PACIFICORP
EXECUTIVE SEVERANCE PLAN
DECEMBER 1, 1996
PACIFICORP
AN OREGON CORPORATION
700 NE MULTNOMAH
PORTLAND, OR 97232 COMPANY
PACIFICORP
EXECUTIVE SEVERANCE PLAN
DECEMBER 1, 1996
PACIFICORP
AN OREGON CORPORATION
700 NE MULTNOMAH
PORTLAND, OR 97232 COMPANY
The Company adopts the PacifiCorp Executive Severance Plan (the Plan) as a
new executive severance program to supersede and replace the prior PacifiCorp
Executive Severance Plan that terminated by its terms December 31, 1995. The
Plan also supersedes and replaces any prior executive severance pay policy or
other policy, plan or practice under which severance benefits have been provided
to executives of the Company and adopting affiliates except benefits provided
pursuant to any individual separation agreement entered into in writing between
any executive and the Company.
ARTICLE I
EFFECTIVE DATE; PLAN YEAR; ERISA
1.01 EFFECTIVE DATE
The effective date of the Plan is December 1, 1996.
1.02 PLAN YEAR
The plan year shall be a calendar year.
1.03 ERISA
The Plan is intended to be and shall be administered and maintained
primarily for the purpose of providing benefits for a select group of management
or highly compensated employees. Severance pay and benefits under the Plan
shall be paid as needed solely from the general assets of Employer, in
accordance with Department of Labor regulation Section 2520.104-24. The Plan is
intended to qualify for the alternative method of compliance in Department of
Labor Regulation Section 2520.104-23.
ARTICLE II
APPLICATION TO COMPANY AND AFFILIATES
2.01 EMPLOYERS
2.01-1 The Company maintains the Plan, and any affiliate approved
by the Company may adopt and maintain the Plan for its employees. "Affiliate"
means a corporation, person or other entity that is designated as an affiliate
by the Company.
2.01-2 "Employer" means the Company, with respect to its employees,
and any adopting affiliate, with respect to its employees. The Plan is a single
plan maintained by the Company and any adopting affiliate.
2.02 ADOPTION PROCEDURE
An affiliate may adopt the Plan by a written statement signed by the
affiliate, subject to approval and revocation by the Company. The statement
shall include the effective date of adoption and any special provisions that are
to be applicable only to employees of the affiliate.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 ELIGIBLE EMPLOYEES
Eligible employees are key employees of any Employer selected by
the Personnel Committee of the Company's Board of Directors (Committee) and
designated as Level 1 eligible employees or Level 2 eligible employees.
3.02 PARTICIPANT
An eligible employee must satisfy the requirements of 3.03 to be
entitled to severance benefits under the Plan and upon satisfying those
requirements shall be a participant in the Plan.
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3.03 REQUIREMENTS OF PARTICIPATION AND BENEFITS
3.03-1 Subject to 3.04, an eligible employee will participate and
be entitled to severance benefits upon satisfaction of the following
conditions:
(a) The eligible employee's employment terminates under
either of the following circumstances:
(i) The eligible employee has resigned within six months
after a material alteration in the eligible employee's
position (as determined according to 3.03-2) that has a
detrimental impact on the eligible employee(as determined
according to 3.03-3).
(ii) There has been an Employer-initiated termination.
(b) The eligible employee has agreed in writing to forego
any severance rights or benefits under any other severance plan
maintained by or agreement with Employer or any affiliate.
3.03-2 A material alteration in position occurs in any of the
following events:
(a) The eligible employee's reporting level in the
Company has been changed and is lower after the change than it was
before.
(b) There is a material reduction in the scope
of the eligible employee's duties and responsibilities.
(c) There is a material reduction in the
eligible employee's authority.
3.03-3 All questions concerning whether a material alteration in
position has had a detrimental impact on the eligible employee shall be
determined by the Company exercising full discretion when acting under 5.04-1
through 5.04-3 and, in the case of the review of a denied claim, by the
Committee exercising full discretion when acting under 5.04-4 and 5.04-5.
