Exhibit 10.01

 

 

 

CASCADE NATURAL GAS CORPORATION

OFFICER SEVERANCE PAY PLAN

 

 

October 1, 2004

 

 

 

 

 

 

Cascade Natural Gas Corporation

 

 

a Washington corporation

 

 

222 Fairview Avenue North

 

 

Seattle, Washington 98109

 

Company

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

 

 

 

 

ARTICLE 1

 

Effective Date; Plan Year; ERISA

 

1.01

 

Effective Date

 

1.02

 

Plan Year

 

1.03

 

ERISA

 

ARTICLE 2

 

Eligibility and Participation

 

2.01

 

Eligible Employees

 

2.02

 

Participation

 

2.03

 

Determination of Eligibility and Participation

 

ARTICLE 3

 

Severance Benefits

 

3.01

 

Entitlement to Severance Benefits

 

3.02

 

Severance Pay

 

3.03

 

Medical Insurance Benefits

 

3.04

 

Time and Manner of Payment

 

3.05

 

Forfeitability of Severance Benefits

 

ARTICLE 4

 

Administration

 

4.01

 

Administrator

 

4.02

 

The Administrator’s Powers and Duties

 

4.03

 

Company Functions

 

4.04

 

Claims Procedures

 

4.05

 

Appeal Procedures

 

4.06

 

Indemnity and Bonding

 

4.07

 

Expenses

 

ARTICLE 5

 

General Provisions

 

5.01

 

Enforceability and Exclusive Benefit

 

5.02

 

Amendment and Termination

 

5.03

 

Not Contract of Employment

 

5.04

 

Unfunded

 

5.05

 

Nonassignment

 

5.06

 

Applicable Law

 

 

ii

--------------------------------------------------------------------------------

INDEX OF TERMS

 

Term

 

Section

 

Page

 

Administrator

 

4.01

 

6

 

Average Annual Bonus

 

3.02-1(c)

 

4

 

Company

 

Preamble

 

1

 

Effective Date

 

1.01

 

1

 

Eligible Employee

 

2.01-1

 

2

 

ERISA

 

1.03-1

 

1

 

Participant

 

2.02

 

3

 

Plan Year

 

1.02

 

1

 

Policy

 

Preamble

 

1

 

Regular Pay

 

3.02-1(b)

 

4

 

Workforce Reduction

 

3.01-1

 

3

 

Workforce Reduction Policy

 

Preamble

 

1

 

Years of Credited Service

 

3.02-1(a)

 

4

 

 

iii

--------------------------------------------------------------------------------

CASCADE NATURAL GAS CORPORATION

OFFICER SEVERANCE PAY PLAN

 

October 1, 2004

 

 

Cascade Natural Gas Corporation

 

 

a Washington corporation

 

 

222 Fairview Avenue North

 

 

Seattle, Washington 98109

 

Company

 

The Company provides severance benefits for its employees through termination
policies or practices.  The Company adopts this Plan to provide separate
severance benefits for officers..  Unless expressly stated otherwise in writing
to an individual, benefits under this Plan are in lieu of any other severance
benefits that might otherwise be available to the participants. The Plan
supersedes and replaces any prior severance pay or workforce reduction policy
that apply to officers.

 

ARTICLE 1
EFFECTIVE DATE; PLAN YEAR; ERISA

1.01        Effective Date

The effective date of the Plan is October 1, 2004.  The benefits of Eligible
Employees who receive notice of termination from employment on or after that
date shall be determined under this Plan.

 

1.02        Plan Year

The plan year shall be a calendar year.

 

1.03        ERISA

1.03-1    The Plan is intended to be and shall be administered and maintained as
a welfare benefit plan under section 3(1) of the Employee Retirement Income
Security Act of 1974 (“ERISA”), providing certain benefits to participants on
certain severances from employment.

1.03-2    The Plan is not intended to be a pension plan under section 3(2)(A) of
ERISA and shall be maintained and administered so as not to be such a plan.  The
Plan is intended to come within, and shall be administered and maintained to
come within, the severance pay plan exception to ERISA in Department of Labor
regulations section 2510.3-2(b).

