September 18, 1998
[REVISED OCTOBER 15, 1998]
PERSONAL & CONFIDENTIAL
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c/o ▇▇▇▇▇ ▇▇▇▇▇, Esq.
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RE: LETTER AGREEMENT REGARDING SEVERANCE BENEFITS
UNDER PACIFICORP EXECUTIVE SEVERANCE PLAN
Dear ▇▇▇▇:
You are a Level One eligible employee under the PacifiCorp Executive
Severance Plan dated December 1, 1996 ("the Plan"). As a result of the
Company's and your agreement concerning your resignation from your position as
President and Chief Executive Officer of PacifiCorp, you qualify for benefits
under Section 3.03-1(a) of the Plan. Consequently, if you timely resign your
employment and satisfy the remaining conditions of Section 3.03 of the Plan you
will become a Plan participant and receive benefits thereunder. This Letter
Agreement is governed by and subject to the terms of the Plan, including the
claims review and dispute resolution procedures identified therein. Terms
defined herein shall have the same meaning in the Plan. A copy of the Plan is
attached as Exhibit A.
A. CONDITIONS FOR BENEFITS INCLUDE:
1. RESIGNATION. Based upon our discussions, your resignation as an
officer and director will be effective September 1, 1998. Pursuant to this
Letter Agreement, September 25, 1998 will be the effective date of your
employment separation (the "Separation Date").
2. CONSIDERATION PERIOD. You must execute this Letter Agreement at or
before 12:00 PM (NOON), OCTOBER 16, 1998 (the "Consideration Period"). You may,
of course, execute the Letter Agreement earlier if you wish.
3. WAIVER OF PARTICIPATION IN OTHER COMPENSATION OR EMPLOYEE BENEFIT
PLANS. Section 3.03-1(b) of the Plan requires that you agree in writing to
forego any severance rights or benefits under any other severance plan
maintained by or agreement with PacifiCorp or any affiliate. You also
understand that consistent with Section 3.04-4 of the Plan, you will not receive
any other compensation or employee benefits except (1) as provided in this
Letter Agreement; (2) your final pay; and (3) any Restricted Stock Award
Agreement between you and the Company. You agree to waive the right to
participate in any Company compensation or benefit plans to which you might
otherwise be entitled, except those specified in this Letter Agreement. You
acknowledge and agree that the severance pay and benefits provided to you under
this Letter Agreement are in lieu of, and not in addition to, the benefits
offered under any other plan, policy or practice that otherwise might be
applicable to you as a result of your current or former positions with the
Company and its affiliates. You may indicate your acceptance of these
conditions by countersigning this Letter Agreement where indicated below.
4. ▇▇▇▇▇▇ AND RELEASE OF CLAIMS AGAINST THE COMPANY. Section 3.04-4 of
the Plan requires that you execute and deliver a waiver and release of claims
against the Company and affiliates in the form provided by Employer ("Release").
The Release must be signed on your last day of employment, or by the end of the
Consideration Period, whichever is later. That form is attached as Exhibit B
and incorporated herein by reference.
5. CONFIDENTIALITY, NONCOMPETITION AND NONSOLICITATION AGREEMENT.
Section 3.04-4 of the Plan requires that you execute any confidentiality,
noncompetition, and nonsolicitation agreement required by Employer. That
agreement is attached as Exhibit C and incorporated herein by reference.
6. ASSISTANCE IN DEFENSE OF LITIGATION OR CLAIMS. In the event
PacifiCorp or its Affiliates requests your assistance, you agree to assist in
the defense of litigation or claims about which you have knowledge without
additional compensation during the two-year period covered by your severance pay
and benefits ("Separation Period"). After your Separation Period expires, you
agree to assist in the defense of such litigation or claims for additional
compensation at your base rate of salary on your Separation Date. You will be
paid an hourly rate for up to seven (7) hours in one day or a per diem rate for
any day in which more than seven (7) hours are worked. You will be reimbursed
for any reasonable expenses incidental to this assistance approved in advance by
the Company. The Company will reasonably accommodate your scheduling needs and
will not make unreasonable demands on your time. You may indicate your
acceptance of this condition by countersigning this Letter Agreement below.
7. REPAYMENT OF SEVERANCE. You agree to repay severance benefits if you
are rehired by PacifiCorp or an affiliate or disqualified under the Plan as
provided in Section 4.06-1.