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3.03-4 A material alteration in position shall not be deemed to have
a detrimental impact on the eligible employee where there is no change of
control and:
(a) The number of levels in the reporting line
between an eligible employee and the Chairman of the Board
is increased by one but the eligible employee's scope of
responsibility is substantially the same and any changes
in authority are reasonably related to the restructured
reporting relationship; or
(b) An eligible employee is given a comparable
new assignment with materially different duties and
responsibilities. A new assignment is comparable if the
title of any Company elected office (for example, Vice
President, Senior Vice President), annualized base salary
and bonus opportunity remain the same or higher and any
changes in authority are reasonably related to the nature
of the new assignment. With respect to an eligible
employee who is not an elected officer of the Company,
whether the level of position is comparable will be based
on the level of job title within the Company and not the
title of any assigned or elected position with a Company
subsidiary. With respect to an eligible employee who is
employed by an Employer other than the Company, a new
assignment is comparable if title of any elected office,
annualized base salary and bonus opportunity remain the
same or higher and any changes in authority are reasonably
related to the nature of the new assignment.
(c) An eligible employee is required to relocate
by the Company to a new geographic area and that employee
has not been relocated by the Company within the past
three years. For purposes of this provision, relocation
shall mean reassignment to a position in an office located
more than 100 miles from the eligible employee's then-
current office or 60 miles from the eligible employee's
residence whichever is greater.
3.03-5 During the 18-month period following a change in control of
the Company, a material alteration in position shall be deemed to have a
detrimental impact on the eligible employee. A "change in control" of the
Company occurs in any of the following cases:
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(a) Any "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the Act)) becomes the
"beneficial owner" (as defined in Rule 13-d under the Act)
of more than 20 percent of the then outstanding voting
stock of the Company otherwise than through a transaction
arranged by or consummated with the prior approval of the
Company's Board of Directors (Board).
(b) During any period of two consecutive
years, individuals who, at the beginning of such period,
constitute the Board (and any new director whose election
by the Board or whose nomination for election by the
shareholders of the Company was approved by a vote of at
least two-thirds of the directors then still in office who
either were directors at the beginning of such period or
whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority
of the Board.
3.03-6 An Employer-initiated termination is any termination of the
eligible employee's employment by Employer (including a request for resignation
that is agreed to by the eligible employee for any reason other than cause under
3.04).
3.04 DISQUALIFICATION FROM PARTICIPATION AND BENEFITS
3.04-1 An eligible employee will be disqualified from participation
and entitlement to severance benefits if termination of employment is for cause
under 3.04-2 or under circumstances described in 3.04-3.
3.04-2 Termination of employment for cause means:
(a) Except during the 24-month period following a change
in control, termination of employment for cause determined according
to 3.04-3.
(b) During the 24-month period following a
change in control, termination of employment for either of
the following reasons determined according to 3.04-3:
(1) The eligible employee's gross misconduct; or
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(2) The eligible employee's gross negligence or
conduct which indicates a reckless disregard for the
consequences and has a material adverse effect on the
Company or its affiliates.
3.04-3 All questions concerning whether a termination was for cause
under 3.04-2(a) or for a reason stated in 3.04-2(b) shall be determined by the
Company exercising full discretion when acting under 5.04-1 through 5.04-3 and,
in the case of the review of a denied claim, by the Committee exercising full
discretion when acting under 5.04-4 and 5.04-5.
3.04-4 An eligible employee shall be disqualified from
participation and entitlement to severance benefits if the eligible employee
fails to execute and deliver to Employer within the Designated Acceptance Period
under 4.05-1, or revokes or breaches, any of the following:
(a) A waiver and release of claims against the
Company and affiliates in the form provided by Employer.
(b) Any agreement to repay severance benefits
under circumstances required by 4.06.
