or default (howsoever characterized) under the terms of all
Contracts, to terminate, liquidate and accelerate any and all Contracts and to
exercise any right under any security relating to any Contract and any right to
net or set off payments which may arise under any Contract or other agreement
or under agreement or under applicable law, (d) upon the filing by or against
the Undersigned of a petition or other proceeding in bankruptcy, insolvency, or
for the appointment of a receiver, (e) upon the levy of an attachment against
any property or the accounts of the Undersigned, (f) upon the failure of the
Undersigned to fulfill or discharge any obligations relating to the purchase or
sale of securities or commodities, including but not limited to the failure to
make a payment on demand, or (g) should you for any reason whatsoever deem it
necessary or desirable for your protection, to cancel any outstanding orders for
the purchase or sale of any securities or other property, or to sell any or all
of the securities and commodities or other property which may be in your
possession or control (either individually or jointly with others), or to buy
in any securities, commodities or other property of which the account or
accounts of the Undersigned may be short. Such sale, purchase or cancellation
may be made on the exchange or other market where such business is then usually
transacted, or at public auction or private sale, without advertising the same
and without any notice of the time or place of sale to the Undersigned or to
the personal representatives of the Undersigned, all of which are expressly
waived, and you may purchase the whole or any part thereof free from any right
of redemption, and the Undersigned shall remain liable for any deficiency; it
being understood that a prior tender, demand or call of any kind from you, or
prior notice from you, of the time and place of such sale or purchase shall not
be considered a waiver of your right to sell or buy any securities and/or
commodities and/or other property held by you, or which the Undersigned may owe
to you, at any time as provided herein.

 

Morgan Stanley is a service mark of Morgan Stanley Dean
Witter & Co. Services are offered through Morgan Stanley & Co.
Incorporated, member SIPC.

 

 

3.     Adequate assurances 

If at any time you have reasonable grounds for
insecurity with respect to the Undersigned’s performance of any of its
Obligations, you may demand, and the Undersigned shall give, adequate assurance
of due performance by the Undersigned within 24 hours, or within any shorter
period of time you demand, that is reasonable under the circumstances. The
adequate assurance of performance that may be demanded by you may include, but
shall not be limited to, the delivery by the Undersigned to you of additional
property such as cash, securities, commodities and other property which may
from time to time be held or carried in Account Number 14-81836 and 14-A045D for the Undersigned, that is due to
the Undersigned in connection with Account Number 14-81836 and 14-A045D or that
is delivered to or in the possession or control or any of your agents in connection with Account Number
14-81836 and 14-A045D, and any proceeds thereof (“collateral”).

 

4.     Netting and set off rights of Morgan
Stanley 

You shall have the right,
at any time and from time to time, to set off any and all your Obligations
against any and all Obligations of the Undersigned, to foreclose on any
Collateral for the purpose of satisfying any and all Obligations of the
Undersigned. The Undersigned agrees that the fulfillment of the Obligation of
any Morgan Stanley Entity is contingent upon there being no breach,
repudiation, misrepresentation or default (howsoever characterized) by the
Undersigned which has occurred and is continuing under any Contract. For
purposes of this Agreement obligations shall mean any and all obligations of a
party arising at any time and from time to time, whether or not mature or contingent,
under or in connection with Contracts, including without limitation, payment
and delivery obligations, obligations relating to the extension of credit or to
pay damages (including costs of cover) and payment of legal and other expenses
incurred in connection with the enforcement of Contracts. 

 

5.     Currency conversion 

You shall have the right
to convert currencies in connection with the exercise of your rights hereunder
in such a manner as you may determine, in your sole discretion, to be commercially
reasonable. 

 

6.     Maintenance of collateral 

All securities,
commodities or other property, now or hereafter in your possession or control
in connection with Account Number 14-81836 and 14-A045D (either individually or
jointly with others), or deposited to secure the same in connection with
Account Number 14-81836 and 14-A045D, including proceeds and distributions
thereof, may from time to time and without notice to the Undersigned, be
carried in your general loans and may be pledged, repledged, hypothecated or
rehypothecated, separately or in common with other securities, commodities or
other property, for the sum due to you thereon or for a greater sum and without
retaining in your possession and control for delivery a like amount of similar
securities, commodities, or other property. 

 

7.     Short and long sales 

It
is understood and
agreed that the Undersigned, when placing with you any sell order for a short
account, will designate it as such and hereby authorizes you to mark such order
as being “short,” and when placing with you any sell order for a long account,
will designate it as such and hereby authorizes you to mark such order as being
“long.” Any sell order which the Undersigned shall designate as being for a long account, as
above provided, is for securities then owned by the Undersigned and, if such
securities are not then deliverable by you from any account of the Undersigned,
the placing of such order shall constitute a representation by the Undersigned
that it is impracticable for the Undersigned then to deliver such securities to
you but that the Undersigned will deliver them as soon as it is possible to do
so, without undue convenience or expense to you. 

 

8.     Failure of delivery 

In
case of the sale of any security, commodity, or other property by you at the
direction of the Undersigned and your inability to deliver the same to the
purchaser by reason of failure of the Undersigned to supply you therewith, the
Undersigned authorizes you to borrow or purchase any such security, commodity,
or other property necessary to make delivery thereof. The Undersigned hereby
agrees to be responsible for any loss which you may sustain thereby and any
premiums which you may be required to pay thereon, and for any loss which you
may sustain by reason of your inability to borrow or purchase the security,
commodity, or other property sold to fulfill your delivery obligation. 

 

9.     Confirmations, statements,
and other communications 

Reports
of the execution of orders and statements of the account or accounts of the Undersigned
shall be conclusive and binding if not objected to in writing, the former
within five days, and the latter within ten days, after transmittal by you to
the Undersigned by mail or otherwise. Communications may be sent to the
Undersigned at the address of the Undersigned, or at such other address as the
Undersigned may hereinafter give you in writing, and all communications so
sent, whether by mail, telegraph, messenger or otherwise, shall be deemed given
to the Undersigned personally as of the date sent, whether actually received or
not. 

 

10.  No obligation 

The
Undersigned agrees that you shall be under no obligation whatsoever to enter
into any Contract with the Undersigned. 

 

11.  Notices 

Communications
may be sent to the Undersigned at its address or at such other address as the
Undersigned gives you in writing. All communications so sent, whether by mail,
telegraph, messenger or otherwise, will be considered to have been given to the
Undersigned personally upon such sending, whether or not the Undersigned
actually receives them. 

 

12.  Extraordinary events 

The
Undersigned agrees that you will not be liable for any loss caused, directly or
indirectly, by government restrictions, exchange or market rulings, suspensions
of trading, war (whether declared or undeclared), terrorist acts, insurrection,
riots, fires, flooding, strikes, failure of utility services, accidents,
adverse weather or other events of nature, including but not limited to
earthquakes, hurricanes and tornadoes, or other similar conditions or events.
In the event that any communications network, data processing system, or
computer system you use or used by the Undersigned, whether you own it or not,
is rendered inoperable, you will not 

 

1

 

be
liable to the Undersigned for any loss, liability, claim, damage or expense
resulting, either directly or indirectly, therefrom. 

 

13.  Liability for costs of
collection 

To
the extent permitted by the law of the State of New York, the Undersigned agrees
to pay you the reasonable costs and expenses of collection, including attorney's
fees, for any debit balance and any unpaid deficiency that it owes in the
Securities Account. 

 

14.  Applicable rules and
regulations 

All
transactions under this Agreement shall be subject to the rules and regulations
of all applicable federal, state and self-regulatory authorities including but
not limited to the Securities and Exchange Commission, all relevant securities
and commodities exchanges, the Municipal Securities Rulemaking Board, the
National Association of Securities Dealers, the Board of Governors of the
Federal Reserve System and the constitution, rules and customs of the exchange
or market (and its clearing house, if any) where executed. 

 

15.  Choice of dispute resolution 

ANY DISPUTE THE UNDERSIGNED MAY HAVE WITH YOU
ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THE UNDERSIGNED’S BUSINESS
AND ANY TRANSACTION OR CONTRACT BETWEEN THE PARTIES TO THIS AGREEMENT SHALL BE
DETERMINED BY ARBITRATION OR LITIGATION IN COURT AT THE ELECTION OF THE
UNDERSIGNED. REGARDLESS OF WHETHER THE UNDERSIGNED CHOOSES TO PROCEED BY
ARBITRATION OR LITIGATION, YOU AND THE UNDERSIGNED AGREE TO FOLLOW THE
PROCEDURES, AND ABIDE BY THE REQUIREMENTS, LISTED BELOW. 

•          Arbitration is final and
binding on the parties. 

•            The parties are waiving their
right to seek remedies in court, including the right to jury trial. 

•            Pre-arbitration discovery is
generally more limited than and different from court proceedings. 

•            The arbitrators’ award is not
required to include factual findings or legal reasoning and any party’s right
to appeal or to seek modification of rulings by the arbitrators is strictly
limited. 

•            The panel of arbitrators will typically include a
minority of arbitrators who were or are affiliated with the securities
industry. 

THE
UNDERSIGNED AGREES THAT ALL CONTROVERSIES WHICH MAY ARISE BETWEEN THE
UNDERSIGNED AND YOU, INCLUDING BUT NOT LIMITED TO THOSE INVOLVING ANY
TRANSACTION OR THE CONSTRUCTION, PERFORMANCE, OR BREACH OF THIS OR ANY OTHER
AGREEMENT BETWEEN THE PARTIES, WHETHER ENTERED INTO PRIOR, ON OR SUBSEQUENT TO
THE DATE HEREOF, SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS
AGREEMENT SHALL BE CONDUCTED ONLY BEFORE THE NEW YORK STOCK EXCHANGE, INC., THE
AMERICAN STOCK EXCHANGE, INC., OR AN ARBITRATION FACILITY PROVIDED BY ANY OTHER
EXCHANGE, THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., OR THE
MUNICIPAL SECURITIES RULEMAKING BOARD, AND IN ACCORDANCE WITH ITS ARBITRATION
RULES THEN IN FORCE. THE UNDERSIGNED MAY ELECT IN THE FIRST INSTANCE WHETHER
ARBITRATION SHALL BE CONDUCTED BEFORE THE NEW YORK STOCK EXCHANGE, INC., OTHER
EXCHANGES, THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., OR THE
MUNICIPAL SECURITIES RULEMAKING BOARD, BUT IF THE UNDERSIGNED FAILS TO MAKE
SUCH ELECTION, BY REGISTERED LETTER OR TELEGRAM ADDRESSED TO YOU AT THE OFFICE
WHERE THE UNDERSIGNED MAINTAINS ITS ACCOUNT, BEFORE THE EXPIRATION OF FIVE DAYS
AFTER RECEIPT OF A WRITTEN REQUEST FROM YOU TO MAKE SUCH ELECTION, THEN YOU MAY
MAKE SUCH ELECTION. JUDGMENT UPON THE AWARD OF THE ARBITRATORS MAY BE ENTERED
IN ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION. 

 

No person shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a putative class action, who is a member
of a putative class who has not opted out of the class with respect to any
claims encompassed by the putative class action until:

 

I.    the class certification is denied;

 

II.   the class is decertified; or

 

III.  the Undersigned is excluded from the class by
the court. 

 

Such
forbearance to enforce an agreement to arbitrate shall not constitute a waiver
of any rights under this Agreement except to the extent stated herein. 

 

UNLESS THE PARTIES
OTHERWISE AGREE IN WRITING, WHEN ANY DISPUTE ARISES, ANY LITIGATION MUST BE
INSTITUTED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK OR THE SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK.
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION IS HEREBY WAIVED
BY ALL PARTIES TO THIS AGREEMENT. 

 

16.  Applicable law; Enforceability 

THIS AGREEMENT, ITS
ENFORCEMENT, ANY CONTRACT AND ANY DISPUTE BETWEEN THE PARTIES, WHETHER ARISING
OUT OF OR RELATING TO THE UNDERSIGNED’S ACCOUNTS OR OTHERWISE, SHALL BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK, EXCLUDING ITS CONFLICT OF LAW
RULES; and its provisions shall be continuous, shall cover individually and
collectively all accounts which the Undersigned may open or reopen with you,
and shall inure to the benefit of the Undersigned’s present organization and
any successor organization, irrespective of any change or changes at any time
in the personnel thereof, for any cause whatsoever, and of the assigns of the
Undersigned’s present organization or any successor organization, and shall be
binding upon the 

 

2

 

Undersigned,
and/or the estate, executors, administrators, trustees, agents, officers,
directors and assigns of the Undersigned. 

