SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
Registrant; State of Incorporation; IRS Employer
COMMISSION FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
1-5532 PORTLAND GENERAL CORPORATION 93-0909442
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8820
1-5532-99 PORTLAND GENERAL ELECTRIC COMPANY 93-0256820
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares outstanding of the registrants' common stocks as of July
31, 1996 are:
Portland General Corporation 51,167,274
Portland General Electric Company 42,758,877
(owned by Portland General Corporation)
1
TABLE OF CONTENTS
PAGE
NUMBER
DEFINITIONS ............................................................ 2
PART I. PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
FINANCIAL INFORMATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 3
Consolidated Statements of Income .......................... 11
Consolidated Statements of Retained Earnings ............... 11
Consolidated Balance Sheets ................................ 12
Consolidated Statements of Cash Flow ....................... 13
Notes to Consolidated Financial Statements ................. 14
Portland General Electric Company and
Subsidiaries Financial Information ........................ 17
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings ................................. 20
Item 4 - Submission of Matters to a Vote of Security Holders 20
Item 6 - Exhibits and Reports on Form 8-K .................. 21
Signature Page ............................................. 22
DEFINITIONS
Bonneville Pacific .................Bonneville Pacific Corporation
BPA ...............................Bonneville Power Administration
Coyote Springs ....................Coyote Springs Generation Plant
Enron .................................................Enron Corp.
FERC .........................Federal Energy Regulatory Commission
Holdings ..........................Portland General Holdings, Inc.
kWh .................................................Kilowatt-Hour
MWa .............................................Average megawatts
MWh .................................................Megawatt-hour
NYMEX ................................New York Mercantile Exchange
OPUC or the Commission ...........Oregon Public Utility Commission
Portland General or PGC ..............Portland General Corporation
PGE or the Company ..............Portland General Electric Company
PUHCA ..................Public Utility Holding Company Act of 1935
Trojan .......................................Trojan Nuclear Plant
USDOE ..........................United States Department of Energy
2
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL AND OPERATING OUTLOOK
PORTLAND GENERAL CORPORATION - HOLDING COMPANY
Portland General Corporation (Portland General or PGC), an electric utility
holding company, was organized in December 1985. Portland General Electric
Company (PGE or the Company), an electric utility company and Portland
General's principal operating subsidiary, accounts for substantially all of
Portland General's assets, revenues and net income.
PROPOSED MERGER
On July 20, 1996, Portland General entered into an Agreement and Plan of
Merger with Enron, a Delaware corporation, to merge in a tax-free, stock-for-
stock transaction. The transaction which has been approved by both companies'
boards of directors, will entitle Portland General shareholders to receive one
share of Enron common stock for each share of Portland General common stock
held by them.
Under the terms of merger agreement, Enron will reincorporate in Oregon to
allow it to qualify as an intrastate holding company that is exempt from the
registration requirements of PUHCA. In the event that PUHCA is amended or
repealed in a manner that would make this reincorporation no longer necessary,
PGC will merge directly into the present Enron, a Delaware corporation. PGE,
Portland General's utility subsidiary, will retain
its name and most of its functions, becoming the fifth business unit of Enron.
It will join the existing four Enron business units: Enron Operations;
Enron Development/Enron Global Power and Pipelines;
Enron Capital and Trade Resources; and Enron Oil and Gas Company.
The merger is conditioned, among other things, upon the approvals of each
company's shareholders at special meetings planned for the fall of 1996
and the completion of regulatory procedures including
those at the OPUC and FERC. The
companies are hopeful that the regulatory procedures can be completed in less
than 12 months from the date of the agreement.
The merger agreement may be terminated by Enron if the average of the closing
prices of Enron Common Stock during the 20 consecutive trading day period
ending five trading days prior to the date of the special meeting of the
shareholders of Portland General is more than
$47.25 per share, and may be terminated by
PGC if the average of the closing prices of Enron Common Stock during such
period is less than $36.25 per share.
APPROVALS AND CONSENTS
OPUC - Upon completion of the PGC merger, Enron will be the
owner of the common stock of PGE. PGE
is subject to the jurisdiction of the OPUC with respect to its electric
utility operations. Under Oregon statute, the OPUC must approve any
transaction in which a person acquires the power to exercise any substantial
influence over the policies and actions of a public utility subject to its
jurisdiction. Enron and Portland General will file a joint application
with the
Commission seeking approval of the merger. The OPUC will address whether the
merger will serve the customers of PGE in the public interest. In making that
finding the OPUC considers whether the change in ownership of the public
utility will impair the ability of the utility to provide adequate service at
just and reasonable rates. Concurrent with working with the Commission on the
merger approval issues and process, PGE has presented a rate plan to the OPUC
that proposes to reduce prices and provide new options and services for
customers, as well as commits to no general price increase
3
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
through December 31, 1998 (see discussion below).
FERC - The Federal Power Act provides that no public utility
shall sell or otherwise dispose of its jurisdictional facilities or, directly
or indirectly, merge or consolidate such facilities with those of any other
person or acquire any security of any other public utility without first
having obtained authorization from FERC. The Approval of FERC is required in
order to consummate the Merger. Under the Federal Power Act, FERC will
approve the merger if it finds such merger consistent with the public
interest. In reviewing a merger, FERC generally evaluates: whether the
merger will adversely affect competition; whether the merger will adversely
affect operating costs and rates; whether the merger will impair the
effectiveness of regulation; whether the purchase price is reasonable; whether
the merger is the result of coercion; and whether the accounting treatment is
reasonable.
OTHER - The merger will require the consent and approval of various other
regulatory agencies. PGC and Enron will seek to obtain all necessary consents
and approvals in order to consummate the merger. It is anticipated that these
regulatory procedures can be completed in less than 12 months.
PORTLAND GENERAL ELECTRIC COMPANY - ELECTRIC UTILITY
REGULATORY MATTERS
RATE PROPOSAL - On August 6, 1996 PGE presented a plan to the OPUC to address
issues related to lower than expected power and natural gas costs. The plan
seeks Commission approval for change to certain PGE
tariffs. Changes include expansion of PGE's market based retail rates,
a 3.5 percent reduction in residential customer rates, development of
tariffs for time of day and direct access experimental programs for
residential and small commercial customers,
a potential extension beyond its 1996 expiration of a rate mechanism to
decouple short-term profits from retail kilowatt-hour sales
and acceleration of the Trojan investment recovery.
PGE's current rates were established after a lengthy formal public process
ending in March 1995. Since PGE's last general rate case the Company has
benefited from significant savings as a result of falling natural gas and
power purchase prices. In early 1996, PGE agreed
to develop a plan for sharing some of these savings
with customers beginning in 1997. If approved, the rate plan will provide
approximately $50 million in annual rate reductions, benefiting all
customer classes, as well as accelerating PGE's recovery of its Trojan
investment.
The proposal is based on forecasts that assume regulatory
approval of the merger between Portland General and Enron. The Company has
included in the plan a request to accelerate certain of the rate reductions
upon the OPUC's approval of the merger application. PGE's goal is
to obtain Commission
approval for both the rate plan and the merger application this fall.
TROJAN INVESTMENT RECOVERY - In April 1996 a circuit court judge in Marion
County, Oregon contradicted a November 1994 ruling from the same court,
finding that the OPUC could not authorize PGE to collect a return on its
undepreciated investment in Trojan currently in PGE's rate base. The ruling
was the result of an appeal of PGE's 1995 general rate order which granted PGE
recovery of, and a return on, 87 percent of its remaining investment in
Trojan.
The November 1994 ruling, by a different judge of the same court, upheld the
Commission's 1993
4
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Declaratory Ruling (DR-10). In DR-10 the OPUC ruled that
PGE could recover and earn a return on its undepreciated Trojan investment,
provided certain conditions were met. The Commission relied on a 1992 Oregon
Department of Justice opinion issued by the Attorney General's office stating
that the Commission had the authority to set prices including recovery of and
on investment in plant that is no longer in service.
The 1994 ruling was appealed to the Oregon Court of Appeals and stayed
pending the appeal of the Commission's March 1995 order. Both PGE and the
OPUC have separately appealed the April 1996 ruling which was
combined with the appeal of the November 1994 ruling at the Oregon Court of
Appeals.
For further information regarding the legal challenges to the OPUC's authority
to grant recovery of PGE's Trojan investment see Item 3, Legal proceedings, of
Portland General's and PGE's Forms 10-K for the year ended December 31, 1995.
COMPETITION
The Energy Policy Act of 1992 (Energy Act) set the stage for change in federal
and state regulations aimed at increasing both wholesale and retail
competition in the electric industry. The Energy Act eased restrictions on
independent power production and granted authority to FERC to mandate open
access for the wholesale transmission of electricity.
FERC has taken steps to provide a framework for increased competition in the
electric industry. In 1996 FERC issued Order 888 requiring non-
discriminatory open access transmission by all public utilities that own
interstate transmission. The final rule requires utilities to file tariffs
that offer others the same transmission services they provide themselves under
comparable terms and conditions. This rule also allows public utilities to
recover stranded costs in accordance with the terms, conditions and procedures
set forth in Order 888. The ruling requires reciprocity from municipals,
cooperatives and federal power marketers receiving service under the tariff.
The new rules became effective July 9, 1996 and are expected to result in
increased competition, lower prices and more choices to wholesale energy
customers.
The FERC action applies only to the wholesale transmission of electricity and
does not proscribe terms and conditions of retail transmission service which
is subject to individual state regulation. Since the passage of the Energy
Act, various state utility commissions have addressed proposals which would
gradually allow retail customers direct access to generation suppliers,
marketers, brokers and other service providers in a competitive marketplace
for energy services (retail wheeling). Although
presently operating in a cost-based regulated environment, PGE expects
increasing competition from other forms of energy and other suppliers of
electricity. While the Company is unable to determine the future impact of
increased competition, it believes that ultimately it will result in reduced
retail as well as wholesale prices.
OREGON RESTRUCTURING WORKSHOP - In April 1996, FERC concluded that each
state should decide, given its own unique circumstances and objectives,
whether and how retail wheeling of electric power should occur. The OPUC
began its investigation into
restructuring the state's electric utility on June 19, 1996, meeting with
state utility executives, customers, environmental advocates and
other interested parties. The workshop included a discussion on how different
electric industry structures would meet public policy objectives. The
discussion centered on how competition in the generation of electric power
could be introduced and when to allow customers access to competing
power suppliers. The Commission's objective is to ensure that all electric
utility customers are able to benefit from any savings resulting from a
restructured electric industry.
5
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Four specific issues will be the focus of subsequent meetings:
how an electricity distribution company would operate and be regulated; how
energy efficiency and other public purpose programs will be offered and funded
in a restructured environment; what treatment is appropriate for utility
investment in a generating plant that is no longer economic;
and whether vertical integration of electrical utilities should be discouraged
or prohibited. The Commission intends to use future discussions to
prepare itself to act on the competitive initiatives that can be implemented
under its direct authority and to work with the legislature in assessing
proposals for restructuring or allowing greater customer access to the
electric generation market.
RETAIL CUSTOMER GROWTH AND ENERGY SALES
Weather adjusted retail energy sales were relatively flat for the three months
ended June 30, 1996 compared to the same period last year. Residential and
commercial sales increased 2.5 percent
and 1.7 percent respectively with the addition of 3,740 new customers during
the quarter. High-tech and transportation industrial sales were strong as
well; however, production cutbacks by paper and metal manufacturers caused
total industrial sales to be off approximately
4.1 percent for the year. Energy sales have also been adversly affected by
the lingering impact of the December 1995 wind storms and February 1996
flooding which interrupted services for extended periods. As a result the
Company has revised its projected retail energy sales growth to be less than
1 percent for 1996.
WHOLESALE MARKETING
The surplus of electric generating capability in the Western U.S., the
entrance of numerous wholesale marketers and brokers into the market, and open
access transmission will contribute to increasing pressure on the price of
power. In addition the development of financial markets and the NYMEX futures
trading have led to increased information available to market participants,
further adding to the competitive pressure on wholesale prices.