(c) The agreement required under 3.03-1(b) and any other
agreement required by Employer, including but not limited to,
confidentiality, noncompetition, nonsolicitation, nondisparagement,
assistance to Employer and assistance in defense of litigation
agreements.
ARTICLE IV
SEVERANCE BENEFITS
4.01 SEVERANCE PAY
4.01-1 Subject to 4.01-2 and 4.01-3, a participant entitled to
severance benefits shall receive severance pay as provided in Exhibit A.
4.01-2 Severance pay in the event of a change in control shall not
exceed three times the average annual compensation payable by the Company or
Employer to the participant
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and includable in the participant's gross income for the most recent five
taxable years ending before the change in control.
4.02 GROUP HEALTH CONTINUATION BENEFITS
4.02-1 Participants who are awarded severance benefits under 4.02,
and their covered dependents, shall receive continued coverage under one of the
following group health plans:
(a) The group health plans in which they were
enrolled at the time of termination.
(b) If the plans in (a) are not available to
active employees, the similar group health plans provided
to active employees, as determined by Employer.
4.02-2 The coverage provided under 4.02-1 shall continue until the
earlier of the following:
(a) Three months after coverage would
otherwise end due to the participant's termination of
employment.
(b) The date of eligibility for group health
coverage obtained through other employment of the
participant after the participant's termination date with
Employer.
(c) The last day of the month for which the
participant fails to make any contribution toward the cost
of such coverage that is required by Employer of similarly
situated active employees.
4.02-3 Employer shall continue its contributions for the
continuation coverage provided under 4.02-1. The amount of such contribution
with respect to each participant shall be Employer's cost to provide such
coverage to similarly situated active employees.
4.02-4 After termination of coverage under 4.02-1, participants and
covered dependents may elect to continue their group health coverage on a self-
pay basis as allowed by law. The group health plan continuation benefits
provided under 4.03-1 shall reduce a participant's, and any other affected
person's, maximum continuation period for any continuation coverage required by
law. For the purposes of 4.03, "group health plans" include the
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Employer-sponsored medical, dental and vision plans but exclude any health care
spending account under any cafeteria plan maintained by Employer pursuant to
section 125 of the Internal Revenue Code of 1986 and related regulations.
4.03 OUTPLACEMENT BENEFITS
Employer shall provide outplacement benefits to participants entitled
to severance benefits following termination of employment in accordance with
Employer's policy on outplacement benefits as in effect from time to time.
4.04 TIME AND MANNER OF PAYMENT
4.04-1 Employer shall determine, in its sole discretion, the time
and manner of payment of any severance pay. Subject to the exercise of such
discretion to pay in installments, severance pay shall be paid in a lump sum
cash payment within a reasonable time on or after the later of the following:
(a) The date of the participant's termination.
(b) If applicable, the date the participant
may no longer revoke a waiver and release of claims
required under 3.04-3.
4.04-2 Employer shall withhold from any amounts paid under this
Plan any income tax or other amounts as allowed or required by law.
4.04-3 Severance pay shall not be included as compensation under
any retirement plan maintained by Employer or any affiliate.
4.05 NOTICE OF ACCEPTANCE PERIOD
4.05-1 Employer shall give eligible employees written notice of the
time period within which they must meet any conditions required in order to
receive the benefits offered under this Plan (the Designated Acceptance Period).
If an eligible employee fails to meet the conditions within the Designated
Acceptance Period, the eligible employee shall not be entitled to participation
and severance benefits under this Plan.
4.05-2 All eligible employees over the age of 40 shall be notified
of the right to consult with an attorney before accepting benefits under this
Plan and before executing any required waiver and release of claims forms.
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4.06 REPAYMENT OF SEVERANCE UPON REHIRE
4.06-1 Employer shall require a participant to repay severance
benefits if the participant is rehired by Employer or an affiliate or in the
event of a disqualification under 3.04-3.
4.06-2 If repayment is required under 4.06-1, the Company shall
determine the amount, timing and manner of repayment on a discretionary basis
with respect to each individual participant, subject to the following:
(a) If repayment is made in a lump sum, the
lump sum shall be repaid before the participant begins
work with Employer or an affiliate.