 

17.  Representations 

The
Undersigned represents that neither we, nor any other persons, who have an
ownership interest in the account(s) or have authority over the account(s) are
currently, or have been in the past, a senior foreign political figure(1) or
any immediate family member(2) or close associate(3) of a senior foreign
political figure within the meaning of the U.S. Department of Treasury’s
Guidance on Enhanced Scrutiny for Transactions That May Involve the Proceeds of
Foreign Official Corruption(4) and as referenced in the USA PATRIOT Act of 2001
(the “PATRIOT Act”).(5) If we, or any other persons, who have an ownership
interest in the account(s) or have authority over the account(s) are currently,
or have been in the past, a senior foreign political figure (as defined above),
we shall disclose such to Morgan Stanley. Furthermore, we agree to provide to
Morgan Stanley with such information as may be required by U.S. law to open
and/or to service our account(s). Except to the extent prohibited by any
applicable local law, regulation, and/or sanction program, by signing this
Agreement we, and any other persons, who have an ownership interest in the
account(s) or have authority over the account(s), agree that that these
account(s) will not be used for any transactions with, or for the benefit,
directly or indirectly, for any persons, entities or governments subject to the
sanctions administered by the Office of Foreign Assets Control of the U.S.
Department of Treasury. 

 

(1)  A “senior foreign political figure” is defined as a senior
official in the executive, legislative, administrative, military or judicial
branches of a foreign government (whether elected or not), a senior official of
a major foreign political party, or a senior executive of a foreign
government-owned corporation. In addition, a “senior foreign political figure”
includes any corporation, business or other entity that has been formed by, or
for the benefit of, a senior foreign political figure. 

(2)  “Immediate
family” of a senior foreign political figure typically includes the figure’s
parents, siblings, spouse, children and in-laws. 

(3)  A “close associate” of a senior foreign
political figure is a person who is widely and publicly known to maintain an
unusually close relationship with the senior foreign political figure, and
includes a person who is in a position to conduct substantial domestic and
international financial transactions on behalf of the senior foreign political
figure. 

(4)  For a fuller discussion of the preceding
terms and definitions, see http://www.federalreserve.gov/boarddocs/srletters/2001/sr0103a1.pdf

(5)  The Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, Pub. L. No. 107-56 (2001).

 

18.  Severability 

If
any provision of this Agreement is held to be invalid, illegal, void or
unenforceable, by reason of any law, rule, administrative order or judicial
decision, such determination will not affect the validity of the remaining
provisions of this Agreement. 

 

19.  IMPORTANT INFORMATION ABOUT PROCEDURES FOR
OPENING A NEW ACCOUNT OR ESTABLISHING A NEW CUSTOMER RELATIONSHIP 

To help the U.S.
government fight the funding of terrorism and money laundering activities,
Federal law requires all U.S. financial institutions to obtain, verify, and
record information that identifies each individual or institution that opens an
account. 

 

What this means: When
entering into a new customer relationship with Morgan Stanley, the Firm will
ask for your name, address, date of birth (as applicable), and other
identification information. This information will be used to verify your
identity. As appropriate, the Firm may, in its discretion, ask for additional
documentation or information. If all required documentation or information is
not provided, Morgan Stanley may be unable to open an account or establish a
relationship with you. 

 

20.  Headings 

The heading of each
provision of this Agreement is for descriptive purposes only and shall not be
deemed to modify or qualify any of the rights or obligations set forth in each
such provision. 

 

By signing below, I
acknowledge: 

 

1.               That this Agreement contains a pre-dispute arbitration
clause in paragraph 15; and 

 

2.               Receipt of a copy of the attached Agreement form,
consisting of 20 numbered paragraphs as of this date; 

 

3.               Receipt of a copy of Morgan Stanley’s U.S. Privacy
Policy (solely for individual account holders). The Privacy Policy, and the
rights granted therein, are not applicable to partnerships, corporations,
trusts or other non-individual account holders. 

 

	
   

  /s/ Bruce R. Wright

  
	
  Signature (Primary
  Account Holder)

  
	
   

  Chief Financial Officer

  
	
  Title (For special
  accounts, e.g. Trustee)

  
	
   

  December 16, 2004

  
	
  Date

  
	
   

   

  
	
  Signature (Secondary
  Account Holder, if Joint Account)

  
	
   

   

  
	
  Title (For special
  accounts, e.g. Trustee)

  
	
   

   

  
	
  Date

  

 

3

 

Morgan
Stanley 

Private
Wealth Management

14-81836

Account Number

Margin Agreement

 

In
consideration of your accepting one or more accounts of the undersigned (whether
designated by name, number or otherwise), your agreeing to act as broker for
the undersigned’s purchase or sale of securities or commodities, or your
entering into any contract with the undersigned from time to time, including,
without limitation, securities contracts, commodity contracts, forward
contracts, repurchase agreements, or swap agreements, howsoever any such
agreement may be evidenced, including agreements confirmed in writing by only one
party thereto (this agreement, and all such contracts and transactions,
collectively “Contracts”), the undersigned agrees to the following with respect
to Account Number
14-81836 and 14-A045D for extensions of credit, the purchase and
sale of securities, options, and other property, or any transaction between
you and the undersigned
in connection with Account Number 14-81836 and 14-A045D, and for the
purpose of granting you rights of netting and set off and of foreclosure on
cash, securities, commodities and other property which may from time to time be
held or carried in Account
Number 14-81836 and 14-A045D for the undersigned, that is due to the
undersigned in connection with Account Number 14-81836 and 14-A045D, or that is
delivered to or in the possession or control of you or any of your agents in connection with Account Number
14-81836 and 14-A045D, and any proceeds thereof (“Collateral”). For
purposes of this agreement, “you” and “your” refer to Morgan Stanley & Co.
Incorporated, Morgan Stanley & Co. International Limited, Morgan
Stanley Japan Ltd., Morgan Stanley Asia Ltd., Morgan Stanley Trust Company,
Morgan Stanley GMBH, Morgan Stanley Bank Luxembourg, Morgan Stanley Market
Products Inc., Morgan Stanley Capital Group Inc., Morgan Stanley Group Inc.,
and any of their subsidiaries, parents, affiliates, divisions, officers,
directors, agents and/or employees (also collectively referred to as “Morgan
Stanley” and the “Morgan Stanley Entities").

 

1.     Applicable rules and regulations 

All
transactions under this agreement shall be subject to the rules and regulations
of all applicable federal, state and self-regulatory authorities including but
not limited to the Securities and Exchange Commission, all relevant securities
and commodity exchanges, the Municipal Securities Rulemaking Board, the
National Association of Securities Dealers, the Board of Governors of the
Federal Reserve System and the constitution, rules and customs of the exchange
or market (and its clearinghouse, if any) where executed.

 

2.     Security interest and lien

All
collateral which you may at any time be carrying for the undersigned or which
may at any time be in your possession or control for any purpose, including
safekeeping, and any proceeds and distributions therefrom, shall be subject to
a general lien and a continuing first security interest for the discharge of
all Obligations and liabilities of the undersigned to you in connection with
Account Number 14-81836 and 14-A045D, irrespective of whether or not you have
made advances in connection with such Collateral, and irrespective of the
number of accounts the undersigned may have with you, or which Morgan Stanley
Entity holds such Collateral. For purposes of this agreement, “Obligations”
shall mean any and all obligations of a party arising at any time and from time
to time, whether or not mature or contingent, related to the purchase or sale
of securities or other property, or under or in connection with any and all
Contracts, including without limitation, payment and delivery obligations,
obligations relating to the extension of credit or to pay damages (including
cost of cover) and payment of legal and other expenses incurred in connection
with the enforcement of Contracts. You and the undersigned each acknowledge and
agree that each Morgan Stanley Entity which holds Collateral holds such
Collateral for itself and also as agent and bailee for all other Morgan Stanley
Entities which are secured parties under any Contract in connection with Account Number 14-81836
and 14-A045D. You may, at any time at your discretion and without prior notice
to the undersigned, use, apply, or transfer any and all Collateral
interchangeably between Morgan Stanley Entities in connection with Account
Number 14-81836 and 14-A045D other than from Regulated Commodity Accounts. In
the event of a breach or default under this or any other, agreement, you
shall have all rights and remedies available to a secured creditor under any
applicable law in addition to the rights and remedies provided herein. All Collateral
delivered to you shall be free and clear of all prior liens, claims and
encumbrances, and the undersigned will not cause or allow any of the Collateral
in your possession or control, whether now owned or hereafter acquired, to be or
become subject to any liens, security interests, mortgages or encumbrances of
any nature other than the security interest created in your favor. The
undersigned shall execute such documents and take such other action as you
shall reasonably request in order to perfect your rights with respect to any
such 

 

Morgan Stanley is a service mark of Morgan Stanley Dean
Witter & Co. Services are offered through Morgan Stanley & Co.
Incorporated, member SPIC.

 

 

Collateral. In addition,
the undersigned appoints you as the undersigned’s attorney-in-fact to act on
the undersigned’s behalf to sign, seal, execute, and deliver all documents, and
do all such acts as may be required, to realize upon all rights in the
Collateral. 

 

3.     Rights of Morgan Stanley 

You are hereby authorized,
in your discretion, (a) upon the undersigned’s death or breach of this
agreement, (b) upon a breach, repudiation, misrepresentation or default
(howsoever characterized) by the undersigned under any Contract, (c) upon the
failure by the undersigned to give adequate assurance of due performance as set
forth in Section 4 hereof, which shall constitute a material and additional
breach, repudiation, misrepresentation or default (howsoever characterized)
under the terms of all Contracts, to terminate, liquidate and accelerate any
and all Contracts and to exercise any right under any security relating to any
Contract and any right to net or set off payments which may arise under any
Contract or other agreement or under applicable law, (d) upon the filing by or against
the undersigned of a petition or other proceeding in bankruptcy, insolvency, or
for the appointment of a receiver, (e) upon the levy of an attachment against
any property or the accounts of the undersigned, (f) upon the failure of the
undersigned to fulfill or discharge any Obligations under this agreement or any
Contract, including but not limited to the failure to make a payment on demand,
or (g) should you for any reason whatsoever deem it necessary or desirable for
your protection, to cancel any outstanding orders for the purchase or sale of
any securities or other property, or to sell any or all of the securities and
commodities or other property which may be in your possession or control
(either individually or jointly with others), or to buy in any securities,
commodities or other property of which the account or accounts of the
undersigned may be short. Such sale, purchase or cancellation may be made on
the exchange or other market where such business is then usually transacted, or
at public auction or at private sale, without advertising the same and without
any notice of the time or place of sale to the undersigned or to the personal
representatives of the undersigned, and without prior tender, demand or call of
any kind upon the undersigned or upon the personal representatives of the
undersigned, all of which are expressly waived, and you may purchase the whole
or any part thereof free from any right of redemption, and the undersigned
shall remain liable for any deficiency; it being understood that a prior
tender, demand or call of any kind from you, or prior notice from you, of the
time and place of such sale or purchase shall not be considered a waiver of
your right to sell or buy any securities and/or commodities and/or other
property held by you, or which the undersigned may owe to you, at any time as
provided herein. 

 

4.     Adequate assurances 

If at any time you have
reasonable grounds for insecurity with respect to the undersigned’s performance
of any of its Obligations, you may demand, and the undersigned shall give,
adequate assurance of due performance by the undersigned within 24 hours, or
within any shorter period of time you demand, that is reasonable under the
circumstances. The adequate assurance of performance that may be demanded by
you may include, but shall not be limited to, the delivery by the undersigned
to you of additional property as Collateral. 

 

5.     Netting and set off rights of Morgan
Stanley 

You shall have the right,
at any time and from time to time, to set off any and all your Obligations
against any and all Obligations of the undersigned and to foreclose on any
Collateral for the purpose of satisfying any and all Obligations of the
undersigned. The undersigned agrees that the fulfillment of your Obligations is
contingent upon there being no breach, repudiation, misrepresentation or
default (howsoever characterized) by the undersigned which has occurred and is
continuing under any Contract. 

 

6.     Currency conversions 

You shall have the right
to convert currencies in connection with the exercise of your rights hereunder
in such a manner as you may determine, in your sole discretion, to be
commercially reasonable. 

 

7.     Maintenance of Undersigned’s collateral 

All securities,
commodities or other property, now or hereafter in your possession or control
in connection with Account Number 14-81836 and 14-A045D (either individually or
jointly with others), or deposited to secure the same in connection with
Account Number 14-81836 and 14-A045D, including proceeds and distributions
thereof, may from time to time and without notice to the undersigned, be
carried in your general loans and may be pledged, repledged, hypothecated or
re-hypothecated, separately or in common with other securities, commodities or
other property, for the sum due to you thereon or for a greater sum and without
retaining in your possession and control for delivery a like amount of similar
securities, commodities, or other property. 

