Exhibit 10.33

 

 

 

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Cascade Natural Gas Corporation
Cascade Incentive Plan
2006

 

Cascade Natural Gas has an incentive plan designed to reward salaried employees
for outstanding, company performance. The objectives of this plan are to:

 

•                  Reward for company performance

 

•                  Emphasize performance in critical areas such as safety and
customer satisfaction

 

•                  Shift to a performance-based, financially-driven organization

 

•                  Emphasize the importance of cash flow to company financial
success

 

•                  Establish a link between pay and company performance

 

•                  Establish a profitable customer focus

 

•                  Encourage team building

 

•                  Link to Company’s objectives

 

•                  Attract, retain and motivate teams and employees

 

•                  Motivate higher levels of performance

 

•                  Focus employees on company direction (in their actions)

 

CASCADE INCENTIVE PLAN

 

The purpose of the plan is to provide a financial incentive for salaried
employees to perform at high levels, both with regard to non-financial and
financial measures.  All salaried employees in the company are eligible to
participate in this plan.

 

PLAN FUNDING

 

The threshold for establishing funding for the plan is based on two factors:  1)
Earnings per Share (EPS)  greater than dividends paid ($.96 per share); and 2)
the company is “cash flow neutral”.  Cash flow neutral is defined later in the
plan.  After both of these factors are achieved, pre-tax earnings will be shared
with 50% going to the incentive plan and 50% going to shareholders (retained
earnings).  Funding for incentive plans shall go to both this incentive plan and
the 401(k) Profit Sharing Plan once the threshold is met.

 

Funding for Non-financial measures – Funding for non-financial measures at
mid-point award levels will be 30% of the total potential mid-point payout.  All
funding for the incentive plan up to 30% of the total potential mid-point payout
will be used for payouts for achievement of non-financial measures.

 

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Funding for Financial measures – Funding for performance for financial measures
begins after the payout for non-financial measures is funded.  (Above 30% of
total potential mid-point payout.)

 

CASH FLOW NEUTRAL - DEFINITION

 

Having a neutral or positive cash flow is essential for the financial success of
the company, just like it is essential for the financial success of your
household.  Having a positive cash flow demonstrates control of operating and
capital expenses and reduces the need to borrow money.

 

Cash flow is defined as:

 

 

 

Net Income

 

 

 

+

 

depreciation

 

 

 

+

 

common stock issued through existing plans

 

 

 

–

 

capital expenditures

 

 

 

–

 

dividends

 

 

 

=

 

cash flow

 

NON-FINANCIAL PERFORMANCE MEASURES

 

Payouts for performance in non-financial measures shall be based on the
following measures:

 

1.               Safety  The safety measure is based on a company-wide pipeline
safety score.  This score is composed of maintenance schedule rating, missed
locates and ratings on other issues including maintaining appropriate records,
appropriate emergency response and maintaining operator qualifications as
required.

 

2.               Customer Satisfaction  Customer satisfaction is determined by
customer’s responses to the annual customer satisfaction survey.

 

Other non-financial measures may be tracked, and may be critical to overall
company performance, but will not be factored into any payouts achieved under
the plan.

 

COMMUNICATION OF MEASURES

 

Specific Measures will be communicated by the beginning of December.

 

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AWARD POTENTIALS

 

Employees participating in the plan are eligible for an incentive payout. The
payout is calculated as a percentage of the employee’s base pay and is dependent
upon the achievement of the incentive plan goals and company performance. The
details of this target payout are described below:

 

•                  The incentive payout at midpoint performance varies depending
on level in the company.

•                  The plan outlines three levels of performance:

•                  Threshold: represents the minimum acceptable level of
performance for the measure; funding for the plan begins at the threshold level.

•                  Plan Mid Point: represents the level of performance that
generates an incentive payout of 100% of plan mid point.

•                  Outstanding: represents the maximum level of performance for
the measure; this level of performance generates an incentive payout of 200% of
target.

•                  The level of achievement in the earnings per share measure
will determine the funding level of the plan.  Payouts cannot exceed the funding
pool.

 

Timing of Payout

 

Awards will be paid out annually. Payments will be made to employees by
December 1st, 2006

 

Eligibility

 

Employee’s performance must meet expectations for their job and they must be an
“employee in good standing.” An employee in good standing is defined as not have
received any discipline at the written warning level or above.

 

All awards will be pro-rated based on the length of service in that plan year. 
Employees must have a minimum of three months of service with Cascade in order
to be eligible to participate in the plan.

 

BASE PAY DEFINITION

 

For the purposes of calculating incentive awards, earned base pay and actual
overtime earnings will be used for non-exempt employees and earned annual base
pay will be used for exempt employees. Base pay calculations do not included
bonuses, merit awards, incentive earnings or other pay that would be reflected
in W-2 earnings.

 

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BENEFITS

 

Incentive pay is included in the definition of pay for the purpose of matching
and employer contributions in the 401(k).

 

TERMINATIONS

 

Individuals must be employed at the end of the fiscal year in order to be
eligible to receive a payout. Pro-rated awards will be paid to those who
terminate due to retirement, disability or death.

 

The company reserves the right to alter, amend or cancel this program at any
time.

 

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Cascade Natural Gas Corporation
401(k) Profit Sharing Plan
2006

 

Cascade Natural Gas has a 401(k) profit sharing plan designed to reward
employees for outstanding company performance and help fund their retirement. 
All salaried employees in the company are eligible to participate in this plan. 
Plan funding is described below.  Payouts at midpoint are 4% for all salaried
employees.

 

Plan Funding

 

The 401(k) Profit Sharing Plan is funded consistent with the Cascade Incentive
Plan for 2006.  The threshold for establishing funding for the Cascade Incentive
Plan is based on two factors:  1) Earnings per Share (EPS) are greater than
dividends paid ($.96 per share); and 2) the company is “cash flow neutral”. 
(See the Cascade Incentive Plan for the definition of Cash flow neutral.)  After
both of these factors are achieved, pre-tax earnings will be shared with 50%
going to the incentive plan and 50% going to shareholders (retained earnings). 
Funding for incentive plans shall go to both the Cascade Incentive Plan and the
401(k) Profit Sharing Plan once the threshold is met.  The threshold for the
401(k) Profit Sharing Plan shall be the level where midpoint incentive plan
funding for the Cascade Incentive Plan is met.

 

401(k) Profit Sharing

 

 

Threshold

 

Midpoint of the Cascade Incentive Plan

Mid-point

 

Level where midpoint payouts are funded

Maximum

 

Level where 2X midpoint payouts are funded

 

BASE PAY DEFINITION

 

For the purposes of calculating incentive awards, earned base pay and actual
overtime earnings will be used for non-exempt employees and earned annual base
pay will be used for exempt

 

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employees. Base pay calculations do not included bonuses, merit awards,
incentive earnings or other pay that would be reflected in
W-2 earnings.

 

TERMINATIONS

 

Individuals must be employed at the end of the fiscal year in order to be
eligible to receive a payout. Pro-rated awards will be paid to those who
terminate due to retirement, disability or death.

 

The company reserves the right to alter, amend or cancel this program at any
time.

 

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