Company wholesale revenues continue to make a
growing contribution providing nearly 14 percent of total
operating revenues; this represents an 89 percent increase compared to the
second quarter of 1995. The growth in wholesale sales is in part attributed to
PGE's aggressive sales efforts as part of the Company's plan to expand its
existing marketing capabilities and activities throughout the Western U.S.
INDEPENDENT TRANSMISSION GRID OPERATOR
PGE has signed a memorandum of understanding with six other Northwest
utilities to create an independent transmission grid operator called "IndeGo".
The plan between PGE, Idaho Power Company, Montana Power Company, PacifiCorp,
Puget Sound Power & Light Company, Sierra Pacific Power Company and The
Washington Water Power Company is scheduled to be filed with FERC by the end
of the year, in anticipation of operations commencing mid-1997.
6
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
IndeGo's purpose is to ensure non-discriminatory open access to electricity
transmission facilities in compliance with FERC rules. FERC has required open
transmission access in its recent Order 888, as part of deregulation of the
electric utility industry. Under the agreement, IndeGo would assume
responsibility for day to day operation of main transmission lines which are
directly owned by the seven utilities. Each of the companies would maintain
ownership of the lines, as well as responsibility for repair and upgrades.
RESULTS OF OPERATIONS
The following discussion focuses on utility operations, unless otherwise
noted. Due to seasonal fluctuations in electricity sales, as well as the
price of wholesale energy and fuel costs, quarterly operating earnings are not
necessarily indicative of results to be expected for calendar year 1996.
1996 COMPARED TO 1995 FOR THE THREE MONTHS ENDED JUNE 30
Portland General earned $34 million or $0.66 per share for the second quarter
of 1996 compared to earnings of $32 million or $0.64 per share in 1995.
Improved 1996 operating earnings include continued strong growth in
residential sales and wholesale sales, the benefits of an abundant, low cost
supply of electricity resulting from very favorable water conditions and a
competitive wholesale power market.
Operating revenues increased $14 million or 6 percent over the same period
last year primarily driven by an 89 percent jump in wholesale revenues.
Power marketing efforts led to increased sales as PGE was able to purchase
and remarket abundant northwest hydro-generated power. Wholesale sales were
profitable despite a 57 percent decrease in the average sales price
which remained well above the Company's average cost of power.
Retail revenues of $199 million were comparable to 1995.
Residential sales remained strong,
increasing 2.9 percent and providing $6 million in additional revenue.
Residential weather-adjusted sales were 2.5 percent above 1995. This increase
was propelled by the addition of 3,664 residential customers for the quarter.
The Company served an average of 14,300 more customers than in 1995.
Commercial sales were in line with 1995 but an increase in average prices
contributed nearly $3 million to revenues. However, industrial sales are off
last years pace despite robust demand from high-tech customers as paper and
metals manufacturers experienced cutbacks due to weak paper markets and
competitive pressures. The Company deferred $6 million in revenues
related to a one time Oregon state excise tax reduction for refund to
customers which offseet retail revenue increases.
Variable power costs of $46 million approximated the level incurred in 1995
despite a 36 percent increase in total energy sales. An abundant supply of
power available in the market, much of it hydro-generated, displaced more
expensive thermal
generation throughout the region. PGE took advantage of competitive market
prices and purchased 87 percent of its power needs with an additional 10
percent generated by PGE hydro-electric plants.
Company generation, primarily hydro, provided 13 percent of PGE's power needs.
Hydro plant generation increased 7 percent from 1995, or 44,480 MWh,
reflecting good water conditions on the Clackamas River system. PGE thermal
generation accounted for only 3 percent of total Company energy requirements
compared to 9 percent last year.
7
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/kWh)
1996 1995 1996 1995
Generation 13% 22% 3.6 4.6
Firm Purchases 72 29 10.3 22.4
Spot Purchases 15 49 8.8 10.0
Total Resources 100% 100% Average 10.4 13.7
PGE does not have a fuel adjustment clause as part of its retail rate
structure; therefore, changes in fuel and purchased power expenses are
reflected currently in earnings.
Energy purchases were up 48 percent due to higher loads and thermal
displacement. A competitive market and abundant supplies of energy drove
wholesale prices below 1995 levels saving PGE almost $25 million. Firm
purchases, primarily from mid-Columbia projects, averaged 10.3 mills
compared to 22.4 mills while spot market purchases averaged 8.8 mills
compared to an average 10.0 mills in 1995.
Operating expenses (excluding variable power, depreciation and income
taxes) were $5 million higher than last year. Operating costs associated
with the new Coyote Springs facility, including higher firm natural gas
transportation costs, and increased customer marketing and service
costs contributed to this increase. Decreased operations and
maintenance costs at Company generating plants helped partially offset the
increases for the quarter. PGE effectively utilized personnel from its
idle thermal plants to reduce expenditures for temporary, contract and
overtime labor as well as assist in Trojan decommissioning activities.
Depreciation, Decommissioning and Amortization increased $4 million due to
depreciation taken on Coyote Springs as well as depreciation taken on
other general plant investment completed since the second quarter of 1995.
Other income decreased nearly $3 million due to discontinuation of
carrying costs accruals on regulatory assets. Interest charges were 9
percent above 1995
due to higher levels of short-term debt, decreased AFDC accruals since the
completion of Coyote Springs in November 1995 and the refinancing of $80
million in preferred stock with Junior Subordinated Deferrable Interest
Debentures. This refinancing of preferred stock has lowered the preferred
dividend requirement by nearly $2 million.
1996 COMPARED TO 1995 FOR THE SIX MONTHS ENDED JUNE 30
Portland General earned $83 million or $1.63 per share for the six months
ended June 30, 1996 compared to $30 million or $0.60 per share in 1995.
1995 earnings include a one time $37 million after tax charge to income
relating to the regulatory disallowance of 13 percent of PGE's investment
in Trojan. Excluding the Trojan charge, 1995 earnings would have been $67
million. Improved earnings for the year reflect the benefits of record
water conditions, cooler temperatures coupled with a growing residential
customer base and the Company's aggressive wholesale marketing efforts.
8
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Retail Revenues exceeded 1995 by $23 million or 5 percent largely due to
April 1995 and November 1995 rate increases accompanied by a 2.2 percent
growth in energy sales. Significantly colder mean temperatures in January
and February, 2.6 and 4.5 degrees respectively, contributed to higher
energy sales in both residential and commercial sectors. For the year the
Company has seen a 13 percent increase in residential heating days. In
addition, residential load growth has contributed significantly to
increased revenues with PGE serving an average of over 16,000 more retail
customers during the period. Although industrial loads have benefited
from the anticipated growth in high-tech industries weak demand from paper
and metals manufacturers has led to a 4 percent decline in industrial
sales for the year.
Aggressive marketing and active trading enabled the Company to increase
wholesale sales by 291 percent contributing $32 million in additional
revenues. A competitive marketplace led to a reduction in the average
sales price by nearly 53 percent.
Variable power costs were $6 million or 4 percent below 1995. Steep
reductions in the cost of purchased power helped more than offset a 34
percent increase in energy needs. Optimal hydro conditions brought sharp
declines in the cost of firm power purchased from the mid-Columbia
projects as well as Company owned hydro projects on the Clackamas River
system. Power purchases amounted to 85 percent of total PGE load at an
average cost of 11.9 mills compared to 18.3 mills in 1995. PGE hydro
projects generated 11 percent of the Company is energy needs with a 12
percent increase in production levels. PGE's thermal plants were largely
displaced contributing to reduced fuel expenditures.
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/KWh)
1996 1995 1996 1995
Generation 15% 32% 4.1 6.9
Firm Purchases 70 37 12.5 24.8
Spot Purchases 15 31 9.1 10.5
Total Resources 100% 100% Average 11.7 16.0
PGE does not have a fuel adjustment clause as part of its retail
rate structure; therefore, changes in fuel and purchased power
expenses are reflected currently in earnings.
Operating expenses (excluding variable power, depreciation and
income taxes) were $18 million higher than last year. The increase
is primarily due to an additional $7 million in fixed natural gas
transportation costs, approximately $7 million in increased costs
for transmission and distribution most of which is related to storm
related repair costs and maintenance deferred from December 1995,
and an increase in planned customer marketing and support costs to
meet 1996 marketing objectives and improve to PGE's
Customer Information System.
Depreciation, Decommissioning and Amortization increased $10
million, or 15 percent, due to depreciation taken on Coyote
Springs, new depreciation rates effective April 1, 1995 and
depreciation taken on other general plant investment completed
since the second quarter of 1995.
9
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Excluding the Trojan write-down, other income declined $6 million
due to the discontinuance of accruals of carrying costs on
regulatory assets in late 1995. Interest charges are $4 million
above 1995 due to the lack of AFDC accruals in 1996 as well as
higher levels of short-term debt. PGE's preferred dividend
requirement is down $3 million due to the refinancing of nearly $80
million in preferred stock in 1995.
CASH FLOW
PORTLAND GENERAL CORPORATION
Portland General requires cash to pay dividends to its common
shareholders, to provide funds to its subsidiaries, to meet debt
service obligations and for day to day operations. Sources of cash
are dividends from PGE, leasing rentals, short- and intermediate-
term borrowings and the sale of its common stock. During the
second quarter of 1996 Portland General received $15 million in
dividends from PGE. The retirement of Portland General's $30 million
in medium term notes which mature in September 1996 is expected to be
funded through a special cash dividend from PGE.
Portland General has agreed, as to itself, PGE and other subsidiaries, to
certain limitations on its ability to declare or pay dividends on or
repurchase or redeem its securities, issue securities, and incur
indebtedness pending consummation of the merger agreement with Enron.
This is not expected to interfere with the ability of Portland General or PGE
to declare dividends, obtain financing or conduct its business operations
in a manner consistent with past practice. For further details regarding
these limitations please see Portland General's Form 8-K dated July 20, 1996.
PORTLAND GENERAL ELECTRIC COMPANY
CASH PROVIDED BY OPERATIONS is used to meet the day-to-day cash
requirements of PGE. Supplemental cash is obtained from external
borrowings as needed. A significant portion of cash from operations
comes from
depreciation and amortization of utility plant, charges which are
recovered in customer revenues but require no current cash outlay.
Changes in accounts receivable and accounts payable can also be
significant contributors or users of cash. Improved cash flow for
the current year reflects a higher percentage of cash revenues
combined with lower variable power costs.
INVESTING ACTIVITIES include improvements to generation,
transmission and distribution facilities and continued investment
in energy efficiency programs. Capital expenditures for 1996 of
approximately $170 million are expected to be fully funded by
operating cash flows. Through June 30, 1996 nearly $ 98 million
has been expended for capital projects, including energy efficiency
programs, primarily for improvements to the Company's distribution
system to support the addition of new customers to PGE's service
territory.
PGE funds an external trust for Trojan decommissioning costs
through customer collections at a rate of $14 million annually.
The trust invests in investment-grade tax-exempt and U.S. Treasury
bonds. The Company makes withdrawals from the trust, as necessary,
for reimbursement of decommissioning expenditures.
FINANCING ACTIVITIES - On April 15, 1996 PGE redeemed the 200,000
outstanding shares of its 8.10 percent preferred stock, at par.
The $20 million redemption leaves outstanding only the Company's
7.75 percent preferred stock which has sinking fund requirements
beginning in 2002.
The issuance of additional preferred stock and First Mortgage Bonds
requires PGE to meet earnings coverage and security provisions set
forth in the Articles of Incorporation and Indenture securing its
First Mortgage Bonds. As of June 30, 1996, PGE has the capability
to issue in excess of $500 million each of preferred stock and
additional First Mortgage Bonds under the earnings coverage test.