 

8.     Short and long sales 

It is understood and
agreed that the undersigned, when placing with you any sell order for a short
account, will designate it as such and hereby authorizes you to mark such order
as being “short,” and when placing with you any sell order for a long account,
will designate it as such and hereby authorizes you to mark such order as being
"long.” Any sell order which the undersigned shall designate as being for
a long account, as above provided, is for securities then owned by the
undersigned and, if such securities are not then deliverable by you from any
account of the undersigned, the placing of such order shall constitute a
representation by the undersigned that it is impracticable for the undersigned
then to deliver such securities to you but that the undersigned will deliver
them as soon as it is possible to do so, without undue inconvenience or expense
to you. 

 

9.     Failure of delivery 

In case of the sale of
any security, commodity, or other property by you at the direction of the
undersigned and your inability to deliver the same to the purchaser by reason
of failure of the undersigned to supply you therewith, the undersigned
authorizes you to borrow or purchase any such security, commodity, or other
property necessary to make delivery thereof. The undersigned hereby agrees to
be responsible for any loss which you may sustain thereby and any premiums
which you may be required to pay thereon, and for any loss which you may 

 

2

 

sustain
by reason of your inability to borrow or purchase the security, commodity, or
other property sold to fulfill your delivery obligation. 

 

10.  Confirmations, statements,
and other communications 

Reports
of the execution of orders and statements of the account or accounts of the
undersigned shall be conclusive and binding if not objected to in writing, the
former within five days, and the latter within ten days, after transmittal by
you to the undersigned by mail or otherwise. Communications may be sent to the
undersigned at the address of the undersigned, or at such other address as the
undersigned may hereinafter give you in writing, and all communications so
sent, whether by mail, telegraph, messenger or otherwise, shall be deemed given
to the undersigned personally as of the date sent, whether actually received or
not. 

 

11.  No obligations 

The
undersigned agrees that you shall be under no obligation whatsoever to enter
into any Contract with the undersigned. 

 

12.  Choice of dispute resolution 

ANY
DISPUTE THE UNDERSIGNED MAY HAVE WITH YOU ARISING OUT OF, RELATING TO OR IN
CONNECTION WITH YOUR BUSINESS, ANY TRANSACTION OR CONTRACT BETWEEN US OR THIS
AGREEMENT SHALL BE DETERMINED BY ARBITRATION OR LITIGATION IN COURT AT THE
ELECTION OF THE UNDERSIGNED. REGARDLESS OF WHETHER THE UNDERSIGNED CHOOSES TO
PROCEED BY ARBITRATION OR LITIGATION, THE UNDERSIGNED AND YOU AGREE TO FOLLOW
THE PROCEDURES, AND ABIDE BY THE REQUIREMENTS, LISTED IN PARAGRAPHS 13, 14, AND
17, BELOW. 

 

13.  Arbitration 

•          Arbitration is final and binding
on the parties. 

•          The parties are waiving their
right to seek remedies in court, including the right to jury trial.

•          Pre-arbitration discovery is
generally more limited than and different from court proceedings. 

•          The arbitrators’ award is not
required to include factual findings or legal reasoning and any party’s right
to appeal or to seek modification of rulings by the arbitrators is strictly
limited. 

•          The panel of arbitrators will
typically include a minority of arbitrators who were or are affiliated with the
securities industry.

 

ANY
ARBITRATION SHALL BE CONDUCTED ONLY BEFORE THE NEW YORK STOCK EXCHANGE, INC.,
THE AMERICAN STOCK EXCHANGE, INC., THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC., OR ANY OTHER SELF-REGULATORY ORGANIZATION OF WHICH YOU ARE A
MEMBER. THE UNDERSIGNED HAS THE RIGHT TO ELECT ONE OF THE FOREGOING
ORGANIZATIONS, BUT IF THE UNDERSIGNED FAILS TO MAKE SUCH ELECTION BY CERTIFIED
LETTER ADDRESSED TO YOU AT YOUR MAIN OFFICE BEFORE THE EXPIRATION OF TEN DAYS
AFTER RECEIPT OF A WRITTEN REQUEST FROM YOU TO MAKE SUCH ELECTION THEN YOU MAY
MAKE SUCH ELECTION. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS CONSENT BY
YOU TO AN AWARD OF PUNITIVE DAMAGES. THE AWARD OF THE ARBITRATORS, OR THE
MAJORITY OF THEM, SHALL BE FINAL, AND JUDGMENT UPON THE AWARD RENDERED MAY BE
ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION. 

 

No person shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a putative class action; who is a member
of a putative class who has not opted out of the class with respect to any
claims encompassed by the putative class action until:

 

(I)     The class certification is denied;

(II)   The class is decertified; or

(III)  The customer is excluded
from the class by the court. 

 

Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of such rights under this agreement except to the extent
stated herein. 

 

14.  Litigation in court 

(A)          UNLESS THE PARTIES OTHERWISE AGREE IN
WRITING WHEN ANY DISPUTE ARISES, ANY LITIGATION MUST BE INSTITUTED IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE
SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK AND THE
UNDERSIGNED IRREVOCABLY CONSENTS TO THE JURISDICTION OF EITHER OF THOSE COURTS.
(B) ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION IS HEREBY
WAIVED BY ALL PARTIES TO THIS AGREEMENT. 

 

15.  Modification and waiver 

The
undersigned agrees that you may modify the terms of this agreement at any time
upon prior written notice. If the modifications are unacceptable, the
undersigned agrees to notify you in writing within ten days of the transmittal
of

 

3

 

such
written notice. You may then terminate the undersigned’s account, after which
the undersigned agrees to remain liable for all existing liabilities or
Obligations. The undersigned further agrees that all transactions and Contracts
entered into after such notification shall be subject to the modifications.
Under no circumstances may a modification be made by the undersigned without
your written consent. To the extent this agreement is inconsistent with any
other agreement between you and the undersigned, the provisions of this
agreement shall govern. Your failure to insist at any time upon compliance with
this agreement or with any of its terms, or any continued course of such
conduct on your part shall not constitute or be considered a waiver by you of
any of your rights. 

 

16.  Severability

If
any provision of this agreement is or becomes inconsistent with any applicable
present or future law, rule or regulation, that provision will be deemed
modified or, if necessary, rescinded in order to comply with the relevant law,
rule or regulation. All other provisions of this agreement will continue and
remain in provisions of this agreement will continue and remain in full force
and effect. To the extent that this agreement is not enforceable as to any
Contract, this agreement shall remain in full force and effect and be
enforceable in accordance with its terms as to all other Contracts. 

 

17.  Applicable law; Enforceability 

THIS
AGREEMENT, ITS ENFORCEMENT, ANY CONTRACT AND ANY DISPUTE BETWEEN US, WHETHER
ARISING OUT OF OR RELATING TO THE UNDERSIGNED’S ACCOUNTS OR OTHERWISE, SHALL BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK, EXCLUDING ITS CONFLICT OF LAW
RULES; and its provisions shall be continuous, shall cover individually and
collectively all accounts which the undersigned may open or reopen with you,
and shall inure to the benefit of your present organization and any successor
organization, irrespective of any change or changes at any time in the
personnel thereof, for any cause whatsoever, and of the assigns of your present
organization or any successor organization, and shall be binding upon the
undersigned, and/or the estate, executors, administrators, trustees, agents,
officers, directors and assigns of the undersigned. 

 

18.  Lending of securities 

Within
the limits of applicable law and regulation, until you receive written notice
of revocation from the undersigned, you are hereby authorized to lend, to
yourselves as brokers or to others, any securities held by you on margin in
your possession or control together with all attendant rights of ownership (including
the right to vote the securities). 

 

19.  Extraordinary events 

The
undersigned agrees that you will not be liable for any loss caused, directly or
indirectly, by government restrictions, exchange or market rulings, suspension
of trading, war (whether declared or undeclared), terrorist acts, insurrection,
riots, fires, flooding, strikes, failure of utility services, accidents, adverse weather or other
events of nature, including but not limited to earthquakes, hurricanes and
tornadoes, or other conditions beyond your control. In the event that any
communications network, data processing system, or computer system you use or
used by the undersigned, whether you own it or not, is rendered inoperable, you
will not be liable to the undersigned for any loss, liability, claim, damage or
expense resulting, either directly or indirectly, therefrom. 

 

20.  Limitation of liability 

You shall not be liable
in connection with the execution, clearing, handling, purchasing or selling of
securities, commodities or other property, or other action, except for gross
negligence or willful misconduct on your part. 

 

21.  Costs of collection 

To the extent permitted
by the laws of the State of New York, the reasonable costs and expenses of
collection of any debit balance and any unpaid deficiency in the accounts of
the undersigned with you, including but not limited to attorneys’ fees incurred
and payable or paid by you, shall be payable to you by the undersigned. 

 

22.  Representations and warranties 

The undersigned hereby
represents and warrants as of the date hereof, which representations and
warranties will be deemed repeated on each date on which a transaction or
Contract is effected for the undersigned’s account, that: 

 

a.     The undersigned will at all times maintain such securities and
other property in the accounts of the undersigned for margin purposes, as
required by you from time to time in your sole discretion; 

 

b.     The undersigned is of legal age and is not an employee of any
exchange, or of any corporation of which any exchange owns a majority of the
capital stock, or of a member of any exchange, or of a member firm or member
corporation registered on any exchange, or of a bank, trust company, insurance
company or of any corporation, firm or individual engaged in the business of
dealing, either as broker or as principal, in securities, bills of exchange,
acceptances or other forms of commercial paper; 

 

c.     No other party has an interest in the account or accounts of the
undersigned with you; 

 

d.     Except as noted below, the undersigned is not an affiliate (as
defined in Rule 144(a)(1) under the Securities Act of 1933) of the issuer of
any security held in the undersigned’s account and undertakes to inform you of
any changes thereof; 

 

e.     It has full power and authority to execute and deliver each
Contract and to perform and observe the provisions thereof; 

 

f.      The execution, delivery and performance of each Contract either
have been or will be, prior to entering into each Contract, duly authorized by
all necessary corporate action and do not contravene any requirement of law or
any contractual restriction or agreement binding on or affecting the
undersigned or its assets;

 

4

 

g.     Each Contract has been or will be at the time it is entered into
duly properly executed and delivered by it and constitutes and will constitute
a legal, valid and binding obligation enforceable in accordance with its terms;

 

h.     Since the date of its most recent audited or unaudited financial
statements, there has been no material adverse change in the business,
financial condition, results or operations or prospects of the undersigned; and

 

i.      It owns Collateral assigned and to be assigned to you under
each Contract, free and clear of any lien, claims, encumbrances and transfer
restrictions, and upon delivery of the Collateral to you or upon the filing of
appropriate financing statements, you will have, as security for the
Obligations of the undersigned, a perfected first priority security interest. No
further filings or recordings with any governmental body, agency or official
are necessary to create or perfect the security interest in the Collateral. 

 

23.  Acknowledgements 

The undersigned hereby
acknowledges that: 

 

a.     The undersigned has received, and agrees to bound by, your
Credit Charge and Margin Information disclosure statement, which is
incorporated herein by reference. Debit balances of the accounts of the
undersigned shall be charged with interest, in accordance with the methods
described in such statement, and with such other charges as you may impose to
cover your facilities and extra services. Any interest charged on debit
balances which is not paid at the close of an interest period will be added to
the opening balance for the next interest period; 

 

b.     The securities in the undersigned’s margin account may be loaned
to you or loaned out to others; and 

 

c.     The undersigned has received a copy of this agreement. 

 

Notice: This agreement contains a pre-dispute arbitration
clause in paragraphs 12, 13, and 17. 

 

	
   

  /s/ Bruce R. Wright

  
	
  Signature (Primary
  Account Holder)

  
	
   

   

  
	
  Signature (Secondary
  Account Holder, if Joint Account)

  
	
   

  December 16, 2004

  
	
  Date

  

 

5

Morgan
Stanley 

Private
Wealth Management 

 

 

Credit Charge and Margin Information

 

We wish to inform you of
certain procedures regarding interest charges on credit extended for the
financing of margin and other securities transactions. 

 

Interest
charges and determination of debit balance 

Interest will be charged
on the net debit balance in your account, which is comprised of all credit
extended to or maintained for your account by us for the purpose of purchasing,
carrying or trading in any security or otherwise. Extension or maintenance of
credit is governed by, and loan value is based on Regulation T of the Board of
Governors of the Federal Reserve System and any exchange or self-regulatory
agency to whose jurisdiction we are subject. Each extension of credit creates
or increases the debit balance upon which interest is charged. Interest will be
computed on the actual daily net debit balance in your account during the
interest period. For each separate account that you maintain with us, the net
debit balance is calculated by combining any debit balances in cash and margin
accounts, while deducting any free credit balance in the accounts. Free credit
balances exclude proceeds from sales of securities not custodied in the
account, or where the securities received are not in negotiable form (e.g., shares
deposited are not in street name form). The net debit calculation excludes any
credit balance in a short sale account, as these funds are used to obtain
securities for delivery against short sales, notwithstanding the fact that the
customer may be long the same securities in his margin account (i.e., short
against the box). 