8. BREACH. You must not breach any of the terms of this Letter
Agreement, including without limitation Exhibits B and C. If you breach any
material term of this Letter Agreement, you will immediately forfeit all
remaining pay and benefits. You acknowledge that the terms of Exhibits B and C
are material terms.
▇. ▇▇▇▇▇▇▇▇▇ PAY AND BENEFITS
1. SEVERANCE PAY. In consideration for your execution of this Letter
Agreement and fulfilling the other terms and conditions provided under the Plan,
the Company will provide you with severance pay in an amount equal to two times
the annual cash compensation (as defined in Section 2 of Exhibit A to the Plan),
less applicable state and federal tax withholding. Payment of severance
benefits will be in twenty-four (24) monthly installments as follows: four (4)
payments each in the amount of $104,900 covering the months September through
December, 1998; twelve payments each in the amount of $91,500 covering the
months of January through December 1999; and eight (8) payments each in the
amount of $125,000 covering the months of January through August, 2000. The
first payment (less deduction for amounts owing in connection with spousal
travel on the corporate aircraft to be calculated consistent with past practice)
will be made as soon as practicable following the date you may no longer revoke
your Release of Claims, provided you have not revoked the Release of Claims;
thereafter, the monthly payments will be made by the end of the month in which
they are scheduled. Please refer to C.3., below for information about your
revocation period and the Plan for additional information.
2. SEVERANCE BENEFITS. The Company will also provide you and your
covered dependents with three months' group health continuation benefits.
Additionally, the Company will provide you with executive outplacement
assistance. Please refer to the Plan for additional information.
3. LUMP SUM PAYMENT. As additional consideration for your execution of
Exhibits B and C and in addition to severance benefits provided for under the
Plan, the Company will pay you the amount of Five Hundred Twenty Thousand
Dollars ($520,000), subject to applicable state and federal tax withholding.
Payment will be made as soon as practicable after October 24, 1998, provided you
have not revoked the Release of Claims.
4. EFFECT OF AGREEMENT ON COMPENSATION AND BENEFITS.
4.1 HEALTH AND LIFE INSURANCE PLANS. By executing this Letter
Agreement you are not waiving any rights you may have as a terminated employee
under the Company's group health and life insurance plans.
4.2 RETIREMENT PLANS. This Letter Agreement shall not affect your
vested rights to benefits in the PacifiCorp K Plus Plan. You will be eligible
to receive a distribution of your entire K Plus account after you terminate
employment according to the provisions of the plan.
4.2.1 SERP. You acknowledge that you are not vested in the
Supplemental Executive Retirement Plan ("SERP") and therefore are not entitled
to any benefits under this plan.
4.2.2 PACIFICORP RETIREMENT PLAN. You acknowledge that you are
not vested in the PacifiCorp Retirement Plan and therefore are not entitled to
any benefits under this plan.
4.3 DEFERRED COMPENSATION. You will be eligible to receive any
deferred compensation you have accrued after you terminate employment with the
Company according to the provisions of the Compensation Reduction Plan. Timing
of such payments is governed by your prior timely elections and subject to plan
provisions.
4.4 LONG-TERM INCENTIVE PLAN ("LTIP") AND PACIFICORP STOCK INCENTIVE
PLAN. To the extent that option grants have vested prior to your employment
separation, you will retain those options as provided for in the Stock Incentive
Plan and any Nonstatutory Stock Option Agreement issued under the authority of
the aforementioned plans, including without limitation stock awards pursuant to
your Incentive Compensation Agreement dated February 1, 1994. Pursuant to the
Company's Nonstatutory Stock Option Agreement, vested options may be exercised
prior to the expiration of thirty (30) days after the date of employment
termination, that is within thirty (30) days of September 25, 1998. You
acknowledge that the Company has transferred to you or your account in the
Compensation Reduction Plan, any stock vested prior to your resignation under
the LTIP, and related agreements. Your Restricted Stock Agreements under the
LTIP and Stock Incentive Plan will be amended to vest the 51,963 unvested shares
granted prior to your termination. Distributions of stock will be made as soon
as practicable after October 24, 1998, provided you have not revoked the Release
of Claims.
C. OTHER
1. PLAN DOCUMENT. The Plan is attached as Exhibit A. The Plan is
governed by Employee Retirement Income Security Act ("ERISA"), and is
administered and maintained primarily for the purpose of providing benefits for
a select group of management or highly-compensated employees.