(b) If repayment is made in periodic installments, the
repayment shall be made in accordance with both of the following
requirements:
(1) The participant shall sign and execute a
promissory note furnished by Employer before the participant
begins work with Employer or an affiliate.
(2) The terms of the promissory note shall be
commercially reasonable as determined by Employer.
ARTICLE V
ADMINISTRATION
5.01 ADMINISTRATOR
The Plan shall be administered by the Committee.
5.02 COMMITTEE'S POWERS AND DUTIES
5.02-1 The Committee shall interpret the Plan, decide any questions
about the rights of participants and in general administer the Plan. Any
decision by the Committee shall be final and bind all parties. The Committee
shall have absolute discretion to carry out its responsibilities.
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5.02-2 The Committee may delegate all or part of the administrative
duties except in connection with review under 5.04-4 and 5.04-5 to one or more
agents and may retain advisors for assistance. The Committee may consult with
and rely upon the advice of counsel who may be counsel for the Company or any
affiliate.
5.02-3 The Committee shall be the plan administrator under federal
laws and regulations applicable to plan administration and shall comply with
such laws and regulations. The Committee shall be the agent for service of
process on the Plan at the Company's address.
5.03 COMPANY AND EMPLOYER FUNCTIONS
5.03-1 All authority of the Company or an Employer shall be
exercised by the chief executive officer of the Company or the Employer, who may
delegate some or all of the authority to any officer or manager of the Company
or the Employer.
5.03-2 The power to amend or terminate this Plan may be exercised
only by the Company's chief executive officer, who may delegate some or all of
the authority to any officer of the Company.
5.03-3 The Board of Directors of the Company or any Employer shall
have no administrative authority or function with respect to the Plan. Being a
member of the Board shall not, in and of itself, make a person a plan fiduciary.
5.04 CLAIMS AND REVIEW PROCEDURES
5.04-1 Any person claiming a benefit or requesting information, an
interpretation or a ruling under the Plan shall present the request in writing
to the person designated by the Company.
5.04-2 The decision on a claim shall be made by the Company and
shall normally be made within 90 days. If special circumstances require an
extension of time for processing the claim, the claimant shall be so notified
and the time limit shall be 180 days. If the claimant has not been notified of
a decision on a claim within the time limit, the claim shall be deemed denied.
5.04-3 If the claim or request is denied, the written notice of
denial shall state:
(a) The reasons for denial, with specific
reference to the terms of the Plan on which denial is
based.
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(b) A description of any additional material
or information required for review of the claim and an
explanation of why it is necessary.
(c) An explanation of the Plan's claims review
procedure.
5.04-4 Any person whose claim or request is denied, or who has not
received a response within 90 days, or within 180 days if special circumstances
require an extension of time, may request review by notice in writing to the
Committee. The original decision will be reviewed by the Committee or the
Committee's delegate, who may, but shall not be required to, grant the claimant
a hearing. On review, whether or not there is a hearing, the claimant may have
representation, examine pertinent documents and submit issues and comments in
writing.
5.04-5 The decision on review shall normally be made within 60
days. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be so notified and the time limit shall be 120
days. The decision shall be in writing and shall state the reasons and the
relevant Plan provisions. All decisions on review shall be final and binding on
all parties concerned. If the participant does not receive a decision within
the time limit, the claim shall be considered wholly denied on review.
5.04-5 The Company, when acting on a claim under 5.04-2 and 5.04-3,
and the Committee, when acting on a review of a claim under 5.04-4 and 5.04-5,
shall have full and absolute discretion to determine all questions concerning
eligibility and participation and whether or not the conditions for payment of
severance benefits have been made, including questions of interpretation of the
Plan.
5.04-6 Decisions by the Company on claims shall have no binding
effect on the Committee and no precedential value when the Committee is acting
on a review of a claim.