 

Interest
rate 

The annual rate of
interest charged on your actual daily net balance consists of the Base Rate as
we determine, plus a percentage, as outlined below. The daily determination of
the Base Rate is at our sole discretion and may be affected by such rates as
those published by The Wall Street Journal, The New York Times and other
sources recognized in the industry to be reliable indications of comparable
rates for such loans. 

 

	
  On actual daily net debit
  balances of 

  	
   

  	
  Percentage added to the Base Rate 

  	
   

  
	
  $0-$99,999.99

  	
   

  	
  2 1/2

  	
  %

  
	
  $100,000 and over

  	
   

  	
  1 3/4

  	
  %

  

 

Any change in our Base Rate will result in corresponding
change in the interest rate charged in your account, which change will be made
without notice to you. However, should we find it necessary to increase the
interest rate for any other reason, you will be given at least thirty days’
written notice prior to such change. The percentages added to our Base Rate may
be varied in individual situations at our discretion. Each affected customer
will receive prior notification thereof. 

 

What
your monthly statement will show 

Your monthly statement
will show all debit and credit entries for the period and the dates of such
entries, the opening and closing interest balances for the period, the
beginning and ending dates of the interest period(s), the annual rate(s) of
interest charged for each different annual rate, the actual debit balance upon
which interest is computed, and the total interest charged for any period
during which interest is charged. Your actual net debit balance includes
interest charged to your account from prior interest periods which you have not
paid. 

 

The
method of computing interest 

To compute daily interest,
use the formula: 

 

	
  Actual Daily Net Debit Balance x Daily Interest Rate

  	
   

  
	
  360

  	
   

  

 

Interest, which is
calculated daily and usually posted on the first business day of the following
month, is reflected in the monthly statement of account. You should retain the
previous monthly statement in order to verify the amount of interest payable on
your account. 

 

Mark to
the market 

Where the aggregate
market value of short positions increases, the balance in the short account
will be increased accordingly by crediting that account and debiting the margin
account. Such entries, which are processed periodically and commonly referred
to as “mark to the market,” affect the balance in the margin account which is
used for computing interest charges. Should the aggregate market value of the
short positions later decrease, we would mark the account to the market to
reflect the decrease. 

 

Other
charges 

Separate interest charges
may be made and debit balances can arise from payments we make to you before
the regular settlement date, or from your failure to pay for 

 

6

 

securities purchased in
either a cash or margin account by settlement date. 

 

Liens,
additional collateral and general policies 

On all securities which
this firm or any affiliate has or at any time may hold or carry for you (either
individually or jointly with others) or which may be deposited with us for any
purpose, including safe-keeping, we, as a pledgee, have a general lien for the
discharge of all your obligations to Morgan Stanley & Co. Incorporated (“Morgan
Stanley”), however arising, irrespective of the number of accounts you maintain
with Morgan Stanley or its affiliates. You will be required to deposit
collateral in accordance with the Rules and Regulations of the Federal Reserve
System, the New York Stock Exchange, Inc., or any other regulatory agency under
whose jurisdiction we fall. Morgan Stanley has established “house” margin
policies which generally require the maintenance of equity in your account
above that required by applicable rules. 

 

Accordingly, Morgan
Stanley may, but need not, require you to deposit additional collateral as
Morgan Stanley, in its sole discretion, determines is needed as security for
your obligations to Morgan Stanley. In determining whether to require
additional collateral, Morgan Stanley reviews each account individually and
considers factors such as, but not limited to, marketability and volatility in
relations to securities held, concentrations in particular issues, current
market conditions, frequency of activity, size of account and length of time
the account has been open. Although in your monthly statement Morgan Stanley
may base the value of certain securities on pricing information supplied by
outside pricing services,(1) Morgan Stanley reserves the right in its sole
discretion to value your securities at any time and without prior notice by
reference to prices that reflect current market conditions obtained directly
from our trading desks which deal in the securities, or from other sources.
Please consult your broker for additional information regarding Morgan Stanley’s
margin policies.

 

How to
compute interest 

The following example is
presented for the purpose of illustrating the method by which interest is
computed using the actual daily net debit balance for the interest period. 

 

Opening
Balance: $10,000

 

	
  From

  	
   

  	
  To

  	
   

  	
  Interest Balance

  	
   

  	
  Effective Rate

  	
   

  	
  Daily Interest

  	
   

  	
  Number of days

  	
   

  	
  Total Interest

  	
   

  
	
  7/1

  	
   

  	
  7/29

  	
   

  	
  $

  	
  10,000

  	
   

  	
  5.500

  	
  %

  	
  1.528

  	
   

  	
  29

  	
   

  	
  $

  	
  44.31

  	
   

  
	
  7/30

  	
   

  	
  7/30

  	
   

  	
  $

  	
  5,000 credit

  	
   

  	
  0.00

  	
  %

  	
  0.000

  	
   

  	
  1

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  7/31

  	
   

  	
  7/31

  	
   

  	
  $

  	
  100,000

  	
   

  	
  4.750

  	
  %

  	
  13.19

  	
   

  	
  1

  	
   

  	
  $

  	
  13.19

  	
   

  

 

Closing
Balance: $100,000

 

Total
credit interest for period: $0.00                                              Total debit interest for period: $57.50 

 

1. Morgan Stanley
considers these services reliable, but we do not represent that they are
accurate, complete or timely and we are not responsible for any inaccuracies or
errors in the pricing service reports.

 

7

 

Morgan
Stanley 

Private
Wealth Management 

 

 

Margin Disclosure Document

 

Morgan
Stanley is required to furnish this document to non-institutional accounts(1)
to provide some basic facts about purchasing securities on margin, and to
describe the risks involved with trading securities in a margin account. You
should carefully review this document and the margin agreement governing your
account.(2) If you have any questions, please consult with your account
representative. 

 

1                  Non-institutional accounts
are defined as other than: (1) a bank, savings and loan association, insurance
company, or registered investment company; (2) an investment adviser registered
either with the SEC under Section 203 of the Investment Advisers Act of 1940 or
with a state securities commission (or agency or office performing similar
functions); or (3) any other entity (whether a natural person, corporation,
partnership, trust, or otherwise) with total assets of at least $50 million. If
you do not meet this definition, Morgan Stanley is not required to send this
notice to you. 

 

2                  In the event of any conflict
between this document and any agreements that you have with Morgan Stanley, the
latter will govern.

 

When
you purchase securities, you may pay for the securities in full or you may
borrow part of the purchase price from us. If you choose to borrow funds from
Morgan Stanley, you will open a margin account with us. The securities in your
account are the Firm’s collateral for the loan to you. If the securities in
your account decline in value, so does the value of the collateral supporting
your loan. As a result, the Firm can take action such as issuing a margin call
and/or selling securities or other assets in any of your accounts held with the
Firm in order to maintain the required equity in the account. 

 

It
is important that you fully understand the risks involved in trading securities
on margin. These risks include, but are not limited to, the following: 

 

•          You can lose more funds than you
deposit in the margin account. 

A decline in the value of securities that are purchased on margin may
require you to provide additional funds to the Firm to avoid the forced sale of
those securities or other securities or assets in your account(s). 

•          The Firm can force the sale of
securities or other assets in your account(s). 

If the equity in your account falls below the maintenance margin
requirements or the Firm’s higher ‘house” requirements, the Firm can sell the
securities or other assets in any of your accounts held at the Firm to cover
the margin deficiency. You also will be responsible for any short fall in the
account after such a sale. 

•          The Firm can sell your securities
or other assets without contacting you. 

While Morgan Stanley may attempt to notify you of margin calls, we are
not required to do so. Furthermore, even if we contacted you and provided a
specific date by which you can meet a margin call, we can still take necessary
steps to protect our financial interests, including immediately selling the
securities without notice to you. 

•          You are not entitled to choose
which securities or other assets in your account(s) are liquidated or sold to
meet a margin call. 

Because the securities are collateral for the margin loan, the Firm has
the right to decide which securities to sell in order to protect its interests.

•          The Firm can increase its “house”
maintenance margin requirements at any time and is not required to provide you
advance written notice. 

These changes in Firm policy often take effect immediately and may
result in the issuance of a maintenance margin call. Your failure to satisfy
the call may require us to liquidate or sell securities in your account(s). 

•          You are not entitled to an
extension of time on a margin call. 

While an extension of time to meet margin requirements may be available to you
under certain conditions, you do not have a right to the extension. 

Morgan Stanely is a service mark of Morgan Stanely Dean Winer & Co.
Services are offered through Morgan Stanely & Co. Incorporated, member
SIPC.

 

 

Morgan
Stanley 

 

 

 

December 1, 2004 

 

 

 

Lee Adair 

Ultratech Inc. 

3050 Zanker Road 

San Jose, CA 95134-2126 

 

Re:          Ultratech
Inc Margin Account 

                Account
#81836 

 

Dear Lee: 

 

The following margin fee
will be charged to your new brokerage account: 

 

Federal Funds Open Rate + 100 basis
points 

 

 

The Margin Agreement that
will need to be signed in conjunction with opening the margin account describes
in detail the interest calculation methodology and the terms governing any
extension of credit. If you have any questions, please do not hesitate to call
me at 415/576-2016. 

 

Sincerely,

 

 

	
  /s/ Scott Waxman

  
	
  Scott Waxman

  
	
  Managing Director

  
	
  Morgan Stanley

  

 

 

	
   

  Private
  Wealth Management

  	
   

  555
  California Street

  
	
   

  	
  Suite
  2200

  
	
   

  	
  San
  Francisco, CA 94195

  

 

Morgan
Stanley 

 

 

 

December 23, 2004 

 

 

 

Ulltratech Inc. 

Attn: Doug Gips 

3050 Zanker Road 

San Jose, CA 95134 

 

Dear Doug:

 

Securities held in account
14-A045D that are consistent with Ultratech, Inc.’s Investment Policy dated
January 14, 2004 can be margined for up to seventy-five percent of its face
value. 

 

Please feel free to contact
me with any questions. 

 

Sincerely,

 

 

	
  /s/ Scott
  Waxman

  
	
  Scott
  Waxman

  
	
  Managing
  DirectorExhibit 10.1

 

DAVID W. STEVENS

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT  AGREEMENT
(the “Agreement”) is made and entered into as of this 3rd day of March 2005,
by and between Cascade Natural Gas Company (hereinafter referred to as the “Company”),
a Delaware corporation, and David W. Stevens (hereinafter referred to as the “Executive”).

 

WHEREAS,
the Executive will become employed by the Company in the capacity of President
and Chief Executive Officer of the Company;

 

WHEREAS,
the Company is desirous of assuring the continued employment of the Executive
as a senior executive of the Company, and Executive is desirous of having such
assurance.

 

NOW, THEREFORE,
in consideration of the foregoing and of the mutual covenants and agreements of
the parties set forth in this Agreement, and of other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:

 

Section 1.                                          Terms
of Employment; Prior Agreements

 

1.1                               Employment
Term.  The Company hereby agrees to
employ the Executive and the Executive hereby agrees to serve the Company, in
accordance with the terms and conditions set forth herein, beginning on April 1,
2005 and until terminated by either party in accordance with the terms and
conditions of this Agreement.

 

1.2                               Prior
Agreements.  This Agreement
supersedes all prior agreements and understandings (including verbal
agreements) between Executive and the Company and/or any of its Affiliates
regarding the terms of Executive’s employment with the Company and/or of its
Affiliates.   For purposes of this
Agreement, an “Affiliate” shall mean any entity that, directly or indirectly,
through one or more intermediaries, is controlled by, controls or is under
common control with the Company.

 

Section 2.                                          Position
and Responsibilities.  During the
Term of this Agreement, the Executive agrees to serve as President and CEO of
the Company.  In such capacity, the
Executive shall have such level of duties and responsibilities as Executive may
be reasonably assigned from time to time by the Board of Directors of the
Company.  The Executive shall have the
same status, privileges and responsibilities normally inherent for the
President and CEO of the Company, including presiding at all meetings of
shareholders, shall be responsible for general and active management of the
business of the corporation under the direction of the Board of Directors, and
shall see that all orders and resolutions of the Board are carried into effect.

 

 

Section 3.                                          Standard of Care.  During the Term of this Agreement, the
Executive agrees to devote his full business time and reasonable best efforts
to the business of the Company, as may be reasonably assigned from time to time
by the Board of Directors of the Company. 
Executive shall not be engaged in any other business activity, whether
or not such business activity is pursued for gain, profit or other pecuniary
advantage, without the prior written consent of the Chairman of the Board of
Directors of the Company.  The Executive
may serve on the Board of Directors or trustees of any business corporation or
charitable organizations so long as such service is not injurious to the
Company and is approved by the Chairman of the Board of Directors of the
Company.  This Section 3 shall not
be construed as preventing the Executive from holding, as a passive investor,
up to two percent (2%) of the common stock of any public company.