2. RESPONSIBILITY FOR EVALUATION OF TAX CONSEQUENCES. You have sole
responsibility for evaluation of any tax issues arising from or related to this
Letter Agreement. The Company takes no responsibility for any tax consequences
to you and
makes no representation regarding the tax treatment of your pay or benefits
described in Section B of this Letter Agreement or otherwise.
3. OLDER WORKERS' BENEFIT PROTECTION ACT NOTICE. The Older Workers'
Benefit Protection Act contains specific conditions for "knowing and willing"
release of certain claims by employees over age forty (40). The Company's
understanding of these requirements and conditions is as follows:
(a) CONSULTATION WITH ATTORNEY. You have the right to consult with
an attorney of your choice before you sign this Letter Agreement
and the Release. No one in the Company is authorized to give you
advice on whether or not to consult with an attorney or whether
or not to sign this Letter Agreement or the Release. The
decision whether to consult an attorney or not is yours alone.
The Company does not pay for legal fees.
(b) CONSIDERATION PERIOD. The Company is providing you a
Consideration Period of at least twenty-one (21) calendar days
(Section A.2) to consider this Letter Agreement and the Release
and decide whether to accept severance pay and benefits and sign
this Letter Agreement and the Release. However, if you do not
sign and return this Letter Agreement within the Consideration
Period and the Release by the end of the Consideration Period or
on your last day of employment, whichever is later, you will not
be eligible for the severance pay and benefits.
(c) PERIOD OF REVOCATION. After you have signed the Release, you
have seven (7) calendar days to revoke your acceptance of
benefits as indicated on this Letter Agreement and the Release
(Section A.4). By revoking this Letter Agreement and the
Release, you are exercising your right to change your mind. If
you revoke this Letter Agreement and the Release, though, you
will not be eligible to receive the severance pay and benefits.
(d) EXCHANGE FOR CONSIDERATION. The Release is in exchange for
"consideration" (benefits), which exceeds anything to which you
otherwise may have been entitled. This means that you will
receive severance benefits that you would not otherwise receive
from the Company. Severance benefits are extra, in part, because
you signed the Release.
4. CONFIDENTIALITY OF NEGOTIATIONS AND LETTER AGREEMENT. You agree not
to disclose to any person, agency or court the terms and conditions of this
Letter Agreement and our discussions concerning your separation from employment
unless
compelled to do so pursuant to legal process (e.g., a summons or subpoena) or
otherwise required by law. You may discuss the Letter Agreement with your
attorney, financial adviser, certified public accountant or immediate family
members on a confidential basis.
5. PAYMENT UPON DEATH. In the event of your death, any remaining
payments or distribution of stock provided for herein shall be made to your
estate or designated beneficiary at the time specified in this Letter Agreement.
6. ENTIRE AGREEMENT. All agreements between the parties are embodied and
expressed in this Letter Agreement including its attachments. You acknowledge
that no representations have been made to you by the Company other than those
set forth herein. The terms of this Letter Agreement are contractual and not
mere recitals.
Please read this Letter Agreement carefully. If it meets with your
acceptance, please sign and return it to me no later than 12:00 p.m. (noon)
(Pacific Standard Time), OCTOBER 16, 1998.
Sincerely,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman, Personnel Committee
PacifiCorp Board of Directors
Attachments: Exhibit A: PacifiCorp Executive Severance Plan
Exhibit B: Release of Claims
Exhibit C: Confidentiality, Noncompetition and Nonsolicitation
Agreement
ACKNOWLEDGMENT AND AGREEMENT:
I have read this Letter Agreement including its Attachments. I understand that
by signing below I am entering a legal agreement and releasing legal rights. I
have chosen voluntarily to enter this Letter Agreement after careful
consideration.
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EXHIBIT B
RELEASE OF CLAIMS
This Release of Claims (the "Release") is made and executed by me, the
undersigned employee, in connection with my separation from employment with
PacifiCorp, an Oregon corporation and in consideration of my receiving severance
pay and benefits of value as provided for under that certain Letter Agreement
dated September 18, 1998 [revised October 15, 1998] (the "Agreement"). These
benefits are substantial consideration to which I am not otherwise entitled.