1

--------------------------------------------------------------------------------

ARTICLE 2
ELIGIBILITY AND PARTICIPATION

2.01        Eligible Employees

(a)   2.01-1Subject to 2.01-2, “Eligible Employees” are officers selected by the
Board of Directors of the Company for participation in the Plan in connection
with any force reduction or other designated severance.

2.01-2    Eligible Employees do not include the following:

(a)   An employee who has not completed at least six months of continuous
service with the Company.

(b)   An employee whose employment is governed by an individual employment or
severance agreement.

(c)   A leased employee treated as an employee solely because of section 414(n)
of the Code.

(d)   An individual classified by the Company as an independent contractor or as
an employee of an entity that is not the Company, even if it is later determined
that the individual was an employee of the Company.

2.02        Participation

Any Eligible Employee whose employment is terminated by reason of a Workforce
Reduction is a Participant in the Plan.  A Participant must satisfy the
requirements of 3.01 to be entitled to severance benefits under the Plan.

 

2.03        Determination of Eligibility and Participation

All questions of eligibility and participation of employees shall be determined
by the Administrator, whose decision shall be final.

 

ARTICLE 3
SEVERANCE BENEFITS

3.01        Entitlement to Severance Benefits

3.01-1    Except as provided in 3.01-3, a Participant who receives notice and
who is terminated from employment with the Company because of a Workforce
Reduction is entitled to the severance benefits described in this Article 3.

3.01-2    A “Workforce Reduction” shall be any elimination of position or
reduction in workforce that is specifically designated as a Workforce Reduction
by the Company.

3.01-3    Unless otherwise specified by the Company in writing, a Participant
shall not be entitled to severance benefits under the Plan if any of the
following occur with respect to such Participant:

2

--------------------------------------------------------------------------------

(a)   Termination of employment related to any transfer of operations or work to
a third party, whether by merger, consolidation, spin-off, outsourcing or sale
of all or part of the assets or stock of a business unit, or other transaction
occurring where the successor or receiving entity or other third party offers
the Participant employment in a position determined by the Company to be
consistent with the Participant’s qualifications and experience or, in the
judgment of the Company, the Participant fails to make good faith efforts to
apply for or to obtain an employment offer or discourages the successor or
receiving entity or other third party from making an employment offer.

(b)   Transfer to another position with, or reemployment by, or other
continuation of employment with, the Company before the Participant’s
termination date.

(c)   Voluntary election to retire from employment before the Participant’s
termination date.

(d)   Receipt of an offer of severance or other separation benefits under either
an individual written agreement with the Company or any voluntary early
retirement program maintained by the Company or any severance plan maintained by
the Company, other than this Plan.

(e)   Involuntary termination of employment for reasons other than a Workforce
Reduction, including, but not limited to, involuntary termination for
unsatisfactory performance, unacceptable behavior, misconduct, violations of
Company’s policies, or other disciplinary problems.

(f)    Failure to waive all severance benefits under any applicable employment
contract or other agreement or plan in exchange for severance benefits under the
Plan.

(g)   Failure to execute a waiver and release of claims against the Company in
the form provided by the Company within the specified consideration period or
execution and later revocation of the waiver and release of claims form within
any revocation period stated therein.

(h)   Death or voluntary termination of employment before the date set by the
Company for the Participant’s termination due to a Workforce Reduction.

(i)    Other circumstances determined by the Company not to constitute a
termination due to a Workforce Reduction as defined in 4.01-1.

3.02        Severance Pay

3.02-1    Subject to 3.02-5, 3.04 and 3.05, Participants who are salaried
employees and are eligible for severance benefits under 3.01 shall be entitled
to receive a number of weeks of Regular Pay determined on the basis of the
Participant’s full Years of Credited Service and annualized Regular Pay at the
time of termination; the participant’s Average Annual Bonus, a

3

--------------------------------------------------------------------------------

 

cash award equal to the amount of COBRA premiums and an outplacement award, all
according to the benefit grid in 3.02-2.

(a)   “Years of Credited Service” are the Participant’s actual fully completed
years of service with the Company since the Participant’s most recent date of
hire.

(b)   “Regular Pay” base pay on the date of termination, excluding any overtime,
severance pay, bonuses, commissions, reimbursements, any other allowances and
any other type of extra or variable compensation.