5.05 INDEMNITY AND BONDING
5.05-1 Subject to the indemnification provisions in the Articles
and Bylaws of the Company and any provisions and procedures in the corporate
resolutions of the Company, 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.
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(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.
5.05-2 Plan fiduciaries shall be bonded to the extent required by
applicable law.
5.06 EXPENSES
5.06-1 A Committee member who is employed full-time by an Employer
shall not be separately compensated for services as Administrator. The
Committee shall be reimbursed by the Company for all expenses incurred while
acting as Committee.
5.06-2 The Company may elect to pay any administrative fees or
expenses and may allocate the cost among the Employers. Otherwise, the expenses
and fees shall be paid from Company assets.
ARTICLE VI
GENERAL PROVISIONS
6.01 ENFORCEABILITY AND EXCLUSIVE BENEFIT
The Company and Employers intend the terms of this Plan, including
those relating to the coverage and benefits, to be legally enforceable. The
Company and Employers further intend that the Plan be maintained for the
exclusive benefit of eligible employees of Employers.
6.02 AMENDMENT
The Company may amend this Plan at any time only by written
instrument. No purported oral amendment shall have any effect.
6.03 TERMINATION
The Company may terminate this Plan at any time.
6.04 GOVERNING LAW
This Severance Plan shall be construed according to the laws of
Oregon, except as preempted by federal law.
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6.05 NOT CONTRACT OF EMPLOYMENT
Nothing in this 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.
6.06 ATTORNEYS' FEES
In any suit or action arising out of or in any way pertaining to
this Plan, the prevailing party may recover from the other party reasonable
attorneys' fees at trial and on any appeal.
6.07 UNFUNDED
All benefits payable under this Plan shall be unfunded and shall be
payable only from the general assets of Employer. The participants shall have
no interest in any assets of Employer and shall have no rights greater than the
rights of any unsecured general creditor of Employer.
6.08 NONASSIGNMENT
The rights of a participant under this Plan are personal. No
interest of a participant under this Plan may be assigned, transferred, seized
by legal process or subjected to the claims of creditors in any way. A
participant's rights under this Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge or encumbrance.
6.09 CONDITIONS
The waiver of a condition of benefits on any occasion shall not
constitute a waiver of any other condition on the same occasion or a waiver of
the same or any other condition on any other occasion.
6.10 OBLIGATIONS OF EMPLOYERS
The obligations of the Employers under this Plan are obligations to
their own employees alone and the Company assumes no obligations to employees of
any other Employer.
6.11 ARBITRATION
After exhaustion of the claims and review procedure under 5.04, any
dispute arising out of or in any way pertaining to the interpretation or
administration of this Plan shall be submitted to binding arbitration. Except
as specifically provided herein, the arbitration shall be governed under Federal
Arbitration Act. The parties shall select a mutually agreeable arbitrator.
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If the parties are unable to agree on the selection of an arbitrator within
thirty days, the Presiding Judge of the Federal District of Oregon shall be
asked to designate an arbitrator. The arbitration shall be conducted with no
attorneys' fees or costs to be awarded to either side.
Effective Date: December 1, 1996
Adopted: November 13, 1996
COMPANY PACIFICORP
By /s/ Frederick W. Buckman, President
-----------------------------------
Date: March 19, 1997
-----------------------------------
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EXHIBIT A
SEVERANCE PAY
1. Participants entitled to severance benefits shall receive
severance pay as follows:
Level 1 Two times annual cash compensation
Level 2 One times annual cash compensation
2. "Annual cash compensation" shall mean the sum of the following:
(a) The eligible employee's annualized base salary rate in
effect at the time of material alteration in the position or
termination, whichever is earlier.
(b) The eligible employee's guideline incentive award in effect
at the time of material alteration in the position or termination,
whichever is earlier, as determined by Employer in accordance with the
applicable incentive program.
(c) The eligible employee's annualized vehicle allowance in
effect at the time of material alteration in the position or
termination, whichever is earlier.