I hereby release PacifiCorp and its related corporations, affiliates, joint
ventures, and partnerships, all predecessor and successor organizations for all
entities referred to in this paragraph and all current and former partners,
joint ventures, officers, directors, employees, agents, insurers, shareholders,
representatives and assigns of all of the aforementioned and all other persons
who might be claimed as liable (collectively the "Company") from any and all
liability, damages or causes of action, direct or indirect, whether known or
unknown, which have been or could have been asserted by me relating to my
employment with the Company or the termination of that employment, including but
not limited to any claims for additional compensation or benefits in any form,
or damages. This Release specifically includes, but is not limited to, all
claims for relief or remedy under any state or federal laws, including but not
limited to the Employee Retirement Income Security Act (ERISA), Title VII of the
Civil Rights Act of 1964, the Post-Civil War Civil Rights Acts (42 USC Sections
1981-88), the Civil Rights Act of 1991, the Equal Pay Act, sections 503 and 504
of the Vocational Rehabilitation Act, the Age Discrimination in Employment Act,
the Americans With Disabilities Act, the Older Workers' Benefit Protection Act,
the Federal Family and Medical Leave Act, the Worker Adjustment and Retraining
Notification Act, the Rehabilitation Act of 1973, the Uniformed Services
Employment and Reemployment Rights Act of 1994, the Fair Labor Standards Act,
Executive Order 11246, all as amended, and any other regulations under such
authorities and all other civil rights, employment and labor laws of any state
or the United States, and all applicable contract, tort or other common or
statutory law theories.
This Release shall not affect any rights which I may have under any Company
health insurance plans or vested rights under the retirement plan(s) maintained
by the Company.
I acknowledge that I have been given a specified period of time, as set
forth in the Agreement, to consider my election to accept benefits under the
Agreement and to sign this Release and that the Release must be signed on the
later of my last day of active employment or the end of the consideration
period; that I am being provided with a period of seven (7) days following
execution of this Release in which I may revoke, at my sole election, my
Agreement and my Release; and that unless I so revoke, my Agreement will be
effective the date it is signed and my Release will be fully effective
and irrevocable on the eighth (8th) day after it is signed. I further
understand I must execute this Release in order to be entitled to receive the
benefits offered under the Agreement and that the Company is not obligated to
give me any benefits under the Agreement until the revocation period has
passed without my exercising the right to revoke.
I acknowledge that I have had time to consider the alternatives and
consequences of my signing the Agreement and the Release; that I am aware of my
right to consult an attorney or financial advisor at my own expense; and that,
in consideration for executing this Release and my Agreement, I have received
additional benefits and compensation of value to which I would not otherwise be
entitled.
Every provision of this Release is intended to be severable. In the event
a court or agency of competent jurisdiction determines that any term or
provision contained in this Release is illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall not affect the other terms and
provisions of this Release which shall continue in full force and effect.
I HAVE READ THE FOREGOING RELEASE AND UNDERSTAND THE EFFECT OF THIS RELEASE. I
UNDERSTAND THAT I AM RELEASING LEGAL RIGHTS AND VOLUNTARILY ENTER INTO THIS
RELEASE.
Dated: , 1998
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EXHIBIT C
CONFIDENTIALITY, NONCOMPETITION
AND NONSOLICITATION AGREEMENT
In consideration of benefits provided to me pursuant to the PacifiCorp
Executive Severance Plan ("Plan"), I agree to the following terms:
1. CONFIDENTIALITY. I acknowledge that in the course of my employment I
had access to proprietary information, trade secrets, and other information
treated by PacifiCorp, an Oregon corporation, and its affiliates (collectively
referred to as "Employer") as confidential (hereinafter collectively referred to
as "Confidential Information"), that such information is a valuable asset of
Employer and that its disclosure or unauthorized use will cause Employer
irreparable harm. As used in this Agreement, the term "Confidential
Information" means: (a) proprietary information of Employer; (b) information
marked or designated by Employer as confidential; (c) information that is known
to me to be treated by Employer as confidential and (d) information provided to
Employer by third parties which Employer is obligated to keep confidential.
Confidential Information includes but is not limited to trade secrets as defined
under the Uniform Trade Secrets Act, all information relating to Employer's
business strategies, pricing, customers, technology, products, costs, employee
compensation, marketing plans, computer programs or systems, inventions,
developments, and trade secrets of every kind and character. I agree that I
will not disclose any Confidential Information to any person, agency or court
unless compelled to do so pursuant to legal process (E.G., a summons or
subpoena) or otherwise required by law and then only after providing the
Employer with prior notice and a copy of the legal process, nor will I use such
Confidential Information for my own benefit or that of any other person,
corporation, government or other entity except as is required by law. I agree
that upon my separation from employment (or earlier if requested by Employer), I
will return to Employer all originals and copies of documents and other
materials relating to Employer or containing or derived from Confidential
Information that are in my possession or control, accompanied, if requested, by
written certification signed by me and satisfactory to Employer to the effect
that all such documents and materials have been returned.