10
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
OPERATING REVENUES $ 233,425 $ 219,892 $ 534,006 $ 479,069
OPERATING EXPENSES
Purchased power and fuel 46,262 46,616 128,559 134,312
Production and distribution 20,018 16,288 41,970 31,441
Maintenance and repairs 11,845 11,384 25,094 21,317
Administrative and other 27,566 26,409 55,251 51,549
Depreciation and amortization 38,550 34,785 76,083 66,243
Taxes other than income taxes 12,766 13,026 27,659 26,783
157,007 148,508 354,616 331,645
OPERATING INCOME BEFORE INCOME TAXES 76,418 71,384 179,390 147,424
INCOME TAXES 24,743 24,205 60,971 50,692
NET OPERATING INCOME 51,675 47,179 118,419 96,732
OTHER INCOME (DEDUCTIONS)
Regulatory disallowance - net of income
taxes of $17,101 - - - (36,708)
Interest expense (19,835) (20,134) (39,603) (39,329)
Allowance for funds used during construction 500 2,926 742 5,074
Preferred dividend requirement - PGE (645) (2,417) (1,631) (5,000)
Other - net of income taxes 1,984 4,849 5,114 9,680
NET INCOME $ 33,679 $ 32,403 $ 83,041 $ 30,449
COMMON STOCK
Average shares outstanding 51,109,790 50,697,040 51,086,325 50,644,415
Earnings per average share $0.66 $0.64 $1.63 $0.60
Dividends declared per share $0.32 $0.30 $0.64 $0.60
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $ 168,365 $ 101,063 $ 135,885 $ 118,676
NET INCOME 33,679 32,403 83,041 30,449
ESOP TAX BENEFIT AND OTHER (605) (474) (1,135) (948)
201,439 132,992 217,791 148,177
DIVIDENDS DECLARED ON COMMON STOCK 16,358 15,215 32,710 30,400
BALANCE AT END OF PERIOD $ 185,081 $ 117,777 $ 185,081 $ 117,777
The accompanying notes are an integral part of these consolidated statements.
11
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
June 30 December 31
1996 1995
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$49,011 and $33,382) $ 2,828,860 $ 2,754,280
Accumulated depreciation (1,089,073) (1,040,014)
1,739,787 1,714,266
Capital leases - less amortization of $29,388 and $27,966 7,980 9,353
1,747,767 1,723,619
OTHER PROPERTY AND INVESTMENTS
Leveraged leases 151,911 152,666
Trojan decommissioning trust, at market value 75,170 68,774
Corporate owned life insurance, less loans of $27,763 and $26,432 78,481 74,574
Other investments 36,752 28,603
342,314 324,617
CURRENT ASSETS
Cash and cash equivalents 7,549 11,919
Accounts and notes receivable 101,115 104,815
Unbilled and accrued revenues 45,438 64,516
Inventories, at average cost 38,269 38,338
Prepayments and other 16,670 16,953
209,041 236,541
DEFERRED CHARGES
Unamortized regulatory assets
Trojan investment 289,897 301,023
Trojan decommissioning 300,382 311,403
Income taxes recoverable 210,318 217,366
Debt reacquisition costs 29,306 29,576
Energy efficiency programs 82,092 77,945
Other 26,640 27,611
WNP-3 settlement exchange agreement 166,239 168,399
Miscellaneous 30,388 29,917
1,135,262 1,163,240
$ 3,434,384 $ 3,448,017
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock equity
Common stock, $3.75 par value per share, 100,000,000 shares
authorized, 51,116,367 and 51,013,549 shares outstanding $ 191,686 $ 191,301
Other paid-in capital - net 576,929 574,468
Unearned compensation (6,208) (8,506)
Retained earnings 185,081 135,885
947,488 893,148
Cumulative preferred stock of subsidiary
Subject to mandatory redemption 30,000 40,000
Long-term debt 865,067 890,556
1,842,555 1,823,704
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 66,542 105,114
Short-term borrowings 226,532 170,248
Accounts payable and other accruals 85,990 133,405
Accrued interest 16,754 16,247
Dividends payable 17,318 16,668
Accrued taxes 23,500 15,151
436,636 456,833
OTHER
Deferred income taxes 635,991 652,846
Deferred investment tax credits 48,944 51,211
Trojan decommissioning and transition obligation 372,933 379,179
Miscellaneous 97,325 84,244
1,155,193 1,167,480
$ 3,434,384 $ 3,448,017
The accompanying notes are an integral part of these consolidated balance sheets.
12
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
CASH PROVIDED (USED) BY -
OPERATIONS:
Net income $ 33,679 $ 32,403 $ 83,041 $ 30,449
Adjustment to reconcile net income to net cash
provided by operations:
Depreciation and amortization 30,503 27,039 59,616 50,845
Amortization of WNP-3 exchange agreement 864 1,227 2,160 2,455
Amortization of Trojan investment 5,935 5,946 11,760 12,409
Amortization of Trojan decommissioning 3,511 3,510 7,021 6,315
Amortization of deferred charges - other 1,355 833 (118) (178)
Deferred income taxes - net (7,087) (140) (11,859) (3,872)
Other noncash revenues (416) (1,405) (799) (1,687)
Regulatory disallowance - - - 36,708
Changes in working capital:
(Increase) Decrease in receivables 22,321 5,914 22,725 10,801
(Increase) Decrease in inventories 590 (946) 69 (7,591)
Increase (Decrease) in payables (59,441) (41,773) (32,545) (17,107)
Other working capital items - net 8,821 11,835 283 785
Nuclear decommissioning expenditures (1,609) (2,497) (2,139) (3,871)
Deferred items - other 13,709 (7,373) 11,626 (5,869)
Miscellaneous - net (1,557) 2,351 3,147 5,043
51,178 36,924 153,988 115,635
INVESTING ACTIVITIES:
Utility construction - new resources (4) (13,452) (15) (29,411)
Utility construction - other (56,922) (36,729) (90,196) (65,163)
Energy efficiency programs (4,694) (5,050) (7,405) (8,952)
Rentals received from leveraged leases 10,516 7,262 16,092 11,685
Nuclear decommissioning trust deposits (3,511) (7,702) (7,950) (10,507)
Nuclear decommissioning trust withdrawals 91 1,670 1,447 6,608
Other (3,594) (2,969) (10,602) 2,247
(58,118) (56,970) (98,629) (93,493)
FINANCING ACTIVITIES:
Short-term borrowings - net 54,133 (24,898) 56,284 (48,525)
Borrowings from corporate owned life insurance - - 1,312 2,589
Long-term debt issued - 75,000 35,000 75,000
Long-term debt retired (5,066) - (87,661) (3,045)
Repayment of nonrecourse borrowings for
leveraged leases (9,516) (6,757) (14,390) (10,628)
Preferred stock retired (20,000) (10,000) (20,000) (10,000)
Common stock issued 353 2,148 1,786 4,562
Dividends paid (16,757) (15,406) (32,060) (30,539)
3,147 20,087 (59,729) (20,586)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,793) 41 (4,370) 1,556
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 11,342 19,057 11,919 17,542
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 7,549 $ 19,098 $ 7,549 $ 19,098
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest, net of amounts capitalized $ 19,273 $ 18,248 $ 36,174 $ 31,623
Income taxes 67,670 41,390 67,670 41,390
The accompanying notes are an integral part of these consolidated statements.
13
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - PRINCIPLES OF INTERIM STATEMENTS
The interim financial statements have been prepared by Portland General
and, in
the opinion of management,
reflect all material
adjustments which are
necessary to a fair statement
of results for the interim
period presented. Certain
information and footnote
disclosures made in the last
annual report on Form 10-K
have been condensed or
omitted for the interim
statements. Certain costs
are estimated for the full
year and allocated to interim
periods based on the
estimates of operating time
expired, benefit received or
activity associated with the
interim period. Accordingly,
such costs are subject to
year-end adjustment. It is
Portland General's opinion
that, when the interim
statements are read in
conjunction with the 1995
Annual Report on Form 10-K,
the disclosures are adequate
to make the information
presented not misleading.
RECLASSIFICATIONS - Certain amounts in prior years have been reclassified
for comparative purposes.
NOTE 2 - LEGAL MATTERS
BONNEVILLE PACIFIC LAWSUIT - In April 1992 legal action
was filed by Bonneville
Pacific against Portland
General, Holdings, and
certain individuals
affiliated with Portland
General and Holdings alleging
breach of fiduciary duty,
tortious interference, breach
of contract, and other
actionable wrongs related to
Holdings' investment in
Bonneville Pacific.
Following his appointment,
the Bonneville Pacific
bankruptcy trustee, on behalf
of Bonneville Pacific, filed
numerous amendments to the
complaint. The complaint now
includes allegations of civil
conspiracy, negligent
misrepresentation, breach of
fiduciary duty, and breach of
contract. The amount of
damages sought is not
specified in the complaint.
The Court has rejected the
Trustee's previously filed
damage study which is
expected to be revised and
refiled.
OTHER LEGAL MATTERS - Portland General and certain
of its subsidiaries are party
to various other claims,
legal actions and complaints
arising in the ordinary
course of business. These
claims are not considered
material.
SUMMARY - While the ultimate
disposition of these matters
may have an impact on the
results of operations for a
future reporting period,
management believes, based on
discussion of the underlying
facts and circumstances with
legal counsel, that these
matters will not have a
material adverse effect on
the financial condition of
Portland General.
14
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - TROJAN NUCLEAR PLANT
INVESTMENT RECOVERY - On April 4, 1996 a circuit
court judge in Marion County,
Oregon contradicted a
November 1994 ruling from the
same court, finding that the
OPUC could not authorize PGE
to collect a return on its
undepreciated investment in
Trojan currently in PGE's
rate base. The ruling was the
result of an appeal of PGE's
1995 general rate order which
granted PGE recovery of, and
a return on, 87 percent of
its remaining investment in
Trojan.
The November 1994 ruling, by
a different judge of the same
court, upheld the
Commission's 1993 Declaratory
Ruling (DR-10). In DR-10 the
OPUC ruled that PGE could
recover and earn a return on
its undepreciated Trojan
investment, provided certain
conditions were met. The
Commission relied on a 1992
Oregon Department of Justice
opinion issued by the
Attorney General's office
stating that the Commission
had the authority to set
prices including recovery of
and on investment in plant
that is no longer in service.
The 1994 ruling was appealed
to the Oregon Court of
Appeals and stayed pending
the appeal of the
Commission's March 1995
order. Both PGE and the OPUC
have separately appealed the
April 1996 ruling which was combined with the
appeal of the November 1994
ruling at the Oregon Court of
Appeals.
Management believes that the
authorized recovery of the
Trojan investment and
decommissioning costs will be
upheld and that these legal
challenges will not have a
material adverse impact on
the results of operations or
financial condition of the
Company for any future
reporting period.
NOTE 4 - SUBSEQUENT EVENT
PROPOSED MERGER - On July 20, 1996, Portland
General entered into an
Agreement and Plan of Merger
with Enron Corp. (Enron), a
Delaware corporation, to
merge in a tax-free, stock-
for-stock transaction . The
transaction which has been
approved by both companies'
boards of directors, will
entitle Portland General
shareholders to receive one
share of Enron common stock
for each share of Portland
General common stock held by
them. The merger is
conditioned, among other
things, upon the approvals of
each company's shareholders at special meetings planned for the fall of
1996 and the completion of regulatory procedures including
those at the OPUC and FERC. The companies are hopeful that the
regulatory procedures can be completed in less than 12 months from
the date of the agreement.
The merger agreement may be
terminated by Enron if the
average of the closing prices
of Enron Common Stock during
the 20 consecutive trading
day period ending five
trading days prior to the
date of the meeting of the
shareholders of the Company expected to be held this fall is more
than $47.25 per share, and may be terminated by the Company if the
aveage of the closing prices of Enron Common Stock during
such period is less than $36.25 per share.
15
PORTLAND GENERAL ELECTRIC COMPANY SUBSIDIARIES
FINANCIAL STATEMENTS AND RELATED INFORMATION
TABLE OF CONTENTS
PAGE
NUMBER
Management Discussion and Analysis of
Financial Condition and Results of Operations * 3-10
Financial Statements 17-19
Notes to Financial Statements ** 14-15
* The discussion is substantially the same as that disclosed by
Portland General and, therefore, is incorporated by reference to
the information on the page numbers listed above.
** The notes are substantially the same as those disclosed by
Portland General and are incorporated by reference to the
information on the page numbers shown above, excluding the
Bonneville Pacific litigation discussion contained in Note 2
which relates solely to Portland General.
