Exhibit 10(b)
1998 ESRIP CHANGE IN CONTROL AMENDMENT
TO
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
OF
NORTHWEST NATURAL GAS COMPANY
(1995 Restatement)
The Executive Supplemental Retirement Income Plan is amended to
implement action by the Board of Directors of Northwest Natural Gas Company on
September 24, 1998, effective on and after September 24, 1998.
1. Section 2.09 and the attached 1998 ESRIP Change in Control Appendix are added
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to incorporate benefit changes which apply to certain terminations of employment
that occur within 24 months after a change in control:
2.09 Change in Control. The Plan benefits of any actively employed
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Participant who has a Qualified Termination of employment within twenty-four
(24) months after a Change in Control shall be vested, determined and paid
under the Plan as modified by the following provisions set forth in the
attached 1998 ESRIP CHANGE IN CONTROL APPENDIX:
Section Subject
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1.05A "Final Average Compensation" defined
(replaces 1.05).
1.11(a) Additional years of participation for benefit accrual
credit (supplements 1.11).
1.14 "Change in Control; Potential Change in Control;
Person" defined.
1.15 "Qualifying Termination" defined.
2.01-2(b)(4) Additional years of participation for benefit accrual
credit (supplements 2.01-2(b)).
2.02A Change in eligibility to receive and the reduction
percentage for early retirement (replaces 2.02).
2.05A Vesting (replaces 2.05).
4.02A No reduction of Change in Control benefits once a
Potential Change in Control occurs (replaces 4.02).
5.02A Substitute 1.14 for previous definition of "change in
control."
1998 ESRIP CHANGE IN CONTROL APPENDIX
TO
NORTHWEST NATURAL GAS COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
(Effective September 24, 1998)
The benefits of any actively employed Participant covered under the
Company's Executive Supplemental Retirement Income Plan (ESRIP) who has a
Qualified Termination of employment within twenty-four (24) months after a
Change in Control shall be vested, determined and paid under the Plan as
modified by the provisions set forth below in 1.05A, 1.11(a), 1.14, 1.15,
2.01-2(a)(4), 2.02A, 2.05A, and 4.02A:
1. Section 1.05A defining "final annual compensation" replaces Plan Section.
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1.05 for any Participant who has a Qualifying Termination under 1.15:
1.05A "Final Annual Compensation: means:
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1.05A-1 The annual salary of the Participant last approved by
the Board of Directors and being paid by the Company at the date of the
Qualified Termination;
1.05A-2 Plus the average annual performance award determined
by taking the sum of the awards (if any) paid on the three (3) consecutive March
1 award payment dates, which immediately precede the Qualifying Termination
date, and dividing such sum by three (3); provided, however, that if a
participant terminates employment during the 61-day period immediately preceding
March 1, and if the sum of the post termination performance award plus the two
(2) consecutive preceding awards is greater than the above determined 3-year
total of awards, such greater sum shall be divided by three (3) and used to
determine final average compensation;
1.05A-3 Without reduction under 1.05A-1 or 1.05A-2 for any
such amounts which are subject to a payment deferral election under the
Company's Executive Deferred Compensation Plan (effective January 1, 1987) or
Retirement K Savings Plan.
2. Section 1.11(a) is amended to cross reference new 2.01-2(b)(4):
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(a) Benefit Accrual. Service for benefit accrual
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under 2.01 means years of actual participation, including service
credited under 1.11(c), after becoming a Participant under this Plan,
plus any additional years of benefit accrual credit earned or awarded
pursuant to 2.01-2(b)(2), (3), or (4).
3. Section 1.14 is added to define "Change in Control," "Potential Change in
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Control" and "Person."
1.14 Change in Control; Potential Change in Control; Person.
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1.14-1 Change in Control. For purposes of this Plan, a "Change
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in Control" of the Company shall mean the occurrence of any of the events
described below in (a), (b) or (c), subject to the limitation described in (d):
(a) The approval by the shareholders of the
Company of:
(1) any consolidation, merger or plan of
share exchange involving the Company (a "Merger") in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of Common Stock of the Company
("Company Shares") would be converted into cash, securities or
other property, other than a Merger involving Company Shares
in which the holders of Company Shares immediately prior to
the Merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the
Merger;
(2) any sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all, or substantially all, the assets of the
Company; or
(3) the adoption of any plan or proposal
for the liquidation or dissolution of the Company;
(b) At any time during a period of two (2)
consecutive years, individuals who at the beginning of such period
constituted the Board ("Incumbent Directors") shall cease for any
reason to constitute at least a majority thereof; provided, however,
that the term "Incumbent Director" shall also include each new director
elected during such two-year period whose nomination or election was
approved by two-thirds of the Incumbent Directors then in office; or
(c) Any Person (as hereinafter defined) shall, as a
result of a tender or exchange offer, open market purchases or
privately negotiated purchases from anyone other than the Company, have
become the beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of securities
of the Company ordinarily having the right to vote for the election of
directors ("Voting Securities") representing twenty percent (20%) or
more of the combined voting power of the then outstanding Voting
Securities.