(c)   “Average Annual Bonus” means the average of the annual bonuses that the
Participant receives for the three fiscal years ending prior to the
Participant’s date of termination.

3.02-2    The following benefit grid shall apply only to Participants who are
salaried employees at the time employment terminates:

Salary Grade

 

Severance Payment Basis

 

Minimum Severance

 

Maximum Severance

 

COBRA Allowance (to be paid in cash)

 

Outplacement

 

Officer-
Grade 14, 15, 16

 

2 weeks per year of service, plus Average Annual Bonus

 

26 weeks plus Average Annual Bonus

 

52 weeks plus Average Annual Bonus

 

Twelve months

 

Up to 12 of annual base pay

%

Officer-
CEO, CFO, COO level

 

52 weeks plus Average Annual Bonus

 

52 weeks plus Average Annual Bonus

 

52 weeks plus Average Annual Bonus

 

Twelve months

 

Up to 15 of annual base pay

%

 

3.02-3    The COBRA allowance shall be the amount equal to the cost to the
Participant of electing to continue health insurance coverage under the Cascade
Natural Gas Corporation Employee Benefit Plan for the Participant and the
members of the Participant’s family covered under the Employee Benefit Plan on
the date the Participant’s employment terminates for the period set out in the
schedule.

(a)   No COBRA allowance shall be paid to a Participant who has no health
insurance coverage under the Employee Benefit Plan when employment terminates.

(b)   Subject to (a), such payments shall be made regardless whether the
Participant elects to continue health coverage under COBRA.

(c)   The COBRA allowance shall be paid in a single lump sum unless the Company
elects in its complete discretion, to pay the COBRA allowance in monthly
installments.

4

--------------------------------------------------------------------------------

3.02-4    The outplacement award shall be provided to Participants in accordance
with the schedule.  Amounts shall be paid either directly to the provider of
outplacement services designated by the Company, or, upon submission by the
Participant of evidence of qualified outplacement expenses, by direct payment to
the Participant.  The Administrator shall determine whether outplacement
expenses are qualified for reimbursement.

3.02-5    The Company may, at its discretion, for any or all classes of Eligible
Employees, offer severance pay benefits and other severance benefits different
from those stated in 4.02-1.  In that event, the substitute benefits will apply
for those employees and benefits shall not be paid.

3.03        Medical Insurance Benefits

Any Workforce Reduction that causes a Participant to lose coverage under one or
more group health, dental and health care reimbursement plans sponsored by
Company shall be deemed a COBRA qualifying event as of the termination date.  As
further described in the COBRA information that will be made available to the
Participant at the time of the qualifying event, unless the Participant elects
COBRA continuation within the applicable time period, the Participant’s elected
health coverage under the group health plans sponsored by Company shall
terminate at midnight on the termination date.

3.04        Time and Manner of Payment

3.04-1    Severance pay shall be paid in a lump sum.  Payment will be made as
soon as practicable following the later of the Participant’s termination date or
the expiration of the revocation period described in the waiver and release of
claims form.

3.04-2    The Company may withhold from any amounts paid under the Severance
Plan any applicable local, state and federal income and other taxes and such
other withholdings as are required by law.

3.04-3    Severance pay shall not be considered part of a Participant’s
compensation for purposes of determining the Participant’s benefits under the
Company’s 401(k) or retirement plans.

3.05        Forfeitability of Severance Benefits

Any right to severance benefits shall be forfeitable until the Participant has
been terminated from employment due to a Workforce Reduction and has satisfied
all of the requirements and conditions for entitlement under 3.01.  The Plan may
be amended or terminated as provided in Article 5 to partially or wholly
eliminate or otherwise change the benefits in 3.02 to the extent they are
forfeitable.

 

5

--------------------------------------------------------------------------------

ARTICLE 4
ADMINISTRATION

4.01        Administrator

4.01-1    The Plan shall be administered by Company’s Vice-President of Human
Resources, who in such capacity shall be the Administrator.

4.01-2    The Administrator may resign on 15 days’ notice to the Company.  The
Company may remove the Administrator without having to show cause or provide
advance notice.  Any vacancy shall be filled as soon as reasonably practicable. 
Until a new appointment is made, the Company shall act as the Administrator.