16
Portland General Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
OPERATING REVENUES $ 232,921 $ 218,476 $ 533,116 $ 477,367
OPERATING EXPENSES
Purchased power and fuel 46,262 46,616 128,559 134,312
Production and distribution 20,018 16,288 41,970 31,441
Maintenance and repairs 11,845 11,384 25,094 21,317
Administrative and other 27,066 26,144 54,136 50,961
Depreciation and amortization 38,529 34,765 76,041 66,202
Taxes other than income taxes 12,746 13,014 27,593 26,735
Income taxes 24,605 23,766 61,057 50,512
181,071 171,977 414,450 381,480
NET OPERATING INCOME 51,850 46,499 118,666 95,887
OTHER INCOME (DEDUCTIONS)
Regulatory disallowance - net
of income taxes of $17,101 - - - (36,708)
Allowance for equity funds used
during construction - 565 - 686
Other 1,643 4,814 3,391 9,504
Income taxes 105 84 428 (260)
1,748 5,463 3,819 (26,778)
INTEREST CHARGES
Interest on long-term debt and other 16,413 17,464 32,950 33,811
Interest on short-term borrowings 2,771 2,059 5,259 4,246
Allowance for borrowed funds used
during construction (500) (2,361) (742) (4,388)
18,684 17,162 37,467 33,669
NET INCOME 34,914 34,800 85,018 35,440
PREFERRED DIVIDEND REQUIREMENT 645 2,417 1,631 5,000
INCOME AVAILABLE FOR COMMON STOCK $ 34,269 $ 32,383 $ 83,387 $ 30,440
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $ 279,904 $ 202,506 $ 246,282 $ 216,468
NET INCOME 34,914 34,800 85,018 35,440
ESOP TAX BENEFIT AND OTHER (605) (474) (1,135) (948)
314,213 236,832 330,165 250,960
DIVIDENDS DECLARED
Common stock 17,958 11,545 32,924 23,090
Preferred stock 645 2,417 1,631 5,000
18,603 13,962 34,555 28,090
BALANCE AT END OF PERIOD $ 295,610 $ 222,870 $ 295,610 $ 222,870
The accompanying notes are an integral part of these consolidated statements.
17
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
June 30 December 31
1996 1995
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$49,011 and $33,382) $ 2,828,860 $ 2,754,280
Accumulated depreciation (1,089,073) (1,040,014)
1,739,787 1,714,266
Capital leases - less amortization of $29,388 and $27,966 7,980 9,353
1,747,767 1,723,619
OTHER PROPERTY AND INVESTMENTS
Trojan decommissioning trust, at market value 75,170 68,774
Corporate owned life insurance, less loans of $27,763 and $26,432 46,508 44,635
Other investments 32,461 24,943
154,139 138,352
CURRENT ASSETS
Cash and cash equivalents 6,533 2,241
Accounts and notes receivable 101,551 102,592
Unbilled and accrued revenues 45,438 64,516
Inventories, at average cost 38,269 38,338
Prepayments and other 15,733 15,619
207,524 223,306
DEFERRED CHARGES
Unamortized regulatory assets
Trojan investment 289,897 301,023
Trojan decommissioning 300,382 311,403
Income taxes recoverable 210,318 217,366
Debt reacquisition costs 29,306 29,576
Energy efficiency programs 82,092 77,945
Other 26,640 27,611
WNP-3 settlement exchange agreement 166,239 168,399
Miscellaneous 28,518 26,997
1,133,392 1,160,320
$ 3,242,822 $ 3,245,597
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock equity
Common stock, $3.75 par value per share, 100,000,000 shares
authorized, 42,758,877 shares outstanding $ 160,346 160,346
Other paid-in capital - net 469,815 466,325
Retained earnings 295,610 246,282
Cumulative preferred stock
Subject to mandatory redemption 30,000 40,000
Long-term debt 865,067 890,556
1,820,838 1,803,509
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 36,542 75,114
Short-term borrowings 224,332 170,248
Accounts payable and other accruals 86,056 132,064
Accrued interest 15,937 15,442
Dividends payable 18,827 14,956
Accrued taxes 26,981 12,870
408,675 420,694
OTHER
Deferred income taxes 513,527 525,391
Deferred investment tax credits 48,944 51,211
Trojan decommissioning and transition costs 372,933 379,179
Miscellaneous 77,905 65,613
1,013,309 1,021,394
$ 3,242,822 $ 3,245,597
The accompanying notes are an integral part of these consolidated balance sheets.
18
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
CASH PROVIDED (USED IN)
OPERATIONS:
Net Income $ 34,914 $ 34,800 $ 85,018 $ 35,440
Non-cash items included in net income:
Depreciation and amortization 30,485 27,019 59,577 50,804
Amortization of WNP-3 exchange agreement 864 1,227 2,160 2,455
Amortization of Trojan investment 5,935 5,946 11,760 12,409
Amortization of Trojan decommissioning 3,511 3,510 7,021 6,315
Amortization of deferred charges - other 1,355 833 (118) (178)
Deferred income taxes - net (4,120) (662) (6,720) (690)
Regulatory disallowance - - - 36,708
Changes in working capital:
(Increase) Decrease in receivables 21,655 9,997 20,066 13,658
(Increase) Decrease in inventories 590 (946) 69 (7,591)
Increase (Decrease) in payables (60,888) (47,866) (25,441) (18,897)
Other working capital items - net 8,623 11,629 (114) (210)
Nuclear decommissioning expenditures (1,609) (2,497) (2,139) (3,871)
Deferred items - other 13,709 (7,373) 11,626 (5,869)
Miscellaneous - net (1,282) 2,242 2,765 4,292
53,742 37,859 165,530 124,775
INVESTING ACTIVITIES:
Utility construction - new resources (4) (13,452) (15) (29,411)
Utility construction - other (56,922) (36,729) (90,196) (65,163)
Energy efficiency programs (4,694) (5,050) (7,405) (8,952)
Nuclear decommissioning trust deposits (3,511) (7,702) (7,950) (10,507)
Nuclear decommissioning trust withdrawals 91 1,670 1,447 6,608
Other investments (2,162) (2,477) (9,170) (2,978)
(67,202) (63,740) (113,289) (110,403)
FINANCING ACTIVITIES:
Short-term debt - net 51,933 (24,904) 54,084 (48,512)
Borrowings from corporate owned life insurance - - 1,312 2,589
Long-term debt issued - 75,000 35,000 75,000
Long-term debt retired (5,066) - (87,661) (3,045)
Preferred stock retired (20,000) (10,000) (20,000) (10,000)
Dividends paid (16,015) (14,170) (30,684) (29,579)
10,852 25,926 (47,949) (13,547)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,608) 45 4,292 825
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 9,141 10,370 2,241 9,590
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 6,533 $ 10,415 $ 6,533 $ 10,415
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest, net of amounts capitalized $ 19,454 $ 18,243 $ 34,884 $ 30,393
Income taxes 64,072 45,818 56,635 45,121
The accompanying notes are an integral part of these consolidated statements.
19
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For further information, see Portland General's and PGE's reports on Form
10-K for the year ended December 31, 1995.
NONUTILITY
ROGER G. SEGAL, AS THE CHAPTER 11 TRUSTEE FOR BONNEVILLE PACIFIC
CORPORATION V. PORTLAND GENERAL CORPORATION, PORTLAND GENERAL HOLDINGS,
INC. ET AL, U.S. DISTRICT COURT FOR THE DISTRICT OF UTAH
At pre-trial hearings held in early May and most recently on August 2, 1996
the court dismissed claims by the trustee regarding RICO
violations and RICO conspriacy, collusive tort, common law fraud and
liability as a partner for the debts of a partnership. The dismissal of
these claims significantly reduces the amount of damages the defendants
could be held liable for if the court were to rule in favor of the
plaintiff on the remaining claims. See Note 2 - Legal Matters in the
Notes to Consolidated Financial Statements for further discussion
regarding this case.
ITEM 4. RESULTS OF VOTES OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on May 7, 1996 the matters
voted upon and the results of voting were as follows:
FOR AGAINST WITHHELD
Election of Class I Directors:
Richard Geary 43,370,772 308,778 597,304
Jerry E. Hudson 43,321,567 391,809 563,478
Bruce G. Willison 43,324,390 373,420 579,044
FOR AGAINST ABSTAIN
Ratification of the appointment of
Arthur Andersen LLP as independent
public accountants for the year 1996: 43,184,628 652,352 439,874
Shareholder proposal to require new
public accountants every four years: 3,703,691 29,491,385 1,059,178
Shareholder proposal regarding
confidential voting: 6,565,088 26,383,627 1,305,539
20
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
FOR AGAINST ABSTAIN
Shareholder proposal regarding
executive compensation upon change
in control: 12,206,248 19,551,457 2,496,549
Names of other directors whose terms of office as director continued after
the meeting are:
CLASS II CLASS III
Carolyn S. Chamers Gwyneth E. Gamble Booth
Ken L. Harrison Peter J. Brix
Jerome J. Meyer John W. Creighton
Randolph L. Miller
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
NUMBER EXHIBIT PGC PGE
10 Portland General Corporation Retirement Plan
for Outside Directors, 1996 Restatement dated
January 1, 1996, filed herewith X X
Portland General Corporation Management
Deferred Compensation Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
Portland General Corporation Supplemental
Executive Retirement Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
Portland General Corporation Outside Directors'
Life Insurance Benefit Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
Portland General Corporation Outside Directors'
Deferred Compensation Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
21
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
NUMBER EXHIBIT PGC PGE
10 Portland General Corporation Outside Directors'
Stock Compensation Plan, Amended and
Restated February 6, 1996, filed herewith X X
24 Power of Attorney X X
27 Financial Data Schedule - UT X X
(Electronic Filing Only)
b. Reports on Form 8-K
July 22, 1996 - Item 5. Other Events: Merger Agreement with Enron Corp.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by
the undersigned hereunto duly authorized.
PORTLAND GENERAL CORPORATION
PORTLAND GENERAL ELECTRIC COMPANY
(Registrants)
August 12 , 1996 By /S/ JOSEPH E. FELTZ
Joseph E. Feltz
Assistant Controller
Assistant Treasurer
*Joseph M. Hirko
Sr. Vice President and
Chief Financial Officer
*Signed on behalf of this person.