(d) Notwithstanding anything in the foregoing to the
contrary, unless otherwise determined by the Board, no Change in
Control shall be deemed to have occurred for purposes of this Plan for
any Participant who (1) acquires (other than on the same basis as all
other holders of Company Shares) an equity interest in an entity that
acquires the Company in a Change in Control otherwise described above
in (a), or (2) is part of a group that constitutes a Person which
becomes a beneficial owner of Voting Securities in a transaction that
otherwise would have resulted in a Change in Control described above in
(c).
1.14-2 Potential Change in Control. For purposes of this Plan,
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a "potential Change in Control" of the Company shall be deemed to have occurred
if the following (a), (b) or (c) occurs:
(a) the Company enters into an agreement, the
approval of which by the shareholders would result in the occurrence of
a Change in Control of the Company;
(b) any Person (including the Company) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control of the Company; or
(c) the Board adopts a resolution to the effect that,
for purposes of this Plan, a potential Change in Control of the Company
has occurred.
1.14-3 Person. For purposes of this Plan, the term "Person"
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shall mean and include any individual, corporation, partnership, group,
association or other "person," as such term is used in Section 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company or
any employee benefit plan(s) sponsored by the Company.
4. Section 1.15 is added defining the termination of employment that qualifies
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for increased benefits in connection with a Change in Control:
1.15 Qualifying Termination means the termination of the employment of
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any Participant within twenty-four (24) months after a Change in Control event
under 1.14, for a reason other than:
(a) Participant's death;
(b) termination after Participant's 62nd birthday;
(c) disability (under 1.15-1)
(d) termination by the Company for Cause (under
1.15-2); or
(e) termination by the Participant without Good
Reason (defined in 1.15-3) based on an event occurring concurrent with
or after a Change in Control.
1.15-1 Disability. Termination by the Company of Participant's
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employment based on "Disability" shall mean termination because of absence from
duties with the Company on a full-time basis for one hundred eighty (180)
consecutive days as a result of Participant's incapacity due to physical or
mental illness, unless within thirty (30) days after Notice of Termination (as
hereinafter defined) is given following such absence Participant shall have
returned to the full-time performance of Company duties.
1.15-2 Cause. Termination by the Company of a Participant's
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employment for "Cause" shall mean termination upon:
(a) the willful and continued failure of Participant
to perform substantially the reasonably assigned duties with the
Company consistent with those duties assigned prior to the Change in
Control (other than any such failure resulting from incapacity due to
physical or mental illness) after a demand for substantial performance
is delivered to Participant by the Chairman of the Board or Chief
Executive Officer of the Company which specifically identifies the
manner in which such executive believes that Participant has not
substantially performed such duties; or
(b) the willful engaging by Participant in illegal
conduct which is materially and demonstrably injurious to the Company.
(c) For purposes of 1.15-2, no act, or failure to
act, shall be considered "willful" unless done, or omitted to be done,
in knowing bad faith and without reasonable belief that the action or
omission was in, or not opposed to, the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by Participant in good faith and in the best
interests of the corporation. Notwithstanding the foregoing,
Participant shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered a copy of the
resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of
the Board called and held for the purpose (after reasonable notice and
an opportunity for Participant, together with Participant's counsel, to
be heard before the Board), finding that in the good faith opinion of
the Board, Participant was guilty of the conduct set forth above in (a)
or (b), and specifying the particulars thereof in detail.