2. AGREEMENT NOT TO DISCUSS PACIFICORP MATTERS. I acknowledge and
understand that my knowledge of the Company's business, its relationships or
prospective relationships with other businesses or entities, information about
its executives, board of directors, or their thinking about business strategy
could benefit others and harm PacifiCorp. Consequently, I agree not to discuss
nor provide information to anyone about PacifiCorp or its executives or board of
directors. To the extent that there is information about PacifiCorp, its
executives or board of directors that I desire to share with potential
employers, I agree to discuss such information in advance with the Chief
Executive Officer and/or Chief Operating Officer of PacifiCorp and agree not to
disclose such information without consent from PacifiCorp.
3. NONCOMPETITION AND NONSOLICITATION OF EMPLOYEES. In order for
PacifiCorp to reasonably protect its interests in the competitive use of any
Confidential Information, knowledge or relationships concerning the business of
Employer to which I have had access to because of the special nature of my
employment by Employer, I agree that I will not for a period of two (2) years
after I qualify for benefits under the Plan, directly or indirectly, whether as
officer, director, employee, stockholder, agent, partner, consultant, paid or
unpaid advisor, or otherwise work for, engage in, or have any interest in or
connection with any of the following without prior written approval of the Chief
Executive Officer or Chief Operating Officer of the Company: (1) any business
(including without limitation utilities or marketers), agency, cooperative,
governmental entity or publicly-owned energy provider within the Western United
States (defined below) which competes with Employer's wholesale or retail
electricity marketing efforts (including without limitation competition from
alternate fuel providers) or (2) businesses within the Western United States in
which Employer was actually engaged or preparing to engage as of the time my
employment ended, or (3) businesses within the Western United States in which
the Employer is engaged or are contemplated within Employer's strategic planning
efforts as of the date of execution of this Agreement. For the purposes of this
Agreement, the Western United States shall mean the states of Montana, Wyoming,
Colorado, Idaho, Utah, New Mexico, Washington, Oregon, Nevada, Arizona and
California. Nor will I solicit, divert or take away the employment of any
employees or customers of the Employer for a period of two (2) years after my
employment with Employer ends. The noncompetition restriction is not applicable
to: (a) ownership of not more than ten percent of the stock of any publicly
traded corporation; (b) employment in or for PG&E's non-regulated gas
transmission business; (c) work for a business which competes with Employer,
where the work is for a division or section of such entity which is in a
business not competitive with Employer's ongoing or planned business; or
(d) work for a competitor where the job assignment is not one where Employer's
Confidential Information would be of a potential benefit; provided however, that
exclusions (c) and (d) are applicable only upon the condition that I notify
Employer prior to commencing such work and provide reasonable assurance to
Employer that Employer's Confidential Information will be protected against
unauthorized disclosure or use. I specifically acknowledge and agree that the
terms of this provision are reasonable in every respect and, in
particular, because of the competitive and specialized nature of the
Employer's business, including without limitation the changing
power-marketing environment and increased competition resulting from open
access of transmission in the electric power market, and changes in the
international energy market, that it is reasonable to include all of the
Western United States and other geographic areas where the Company has or
plans investments, as the geographic limitation in this provision. If a
court holds that any portion of this paragraph is unenforceable, the maximum
restrictions of time, scope of activities, and geographic area reasonable
under the circumstances will be substituted for any such restrictions held
unenforceable.
4. DISPUTES. The rights and obligations under this Agreement shall in
all respects be governed by federal law or the laws of the state of Oregon, as
applicable, without regard to the choice of law rules. Venue in any legal
action shall exist exclusively in state or federal courts in Oregon. The
prevailing party in any such litigation will be entitled to recover all
reasonable attorneys' fees and other expenses, including attorneys' fees and
expenses in connection with any trial, appeal, or petition for review.
5. INJUNCTIVE RELIEF. It is understood and agreed that money damages
would not be a sufficient remedy for any breach of this Agreement by me and that
Employer shall be entitled to specific performance and injunctive relief as
remedies for any such breach. I understand that such remedies shall not be
deemed to be the exclusive remedies in the event of my breach of this Agreement,
but shall be in addition to all other remedies available at law or in equity to
Employer.
6. SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT IS OR BECOMES
UNENFORCEABLE, ALL REMAINING PROVISIONS SHALL REMAIN VALID AND ENFORCEABLE.
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