August 12 , 1996 By /S/ JOSEPH E. FELTZ
Joseph E. Feltz
(Attorney-in-Fact)
22
PORTLAND GENERAL CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
Effective January 1, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I - PURPOSE 1
1.1 Restatement 1
1.2 Purpose 1
1.3 Effective Date 1
1.4 Plan Sponsor 1
ARTICLE II - DEFINITIONS 1
2.1 Account 1
2.2 Base Salary 1
2.3 Beneficiary 2
2.4 Board 2
2.5 Bonuses 2
2.6 Change in Control 2
2.7 Committee 3
2.8 Company 3
2.9 Compensation 3
2.10 Deferral Election 3
2.11 Determination Date 3
2.12 Direct Subsidiary 4
2.13 Eligible Employee 4
2.14 Financial Emergency 4
2.15 Incentive Compensation 4
2.16 Indirect Subsidiary 4
2.17 Interest 5
2.18 Paid Time Off 5
2.19 Paid Time Off Cancellation 5
2.20 Participant 5
2.21 Participating Employer 5
2.22 Pension Plan 5
2.23 Plan 5
2.24 Policies 5
2.25 Senior Administrative Officer 6
ARTICLE III - ELIGIBILITY AND DEFERRALS 6
3.1 Eligibility 6
3.2 Deferral Elections 6
3.3 Limits on Elective Deferrals 7
3.4 Matching Contributions 7
3.5 Welfare Benefits 7
(i)
TABLE OF CONTENTS
PAGE
ARTICLE IV - DEFERRED COMPENSATION ACCOUNT 7
4.1 Crediting to Account 7
4.2 Determination of Accounts 7
4.3 Vesting of Accounts 7
4.4 Statement of Accounts 8
ARTICLE V - PLAN BENEFITS 8
5.1 Benefits 8
5.2 Withdrawals for Financial Emergency 8
5.3 Form of Benefit Payment 8
5.4 Accelerated Distribution 9
5.5 Withholding; Payroll Taxes 9
5.6 Commencement of Payments 10
5.7 Full Payment of Benefits 10
5.8 Payment to Guardian 10
ARTICLE VI - RESTORATION OF PENSION PLAN BENEFITS 10
6.1 Pension Plan 10
6.2 Restoration of Pension Plan Benefits 10
6.3 Restoration of Pension Plan Benefits in Event of Change in Control 11
ARTICLE VII - BENEFICIARY DESIGNATION 11
7.1 Beneficiary Designation 11
7.2 Amendments 11
7.3 No Beneficiary Designation 11
7.4 Effect of Payment 11
ARTICLE VIII - ADMINISTRATION 12
8.1 Senior Administrative Officer; Duties 12
8.2 Agents 12
8.3 Binding Effect of Decisions 12
8.4 Indemnity of Senior Administrative Officer; Committee 12
8.5 Availability of Plan Documents 12
8.6 Cost of Plan Administration 12
(ii)
TABLE OF CONTENTS
PAGE
ARTICLE IX - CLAIMS PROCEDURE 13
9.1 Claim 13
9.2 Denial of Claim 13
9.3 Review of Claim 13
9.4 Final Decision 13
ARTICLE X - AMENDMENT AND TERMINATION OF PLAN 13
10.1 Amendment 13
10.2 Termination 14
10.3 Payment at Termination 14
ARTICLE XI - MISCELLANEOUS 14
11.1 Unfunded Plan 14
11.2 Liability 15
11.3 Trust Fund 15
11.4 Nonassignability 15
11.5 Not a Contract of Employment 16
11.6 Protective Provisions 16
11.7 Governing Law 16
11.8 Terms 16
11.9 Validity 16
11.10 Notice 16
11.11 Successors 16
(iii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
A
Account: 2.1 1
B
Base Salary: 2.2 1
Beneficiary: 2.3 2
Board: 2.4 2
Bonuses: 2.5 2
C
Change in Control: 2.6 2
Committee: 2.7 3
Company: 2.8 3
Compensation: 2.9 3
D
Deferral Election: 2.10 3
Determination Date: 2.11 3
Direct Subsidiary: 2.12 4
E
Eligible Employee: 2.13 4
ERISA: 3.5 7
Exchange Act: 2.6(a) 2
F
Financial Emergency: 2.14 4
I
Incentive Compensation: 2.15 4
Indirect Subsidiary: 2.16 4
Interest: 2.17 5
(iv)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
P
Paid Time Off: 2.18 5
Paid Time Off Cancellation: 2.19 5
Participant: 2.20 5
Participating Employer: 2.21 5
Pension Plan: 2.22 5
PGC: 2.6(a) 2
PGE: 2.6(a) 2
Plan: 2.23 5
Policies: 2.24 5
S
Senior Administrative Officer: 2.25 6
(v)
PORTLAND GENERAL CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
ARTICLE I - PURPOSE
1.1 Restatement
Portland General Corporation adopted a Management Deferred Compensation
Plan effective January 1, 1987 to cover qualified management employees.
Portland General Corporation also restated its Directors' and Senior Officers'
Deferred Compensation Plan on January 1, 1987. Pursuant to Article 8.1 of the
Management Deferred Compensation Plan and Article 9.1 of the Directors' and
Senior Officers' Deferred Compensation Plan, 1987 Restatement, the Company is
amending both plans in order to merge the plans for all employees of
Participating Employers. The existing plans were merged, renamed and amended
for all management employees of Participating Employers by the December 1,
1988 Restatement. The Plan was further amended by the 1990 and 1994
Restatements.
1.2 Purpose
The purpose of this Management Deferred Compensation Plan is to provide
elective deferred compensation in excess of the limits on elective deferrals
under qualified cash or deferred arrangements. It is intended that the Plan
will aid in attracting and retaining personnel of exceptional ability.
1.3 Effective Date
This 1996 Restatement shall be effective as of January 1, 1996.
1.4 Plan Sponsor
The Plan is adopted for the benefit of selected employees of Portland
General Corporation, an Oregon corporation, and selected employees of any
corporations or other entities affiliated with or subsidiary to it, if such
corporations or entities are selected by the Board.
ARTICLE II - DEFINITIONS
2.1 Account
"Account" means the account maintained by a Participating Employer in
accordance with Article IV with respect to any deferral of Compensation
pursuant to this Plan.
2.2 Base Salary
"Base Salary" means the Eligible Employee's actual base pay in the pay
period and, except as provided herein, excluding any bonuses and/or overtime
pay.
PAGE 1 - MANAGEMENT DEFERRED COMPENSATION PLAN
2.3 Beneficiary
"Beneficiary" means the person, persons or entity entitled under Article
VII to receive any Plan benefits payable after a Participant's death.
2.4 Board
"Board" means the Board of Directors of Portland General Corporation.
2.5 Bonuses
"Bonuses" means Our Teamworks Awards, Notable Achievement Awards, and any
other form of cash Incentive Compensation explicitly designated as deferrable
pursuant to this Plan by the Deferral Election form approved by the Senior
Administrative Officer.
2.6 Change in Control
"Change in Control" means an occurrence in which:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Portland General Corporation ("PGC") or Portland General
Electric ("PGE"), any trustee or other fiduciary holding securities under
the employee benefit plan of PGC or PGE, or any Employer owned, directly
or indirectly, by the stockholders of PGC or PGE in substantially the same
proportions as their ownership of stock of PGC or PGE), is or becomes the
"beneficial owner" (as defined in Rule 13d-3) under the Exchange Act),
directly or indirectly, of securities representing thirty percent (30%) or
more of the combined voting power of PGC's or PGE's then outstanding
voting securities;
(b) During any period or two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with PGC to effect a transaction described in clause (a), (c) or (d) of
this Paragraph) whose election by the Board or nomination for election by
PGC's stockholders was approval by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors as of the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof;
(c) The stockholders of PGC or PGE approve a merger or consolidation
of PGC or PGE with any other corporation, other than (a) a merger or
consolidation which would result in the voting securities of PGC or PGE
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than eighty percent (80%) of the combined voting
power of the voting securities of PGC or PGE or such surviving entity
outstanding immediately after such merger or consolidation or (b) a merger
or consolidation effected to implement a recapitalization of PGC or PGE
(or similar transaction) in which no "person" (as hereinabove defined)
acquires more than thirty percent (30%) of the combined voting power of
PGC's or PGE's then outstanding securities; or
PAGE 2 - MANAGEMENT DEFERRED COMPENSATION PLAN
(d) The stockholders of PGC or PGE approve a plan of complete
liquidation of PGC or PGE or an agreement for the sale or disposition by
PGC or PGE of sixty percent (60%) or more of PGC's or PGE's assets
(including stock of subsidiaries) to a person or entity that is not a
subsidiary or parent corporation. For purposes of determining whether a
sale or other disposition of sixty percent (60%) of PGE's assets has
occurred, only long-term assets shall be considered. Assets shall not be
considered long-term assets if they constitute "regulatory assets,"
"stranded investments" or abandoned or non-operational projects. Projects
in economy shutdown shall be considered long-term assets.
2.7 Committee
"Committee" means the Human Resources Committee of the Board.
2.8 Company
"Company" means Portland General Corporation, an Oregon Corporation.
2.9 Compensation
"Compensation" means the total of the following, before reduction for
elective deferrals under this Plan or a Participating Employer's tax qualified
Retirement Savings Plan or any other flexible benefit plan:
(a) Base Salary;
(b) Bonuses;
(c) Any interest on the above payments credited by a Participating
Employer for the benefit of an Eligible Employee prior to the date of
payment, without respect to any deferral of Compensation made pursuant to
this Plan, by a Participating Employer.
Compensation, for purposes of this Plan, may include any new form of cash
remuneration paid by a Participating Employer to any Eligible Employee which
is explicitly designated as deferrable pursuant to this Plan by the Deferral
Election form approved by the Senior Administrative Officer. Compensation for
purposes of this Plan, does not include expense reimbursements, imputed
income, or any form of noncash compensation or benefits.
2.10 Deferral Election
"Deferral Election" means the election completed by Participant in a form
approved by the Senior Administrative Officer which indicates Participant's
irrevocable election to defer Compensation as designated in the Deferral
Election, pursuant to Article III.
2.11 Determination Date
"Determination Date" means the last day of each calendar month.
PAGE 3 - MANAGEMENT DEFERRED COMPENSATION PLAN
2.12 Direct Subsidiary
"Direct Subsidiary" means any corporation of which a Participating
Employer owns at least eighty percent (80%) of the total combined voting power
of all classes of its stock entitled to vote.
2.13 Eligible Employee
"Eligible Employee" means an employee of a Participating Employer who:
(a) Is exempt;
(b) Is not covered by a collective bargaining agreement; and
(c) If employed for the entire calendar year, receives or, based on
current levels of base pay is expected to receive, Compensation from one
(1) or more Participating Employers in the calendar year, in an amount
equal to or in excess of the threshold amount described in 2.13(e) below,
or
(d) If employed for a part of the calendar year, receives or, based
on an annualized level of base pay would have received, Compensation from
one (1) or more Participating Employers in the calendar year, in an amount
equal to or in excess of the threshold amount described in 2.13(e) below.
Notwithstanding the above, eligibility is at the discretion of the Senior
Administrative Officer.
(e) The threshold amount in calendar year 1996 and any subsequent
year shall be eighty-five thousand dollars ($85,000). Such amount may be
adjusted by the Senior Administrative Office each subsequent calendar year
at the same time and in not less than the percentage ratio as the cost of
living adjustment in the dollar limit on defined benefits under Section
415(d) of the Internal Revenue Code.
2.14 Financial Emergency
"Financial Emergency" means a financial need resulting from a serious
unforeseen personal or family emergency, such as an act of God, an adverse
business or financial transaction, divorce, serious illness or accident, or
death in the family.
2.15 Incentive Compensation
"Incentive Compensation" means payments made to a Participant in
recognition of meritorious work performance but shall not include, without
limitation, any payment received as moving expense, mortgage expense or
mortgage interest reimbursement.
2.16 Indirect Subsidiary
"Indirect Subsidiary" means any corporation of which a Participating
Employer directly and constructively owns at least eighty percent (80%) of the
total combined voting power of all classes of its stock entitled to vote. In
determining the amount of stock of a corporation that is constructively owned
by a Participating Employer, stock owned, directly or constructively, by a
corporation shall be considered as being owned proportionately by its
shareholders according to such shareholders' share of voting power of all
classes of its stock entitled to vote.
PAGE 4 - MANAGEMENT DEFERRED COMPENSATION PLAN
2.17 Interest
"Interest" means the interest yield computed at the monthly equivalent of
an annual yield that is three (3) percentage points higher than the annual
yield on Moody's Average Corporate Bond Yield Index for the three (3) calendar
months preceding the immediately prior month as published by Moody's Investors
Service, Inc. (or any successor thereto), or, if such index is no longer
published, a substantially similar index selected by the Board.
2.18 Paid Time Off
"Paid Time Off" means those vacation and holiday days for which the
Employer pays employees for time not worked.
2.19 Paid Time Off Cancellation
"Paid Time Off Cancellation" means cash payments made in lieu of Paid Time
Off earned by an Eligible Employee.
2.20 Participant
"Participant" means any Eligible Employee who has elected to make
deferrals under this Plan.
2.21 Participating Employer
"Participating Employer" means the Company or any affiliated or subsidiary
company designated by the Board as a Participating Employer under the Plan, as
long as such designation has become effective and continues to be in effect.
The designation as a Participating Employer shall become effective only upon
the acceptance of such designation and the formal adoption of the Plan by a
Participating Employer. A Participating Employer may revoke its acceptance of
designation as a Participating Employer at any time, but until it makes such
revocation, all of the provisions of this Plan and any amendments thereto
shall apply to the Eligible Employees of the Participating Employer and their
Beneficiaries.