4.02        The Administrator’s Powers and Duties

4.02-1    The Administrator shall interpret the Plan, decide any questions about
the rights of Participants and in general administer the Plan.  Any decision by
the Administrator shall be final and bind all parties.  The Administrator shall
have absolute discretion to carry out the Administrator’s responsibilities under
this section.

4.02-2    The Administrator may delegate all or part of the administrative
duties to one or more agents and may retain advisors and agents for assistance. 
The Administrator may consult with, and rely upon the advice of counsel, who may
be counsel for the Company or any Affiliate.

4.02-3    The Administrator shall be the plan administrator under federal laws
and regulations applicable to plan administration.  The Administrator shall be
the agent for service of process on the Plan at the Company’s address.

4.03        Company Functions

4.03-1    Except as provided in 4.03-2, all authority of the Company shall be
exercised by the President of the Company, as applicable, who may delegate some
or all of the authority to any officer.

4.03-2    Subject to 4.03-3, the power to designate officers as Eligible
Employees under 2.01-1 and the power to amend or terminate the Plan may be
exercised only by the Board of Directors of the Company.

4.03-3    The President may amend the Plan in writing, on advice of counsel, to
make technical, administrative or editorial changes to comply with applicable
law or to simplify or clarify the Severance Plan.

4.03-4    The Board of Directors of the Company shall have no administrative
authority or function with respect to the Plan.  Being a member of the Board
shall not, in itself, make a person a plan fiduciary.

4.04        Claims Procedures

4.04-1    Claims for benefits under the Plan shall be governed by these
procedures.

6

--------------------------------------------------------------------------------

(a)   The Administrator shall establish administrative processes and safeguards
to ensure and verify that claims decisions are made in accordance with the Plan
and that, where appropriate, Plan provisions have been applied consistently with
respect to similarly situated claimants.

(b)   Any person claiming a benefit, or requesting an interpretation, ruling or
information, shall present the request in writing to a claims administrator
appointed by the Administrator (who may be the Administrator) to decide the
claim.

(c)   If any procedure utilized by the claims administrator, including any
provision under any Plan document or insurance contract, unduly inhibits or
hampers the initiation or processing of a claim under Sections 4.04 and 4.05,
the claimant may immediately submit the request in writing to the Administrator.

(d)   Claims or requests under this Plan should be addressed to the
Administrator at:

Cascade Natural Gas Corporation

222 Fairview Avenue North

Seattle, WA 98109

Attention: Vice President, Human Resources

 

4.04-2    For claims processing, the Administrator will establish procedures for
determining whether any other individual has been authorized to act on behalf of
a claimant.

4.04-3    The Administrator will respond to a claim as follows:

(a)   If the claim is wholly or partially denied, the Administrator will notify
the claimant of the adverse determination within a reasonable time not longer
than 90 days after the Plan received the claim unless special circumstances
require an extension of time.

(b)   The Administrator will notify a claimant in writing of the need for any
extension before the end of the initial 90 days and any extension will be no
longer than another 90 days after the initial period.

(c)   Any notice of extension will indicate the special circumstances requiring
the extension and the date by which a decision is expected.

4.04-4    The time periods for determinations under Section 4.04-3 shall run
from the time the claim is filed under Section 4.04-1, without regard to whether
all needed information is filed.  In case of an extension of time because more
information is needed, the period for making the determination will be tolled
from the time the claimant is notified of the need until the claimant responds.

4.04-5    The Administrator will provide the claimant with written or electronic
notification of any adverse determination on a claim, including:

7

--------------------------------------------------------------------------------

(a)   The specific reason or reasons for the determination.

(b)   Reference to the specific Plan provisions on which the determination is
based.

(c)   A description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why it is necessary.

(d)   A description of the review procedures under Section 4.05 and the
applicable time limits.

(e)   A statement of the claimant’s right to bring a legal action under ERISA
following any adverse determination on review.

4.05        Appeal Procedures

4.05-1    A claimant may request review within 60 days after receiving a
notification of an adverse determination on a claim under Section 4.04 and the
following shall apply:

(a)   The claimant may submit written comments, documents, records, and other
information relating to the claim.