1.15-3 Good Reason. Termination of a Participant's
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employment for "Good Reason" shall mean termination based on:
(a) a change in Participant's status, title,
position(s) or responsibilities as an officer of the Company which, in
Participant's reasonable judgment, does not represent a promotion from
Participant's status, title, position(s) and responsibilities as in
effect immediately prior to the Change in Control, or the assignment to
Participant of any duties or responsibilities which, in Participant's
reasonable judgment, are inconsistent with such status, title or
position(s), or any removal of Participant from or any failure to
reappoint or reelect Participant to such position(s), except in
connection with the termination of Participant's employment for Cause,
Disability or Retirement or as a result of Participant's death or by
Participant other than for Good Reason;
(b) a reduction by the Company in Participant's base
salary as in effect immediately prior to the Change in Control;
(c) the failure by the Company to continue in effect
any Plan (as hereinafter defined) in which Participant is participating
at the time of the Change in Control of the Company (or Plans providing
Participant with at least substantially similar benefits) other than as
a result of the normal expiration of any such Plan in accordance with
its terms as in effect at the time of the Change in Control, or the
taking of any action, or the failure to act, by the Company which would
adversely affect Participant's continued participation in any of such
Plans on at least as favorable a basis to Participant as is the case on
the date of the Change in Control or which would materially reduce
Participant's benefits in the future under any of such Plans or deprive
Participant of any material benefit enjoyed by Participant at the time
of the Change in Control. For purposes of this 1.15-3(c), "Plan" shall
mean any compensation plan such as an incentive, stock option or
restricted stock plan or any employee benefit plan such as a thrift,
pension, profit sharing, deferred compensation, medical, disability,
accident, life insurance, or relocation plan or policy or any other
plan, program or policy of the Company intended to benefit employees.
(d) the failure by the Company to provide and credit
Participant with the number of paid vacation days to which Participant
is then entitled in accordance with the Company's normal vacation
policy as in effect immediately prior to the Change in Control;
(e) the Company's requiring Participant to be based
anywhere other than where Participant's office is located immediately
prior to the Change in Control except for required travel on the
Company's business to an extent substantially consistent with the
business travel obligations which Participant undertook on behalf of
the Company prior to the Change in Control;
(f) the failure by the Company to obtain from any
Successor (as hereinafter defined) the assent to Participant's
employment or severance agreement (if any); or
(g) any purported termination by the Company of
Participant's employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of 1.15-4 ; and for purposes of
this Plan, no such purported termination shall be effective.
1.15-4 Notice of Termination. Any purported termination by the
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Company or by Participant following a Change in Control shall be communicated by
Written Notice of Termination to the other party. For purposes of this Plan, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Plan relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Participant's employment under the provision so indicated.
1.15-5 Date of Termination. "Date of Termination" following a
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Change in Control shall mean (a) if Participant's employment is to be terminated
for a Disability, thirty (30) days after Notice of Termination is given
(provided that Participant shall not have returned to the performance of his
duties on a full-time basis during such thirty (30) day period, (b) if
Participant's employment is to be terminated by the Company for Cause, the date
on which a Notice of Termination is given, and (c) if Participant's employment
is to be terminated by Participant or by the Company for any other reason, the
date specified in the Notice of Termination, which shall be a date no earlier
than ninety (90) days after the date on which a Notice of Termination is given
(provided that if the termination is by Participant for Good Reason, the
circumstances giving rise to the Good Reason have not been fully corrected by
the specified date), unless an earlier date has been agreed to by the party
receiving the Notice of Termination either in advance of, or after, receiving
such Notice of Termination. Notwithstanding anything in the foregoing to the
contrary, if the party receiving the Notice of Termination has not previously
agreed to the termination, then within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination may notify
the other party that a dispute exists concerning the termination, in which event
the Date of Termination shall be the date set either by mutual written agreement
of the parties or by the arbitrators in an arbitration proceeding as provided
under the Company's executive employment or severance agreements.
4. Section 2.01-2(b)(4) is added to increase the years of participation benefit
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accrual by three (3) years for any Participant who has a Qualifying Termination
under 1.15:
(b) Year of Participation means:
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(1) Each consecutive twelve (12) month
period of Company service measured by each anniversary of the
date of first becoming a Participant under this Plan.
(2) All additional years of participation
credit awarded to a Participant by the Committee in the
exercise of its discretion.
(3) All years of service credit earned for
Company service and awarded by the Committee for each of the
nine (9) Participants in the Plan on September 1, 1998, as set
forth in the attached 1998 ESRIP Appendix.
(4) Three (3) additional years of
participation credit shall be awarded to any Participant who
has a Qualifying Termination (defined in 1.15) within
twenty-four (24) months after a Change in Control (defined in
1.14) pursuant to the 1998 ESRIP Change in Control Appendix.
5. Section 2.02A shall replace 2.02 regarding eligibility to receive and the
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award of the early retirement benefits for any Participant who has a Qualifying
Termination under 1.15:
2.02A Early Retirement Supplemental Income. Any Participant who has a
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Qualifying Termination (defined in 1.15) within twenty-four (24) months after a
Change in Control (defined in 1.14) shall be entitled at or after age fifty-five
(55) to receive during Participant's lifetime the reduced monthly supplemental
retirement payments determined as follows:
2.02A-1 First, the total annual retirement pay at normal
retirement date shall be determined under 2.01-2 and -3, using the Participant's
final annual compensation and service at the time employment by the Company
ends.