 

Section 4.                                          Compensation.
 As remuneration for all services to be
rendered by the Executive during the Term of this Agreement, and as
consideration for complying with the covenants herein, the Company shall pay
and provide to the Executive the following:

 

4.1                               Base
Salary.  During the Term, the Company
shall pay the Executive a Base Salary in an amount which shall be established
from time to time by the Governance, Nominating and Compensation Committee of
the Board of Directors (the “Compensation Committee”); provided, however, that such Base Salary
shall in no event be less than $400,000 per year (“Base Salary”).  This Base Salary shall be paid to the
Executive in equal installments throughout the year, consistent with the normal
payroll practices of the Company.

 

While this Agreement is in force, the
Base Salary shall be reviewed at least annually, to ascertain whether, in the
judgment of the Compensation Committee, such Base Salary should be increased,
based primarily on the performance of the Executive during the year and on the
base salary of similarly situated executives at comparable companies.  If so increased, the Base Salary as stated
above shall, likewise, be increased for all purposes of this Agreement.

 

4.2                               Annual
Cash Incentive Compensation.  The
Company shall provide the Executive with the opportunity to earn an annual cash
incentive compensation payment (“Annual Cash Incentive Compensation”) under the
incentive plans described in Appendix D, based upon reasonable goals and
measures for the Executive, established by the Board of Directors of the
Company.

 

4.3                               Long-Term
Incentives.  The Company shall
provide the Executive with the opportunity to earn a long-term incentive award
by participating in the Company’s Long-Term Incentive Plan at a level described
in Appendix D that is no less favorable than that provided to other senior
executives of the Company.  The
anticipated target award shall be 20 percent of Base Salary.  The Compensation Committee shall determine
the maximum amount of award, the medium for granting the award (i.e. restricted
stock or stock options) and the criteria for earning such award.

 

2

 

4.4                               Supplemental
Retirement Benefits.  In recognition
of the Executive’s agreement to move to the Seattle area from Texas in the
middle of his career, the Company shall provide the Executive the opportunity
to participate in a supplemental deferred compensation plan, as it may be
amended from time to time, which will provide for contributions to an account
for the benefit of the Executive that will be anticipated, using reasonable assumptions
concerning the rate of investment return on such contributions, to provide the
Executive with replacement pay at retirement equal to 55 percent of his average
Base Salary, after taking into account benefits under any retirement benefits
payable to the Executive under any qualified or nonqualified retirement plan
sponsored by the Company or by the Executive’s prior employer and social
security.  For this purpose, average Base
Salary shall be the Executive’s Base Salary during the three consecutive fiscal
years of the Company during which such Base Salary was highest.

 

4.5                               Employee
Benefits.  During the Term, the
Company shall provide the Executive with those qualified retirement plan
benefits and welfare benefits that are, in the aggregate, substantially
equivalent to and no less than those benefits that any other similarly situated
senior executives of the Company are generally entitled to receive, without
duplication of benefits. The Executive shall be entitled to paid time off in
accordance with the standard written policy of the Company with regard to
vacations of employees, and, for this purpose only, shall be treated as having
completed 15 years of service with the Company. 
The Company shall provide to the Executive, at the Company’s cost, the
amount and type of perquisites that are, in the aggregate, substantially
equivalent to those perquisites attached to this agreement as Appendix A.

 

4.6                               Initial
Stock Grant.  As of the Executive’s
first day of employment as chief executive officer of the Company, the Company
shall award the Executive a combination of fully vested and restricted shares
of the Company’s common stock under the Company’s 1998 Stock Incentive
Plan.  Restricted shares shall be
revocable until fully vested.

 

(a)  The
number of fully vested shares shall be 5,000.

 

(b)  The
number of restricted shares shall be 10,000. 
Restricted shares shall vest if the Executive’s employment as chief
executive officer does not terminate before the following dates:

 

(i)  One
year from the date of employment (with respect to 5,000 of the 10,000
restricted shares).

 

(ii)  Two
years from the date of employment with respect to the remaining 5,000
restricted shares.

 

(c)  The
Executive shall be responsible for income tax and other withholding on the
awarded shares in accordance with applicable tax laws and the terms of the 1998
Stock Incentive Plan.

 

3

 

Section 5.                                          Expenses

 

5.1  Reimbursable Expenses.  Subject to the rules in section 5.2,
the Company shall reimburse the Executive for reasonable, ordinary and
necessary business expenses actually incurred by the Executive in connection
with his performance under this Agreement, including ordinary and necessary
expenses incurred by the Executive in connection with travel on the Company’s
business; for reasonable expenses incurred by the Executive in connection with
his performance of community service in his capacity as President and Chief
Executive Officer of the Company; and for reasonable expenses incurred for attendance
at professional meetings and other professional education.

 

5.2  Documentation and Approval of Expenses.  The Executive shall account to the Company
for any expenses that are eligible for reimbursement under section 5.1 in
accordance with the Company’s policy. 
Business expenses must be submitted at least quarterly for review and
approval by the chair of the Audit Committee of the Board in accordance with
and subject to the terms and conditions of the Company’s then-prevailing
expense policy, as modified by the Board from time to time as it applies to the
Executive.

 

Section 6.                                          Termination
of Employment

 

6.1  General.  Executive’s employment may be terminated in
accordance with any of the provisions set forth in this Section 6, and
with the exception of the provisions of which survive the termination of this
Agreement as set forth in Section 13 herein, this Agreement shall
terminate upon the effective date of such termination of employment.

 

6.2  Termination Due to Death or Disability.

 

(a)                                  Executive’s
employment may be terminated by the Company on account of Executive’s
Disability, and shall be terminated upon Executive’s death. The Company shall
have the right to terminate Executive’s employment on account of Disability if
the Executive is determined to be disabled under the Company’s disability
plan.  If the Executive is not covered
under the Company’s disability plan, then the Executive shall be deemed to
suffer from a Disability if, as a result of Executive’s incapacity due to
physical or mental illness, Executive shall have been absent from the full-time
performance of his duties with the Company for ninety (90) days – whether or
not consecutive – in any six-month period.

 

4

 

(b)                                 If
the Executive’s employment is terminated due to death or Disability, the
Company shall pay Executive or the Executive’s estate:  (i) his accrued but unpaid Base Salary
and accrued vacation pay through the date of his termination; (ii) any
unpaid Annual Incentive Compensation earned but not paid in the previous year; (iii) an
amount in lieu of any Annual Incentive Compensation determined under (c); plus (iv) any
amounts otherwise payable to Executive under the terms of the Company benefit
plans and programs, including but not limited to any stock incentive plans, in
which he is a participant, at the times such payments are due.

 

(c)                                  In
lieu of payment of any unpaid Annual Incentive Compensation, the Company shall
pay the Executive or the Executive’s estate the greater of (i) the average
Annual Incentive Compensation paid to the Executive during the two fiscal years
prior to the fiscal year of his death or Disability, or (ii) the amount of
the Annual Incentive Compensation that the Board of Directors determines would
have been paid to the Executive if the fiscal year ended on the last business
day of day the month immediately before his death or Disability based solely
upon the earnings per share criterion and multiplied by a fraction, the
numerator of which is the number of months in the fiscal year in which the
Executive dies or becomes disabled that were completed prior to his death or
Disability and the denominator of which is 12.

 

6.3                               Voluntary
Termination by the Executive.

 

(a)                                  The
Executive may terminate this Agreement at any time by giving the Chairman of
the Board written notice of Executive’s intent to terminate, delivered at least
thirty (30) calendar days prior to the effective date of such termination.  The termination shall become effective
automatically upon the expiration of the thirty (30) day notice period.  Such notice shall also constitute the
resignation by the Executive of any positions he may hold as an officer and/or
director of the Company and/or its Affiliates.

 

(b)                                 In
the event such termination is other than for Good Reason, death or Disability,
the Company shall pay the Executive:  (i) his
accrued but unpaid Base Salary and accrued vacation pay through the date of
termination; (ii) any unpaid Annual Incentive Compensation earned but not
paid in the previous year; plus (iii) any amounts otherwise payable to
Executive under the terms of the Company benefit plans and programs, including
but not limited to any stock incentive plans, in which he is a participant, at
the times such payments are due.  In
addition, any shares that have not vested under Section 4.6 shall be
forfeited.

 

5

 

6.4                               Involuntary
Termination by the Company Without Cause. 
The Company may terminate the Executive’s employment at any time by
notifying the Executive in writing of the Company’s intent to terminate,
effective thirty (30) calendar days following the date on which the Company
delivers such notice to the Executive. 
If Executive’s employment is terminated by the Company for reasons other
than death, Disability or for Cause, then the Executive shall not be entitled
to benefits under any Company severance plan but shall be entitled to the
benefits provided below:

 

(a)                                  The
Company shall pay the Executive an amount equal to: (i) his accrued but
unpaid Base Salary and accrued vacation pay through the date of termination; (ii) any
unpaid Annual Incentive Compensation earned but not paid in the previous year; (iii) any
amounts otherwise payable to Executive under the terms of the Company benefit
plans and programs, including but not limited to any stock incentive plans, in
which he is a participant, at the time such payments are due, (iv) 0.75
times the Executive’s Covered Compensation (as hereinafter defined) as a
separation payment and (v), subject to the Executive’s compliance with Sections
6.8 and 7, a Non-Compete Payment equal to

 

1.25 times the
Executive’s Covered Compensation as a Non-Compete Payment (“Non-Compete Payment”).

 

(b)           “Covered
Compensation” shall mean the Executive’s annualized Base Salary plus the
average of the Annual Incentive Compensation paid in the two fiscal years prior
to the fiscal year in which the Executive’s termination occurs.  In the event two fiscal years have not been
completed, the Annual Incentive Compensation shall be deemed to be equivalent
to the entire potential cash incentive compensation payment payable to
Executive pursuant to Section 4.2 for the year the Involuntary Termination
Without Cause occurs.  For the period
between two fiscal years and five fiscal years, the average Annual Incentive
Compensation paid in the prior two fiscal years will be utilized, but in no
event will this amount ever be less than 50% of the potential Annual Incentive
Compensation shown in Appendix D.

 

(c)           As long as Executive remains in
material compliance with the terms and conditions of this Agreement, the
Executive shall be paid the Non-Compete Payment in twenty-four (24) equal
monthly installments, with the first payment to be made within twenty (20) days
of Executive’s termination in accordance with this Section 6.4, or, if
required by Section 6.9, six months following Executive’s
termination.  Notwithstanding anything
herein to the contrary, in the event of a material breach by the Executive of
any of the provisions contained in Section 7 of this Agreement, that is
not cured within thirty (30) calendar days following Executive’s receipt of
written notice from the Company identifying the material breach, the Executive
shall immediately forfeit his right to any and all of the remaining scheduled
Non-Compete Payments set forth herein.

 

6

 

(d)                                 For
a period of 18 months after Executive’s termination, or if less, the remainder
of the term of this agreement under section 1.1, the Company shall provide
the Executive and Executive’s immediate family with life and welfare benefits
substantially similar to those provided from time to time to similarly situated
active senior executives of the Company. The Company may satisfy its obligation
under this paragraph by reimbursing the Executive for any premiums the
Executive pays for continuation coverage that the Company is required to
provide under section 601 of the Employee Retirement Income Security Act
of 1974 and by paying to the Executive the amount of any premium that the
Company would have paid on behalf of the Executive during employment.  In the event that the Employee obtains
substantially similar benefits or coverage from another employer, these life and
welfare benefits shall be correspondingly reduced during such period following
the Executive’s termination.  Executive
agrees to report any such coverage or benefits he obtains to the Company.

 

(e)                                  Upon
approval by the Compensation Committee, any unvested stock options held by the
Executive at the time of his termination shall be deemed fully vested and
exercisable, and Executive shall have one (1) year from the date of his
termination to exercise such stock options. 
In the event and to the extent appropriate Committee approval is not
obtained for the foregoing, the Company shall pay the Executive an equivalent
amount in cash, as determined by the Company in its reasonable discretion using
acceptable valuation methodologies such as the Black-Scholes method to value
the stock options.

 

(f)                                    Notwithstanding
any other provision of this Agreement, in the event of a material breach by the
Executive of any of the provisions contained in Section 7 of this
Agreement, including the non-competition provisions set forth in Appendix C,
that is not cured within thirty (30) calendar days following Executive’s
receipt of written notice from the Company identifying the material breach, the
Executive shall immediately forfeit his right to any and all of the remaining
scheduled Non-Compete Payments described in paragraphs (a) and (c) of
this Section 6.4.