2.22 Pension Plan
"Pension Plan" means the Participating Employer's Pension Plan, as may be
amended from time to time, and any successor defined benefit retirement income
plan or plans maintained by the Participating Employer which qualify under
Section 401(a) of the Internal Revenue Code.
2.23 Plan
"Plan" means the Portland General Corporation Management Deferred
Compensation Plan, as may be amended from time to time.
2.24 Policies
"Policies" means any life insurance policies, annuity contracts or the
proceeds therefrom owned or which may be acquired by Participating Employer.
PAGE 5 - MANAGEMENT DEFERRED COMPENSATION PLAN
2.25 Senior Administrative Officer
"Senior Administrative Officer" means the employee in the management
position designated by the Committee to administer the Plan.
ARTICLE III - ELIGIBILITY AND DEFERRALS
3.1 Eligibility
(a) GENERAL. An Eligible Employee who has completed one (1) year of
continuous employment with one (1) or more Participating Employers shall
be eligible to participate by making a Deferral Election under Paragraph
3.2 below. The Senior Administrative Officer shall notify Eligible
Employees about the Plan and the benefits provided under it. The
requirement of one (1) year of continuous employment may be waived by the
Senior Administrative Officer.
(b) CESSATION OF ELIGIBILITY. An Eligible Employee who ceases to
satisfy condition 2.13(a) or 2.13(b) of the definition of Eligible
Employee shall cease participating as to new deferrals immediately. An
Eligible Employee who ceases to satisfy condition 2.13(c) of the
definition of Eligible Employee may continue to participate in the Plan if
such individual has a current election to defer under the Plan at the time
the Employee ceases to satisfy condition 2.13(c).
3.2 Deferral Elections
(a) TIME OF ELECTIONS. An Eligible Employee may elect to participate
in the Plan with respect to any Compensation and/or Paid Time Off
Cancellation designated in a Deferral Election in a form approved by the
Senior Administrative Officer. The Deferral Election must be filed with
the Senior Administrative Officer no later than December 15, or such
shorter period as is designated in the Deferral Election form.
(b) MID-YEAR ELIGIBILITY. If an individual first becomes eligible to
participate during a calendar year and wishes to defer Compensation and/or
Paid Time Off Cancellation during the remainder of the year, a Deferral
Election may be filed no later than thirty (30) days following
notification of eligibility to participate to the individual by the Senior
Administrative Officer. Such Deferral Election shall be effective only
with regard to Compensation and/or Paid Time Off Cancellation earned after
it is filed with the Senior Administrative Officer.
(c) IRREVOCABILITY. A Deferral Election for the following calendar
year shall become irrevocable on the December 15 by which it is due under
Paragraph 3.2(a) and a Deferral Election for the current calendar year
shall become irrevocable upon filing with the Senior Administrative
Officer under Paragraph 3.2(b).
(d) TRANSFER TO A PARTICIPATING EMPLOYER. If a Participant transfers
employment from one (1) Participating Employer to another Participating
Employer, the Participant's Deferral Election shall remain in effect for
the remainder of the calendar year with respect to Compensation earned by
the individual after the transfer to the new Participating Employer.
PAGE 6 - MANAGEMENT DEFERRED COMPENSATION PLAN
3.3 Limits on Elective Deferrals
A Participant may elect to defer up to eighty percent (80%) of Base Salary
and up to one hundred percent (100%) of Bonuses. The level of deferral elected
in either case must be in one percent (1%) increments. A Participant may elect
to defer up to one hundred twenty (120) hours per year of Paid Time Off in
one-tenth (1/10) hour increments, but may not defer any Paid Time Off earned
in prior calendar years, or the first two hundred (200) hours of Paid Time Off
earned in the calendar year to which the Deferral Election relates.
3.4 Matching Contributions
The Participating Employer shall provide a matching contribution for each
Participant who is making deferrals of Base Salary under this Plan. The
matching contribution shall be six percent (6%) of the Participant's annual
elective Base Salary deferral under this Plan. For purposes of this provision,
Base Salary shall not include amounts received as a Nuclear Regulatory
Commission licensing bonus.
3.5 Welfare Benefits
Compensation deferred under this Plan shall constitute compensation for
purposes of any welfare plans, (as defined by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), sponsored by the Participating
Employer.
ARTICLE IV - DEFERRED COMPENSATION ACCOUNT
4.1 Crediting to Account
The amount of the elective deferrals and matching contributions for a
Participant under this Plan shall be credited to an Account for the
Participant on the books of the Participating Employer at the time the
Compensation would have been paid in cash. Any taxes or other amounts due from
the Participant with respect to the deferred Compensation under federal, state
or local law, such as a Participant's share of FICA, shall be withheld from
nondeferred Compensation payable to the Participant at the time the deferred
amounts are credited to the Account.
4.2 Determination of Accounts
The last day of each calendar month shall be a Determination Date. Each
Participant's Account as of each Determination Date shall consist of the
balance of the Account as of the immediately preceding Determination Date,
plus the Participant's elective deferrals, matching contributions, and
Interest credited under this Plan, minus the amount of any distributions made
from this Plan since the immediately preceding Determination Date. Interest
credited shall be calculated as of each Determination Date based upon the
average daily balance of the Account since the preceding Determination Date.
4.3 Vesting of Accounts
Account balances in this Plan shall be fully vested at all times.
PAGE 7 - MANAGEMENT DEFERRED COMPENSATION PLAN
4.4 Statement of Accounts
The Senior Administrative Officer shall submit to each Participant, after
the close of each calendar quarter and at such other times as determined by
the Senior Administrative Officer a statement setting forth the balance of the
Account maintained for the Participant.
ARTICLE V - PLAN BENEFITS
5.1 Benefits
(a) ENTITLEMENT TO BENEFITS AT TERMINATION. Benefits under this Plan
shall be payable to a Participant on termination of employment with the
Participating Employer, Portland General Corporation, and any and all
Direct or Indirect Subsidiaries of Portland General Corporation. The
amount of the benefit shall be the balance of the Participant's Account
including Interest to the date of payment, in the form elected under
Paragraph 5.3 below.
(b) ENTITLEMENT TO BENEFITS AT DEATH. Upon the death of a
Participant for whom an Account is held under this Plan, a death benefit
shall be payable to the Participant's Beneficiary in the same form as the
Participant elected for payments at termination of employment, under
Paragraph 5.3 below. The amount of the benefit shall be the balance of the
Participant's Account including Interest to the date of payment.
5.2 Withdrawals for Financial Emergency
A Participant may withdraw part or all of the Participant's Account for a
Financial Emergency as follows:
(a) DETERMINATION. The existence of a Financial Emergency and the
amount to be withdrawn shall be determined by the Senior Administrative
Officer.
(b) SUSPENSION. A Participant who makes a withdrawal for Financial
Emergency from any company-sponsored deferral plan, whether qualified or
nonqualified, shall be suspended from participation in this Plan for
twelve (12) months from the date of such withdrawal. Compensation and/or
Paid Time Off Cancellation payable during such suspension that would have
been deferred under this Plan shall instead be paid to the Participant. No
matching contribution shall be credited to a Participant's Account under
this Plan during any period of suspension.
5.3 Form of Benefit Payment
(a) The Plan benefits attributable to the elective deferrals for any
calendar year shall be paid in one (1) of the forms set out below, as
elected by the Participant in the form of payment designation filed with
the Deferral Election for that year. The forms of benefit payment are:
(i) A lump-sum payment;
(ii) Monthly installment payments in substantially equal payments
of principal and Interest over a period of up to one hundred eighty
(180) months. The amount of the
PAGE 8 - MANAGEMENT DEFERRED COMPENSATION PLAN
installment payment shall be
redetermined on the first day of the month coincidental with or next
following the anniversary of the date of termination each year, based
upon the then current rate of Interest, the remaining Account balance,
and the remaining number of payment periods; or
(iii) In the event the account balance is ten thousand dollars
($10,000) or less, that benefit will be paid out in a lump sum
notwithstanding the form of benefit payment elected by the
Participant.
(b) A Participant may elect to file a change of payment designation
which shall supersede all prior form of payment designations with respect
to the Participant's entire Account. The Participant may redesignate a
combination of lump sum and monthly installments if approved by the Senior
Administrative Officer. If, upon termination, the Participant's most
recent change of payment designation has not been in effect for twelve
(12) full months prior to such termination, then the prior election shall
be used to determine the form of payment. The Senior Administrative
Officer may, in his sole discretion, direct that plan benefits be paid
pursuant to the change of payment designation, notwithstanding the twelve
(12) month requirement.
5.4 Accelerated Distribution
Notwithstanding any other provision of the Plan, a Participant shall be
entitled to receive, upon written request to the Senior Administrative
Officer, a lump-sum distribution of all or a portion of the vested Account
balance, subject to the following:
(a) PENALTY.
(i) If the distribution is requested within thirty-six (36)
months following a Change in Control, six percent (6%) of the account
shall be forfeited and ninety-four percent (94%) of the account paid
to the Participant.
(ii) If the distribution is requested at any time other than that
in (i) above, ten percent (10%) of the account shall be forfeited and
ninety percent (90%) of the account paid to the Participant.
(b) SUSPENSION. A Participant who receives a distribution under this
section shall be suspended from participation in this Plan for twelve (12)
calendar months from the date of such distribution. All eligibility
requirements must be met to reenter the Plan. The account balance shall be
as of the Determination Date immediately preceding the date on which the
Senior Administrative Officer receives the written request. The amount
payable under this section shall be paid in a lump sum within sixty-five
(65) days following the receipt of the Participant's written request by
the Senior Administrative Officer.
5.5 Withholding; Payroll Taxes
Each Participating Employer shall withhold from payments made hereunder
any taxes required to be withheld from a Participant's wages for the federal
or any state or local government. Withholding shall also apply to payments to
a Beneficiary unless an election against withholding is made under Section
3405(a)(2) of the Internal Revenue Code.
PAGE 9 - MANAGEMENT DEFERRED COMPENSATION PLAN
5.6 Commencement of Payments
Payment shall commence at the discretion of the Senior Administrative
Officer, but not later than sixty-five (65) days after the end of the month in
which a Participant retires, dies or otherwise terminates employment. All
payments shall be made as of the first day of the month.
5.7 Full Payment of Benefits
Notwithstanding any other provision of this Plan, all benefits shall be
paid no later than one hundred eighty (180) months following the date payment
to a Participant commences.
5.8 Payment to Guardian
If a Plan benefit is payable to a minor or a person declared incompetent
or to a person incapable of handling the disposition of property, the Senior
Administrative Officer may direct payment of such Plan benefit to the
guardian, legal representative or person having the care and custody of such
minor or incompetent person. The Senior Administrative Officer may require
proof of incompetency, minority, incapacity or guardianship as he may deem
appropriate prior to distribution of the Plan benefit. Such distribution shall
completely discharge the Senior Administrative Officer, the Participating
Employer, and the Company from all liability with respect to such benefit.
ARTICLE VI - RESTORATION OF PENSION PLAN BENEFITS
6.1 Pension Plan
If a Participating Employer maintains a tax qualified Pension Plan for the
benefit of eligible employees, and the Pension Plan provides benefits
determined under a formula that is based in part on the employee's nondeferred
compensation, a Participant in this Plan may receive a smaller benefit under
the Pension Plan as a result of electing deferrals under this Plan.
6.2 Restoration of Pension Plan Benefits
In addition to the benefits payable under Paragraph 5.1 above,
Participating Employer shall pay to any Participant whose Pension Plan benefit
is not restored under any other employee or executive benefit plan maintained
by Participating Employer, a benefit payment equal to the excess of (b) over
(a) as follows:
(a) The actuarial equivalent lump sum present value of the retirement
income (or death benefit) payable (either immediately or deferred) under
the Pension Plan; and
(b) the actuarial equivalent lump sum present value of the retirement
income (or death benefit) that would have been payable under the Pension
Plan if Participant had made no Deferral Elections in any calendar year
under this Plan. The actuarial equivalent lump sum present values shall be
calculated in the same manner and using the same factors as are used to
calculate lump-sum distributions under the Pension Plan. If Participant
terminates employment prior to attaining the age of fifty-five (55),
payment of the restoration of Pension Plan benefits shall be made as if
Participant had made a lump-sum election pursuant to Paragraph 5.3(a)(i)
above with respect to the payment of the restoration of Pension Plan
benefits. If Participant terminates employment upon or after attaining the
age of fifty-five (55), pay-
PAGE 10 - MANAGEMENT DEFERRED COMPENSATION PLAN
ment of the restoration of Pension Plan
benefits shall be made as if Participant had made an election to receive
monthly installment payments in substantially equal payments of principal
and Interest over a period of one hundred twenty (120) months pursuant to
Paragraph 5.3(a)(ii) above with respect to the payment of the restoration
of Pension Plan benefits. In the event the actuarial equivalent lump sum
present value is ten thousand dollars ($10,000) or less, that benefit will
be paid out in a lump sum.
