Exhibit 10.33

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  



 


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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