 

7

 

6.5                               Termination
for Cause.

 

(a)                                  The
Company may terminate the Executive’s employment for “Cause.”

 

(i)  “Cause”
shall mean (1) The Executive’s conviction, plea of “guilty” or plea of “no
contest” to any crime constituting a felony in the jurisdiction in which it is
committed or to any crime involving dishonesty or willful misconduct that
materially injures or is likely to materially injure the Company, (2) willful
violation of any significant Company policy that materially injures the Company
and which violation Executive fails to cure after thirty (30) days written
notice to Executive of such violation, (3) fraud, (4) consistent
gross neglect of duties or wanton negligence by the Executive in the
performance of his duties to the Corporation or its Affiliate, or (5) willful
failure by the Executive to substantially perform (for reasons other than
Disability) the Executive’s duties under Sections 2 and 3 or any other duties
reasonably assigned or appropriate to the Executive’s position, which failure
is not cured within thirty (30) days after written notice to Executive of such
failure, or the material breach by Executive of the terms of this Agreement,
which material breach is not cured within thirty (30) days after written notice
to Executive of such default.

 

(ii) 
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a copy of a written notice of termination which shall include a
determination by the Board of Directors finding that, in the good faith opinion
of the Board of Directors, the Executive was guilty of conduct constituting “Cause”
as set forth in this paragraph and specifying the particulars thereof in
detail.  The termination of employment
shall be effective upon the giving of such notice in accordance with the
provisions of this Section.

 

(b)                                 In
the event of termination of the Executive’s employment for “Cause,” the Company
shall pay the Executive his accrued and unpaid Base Salary through the date
notice of termination is delivered to the Executive in accordance with the
provisions of this Section, plus any amounts otherwise payable to Executive under
the terms of the Company benefit plans and programs, including but not limited
to any stock incentive plans, in which he is a participant, at the times such
payments are due.

 

6.6                               Termination
for Good Reason.

 

(a)                                  The
Executive may terminate his employment for Good Reason (as defined below) by
giving the Chairman of the Board thirty (30) days’ written notice of
termination, stating in reasonable detail the facts and circumstances claimed
to provide a basis for such termination. 
In the event of termination for Good Reason, the Company shall pay and
provide to the Executive the amounts and benefits set forth in Section 6.4
hereof in the manner specified therein.

 

8

 

(b)                                 Good
Reason shall mean, without the Executive’s express written consent, the
occurrence of any one or more of the following:

 

(i)                                     The
assignment to the Executive of any duties inconsistent with his status as
President and CEO of the Company or a substantial reduction in the nature or
status of the Executive’s responsibilities from those set forth in Section 2
hereof.

 

(ii)                                  A
reduction by the Company in the Executive’s Base Salary payable under Section 4.1
hereof, as the same may be increased from time to time;

 

(iii)                               The
Company’s requiring the Executive to be based at a location which is more than
fifty (50) miles from the current principal location of the Company without the
Executive’s consent;

 

(iv)                              The
failure by the Company to continue to provide the Executive with the incentive
compensation and benefits set forth in Section 4 hereof;

 

(v)                                 The
failure by the Company to pay the Executive any portion of the Executive’s
current cash compensation, when due;

 

(vi)                              The
failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform the Agreement, as contemplated in Section 9.1
hereof; or

 

(vii)                           Any
purported termination of the Executive’s employment which does not comply with
the applicable provisions of Section 6 of this Agreement, and, for
purposes of the Agreement, no such purported termination shall be effective.

 

Notwithstanding the foregoing, none of the
events described in clauses (i) through (vii) of this Section 6.6(b) shall
constitute Good Reason unless Executive shall have notified the Company in
writing describing the events which constitute Good Reason and then only if the
Company shall have failed to cure such event within thirty (30) days after the
Company’s receipt of such written notice.

 

(c)                                  The
Executive’s right to terminate employment for Good Reason shall not be affected
by the Executive’s incapacity due to physical or mental illness.  However, the Executive’s failure to assert
Good Reason within six (6) months from the time he had knowledge of the
circumstance constituting Good Reason shall constitute a waiver of his right to
terminate employment for Good Reason with respect to such event only.

 

9

 

6.7                               Voluntary
Termination by the Executive, following a “Change of Control” (as defined below).

 

(a)                                  In
the event the Executive elects to terminate his employment within one (1) year
following the date of a Change of Control, the Company shall pay and provide to
the Executive the amounts and benefits set forth in Section 6.4 hereof in
the manner specified therein.

 

(b)                                 For
purposes of this Agreement, a “Change of Control” of the Company shall be
deemed to have occurred if and when:

 

(i)                                     There
shall be consummated either:  (i) any
consolidation or merger of the Company in which the majority of the Board of
Directors are not on the continuing or surviving Board of Directors or pursuant
to which shares of the Company’s common stock are converted into cash,
securities or other property, other than a consolidation or merger of the
Company in which each holder of the Company’s common stock immediately prior to
the merger has, upon consummation of the merger, the same proportionate
ownership of common stock of the surviving corporation as such holder had of
the Company’s common stock immediately prior to the merger; or (ii) any
sale, lease exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) or all or
substantially all of the assets of the Company; or

 

(ii)                                  The
shareholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company;

 

6.8                               Payments
Conditioned on Waiver. 
Notwithstanding any other provision of this Agreement, where a payment
is due to Executive under Section 6.4, 6.6 or 6.7 hereunder, no such
payments shall be made unless and until Executive (or his Estate) shall have
executed a copy of a waiver and release in a form substantially similar to the
form annexed hereto as Appendix “B” as modified for the actual reason of
departure, provided, however,
that any such waiver and release shall expressly protect all rights and
benefits of Executive under this Agreement, including without limitation, the
rights under Sections 6.4, 6.6 and 6.7.

 

6.9                               Payments.  Except as specifically provided herein, all obligations of the Company
to make payments and take any actions under this Agreement shall be discharged
with all reasonable promptness and in no event greater than thirty (30) days
following the date upon which such obligation or action arises.  In the event that the Company determines that
any payments under this Agreement are subject to the restrictions of section 409A
of the Internal Revenue Code, then payment shall not made until six months from
the date that the Executive’s employment terminates.  Furthermore, the time of payment of any
amounts due or performance by Cascade of any obligations under Section 6.4(c),
(d) and (e) shall be delayed until the Executive’s waiver and release
under Section 6.8 becomes effective and enforceable.

 

10

 

6.10                        Limitation
on Payments.

 

Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution by the
Company to the Executive or for the Executive’s benefit (whether paid or
payable or distributed or distributable pursuant to the terms of the Agreement
or otherwise) (a “Payment”) would be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the “Excise Tax”),
then such Payments shall be reduced to the largest portion of the Payment that
would result in no portion of the Payment being subject to the Excise Tax.  If a reduction in payments or benefits
constituting “parachute payments” is necessary to avoid any portion of the
payments or benefits being subject to the Excise Tax, then reductions shall be
applied in the following types of payments in the order specified:  reduction of cash payments, reduction of
employee benefits; and cancellation of accelerated vesting of stock awards.  If acceleration of vesting of stock award
compensation is to be reduced, then such acceleration of vesting shall be
cancelled in the reverse order of the date of grant of the Executive’s stock
awards.

 

Section 7.                                          Confidentiality;
Non-Competition

 

In consideration of his employment by the
Company as chief executive officer and of the confidential information that the
Executive will acquire by virtue of such employment, the Executive agrees to
comply with the confidentiality and non-competition provisions of this Section 7.

 

7.1                               Confidentiality.  During the Term of this Agreement and
thereafter for a period of five (5) years, the Executive will not directly or indirectly divulge or
appropriate to his own use, or to the use of any third party, any “trade
secrets” or “confidential information” (as defined in Section 7.2) of the
Company or any of the Company’s Affiliates (hereinafter, the Company and its
subsidiaries and affiliates shall be collectively referred to as the “Company
Group”), except as may be in public domain other than by violation of the
Agreement or as may be required by law.

 

7.2                               Trade Secrets and Confidential Information.  “Trade Secrets” as used herein means all
secret discoveries, inventions, formulae, designs, methods, processes,
techniques of production and know-how relating to the Company Group’s business.  “Confidential Information” as used herein
means the Company’s internal policies and procedures, suppliers, customers,
financial information and marketing practices, as well as secret discoveries,
inventions, formulae, designs, techniques of production, know-how and other
information relating to the Company Group’s business not rising to the level of
a trade secret under applicable law.

 

11

 

7.3                               Non-Competition.  Executive acknowledges that the Company has a
reasonable and legitimate business interest in protecting its Trade Secrets and
Confidential Information from use by or disclosure to other individuals,
companies or entities that compete with the regulated natural gas distribution
and interstate transmission businesses of the Company (the “Restricted Business”).  Accordingly, the terms of the Non-Competition
provisions in Appendix C shall apply.

 

7.4                               Injunctive
Relief.   The Executive acknowledges
that he will be fully able to earn an adequate livelihood for himself and his
dependents if Sections 7.1, 7.2 or 7.3 should be specifically enforced against
him, and that Sections 7.1, 7.2 and 7.3 merely prevent unfair competition
against the Company for a limited period of time.  The Executive acknowledges that, by virtue of
the Executive’s employment with the Company, the Executive will have access to
and maintain an intimate knowledge of the Company’s activities and affairs,
including Trade Secrets and Confidential Information and other confidential
matters.  As a result of such access and
knowledge, and because of the unique service that the Executive is capable of
performing for the Company or one of its competitors, the Executive
acknowledges that the services to be rendered by the Executive pursuant to this
Agreement are of a character giving them a peculiar value, the loss of which
cannot adequately or reasonably be compensated by money damages.  Consequently, the Executive agrees that:

 

(a)  Any
breach or threatened breach by the Executive of the Executive’s obligations
under Sections 7.1, 7.2 or would cause irreparable injury to the Company.

 

(b)  The
Company shall be entitled to preliminary and injunctive relief enjoining the
Executive from violating such provisions, and money damages in the amount of
any fees, compensation, benefits, profits or other remuneration earned by the
Executive or any competitor of the Company as a result of such breach, together
with interest, and costs and attorneys’ fees expended to collect such damages
or secure such injunctive relief.

 

(c) 
Severance benefits under Section 6.4 paid or payable on or after the date
of the breach of the Executive’s obligations under Sections 7.1, 7.2 or 7.3
shall be forfeited.  Benefits paid after
the breach of the Executive’s obligations under Sections 7.1, 7.2 or 7.3 shall
be added to the amount of any award in the Company’s favor.

 

(d) 
Nothing in this Agreement shall be construed to prohibit the Company from
pursuing any other remedy, the Company and the Executive having agreed that all
such remedies shall be cumulative.

 

12

 

(e)  The
restrictions set forth in Sections 7.1, 7.2 or 7.3 shall be construed as
independent covenants, and shall survive the termination or expiration of this
Agreement, and the existence of any claim or cause of action against the
Company, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the restrictions
contained in Sections 7.1, 7.2 or 7.3. The Executive hereby consents and waives
any objection to the jurisdiction over his person or the venue of any courts
within the state of Washington with respect to any proceedings in law or in
equity arising out of Sections 7.1, 7.2 or 7.3. 
If any court of competent jurisdiction shall hold that any of the
restrictions contained in Sections 7.1, 7.2 or 7.3 is unreasonable as to time,
geographical area or otherwise, said restrictions shall be deemed to be reduced
to the extent necessary in the opinion of such court to make their application
reasonable.

 

Section 8.                                          Indemnification

 

The Company hereby covenants and agrees, to the fullest extent
permitted by law, to indemnify and hold harmless the Executive fully,
completely and absolutely against and in respect to any and all actions, suits,
proceedings, claims, demands, judgments, costs, expenses (including reasonable
attorney’s fees), losses, and damages resulting from the Executive’s good faith
performance of his duties and obligations under the terms of this Agreement.

 

Section 9.                                          Assignment

 

9.1                               Assignment
by the Company.  This Agreement may
be assigned or transferred to, and shall be binding upon and shall inure to the
benefit of, any successor of the Company, and any successor shall be deemed
substituted for the “Company” for all purposes under this Agreement.  As used in this Agreement, the term “successor”
shall mean any person, firm, corporation, or business entity which at any time,
whether by merger, purchase, or otherwise, acquires all or substantially all of
the assets of the Company.  Except as
herein provided, this Agreement may not be assigned by the Company.

 

9.2                               Assignment
by Executive.  This Agreement shall
inure to the benefit and be enforceable by the Executive’s personal or legal
representatives, executors, and administrators, successors, heirs, distributes,
devisees and legatees.  If the Executive
should die while any amounts payable to the Executive hereunder remain
outstanding, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive’s devisee,
legatee, or other designee or, in the absence of such designee, to the
Executive’s estate.