6.3 Restoration of Pension Plan Benefits in Event of Change in Control
In the event of a Change in Control, and a subsequent termination of the
Pension Plan within three (3) years following a Change in Control, all Plan
Participants shall receive a restoration of Pension Plan benefits under
Paragraph 6.2.
ARTICLE VII - BENEFICIARY DESIGNATION
7.1 Beneficiary Designation
Each Participant shall have the right, at any time, to designate one (1)
or more persons or entities as the Participant's Beneficiary, primary as well
as secondary, to whom benefits under this Plan shall be paid in the event of
the Participant's death prior to complete distribution to the Participant of
the benefits due under the Plan. Each Beneficiary designation shall be in a
written form prescribed by the Senior Administrative Officer and will be
effective only when filed with the Senior Administrative Officer during the
Participant's lifetime.
7.2 Amendments
Any Beneficiary designation may be changed by a Participant without the
consent of any Beneficiary by the filing of a new Beneficiary designation with
the Senior Administrative Officer. If a Participant's Compensation is
community property, any Beneficiary designation shall be valid or effective
only as permitted under applicable law.
7.3 No Beneficiary Designation
In the absence of an effective Beneficiary designation, or if all
Beneficiaries predecease a Participant, the Participant's estate shall be the
Beneficiary. If a Beneficiary dies after a Participant and before payment of
benefits under this Plan has been completed, the remaining benefits shall be
payable to the Beneficiary's estate.
7.4 Effect of Payment
Payment to the Beneficiary shall completely discharge the Participating
Employer's obligations under this Plan.
PAGE 11 - MANAGEMENT DEFERRED COMPENSATION PLAN
ARTICLE VIII - ADMINISTRATION
8.1 Senior Administrative Officer; Duties
This Plan shall be administered by a Senior Administrative Officer
appointed by the Committee. The Senior Administrative Officer may be a
Participant under this Plan. The Senior Administrative Officer shall have the
authority to make, amend, interpret and enforce all appropriate rules and
regulations for the administration of this Plan and decide or resolve any and
all questions including interpretations of this Plan as may arise in
connection with the Plan. The Senior Administrative Officer shall report to
the Committee on an annual basis regarding Plan activity, and at such other
times as may be requested by the Committee.
8.2 Agents
In the administration of this Plan, the Senior Administrative Officer may,
from time to time, employ agents and delegate to such agents, including
employees of any Participating Employer, such administrative duties as he sees
fit, and may from time to time consult with counsel, who may be counsel to any
Participating Employer.
8.3 Binding Effect of Decisions
The decision or action of the Senior Administrative Officer in respect of
any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in the Plan.
8.4 Indemnity of Senior Administrative Officer; Committee
Each Participating Employer shall indemnify and hold harmless the Senior
Administrative Officer, the Committee, and its individual members against any
and all claims, loss, damage, expense or liability arising from any action or
failure to act with respect to this Plan, except in the case of gross
negligence or willful misconduct.
8.5 Availability of Plan Documents
Each Participant shall receive a copy of this Plan, and the Senior
Administrative Officer shall make available for inspection by any Participant
a copy of the rules and regulations used in administering the Plan.
8.6 Cost of Plan Administration
The Company shall bear all expenses of administration of this Plan.
However, a ratable portion of the expense shall be charged back to each
Participating Employer.
PAGE 12 - MANAGEMENT DEFERRED COMPENSATION PLAN
ARTICLE IX - CLAIMS PROCEDURE
9.1 Claim
Any person claiming a benefit, requesting an interpretation or ruling
under the Plan or requesting information under the Plan shall present the
request in writing to the Senior Administrative Officer or his delegatee who
shall respond in writing as soon as practicable.
9.2 Denial of Claim
If the claim or request is denied, the written notice of denial shall
state:
(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information required
and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
9.3 Review of Claim
Any person whose claim or request is denied or who has not received a
response within thirty (30) days may request review by notice given in writing
to the Senior Administrative Officer. The claim or request shall be reviewed
by the Senior Administrative Officer, who may, but shall not be required to,
grant the claimant a hearing. On review, the claimant may have representation,
examine pertinent documents and submit issues and comments in writing.
9.4 Final Decision
The decision by the Senior Administrative Officer on review shall normally
be made within sixty (60) days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be notified and the
time limit shall be one hundred twenty (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 bind all parties concerned.
ARTICLE X - AMENDMENT AND TERMINATION OF PLAN
10.1 Amendment
The Senior Administrative Officer may amend the Plan from time to time as
may be necessary for administrative purposes and legal compliance of the Plan,
provided, however, that no such amendment shall affect the benefit rights of
Participants or Beneficiaries in the Plan. The Committee may amend the Plan at
any time, provided, however, that no amendment shall be effective to decrease
or restrict the accrued rights of Participants and Beneficiaries to the
amounts in their Accounts at the time of the amendment.
PAGE 13 - MANAGEMENT DEFERRED COMPENSATION PLAN
10.2 Termination
The Board of each Participating Employer may at any time, in its sole
discretion, terminate or suspend the Plan in whole or in part for that
Participating Employer. However, no such termination or suspension shall
adversely affect the benefits of Participants which have accrued prior to such
action, the benefits of any Participant who has previously retired, the
benefits of any Beneficiary of a Participant who has previously died, or
already accrued Plan liabilities between Participating Employers.
10.3 Payment at Termination
Notwithstanding Paragraph 5.3 above, if the Plan is terminated, payment of
each Account to a Participant or a Beneficiary for whom it is held shall
commence within sixty (60) days of Plan termination in the earlier of one (1)
of the following forms:
(a) The form and time of payment designated by the Participant; or
(b) Paid in the following form:
Appropriate Account Balance PAYOUT PERIOD
Less than $25,000 Lump sum
$25,000 but less than $100,000 Monthly installments over 2 years
$100,000 but less than $500,000 Monthly installments over 3 years
$500,000 or more Monthly installments over 5 years
Interest earned on the unpaid balance in Participant's Account shall be
the applicable Interest rate on the Determination Date immediately
preceding the effective date of such termination of the Plan.
ARTICLE XI - MISCELLANEOUS
11.1 Unfunded Plan
This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly compensated employees" within the meaning of Sections 201, 301, and
401 of ERISA, and therefore to be exempt from the provisions of Parts 2, 3
and 4 of Title I of ERISA. Accordingly, the Board may terminate the Plan
and commence termination payout under 10.3 above for all or certain
Participants, or remove certain employees as Participants, if it is
determined by the United States Department of Labor or a court of competent
jurisdiction that the Plan constitutes an employee pension benefit plan
within the meaning of Section 3(2) of ERISA which is not so exempt. This
Plan is not intended to create an investment contract, but to provide
retirement benefits to eligible individuals who have elected to participate
in the Plan. Eligible individuals are select members of management who, by
virtue of their position with Participating Employer, are uniquely informed
as to Participating Employer's operations and have the ability to
materially affect Participating Employer's profitability and operations.
PAGE 14 - MANAGEMENT DEFERRED COMPENSATION PLAN
11.2 Liability
(a) LIABILITY FOR BENEFITS. Except as otherwise provided in this
paragraph, liability for the payment of a Participant's benefit
pursuant to this Plan shall be borne solely by the Participating
Employer that employs the Participant and reports the Participant as
being on its payroll during the accrual or increase of the Plan
benefit, and no liability for the payment of any Plan benefit shall be
incurred by reason of Plan sponsorship or participation except for the
Plan benefits of a Participating Employer's own employees. Provided,
however, that each Participating Employer, by accepting the Board's
designation as a Participating Employer under the Plan and formally
adopting the Plan, agrees to assume secondary liability for the payment
of any benefit accrued or increased while a Participant is employed and
on the payroll of a Participating Employer that is a Direct Subsidiary
or Indirect Subsidiary of the Participating Employer at the time such
benefit is accrued or increased. Such liability shall survive any
revocation of designation as a Participating Employer with respect to
any liabilities accrued at the time of such revocation. Nothing in this
paragraph shall be interpreted as prohibiting any Participating
Employer or any other person from expressly agreeing to the assumption
of liability for a Plan Participant's payment of any benefits under the
Plan.
(b) UNSECURED GENERAL CREDITOR. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no secured
legal or equitable rights, interest or claims in any property or assets
of a Participating Employer, nor shall they be beneficiaries of, or
have any rights, claims or interests in any Policies or the proceeds
therefrom owned or which may be acquired by a Participating Employer.
Except as provided in Section 11.3, such Policies or other assets of a
Participating Employer shall not be held under any trust for the
benefit of Participants, their Beneficiaries, heirs, successors or
assigns, or held in any way as collateral security for the fulfilling
of the obligations of a Participating Employer under this Plan. Any and
all of a Participating Employer's assets and Policies shall be, and
remain, the general, unpledged, unrestricted assets of the
Participating Employer. A Participating Employer's obligation under the
Plan shall be that of an unfunded and unsecured promise to pay money in
the future.
11.3 Trust Fund
At its discretion, each Participating Employer, jointly or severally,
may establish one (1) or more trusts, with such trustee as the Board may
approve, for the purpose of providing for the payment of such benefits.
Such trust or trusts may be irrevocable, but the assets thereof shall be
subject to the claims of the Participating Employer's creditors. To the
extent any benefits provided under the Plan are actually paid from any such
trust, the Participating Employer shall have no further obligation with
respect thereto, but to the extent not so paid, such benefits shall remain
the obligation of, and shall be paid by the Participating Employer.
11.4 Nonassignability
Neither a Participant nor any other person shall have any right to
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be nonassignable and nontransferable. No part of
the amounts payable shall, prior to actual payment, be subject to seizure
or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency.
PAGE 15 - MANAGEMENT DEFERRED COMPENSATION PLAN
11.5 Not a Contract of Employment
The terms and conditions of this Plan shall not be deemed to constitute
a contract of employment between a Participating Employer and a
Participant, and neither a Participant nor a Participant's Beneficiary
shall have any rights against a Participating Employer except as may
otherwise be specifically provided herein. Moreover, nothing in this Plan
shall be deemed to give a Participant the right to be retained in the
service of a Participating Employer or to interfere with the right of a
Participating Employer to discipline or discharge a Participant at any
time.
11.6 Protective Provisions
A Participant will cooperate with a Participating Employer by
furnishing any and all information requested by a Participating Employer,
in order to facilitate the payment of benefits hereunder, and by taking
such physical examination as a Participating Employer may deem necessary
and taking such other action as may be requested by a Participating
Employer.
11.7 Governing Law
The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Oregon, except as preempted by
federal law.
11.8 Terms
In this Plan document, unless the context clearly indicates the
contrary, the masculine gender will be deemed to include the female gender,
and the singular shall include the plural.
11.9 Validity
In case any provisions of this Plan shall be held illegal or invalid
for any reason, such illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if
such illegal and invalid provision had never been inserted herein.
11.10 Notice
Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail to the Senior
Administrative Officer or to Secretary of Participating Employer. Notice to
the Senior Administrative Officer, if mailed, shall be addressed to the
principal executive offices of Participating Employer. Notice mailed to the
Participant shall be at such address as is given in the records of the
Participating Employer. Notices shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
11.11 Successors
The provisions of this Plan shall bind and inure to the benefit of each
Participating Employer and its successors and assigns. The term successors
as used herein shall include any corporate or other business entity which
shall, whether by merger, consolidation, purchase or otherwise, acquire all
or substantially all of the business and assets of a Participating
Employer, and successors of any such corporation or other business entity.