2.02A-2 Second, the monthly supplemental payment under this
Plan starting at normal retirement date shall be determined under 2.01-4, using
the Participant's early annual retirement allowance payable at the normal
retirement date (under Retirement Plan 7.02-1), projected annual primary Social
Security benefit under the Retirement Plan, and annual retirement benefits under
the Executive Deferred Compensation Plan determined as a supplement to such
payment under the Retirement Plan.
2.02A-3 Third, if supplemental payments start before the
Participant's normal retirement date, to achieve the necessary reduction of the
target benefit under 2.01 and 2.02A-1, the monthly amount under 2.02A-2 shall be
reduced 0.25 percent (.0025) per month for each month of age during the period
starting on the date the first early retirement payment is to be made and ending
on Participant's 62nd birthday.
6. Section 2.05A shall replace 2.05 regarding the vested benefits of any
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Participant who has a Qualifying Termination under 1.15:
2.05A Vested Benefits. Any Participant who has a Qualifying Termination
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(defined in 1.15) within twenty-four (24) months after a Change in Control
(defined in 1.14) thereupon shall have a 100% vested and nonforfeitable right to
receive supplemental payments under this Plan starting as early as age 55 under
2.02A.
7. Section 4.02A replaces Section 4.02 and shall apply on and after the date
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there is a Potential Change in Control (defined in 1.14):
4.02A Company. The Company, by action of the Board of Directors,
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reserves the exclusive right to amend, modify, or terminate this Plan in whole
or in part without notice to any Participant; provided, however, that the Change
in Control benefits provided by the 1998 ESRIP Change in Control Amendment shall
not be diminished or eliminated (but may be increased) on and after the date
when the first Potential Change in Control (defined in 1.14-2) shall occur after
September 1, 1998. Any such termination, modification or amendment shall not
terminate nor diminish any rights or benefits accrued by any Participant or
surviving beneficiary prior thereto.
8. Section 5.02A replaces Section 5.02 to delete the "change of control"
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definition that is replaced by 1.14 and to affirm the change of control
provisions in this 1998 Amendment:
5.02A Legally Binding. The rights, privileges, benefits and
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obligations under this Plan are intended to be legal obligations of the Company
and binding upon the Company, its successors and assigns. The Company agrees it
will not be a party to any merger, consolidation or reorganization, unless and
until its obligations hereunder shall be expressly assumed by its successor or
successors. Notwithstanding any of the provisions of the Plan to the contrary,
upon a change of control (defined in 1.14), the cessation of the corporate
existence of the Company or the failure to continue such existence in full force
and effect as a result of any circumstances or event, each Participant shall be
entitled to receive any Plan benefits, as determined in accordance with the
terms and conditions of payment set forth in Articles II and III, and, if
applicable, the 1998 ESRIP Change in Control Appendix.
NORTHWEST NATURAL GAS COMPANY
APPROVED: By /s/ R. G. Reiten
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President and CEO
Date: September 28, 1998
1998 ESRIP APPENDIX
TO
NORTHWEST NATURAL GAS COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
(Effective September 24, 1998)
1. Accrued Participation Credit and Vesting Credit under ESRIP
Section. 2.01-2 and 2.05
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For purposes of ESRIP benefits, the following executives employed on
September 1, 1998, are entitled to the years of participation credit and vesting
credit set forth below on 9/1/98 based on credit earned for prior Company
service and credit awarded by the Board.
Years of Years of
Participation Vesting
Credit Credit
Executive Born Hired on 9/1/98 on 9/1/98
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DeBolt, Bruce R. 12/07/47 02/15/80 18.55 18.55
Dodson, Mark S. 01/26/45 09/15/97 0.96 (2) 0.96 (2)
Foley, Dwayne L. 09/25/45 10/30/67 30.84 30.84
Harper, William R., Jr. 10/09/53 12/07/92 5.74 5.74
Johnston, Diana J. 12/16/44 05/20/66 32.29 32.29
Kantor, Gregg S. 04/30/57 09/15/96 0.67 1.96
McCoy, Michael S. 05/28/43 11/06/69 28.82 28.82
Reiten, Richard G. 07/01/39 12/31/95 10.67 (1,2) 5.67 (3)
Rue, Conrad J. 11/25/45 10/29/74 23.85 23.85
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(1) Years of participation include a Board grant of 8 years to Reiten.
(2) Benefits also are subject to terms of Board approved Employment Agreement
for Dodson and Reiten.
(3) Subject to Board approved amendment of Reiten's Employment Agreement
granting three (3) years of Vesting Credit.