(b)   Upon request and at no charge, the claimant may have copies of any
document, record, or other information that:

(1)   was relied on in making the determination;

(2)   was submitted, considered, or generated in the course of making the
determination, whether or not relied on; or

(3)   demonstrates compliance with the processes and safeguards under Section
4.04-1(a).

(4)   The Administrator’s review shall take into account all comments,
documents, records and other information submitted by the claimant relating to
the claim, whether or not considered in the initial determination.

4.05-2    The Administrator will respond to an appeal as follows:

(a)   The Administrator will notify the claimant of its determination on review
within a reasonable time not longer than 60 days after the Plan received the
request for review unless an extension of time is required for a hearing or
other special circumstances.

8

--------------------------------------------------------------------------------

(b)   The Administrator will notify a claimant in writing of the need for any
extension before the end of the initial 60 days and no extension will be longer
than another 60 days after the initial period.

(c)   Any notice of extension will indicate the special circumstances requiring
the extension and the date by which a decision is expected.

4.05-3    The time period for determinations under Section 4.05-2 shall run from
the time an appeal is filed, without regard to whether all needed information is
filed.  In case of an extension of time because more information is needed, the
period for making the determination will be tolled from the time the claimant is
notified of the need until the claimant responds.

4.05-4    The Administrator will provide the claimant with written or electronic
notification of its determination on appeal.  If the determination is adverse,
the notice will include:

(a)   The specific reason or reasons for the determination.

(b)   Reference to the specific plan provisions on which the determination is
based.

(c)   A statement that, upon request and at no charge, the claimant may have
copies of any document, record or other information under 4.05-1(b).

4.06        Indemnity and Bonding

4.06-1    The Company shall indemnify and defend any Plan fiduciary who is an
officer, director or employee of the Company against any claim or liability that
arises from any action or inaction in connection with the Plan, subject to the
following rules:

(a)   Coverage shall be limited to actions taken in good faith that the
fiduciary reasonably believed were not opposed to the best interest of the Plan.

(b)   Negligence by the fiduciary shall be covered to the fullest extent
permitted by law.

(c)   Coverage shall be reduced to the extent of any insurance coverage.

4.06-2    Plan fiduciaries shall be bonded to the extent required by applicable
law.

4.07        Expenses

4.07-1    An Administrator who is employed full-time by the Company shall not be
separately compensated for services as the Administrator.  The Administrator
shall be reimbursed by the Company for all expenses incurred by the
Administrator while acting as the Administrator.

9

--------------------------------------------------------------------------------

4.07-2    The Company may allocate the cost of any administrative fees or
expenses among the Company and adopting Affiliates.  Otherwise, all expenses and
fees shall be paid by the Company.

ARTICLE 5
GENERAL PROVISIONS

5.01        Enforceability and Exclusive Benefit

The Company and all adopting Affiliates intend the terms of the Plan, including
those relating to the coverage and benefits, to be legally enforceable.  The
Company and all adopting Affiliates further intend that the Plan be maintained
for the exclusive benefit of Eligible Employees of the Company.

 

5.02        Amendment and Termination

Subject to 3.05, the Company may amend or terminate the Plan at any time.

 

5.03        Not Contract of Employment

Nothing in the Plan shall give any employee the right to continue employment. 
The Plan shall not prevent discharge of any employee at any time for any reason.

 

5.04        Unfunded

All benefits payable under the Plan shall be unfunded and shall be payable only
from the general assets of the Company.  Participants shall have no interest in
any assets of the Company and shall have no rights greater than the rights of
any unsecured general creditor of the Company.

 

5.05        Nonassignment

The rights of a Participant under the Plan are personal.  No interest of a
Participant under the Plan may be assigned, transferred, seized by legal process
or subjected to the claims of creditors in any way.  A Participant’s rights
under the Plan are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge or encumbrance.

 

5.06        Applicable Law

The Plan shall be construed according to the laws of the Washington, except as
preempted by federal law.

 

Adopted:

 

 

CASCADE NATURAL GAS CORPORATION

 

 

 

 

 

 

 

By

/s/ W. Brian Matsuyama

 

 

 

W. Brian Matsuyama, President

 

 

 

 

 

 

 

Date:

October 22,

2004

 

 

 

 

 

 

10

--------------------------------------------------------------------------------