 

13

 

Section 10.                                   Dispute
Resolution and Notice

 

10.1                        Arbitration.  Subject to Section 7.4, any dispute or
controversy arising under or in connection with this Agreement shall be settled
by arbitration, conducted before a panel of three (3) arbitrators sitting
in a location selected by the Executive within fifty (50) miles of the location
of his employment with the Company, in accordance with the rules of the
mutually agreed Arbitration Panel selected. 
In the event mutual agreement cannot be obtained relating to the
Arbitration Panel or its procedures, the parties agree to utilize a panel of
three (3) arbitrators sitting in a location selected by the Executive
within fifty (50) miles of the location of his employment with the Company, in
accordance with the rules of the American Arbitration Association then in
effect.  Judgment may be entered on the
award of the arbitrator in any court having proper jurisdiction.  In the event an arbitration proceeding is
filed, the costs of arbitration shall be born solely by the Company. In
addition, the Company shall be solely responsible for all of its legal and
other expenses associated with any dispute or arbitration.   Executive shall have the authority, in his
sole discretion, to hire counsel to represent the Executive in connection with
any dispute arising out of this Agreement or in such arbitration proceeding at
his sole expense.  Notwithstanding
anything to the contrary contained herein, the Executive will only be
responsible for his legal and associated expenses associated with any dispute
or arbitration up to a total amount of $25,000. 
Any reasonably incurred amounts in excess of this would be paid by the
company as incurred by the Executive.

 

10.2                        Notice.  For the purpose of this Agreement, any
notices, requests, demands, or other communications provided for by this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or by recognized overnight delivery service
(such as, but not limited to, Federal Express), to the Executive at the last
address he has filed in writing with the Company or, in the case of the
Company, at its principal offices, to the attention of the Chairman of the
Board.

 

Section 11.                                   Miscellaneous

 

11.1                        Gender and
Number.  Except where otherwise
indicated by the context, any masculine term used herein also shall include the
feminine, the plural shall include the singular, and the singular shall include
the plural.

 

11.2                        Modification.  This Agreement shall not be varied, altered,
modified, canceled, changed, or in any way amended except by mutual agreement
of the parties in a written instrument executed by the parties hereto or their
legal representatives.

 

11.3                        Severability.  In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect.

 

14

 

11.4                        Counterparts.  This Agreement may be executed in one (1) or
more counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.

 

11.5                        Tax
Withholding.  The Company may withhold
from any benefits payment under this Agreement all federal, state, city, or
other taxes as may be required pursuant to any law or governmental regulation
or ruling.

 

11.6                        Beneficiaries.  The Executive may designate one or more
persons or entities as the primary and/or contingent beneficiaries of any
amounts to be received under this Agreement in the event of Executive’s Death
or Disability.  The Executive may make or
change such designation at any time.

 

Section 12.                                   Governing
Law

 

To the extent
not preempted by federal law, the provisions of this Agreement shall be
construed and enforced in accordance with the laws of the state of Washington,
without regard to conflicts of law principles.

 

Section 13.                                   Survival
of Termination

 

Sections 6 (as applicable to the
circumstances for termination), 7, 8, 9, 10, 11 and 12 shall survive the
termination of this Agreement.

 

Section 14.                                   The
Company represents and warrants that Larry Pinnt is duly authorized to bind the
Company and authorized to execute this agreement on behalf of Company.

 

IN WITNESS WHEREOF,
the Executive and the Company have executed this Agreement, as of the day and
year first above written.

 

	
  CASCADE NATURAL GAS COMPANY

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Larry Pinnt

  	
   

  	
  /s/ David W. Stevens

  	
   

  
	
   

  	
  Larry Pinnt, Chairman

  	
  David W. Stevens

  	
   

  
					

 

15

 

APPENDIX
A

Perquisites
for Chief Executive Officer

 

In addition to the compensation describe in the employment agreement,
the Company shall provide the Executive with the following additional
perquisites:

 

1.  Relocation Allowance.  The Company shall pay the Executive a
relocation allowance that shall consist of the following:

 

a. 
Reasonable closing costs in connection with the sale of the Executive’s
residence at the date of the agreement and in connection with the purchase of a
replacement residence in the greater Seattle area within 18 months of
employment

 

b.  A
monthly living allowance of up to $2,000 for a period of six (6) months
from the Executive’s date of hire, payable to the Executive or the Executive’s
landlord to cover actual living expenses during the Executive’s move from
Austin, Texas to the Seattle area. 
Payment of any living expenses in excess of $2,000 per month requires
approval of the Chairman of the Board.

 

c.  Reasonable
costs of moving the Executive’s household furnishings from Austin, Texas to the
Seattle area in an amount not to exceed $ 25,000 without prior approval by the
Chairman of the Board of Directors.

 

d.  The
cost of airfare and reasonable accommodations in the Seattle area for the
Executive and his family to cover the cost of looking for a replacement
residence for up to four (4) separate visits.

 

e.  The
cost of round-trip airfare between Seattle and Austin for two trips per month
for a period of up to 6 months to allow the Executive the opportunity to spend
time with his family prior to his family’s move to Seattle.

 

2.  Agreed that any flight over 3
hours should be booked as first class recognizing the current cost of tickets.

 

3.   Miscellaneous Allowance.  The Company shall provide the Executive with
a monthly allowance of $1,500 to provide for the lease or purchase of a car,
payment of club dues and other such expenses. 
In addition, the Company will pay the initiation fee for the Stevens’
family to join the Bellevue Athletic Club. 
The Executive shall not be required to document any such expenditures
but will responsible for all taxes (including required tax withholding) on such
allowance.  The Company agrees that
Executive will be reimbursed for approved business related mileage at the
prevailing IRS rate of reimbursement.

 

4.  The Executive will take the
standard new employee physical tests at company expense.

 

A-1

 

APPENDIX
B

Required
Release of Claims

 

AGREEMENT AND GENERAL RELEASE

 

Cascade
Natural Gas Corporation (“Cascade”) and Executive, his heirs, executors,
administrators, successors, and assigns (collectively referred to throughout
this Agreement and General Release as “Executive”), agree:

 

1.                                      Last Day of Employment.  Executive’s
last day of employment with Cascade will
be                              .

 

2.                                      Consideration.  In consideration for signing this fully
executed original Agreement and General Release and in compliance with the promises
made herein, Cascade agrees to provide
the payments and other benefits described in Section 6.4 of the Executive’s
employment agreement with Cascade to Executive after
receiving the original of this fully executed Agreement and General Release and
the original letter from Executive in the
form attached hereto as Exhibit ”A.” 
Executive acknowledges that he would not
otherwise receive this consideration but for signing this Agreement and General
Release.

 

3.                                      General Release of Claims.  Executive
knowingly and voluntarily releases and
forever discharges, to the full extent
permitted by law, Cascade, its parent
corporation, affiliates, subsidiaries, divisions, successors, predecessors and
assigns and the current and former employees, attorneys, insurers, partners,
owners, officers, directors, shareholders, agents thereof, the employee benefit
plan for Cascade, plan fiduciaries and
plan administrators (whether internal or external), (collectively referred to
as “Releasees”), of and from any and all claims, known and unknown, asserted
and unasserted, Executive has or may have against Releasees as of the
date of execution of this Agreement and General Release, including, but not
limited to, any alleged violation of:

 

•                  Title
VII of the Civil Rights Act of 1964, as amended;

•                  The
Civil Rights Act of 1991;

•                  Sections
1981 through 1988 of Title 42 of the United States Code, as amended;

•                  The
Employee Retirement Income Security Act of 1974, as amended;

•                  The
Immigration Reform and Control Act, as amended;

•                  The
Americans with Disabilities Act of 1990, as amended;

•                  The
Workers Adjustment and Retraining Notification Act, as amended;

•                  The
Occupational Safety and Health Act, as amended;

•                  The
Sarbanes-Oxley Act of 2002;

•                  The
Family Medical Leave Act, as amended to the extent permitted by law;

•                  The
Equal Pay Act, as amended;

•                  Washington
Law Against Discrimination, as amended, RCW 49.60 et seq.;

•                  The
National Labor Relations Act;

•                  The
Age Discrimination in Employment Act of 1967, as amended;

•                  The
Older Workers Benefit Protection Act;

 

	
  Executive’s initials 

  	
   

  

 

B-1

 

•                  The
Consolidated Omnibus Budget Reconciliation Act (“COBRA”), to the extent
permitted by law;

•                  Any
provision of Title 49 of the Revised Code of Washington;

•                  The
Washington Minimum Wage Law, as amended, to the extent permitted by law;

•                  Any
provision of Title 296 of the Washington Administrative Code;

•                  Any
claim for failure to pay wages, bonuses, or commissions, including any claim
for liquidated or double damages, to the extent permitted by law;

•                  The
Industrial Insurance Act of Washington, as amended, to the extent permitted by
law;

•                  The
Washington Consumer Protection Act, RCW 19.86 et seq.;

•                  Any
claim under a Collective Bargaining Agreement;

•                  Any
claim for negligent misrepresentation, intentional misrepresentation or fraud;

•                  Any
claim for intentional injury, intentional infliction of emotional distress,
negligence, negligent infliction of emotional distress, negligent hiring,
supervision or retention, or defamation;

•                  Any
claim for disparate impact on any basis;

•                  Any
claim for discrimination, harassment, failure to accommodate or retaliation;

•                  Any
public policy, contract, tort, or common law, including but not limited to
claim(s) for wrongful termination in violation of public policy, wrongful
termination for any reason, or constructive discharge;

•                  Any
claim for breach of any term or condition of an employee handbook or policy
manual, including any claim for breach of any promise of specific treatment in
specific circumstances;

•                  Any
claim for breach of contract, including but not limited to an employment
contract;

•                  Any
claim for violation of any legal or equitable duty of good faith and fair
dealing;

•                  Any
other federal, state or local civil or human rights law or any other local,
state or federal law, regulation or ordinance; or

 

Notwithstanding the foregoing, the release set forth
in this section shall not apply to any vested benefits accrued by Executive prior to the effective date of this
Agreement under any compensation or benefit plan maintained by Cascade for the benefit of its employees that
is subject to section 203 of ERISA or to any claims for payments described
in Section 2 of this Agreement and General Release and Section 6.4 of
Executive’s employment agreement with Cascade.

 

4.                                      Indemnity.  In the event of any claims against
Executive that may arise out of his employment, Cascade will in good faith,
defend, indemnity and hold harmless Executive in the same manner and to the
same extent that it would any officer then in the employ of Cascade and only to
that extent.

 

B-2

 

5.                                      Non-Disparagement Obligation.  Executiveshall not defame, disparage or demean Cascade or any director, officer, employee or
agent of the same in any manner whatsoever; and directors and officers of
Cascade shall not defame, disparage or
demean Executive in any manner
whatsoever.  This paragraph shall not
preclude either party from responding truthfully to inquiries made in
connection with any legal or governmental proceeding pursuant to subpoena or
other legal process.  As a material
portion of this Agreement and General Release, Executiveagrees that he will not appear as a
witness in any matter adverse to Cascade
except under subpoena and will not provide any consultative services that are
adverse to Cascade in any way.  Executive
also agrees that if he is at any time
requested to provide information, whether by subpoena or otherwise, in any
matter involving or affecting Cascade in
which Executive was involved during his
tenure as an employee, Executive will (1) notify
Cascade as soon as practicable, but in
any event before providing the requested information; and (2) provide Cascade the opportunity to participate in any meeting
or proceeding to provide such information.

 

6.                                      Affirmations.

 

6(a).                        Executive affirms
that he has not filed, caused to be
filed, or presently is a party to any
claim, complaint, or action against Cascade
in any forum or form.

 

6(b).                        Executive further affirms that he has been paid
and/or has received all compensation,
wages, bonuses, commissions, and/or benefits to which he may currently be
entitled and that no other compensation, wages, bonuses, commissions and/or
benefits are currently due to him, except (1) for previously accrued paid
time off, (2) for payments described in section 6.4 of the Executive’s
employment agreement with Cascade, and (3) as provided in this Agreement
and General Release.

 

6(c).                        Executive furthermore affirms that he has no known
workplace injuries or occupational diseases and has
been provided and/or has not been denied
any leave requested under the Family and Medical Leave Act.

 

7.                                      Taxation.  If
any taxing authority determines that any portion of the [per agreement] is taxable, Executive agrees to pay all taxes,
penalties, and interest assessed and to hold harmless and indemnify Cascade for all amounts assessed.  Releasees make no representation as to the
taxability of the amounts paid to Executive.

