Document:

Exhibit 10.1

 

Rick Davis

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT  AGREEMENT
(the “Agreement”) is made and entered into as of this 16th day of June 2005,
by and between Cascade Natural Gas Company 
(hereinafter referred to as the “Company”), a Washington corporation,
and Rick Davis (hereinafter referred to as the “Executive”).

 

WHEREAS,
the Executive will become employed by the Company in the capacity of  Chief Financial  Officer (CFO) of the Company;

 

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 June 27,
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 the Chief Financial
Officer 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 President and CEO
and/or the Board of Directors of the Company. 
The Executive shall have the same status, privileges and responsibilities
normally inherent for the CFO of the Company, including attending all Audit
Committee meetings, shall be responsible for general and active management of
all financial aspects of the business of the corporation under the direction of
the President and CEO and the Board of Directors, and shall see that all orders
and resolutions of the Board are carried into effect under the direction of the
President and CEO.

 

 

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 President and CEO and/or 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 President and CEO after
consultation with 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, upon recommendation by the President and CEO, 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
$240,000 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 CEO and/or 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.

 

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4.4                               Supplemental
Retirement Benefits.  In recognition
of the Executive’s agreement to  change
employers 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 at normal retirement age 65 with
15 years of service (or as determined by the Board of Directors), 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 CFO of the Company, the Company shall award the
Executive 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 restricted
shares shall be 5,000.  Restricted shares
shall vest if the Executive’s employment as chief financial officer does not
terminate before one year from the date of employment.

 

(b)         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.

 

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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 CFO 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 another executive of
the Company, subject to a review 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.

 

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(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 President and
CEO or 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.

 

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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) 0.50
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 .50 times the Executive’s Covered
Compensation as a Non-Compete Payment (“Non-Compete Payment”).

 

(b)                                 “Covered
Compensation” shall mean one year of Base Salary using the rate of pay in
effect at the time of termination plus average Annual Incentive Compensation
based on the average of 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  50% of the entire potential cash
incentive compensation payment payable to Executive pursuant to Section 4.2
for the year the Involuntary Termination Without Cause occurs.

 

(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  twelve(12) 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.

 

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(d)                                 For
a period of   12 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
medical 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 benefits shall be correspondingly discontinued 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.

 

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6.5                               Termination
for Cause.

 

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

 

(i)            For Cause shall
mean:   (a) the Executive’s
conviction, plea of guilty, plea of no contest, or entering an Alford plea to
any criminal charge;  (b) engaging
in any conduct which materially injures the Company;  (c) violation of any Company policy that
materially injures the Company;  (d) fraud;
(e) commission of any act of dishonesty or intentional misrepresentation; (f) violation
of the Company’s Ethics policy; (g) falsification of any Company record; (h) nondisclosure
or concealment of any facts relating to obtaining employment or relating in any
manner to the performance of the Executive’s 
duties; (i) engaging in any 
harassment or discrimination; (j) violation of the Company’s drug and
alcohol policy; or (k) intentional violation of any law or regulation related
to the performance of his duties.

 

(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 President and
CEO or the Board of Directors finding that, in the good faith opinion of the
President and CEO or 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 President and CEO or 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.

 

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(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 the
CFO 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.

 

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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.

 

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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 CFO 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.

 

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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.

 

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(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.   Except as provided in Section 7.4, any
dispute arising under or in connection with this Agreement or the Executive’s
employment, shall be settled by arbitration according to the following procedure.  The parties will attempt to agree on an
arbitrator.  If they are unable to agree,
a list of three arbitrators will be requested from Judicial Dispute
Resolution in Seattle.  The Executive and
the Company, in that order, will strike names from the list until one name
remains and that will be the arbitrator. The arbitration proceedings will be
conducted according to the Judicial Dispute Resolution arbitration rules (except for the selection of the
arbitrator).  The arbitration will be
conducted in Seattle or in such other location as the parties may agree.  The Company will bear the fee and costs of
the arbitrator.  The  executive and the Company will bear their own
legal fees and costs and other expenses. If the parties agree to use a court
reporter, they shall share those costs equally.

 

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 David W. Stevens 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/ David W. Stevens

  	
   

  	
   /s/ Rick
  Davis

  
	
   

  	
  David W. Stevens, President and CEO

  	
  Rick Davis

  
				

 

15

 

APPENDIX
A

Perquisites
for CFO

 

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

 

 Miscellaneous Allowance.  The Company shall provide the Executive a
one-time payment of $3,000 for initiation dues for an athletic club, dining
club or country club.  In addition, the
Company shall provide the Executive with a monthly allowance of $400 to provide
for the lease or purchase of a car, payment of club dues and other such
expenses.  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.

 

Payment for Medical Coverage.  The Company shall provide a payment of $1,000
(gross) per month, for up to three months after the start of employment.  Executive shall purchase medical coverage for
his family until Cascade medical coverage begins.

 

Educational Assistance Reimbursement Program  — Executive is eligible for the Company
educational assistance reimbursement program, which may change from time to
time.  In addition, the Company will pay
100% of reasonable costs for Executive to maintain financial professional
certifications and membership in financial professional organizations.  This benefit may be taxable to income.

 

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;

 

	
  AGREEMENT

  	
   

  	
   

  
	
  AND GENERAL RELEASE

  	
   

  	
  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:

  	
   

  	
   

  
	
   

  	
  LarryRosok

  	
   

  
	
   

  	
  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 Appendix C is found to be
invalid or unenforceable in an included geographical area, that area shall be
severable and this Appendix C 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 98% of base salary for CFO.

 

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 CFO 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-2Exhibit 10.2

 

AMENDMENT 1

TO

AGREEMENT AND GENERAL RELEASE

 

 

The Agreement and General Release dated January 10,
2005 (the “Agreement”), between Cascade Natural
Gas Corporation (“Cascade”) and Joseph D. Wessling, his heirs, executors, administrators, successors, and assigns
(collectively referred to as “Wessling”)
is hereby amended as follows:

 

Section 1 of the Agreement is amended to
read as follows:

 

1.                                      Last
Day of Employment.  Joseph D.
Wessling’s last day of employment with Cascade will be July 21, 2005.  Wessling’s last day as Chief Financial
Officer shall be June 26, 2005. 
From June 27, 2005 through July 21, 2005, Wessling shall have
the title of Consultant and will be available to assist in the transition to a
new Chief Financial Officer.  Wessling will
continue to receive base pay at the current rate through July 21, 2005.

 

The “General Release of Claims” set forth in Section 3
of the Agreement is updated and reaffirmed to be effective as of the date of
this Amendment        and
through July 21, 2005.

 

The “Affirmations” set forth in Section 6
of the Agreement are updated and reaffirmed to be effective as of the date of
this Amendment and through July 21, 2005.

 

Except as amended hereby, all other
provisions of the Agreement shall remain in full force and effect without
change.

 

IN WITNESS WHEREOF, the parties
hereto knowingly and voluntarily execute this Amendment to the Agreement as of the
date set forth below:

 

 

	
   

  	
   /s/ Joseph D. Wessling

  	
   

  	
  Dated:

  	
   June
  17, 2005

  	
   

  
	
   

  	
  Joseph D. Wessling

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Cascade Natural Gas Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Larry Rosok

  	
   

  	
  Dated:

  	
   June
  17, 2005

  	
   

  
	
   

  	
   

  	
  Larry Rosok, Vice
  President and Secretary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]