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