 

B-3

 

8.                                      Governing Law and
Interpretation.  This Agreement and General Release shall be
governed and conformed in accordance with the laws of Washington State without
regard to its conflict of laws provision. 
In the event Executive or Cascade breaches any provision of this
Agreement and General Release, Executive
and Cascade affirm that either may
institute an action to specifically enforce any term or terms of this Agreement
and General Release.  Should any
provision of this Agreement and General Release be declared illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to
be enforceable, excluding the general release language, such provision shall
immediately become null and void, leaving the remainder of this Agreement and
General Release in full force and effect.

 

9.                                      Amendment.  This
Agreement and General Release may not be modified, altered or changed except
upon express written consent of all parties wherein specific reference is made
to this Agreement and General Release.

 

10.                               Revocation.  Executive may revoke this Agreement and General
Release for a period of seven calendar days following the day he executes this Agreement and General Release.  Any revocation within this period must be
submitted, in writing, to Larry Rosok and state, “I hereby revoke my acceptance
of our Agreement and General Release.” 
The revocation must be personally delivered to Larry Rosok or the designee
of Rosok, or mailed and postmarked within
seven calendar days of execution of this Agreement and General Release to:

 

Mr. Larry Rosok

222
Fairview Avenue

Seattle,
WA  98109

 

This Agreement and
General Release shall not become effective or enforceable until the revocation
period has expired and a letter in the form attached as Exhibit ”A,” dated
and signed no sooner than eight days after Executive
dates and signs this Agreement and General Release, is received by Larry Rosok.  If the last day of the revocation period is a
Saturday, Sunday or legal holiday in Washington State, then the revocation
period shall not expire until the next following day which is not a Saturday,
Sunday or legal holiday.

 

                                               11.                                                        Entire Agreement.  This
Agreement and General Release together with the Section 6 (as applicable
to the circumstances for termination) and Sections 7, 8, 9, 10, 11, and 12 of
Executive’s employment agreement with Cascade which are fully incorporated
herein, sets forth the entire agreement between the parties hereto, and fully
supersedes any prior obligations of Releasees to Executive, except Executive’s rights under sections 6.4, 6.6 and 6.7 of
the Executive’s employment agreement with Cascade.  Executiveacknowledges he has not relied on any representations, promises,
or agreements of any kind made to him in connection with his decision to accept
this Agreement and General Release, except for those set forth in this
Agreement and General Release.

 

B-4

 

12.                               Counterparts and Facsimile
Signatures.  This Agreement and General Release may be
executed in counterparts, and, as executed, shall constitute one
agreement.  A facsimile signature shall
be considered the same as the original, provided that the original signature page is
delivered within ten days.

 

EXECUTIVE HAS BEEN ADVISED
THAT HE HAS AT LEAST TWENTY-ONE CALENDAR DAYS TO CONSIDER
THIS AGREEMENT AND GENERAL RELEASE AND HEREBY IS ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF
THIS AGREEMENT AND GENERAL RELEASE.

 

EXECUTIVE AGREES THAT ANY MODIFICATIONS,
MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT
RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE CALENDAR DAY
CONSIDERATION PERIOD.

 

HAVING HAD THE
OPPORTUNITY TO CONSULT WITH AN ATTORNEY, AND HAVING ELECTED TO EXECUTE THIS
AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES AND TO RECEIVE THE SUMS
AND BENEFITS IN PARAGRAPH “2” ABOVE, EXECUTIVE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS DOCUMENT INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST CASCADE AND/OR
RELEASEES.

 

IN WITNESS WHEREOF, Executive
hereto knowingly and voluntarily executes this Agreement and General Release as of the
date set forth below:

 

 

	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
	
  Executive

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
	
  Larry Rosok

  	
   

  	
   

  
	
  For Cascade
  Natural Gas Corporation

  	
   

  	
   

  

 

B-5

 

EXHIBIT A

 

Mr. Larry Rosok

Cascade Natural Gas Corporation

222 Fairview Avenue

Seattle, WA 
98109

 

Re:                               Agreement
and General Release

 

Dear Mr. Rosok:

 

On               
(date), I executed an Agreement and
General Release between myself and Cascade Natural Gas Corporation.  I was advised by Cascade in writing, to consult with an
attorney of my choosing, prior to
executing this Agreement and General Release.

 

More than seven calendar days have elapsed
since I executed the above-mentioned
Agreement and General Release.  I have at no time revoked my acceptance or execution of that Agreement
and General Release and hereby reaffirm my
acceptance of that Agreement and General Release.  Therefore, in accordance with the terms of
the Agreement and General Release, I
hereby request payment of the monies described in Paragraph “2” of that Agreement.

 

Dated this       day
of               ,
2005.

 

Very truly yours,

 

 

Executive

 

 

NOTICE:  Per paragraph 10 of the Release, DO NOT SIGN
THIS LETTER, until eight days after you have signed the Agreement and General
Release

 

B-6

 

APPENDIX
C

Non-Competition

 

(a) In
the event that the Executive’s employment terminates for any reason, and in
consideration of the initial employment of the Executive and of the Non-Compete
Payment (as defined in Section 6.4(a)) to Executive set forth in this
Agreement and in order to protect the Company’s Confidential Information and
Trade Secrets from intentional or inadvertent disclosure to or use by a
competitor, Executive agrees that in the specified Geographical Area (as that
term is hereinafter defined) for a period of two (2) years after the
Termination Date, Executive will not alone, or in any capacity with another
firm, corporation, institution, individual or other entity:

 

(i) directly
or indirectly engage in the Restricted Business (as defined in Section 7.3)
in the Specified Geographic Area, nor will Executive become a significant
investor in or a principal, officer, director, employee, representative or
agent of any venture or enterprise of whatever kind that is engaged in the
Restricted Business within the Specified Geographic Area (except as a passive
investor in publicly held companies) provided that, nothing in this Section shall
restrict the Executive’s employment by or association with any entity, venture
or enterprise which engages in the Restricted Business in the Specified
Geographic Area so long as the following conditions are complied with: (A) the
Executive’s employment or association with such entity, venture or enterprise
is limited to work which is not part of the Restricted Business of such entity;
(B) the Executive’s employer takes all reasonable measures to ensure that
the Executive is not involved with or consulted in any aspect of developing,
marketing or servicing of such Restricted Business; and (C) the Executive,
prior to accepting employment with any new employer, (for which the Executive
has a reasonable belief that his new position is or may be contrary to this
Agreement) informs that employer of this Section of the Agreement and
provides that employer with a copy of this Section of the Agreement,

 

(ii) directly
interfere or attempt to interfere with the Company’s relationships with any of
its current customers or suppliers,

 

(iii) directly
or indirectly through others, induce, encourage or solicit, or attempt to
induce, encourage or solicit, any employee of the Company, or its Affiliates,
to terminate the employee’s employment with the Company or Affiliate (it being
understood that, e.g., newspaper advertisements and other similar general
solicitations or hiring an employee of the Company who has already ceased
employment with the Company shall not be a violation of this provision), or

 

C-1

 

(iv) unless
otherwise required by law or agreed to in writing by Company or in connection
with generic proceedings not specifically targeting the Company, directly or
indirectly through others, provide testimony or consulting advisory services to
or for any (i) current customer or supplier of the Restricted Business of
the Company, (ii) competitor of the Restricted Business of the Company in
the Geographic Area, or (iii) intervenor, federal agency, public utility
commission, division or any governmental agency in or for, with respect to any
of clauses (i), (ii) or (iii) above, a proceeding, docket or
investigation that directly affects the Restricted Business of the Company
and/or in a proceeding which the Company is a participant, in the case of each
of the foregoing within the Specified Geographic Area.

 

(b) ”Specified
Geographic Area” shall mean any city, town, municipality or environs in which
the Company provides the Restricted Business as of or immediately prior to the
Termination. It is understood that the Specified Geographical Area set forth in
this Section 7.3 is divisible so that if this Section 7.3 is found to
be invalid or unenforceable in an included geographical area, that area shall
be severable and this Section 7.3 shall remain in effect for the remaining
included geographical areas in which this Section is valid.

 

(c) Executive
agrees that the limitations imposed in this Section 7.3 as to duration of
restrictions, geographical area, and/or scope of activity to be restrained are
reasonable and not greater than necessary to protect the Company’s Trade
Secrets and Confidential Information and its legitimate business interests.
Executive further agrees that the non-competition provisions of this Agreement
are valid, enforceable and are ancillary to an otherwise enforceable agreement.
In the event that, notwithstanding the foregoing, any of the provisions of this
Section 7.3 hereof shall be held to be invalid or unenforceable, the
remaining provisions thereof shall nevertheless continue to be valid and
enforceable as though the invalid or unenforceable parts had not been included
therein. In the event that any provision of this Section 7.3 relating to
time period and/or areas of restriction shall be declared by a court of
competent jurisdiction to exceed the maximum time period or areas such court
deems reasonable and enforceable, said time period and/or areas of restriction
shall be deemed to become and thereafter be the maximum time period and/or
areas which such court deems reasonable and enforceable.

 

(d) For
each new job or position with a company or entity in the regulated natural gas
business in the specified Geographic Area or that sells or supplies such
products and/or services, in the specified Geographic Area, that the Executive
accepts during the two (2) year period following the Termination Date,
Executive shall disclose in writing the identity of the new employer and the
new job duties of the Executive. Executive shall provide such information to
the Company within ten (10) business days of Executive’s acceptance of
such position or job. The Company shall keep all such information confidential
and not disclose such information to any third party.

 

C-2

 

APPENDIX
D

Officer
Incentive Plans

 

SHORT TERM INCENTIVES:

 

1.                 Key Performance
Plan:

a.               Grade 9 managers
and above are eligible to participate.

b.              The Company will set
aside a bonus pool from which individual payouts are made that will generally
equal a percentage from 0 to 200% (the “Funding Percentage”) of the sum of the
Midpoint Payouts established for all eligible employees.  The percentage of Midpoint Payouts set aside
in the bonus pool is based on the extent to which the Company’s earnings per
share (“EPS”) for a fiscal year meets or exceeds a set target.

c.               Individual payouts
to eligible participants are made out of the bonus pool and are based on the
following factors:

i.                  70% of the
Midpoint Payout for the individual times the Funding Percentage determined
under (b)

ii.               30% of the Midpoint
Payout for the individual times the Funding Percentage times the percentage
(not to exceed 200%) of Key Performance Goals achieved by the individual

d.              The Midpoint Payout
as a percentage of base pay is;

i.                  CEO 50%.  (Payout range from 0-100% of base pay.)

ii.               CFO and COO 45%

iii.            Senior Vice Presidents
25%

iv.           Other Officers 20%

v.              Other managers from
10% to 4%.

e.               In no event will
the sum of all awards exceed the bonus pool. 
Individual awards shall be reduced pro rata to the extent necessary to
avoid paying more than the bonus pool. 
Any amount remaining in the bonus pool after payment of individual
awards reverts to the Company’s general fund.

 

2.                 Team Incentive
Plan:

a.               All salaried
employees are eligible to participate.

b.              The Company will set
aside a bonus pool from which individual payouts are made that will generally
equal a percentage from 0 to 200% % (the “Funding Percentage”) of the sum of
the Midpoint Payouts established for all eligible employees.  The percentage of Midpoint Payouts set aside
in the bonus pool is based on the extent to which the Company’s earnings per
share (“EPS”) for a fiscal year meets or exceeds a set target.

c.               Individual Payouts
are made out of the bonus pool and are based on the following performance
factors:

i.                  Payouts are
determined by five operating performance measures described in the plan.

 

D-1

 

ii.               Payouts to regional
employees are based on the performance of their region.

iii.            Payouts to General
Office employee are based on total company performance.

d.              The amount paid out
to any eligible employee shall be equal to Funding Percentage times Midpoint
payout times the percentage (not to exceed 200%) of the five operating measures
achieved for the region (or General Office) where the individual is employed.

e.               Payout as a
percentage of base pay ranges from 0-8%.

i.                  Midpoint payout
is 4% of base pay

ii.               Employees with a
performance rating of “3” or greater receive 100% of the award.

iii.            Performance ratings at
or below 2.8 receive no award.

f.                 In no event will
the sum of all awards exceed the bonus pool. 
Individual awards shall be reduced pro rata to the extent necessary to
avoid paying more than the bonus pool. 
Any amount remaining in the bonus pool after payment of individual
awards reverts to the Company’s general fund.

 

Summary of short term incentives: 
Potential ranges from —0% to 108% of base salary for CEO.

 

LONG TERM INCENTIVE PLAN:

The Stock Incentive Plan includes the following features:

•                  Specific
grants of stock options (or similar equity-based grants) by Board of Directors
from time to time.

•                  The
target award for the chief executive officer shall have a value of 20 percent
of base pay.

•                  Specific
grants shall be based on achieving performance targets established in advance
by the Board of Directors

 

D-2

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