Exhibit 10.2


 


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).


 





















 


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:


 





















 


(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 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..


 


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.


 





















 


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.


 


(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:


 


(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.


 


(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.


 


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

  	
   

  
	
   

  	
   

  	
   

  	
  W. Brian
  Matsuyama, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date: 

  	
   

  	
  , 2004

  
						



 


EXHIBIT B


 


 


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 “3” of that
Agreement.


 


Dated this      day of           ,
2005.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  William H. Odell

  



 


 


NOTICE: 
Per paragraph 13 of the Release, DO NOT SIGN THIS LETTER, until at least
eight days after you have signed the Agreement and General Release.


 





















 


EXHIBIT
C


 


OFFICERS WHO HAVE BEEN
DESIGNATED AS PARTICIPANTS IN THE THE

CURRENT WORKFORCE REDUCTION COVERED BY THE CASCADE NATURAL

GAS CORPORATION OFFICER SEVERANCE PAY PLAN TO DATE


 


	
  Title

  	
   

  	
  Age

  	
   

  
	
  Chief Operating Officer

  	
   

  	
  43

  	
   

  



 


EXHIBIT
D


 


OFFICERS WHO HAVE NOT BEEN
DESIGNATED AS PARTICIPANTS IN THE

CURRENT WORKFORCE REDUCTION COVERED BY THE CASCADE NATURAL

GAS CORPORATION OFFICER SEVERANCE PLAN TO DATE


 


	
  Title

  	
   

  	
  Age

  	
   

  
	
  President
  & CEO

  	
   

  	
  45

  	
   

  
	
  Chief Financial Officer

  	
   

  	
  52

  	
   

  
	
  Sr. Vice President Regulatory and Gas Supply

  	
   

  	
  58

  	
   

  
	
  Vice President Human Resources

  	
   

  	
  49

  	
   

  
	
  Controller

  	
   

  	
  56

  	
   

  



 





















 


 


CASCADE NATURAL GAS CORPORATION


SEVERANCE PAY PLAN


 


2005 RESTATEMENT


 


August 1, 2005


 


 


	
  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

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  3.01-2

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Years of Credited Service

  	
   

  	
  3.02-1(a)

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


iii





















 


CASCADE NATURAL GAS CORPORATION


SEVERANCE PAY PLAN


 


2005 
RESTATEMENT


 


August 1, 2005


 


	
  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 adopted the 2004 Restatement and now adopts this 2005 Restatement to
modify the benefits provided, change the definition of those eligible for such
benefits, update plan language and make other clarifying and administrative
changes.  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.


 


ARTICLE 1

EFFECTIVE DATE; PLAN YEAR; ERISA


 


1.01         Effective Date


 


The effective date of the 2005 Restatement of the Severance Plan is August 1, 2005.  The benefits of Eligible Employees who
receive notice of termination from employment on or after that date shall be
determined under the Restated Severance Plan.


 


1.02         Plan Year


 


The plan year shall be a calendar year.


 


1.03         ERISA


 


1.03-1    The Severance 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 Severance 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 Severance 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


 


2.01-1    Subject to 2.01-2, “Eligible
Employees” are employees selected by the Company for participation in the Plan
in connection with any force reduction or other designated severance event with
the approval of the President of the Company.


 


2.01-2    Eligible Employees do not
include the following:


 


(a)           Officers
of the Company.


 


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


 


(c)           An
employee covered by a collective bargaining agreement that does not provide for
severance benefits under this Plan.


 


(d)           An
employee classified as temporary or on-call by the Company, whether employed by
the Company or a temporary services agency.


 


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


 


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


 


(g)           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.


 


(h)           A
part-time salaried employee.


 


2.02         Participation


 


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


 


2





















 


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 Severance Plan if any of the following occur with respect to
such Participant:


 


(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 Severance 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 Severance
Plan.


 


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(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, a 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.


 


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

  
	
  Grade 5 - 8

  	
   

  	
  1 week per year of service

  	
   

  	
  4 weeks

  	
   

  	
  26 weeks

  	
   

  	
  3 months

  	
   

  	
  $1,500 for training/career development.

  
	
  Grade 9 - 10

  	
   

  	
  2 weeks per year of service

  	
   

  	
  4 weeks

  	
   

  	
  26 weeks

  	
   

  	
  Cover same period as severance payment basis (minimum 3 months)

  	
   

  	
  Up to 10% of annual base pay

  
	
  Grade - 11 and up

  	
   

  	
  2 weeks per year of service

  	
   

  	
  8 weeks

  	
   

  	
  52 weeks

  	
   

  	
  Cover same period as severance payment basis (minimum 3 months)

  	
   

  	
  Up to 10% of annual base pay

  



 


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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.


 


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 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 described in 3.02-1, 3.02-2
and 3.02-3 shall not be paid.


 


3.02-6    The amount of severance
paid to a Participant who is covered by a collective bargaining agreement on
the date of termination shall be determined by the collective bargaining
agreement that covers the Participant at the time employment terminates.


 


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


 


5





















 


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 Severance 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.


 


ARTICLE 4

ADMINISTRATION


 


4.01         Administrator


 


4.01-1    The Severance 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 Severance Plan, decide any questions about the rights of
Participants and in general administer the Severance 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


 


6





















 


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 Severance 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 amend or terminate the Severance Plan may be exercised only by the
Board of Directors of the Company.


 


4.03-3    The President may amend
the Severance 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 Severance 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.


 


(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


 


7





















 


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:


 


(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:


 


8





















 


(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.


 


(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.


 


9





















 


(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 Severance 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 Severance 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 Severance 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    The Severance 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.


 


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
Severance Plan, including those relating to the coverage and benefits, to be
legally enforceable.  The Company and all
adopting Affiliates further intend that the Severance 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 Severance Plan
at any time.


 


10





















 


5.03         Not
Contract of Employment


 


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


 


5.04         Unfunded


 


All benefits payable under the Severance Plan shall be unfunded and
shall be payable only from the general assets of the Company.  The 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 Severance Plan are personal.  No interest of a Participant under the Severance
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 Severance Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge or encumbrance.


 


5.06         Applicable Law


 


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


 


	
  Adopted:

  	
  CASCADE NATURAL GAS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  David W. Stevens, President

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
   

  	
  , 2005

  
					



 


11