PAGE 16 - MANAGEMENT DEFERRED COMPENSATION PLAN
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its officers thereunto duly authorized, as of the ____ day of
May, 1996.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Donald F. Kielblock
Senior Administrative Officer and
Vice President, Human Resources
PAGE 17 - MANAGEMENT DEFERRED COMPENSATION PLAN
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
Effective January 1, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I - PURPOSE 1
1.1 Restatement 1
1.2 Purpose 1
1.3 Effective Date 1
1.4 Plan Sponsor 1
ARTICLE II - DEFINITIONS 1
2.1 Account 1
2.2 Beneficiary 1
2.3 Board 1
2.4 Change in Control 2
2.5 Committee 3
2.6 Company 3
2.7 Compensation 3
2.8 Deferral Election 3
2.9 Determination Date 3
2.10 Direct Subsidiary 3
2.11 Financial Emergency 3
2.12 Indirect Subsidiary 3
2.13 Interest 4
2.14 Outside Director 4
2.15 Participant 4
2.16 Participating Company 4
2.17 Plan 4
2.18 Policies 4
2.19 Senior Administrative Officer 4
ARTICLE III - ELIGIBILITY AND DEFERRALS 5
3.1 Eligibility 5
3.2 Deferral Elections 5
3.3 Limits on Elective Deferrals 5
ARTICLE IV - DEFERRED COMPENSATION ACCOUNT 5
4.1 Crediting to Account 5
4.2 Determination of Accounts 5
4.3 Vesting of Accounts 6
4.4 Statement of Accounts 6
(i)
TABLE OF CONTENTS
PAGE
ARTICLE V - PLAN BENEFITS 6
5.1 Benefits 6
5.2 Withdrawals for Financial Emergency 6
5.3 Form of Benefit Payment 6
5.4 Accelerated Distribution 7
5.5 Taxes 8
5.6 Commencement of Payments 8
5.7 Full Payment of Benefits 8
5.8 Payment to Guardian 8
ARTICLE VI - BENEFICIARY DESIGNATION 8
6.1 Beneficiary Designation 8
6.2 Amendments 8
6.3 No Beneficiary Designation 9
6.4 Effect of Payment 9
ARTICLE VII - ADMINISTRATION 9
7.1 Senior Administrative Officer; Duties 9
7.2 Agents 9
7.3 Binding Effect of Decisions 9
7.4 Indemnity of Senior Administrative Officer; Committee 9
7.5 Availability of Plan Documents 10
7.6 Cost of Plan Administration 10
ARTICLE VIII - CLAIMS PROCEDURE 10
8.1 Claim 10
8.2 Denial of Claim 10
8.3 Review of Claim 10
8.4 Final Decision 10
ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN 11
9.1 Amendment 11
9.2 Termination 11
9.3 Payment at Termination 11
(ii)
TABLE OF CONTENTS
PAGE
ARTICLE X - MISCELLANEOUS 12
10.1 Unfunded Plan 12
10.2 Liability 12
10.3 Trust Fund 12
10.4 Nonassignability 13
10.5 Protective Provisions 13
10.6 Governing Law 13
10.7 Terms 13
10.8 Validity 13
10.9 Notice 13
10.10 Successors 13
10.11 Not a Contract of Service 14
(iii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
A
Account: 2.1 1
B
Beneficiary: 2.2 1
Board: 2.3 1
C
Change in Control: 2.4 2
Committee: 2.5 3
Company: 2.6 3
Compensation: 2.7 3
D
Deferral Election: 2.8 3
Determinatoin Date: 2.9 3
Direct Subsidiary: 2.10 3
E
Exchange Act: 2.4(a) 2
F
Financial Emergency: 2.11 3
I
Indirect Subsidiary: 2.12 3
Interest: 2.13 4
O
Outside Director: 2.14 4
P
Participant: 2.15 4
Participating Company: 2.16 4
PGC: 2.4(a) 2
PGE: 2.4(a) 2
Plan: 2.17 4
Policies: 2.18 4
S
Senior Administrative Officer: 2.19 4
(iv)
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
ARTICLE I - PURPOSE
1.1 Restatement
Portland General Corporation adopted a Deferred Compensation Plan
effective January 1, 1983 to cover Directors, officers and certain key
employees. The Plan was renamed and amended by the 1987 Restatement and
further amended by the 1988, 1990, and 1994 Restatements.
1.2 Purpose
The purpose of this Outside Directors' Deferred Compensation Plan is to
provide elective deferred compensation to Outside Directors. It is intended
that the Plan will aid in attracting and retaining Outside Directors of
exceptional ability.
1.3 Effective Date
This Restatement shall be effective as of January 1,1996.
1.4 Plan Sponsor
The Plan is maintained for the benefit of Outside Directors of Portland
General Corporation, an Oregon Corporation, and Outside Directors of any
corporations or other entities affiliated with or subsidiary to it, if such
corporations or entities are selected by the Board.
ARTICLE II - DEFINITIONS
2.1 Account
"Account" means the account, maintained by the Participating Company in
accordance with Article IV with respect to any deferral of Compensation
pursuant to this Plan.
2.2 Beneficiary
"Beneficiary" means the person, persons or entity entitled under Article
VI to receive any Plan benefits payable after Participant's death.
2.3 Board
"Board" means the Board of Directors of Portland General Corporation.
PAGE 1 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
2.4 Change in Control
"Change in Control" means an occurrence in which:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Portland General Corporation ("PGC") or Portland General
Electric ("PGE"), any trustee or other fiduciary holding securities under
an employee benefit plan of PGC or PGE, or any Employer owned, directly or
indirectly, by the stockholders of PGC or PGE in substantially the same
proportions as their ownership of stock of PGC or PGE), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities representing thirty percent (30%) or
more of the combined voting power of PGC's or PGE's then outstanding
voting securities;
(b) During any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with PGC to effect a transaction described in clause (a), (c) or (d) of
this paragraph) whose election by the Board or nomination for election by
PGC's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors as of the
beginning of the period of whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof;
(c) The stockholders of PGC or PGE approve a merger or consolidation
of PGC or PGE with any other corporation, other than:
(i) A merger or consolidation which would result in the voting
securities of PGC or PGE outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of the voting
securities of PGC or PGE or such surviving entity outstanding
immediately after such merger or consolidation, or
(ii) A merger or consolidation effected to implement a
recapitalization of PGC or PGE (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than thirty percent
(30%) of the combined voting power of PGC's or PGE's then outstanding
securities; or
(d) The stockholders of PGC or PGE approve a plan of complete
liquidation of PGC or PGE or an agreement for the sale or disposition by
PGC or PGE of sixty percent (60%) or more of PGC's or PGE's assets
(including stock of subsidiaries) to a person or entity that is not a
subsidiary or parent corporation. For purposes of determining whether a
sale or other disposition of sixty percent (60%) of PGE's assets has
occurred, only long-term assets shall be considered. Assets shall not be
considered long-term assets if they constitute "regulatory assets,"
"stranded investments" or abandoned or nonoperational projects. Projects
in economy shutdown shall be considered long-term assets.
PAGE 2 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
2.5 Committee
"Committee" means the Human Resources Committee of the Board.
2.6 Company
"Company" means Portland General Corporation, an Oregon Corporation.
2.7 Compensation
"Compensation" means annual retainer and fees for attendance at Board and
various committee meetings paid to an Outside Director by the Participating
Company during the calendar year with respect to duties performed as a member
of the Board. Compensation, for purposes of this Plan, may include any new
form of cash remuneration paid by the Participating Company to an Outside
Director which is explicitly designated as deferrable pursuant to this Plan by
the Deferral Election form approved by the Senior Administrative Officer.
Compensation does not include expense reimbursements, imputed compensation, or
any form of noncash compensation or benefits.
2.8 Deferral Election
"Deferral Election" means the election completed by the Participant in a
form approved by the Senior Administrative Officer which indicates the
Participant's irrevocable election to defer Compensation as designated in the
Deferral Election, pursuant to Article III.
2.9 Determination Date
"Determination Date" means the last day of each calendar month.
2.10 Direct Subsidiary
"Direct Subsidiary" means any corporation of which a Participating Company
owns at least eighty percent (80%) of the total combined voting power of all
classes of its stock entitled to vote.
2.11 Financial Emergency
"Financial Emergency" means a financial need resulting from a serious
unforeseen personal or family emergency, such as an act of God, an adverse
business or financial transaction, divorce, serious illness or accident, or
death in the family.
2.12 Indirect Subsidiary
"Indirect Subsidiary" means any corporation of which a Participating
Company directly and constructively owns at least eighty percent (80%) of the
total combined voting power of all classes of its stock entitled to vote. In
determining the amount of stock of a corporation that is constructively owned
by a Participating Company stock owned, directly or constructively, by a
corporation shall be considered as being owned proportionately by its
shareholders according to such shareholder's share of voting power of all
classes of its stock entitled to vote.
PAGE 3 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
2.13 Interest
"Interest" means the interest yield computed at the monthly equivalent of
an annual yield that is three (3) percentage points higher than the annual
yield on Moody's Average Corporate Bond Yield Index for the three (3) calendar
months preceding the immediately prior month as published by Moody's Investors
Service, Inc. (or any successor thereto), or, if such index is no longer
published, a substantially similar index selected by the Board.
2.14 Outside Director
"Outside Director" means a member of the Board who is not an employee of
Portland General Corporation or any Direct Subsidiary or Indirect Subsidiary
of Portland General Corporation.
2.15 Participant
"Participant" means any eligible Outside Director who has elected to make
deferrals under this Plan.
2.16 Participating Company
"Participating Company" means the Company or any affiliated or subsidiary
company designated by the Board as a Participating Company under the Plan, as
long as such designation has become effective and continues to be in effect.
The designation as a Participating Company shall become effective only upon
the acceptance of such designation and the formal adoption of the Plan by a
Participating Company. A Participating Company may revoke its acceptance of
designation as a Participating Company at any time, but until it makes such
revocation, all of the provisions of this Plan and any amendments thereto
shall apply to the Outside Directors of the Participating Company and their
Beneficiaries.
2.17 Plan
"Plan" means the Portland General Corporation Outside Directors' Deferred
Compensation Plan, as may be amended from time to time.
2.18 Policies
"Policies" means any life insurance policies, annuity contracts or the
proceeds therefrom owned or which may be acquired by the Participating
Company.
2.19 Senior Administrative Officer
"Senior Administrative Officer" means the employee in the management
position designated by the Committee to administer the Plan.
PAGE 4 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
ARTICLE III-ELIGIBILITY AND DEFERRALS
3.1 Eligibility
An Outside Director shall be eligible to participate by making Deferral
Elections under paragraph 3.2 below. The Senior Administrative Officer shall
notify eligible Outside Directors about the Plan and the benefits provided
under it.
3.2 Deferral Elections
(a) TIME OF ELECTIONS. An eligible Outside Director may elect to
participate in the Plan with respect to any calendar year by making an
election to defer Compensation in a Deferral Election in a form approved
by the Senior Administrative Officer. The Deferral Election must be filed
with the Senior Administrative Officer no later than December 15, or such
shorter period as designated in the Deferral Election form.
(b) MID-YEAR ELIGIBILITY. If an individual first becomes eligible to
participate during a calendar year and wishes to defer Compensation during
the remainder of that year, a Deferral Election may be filed no later than
thirty (30) days following notification to the Outside Director by the
Senior Administrative Officer of eligibility to participate. Such Deferral
Election shall be effective only with regard to Compensation earned after
it is filed with the Senior Administrative Officer.
(c) IRREVOCABILITY. A Deferral Election for the following calendar
year shall become irrevocable on the December 15 by which it is due under
paragraph 3.2(a) and a Deferral Election for the current calendar year
shall become irrevocable upon filing with the Senior Administrative
Officer under paragraph 3.2(b).
3.3 Limits on Elective Deferrals
An eligible Outside Director may elect to defer up to one hundred percent
(100%) of Compensation. The level elected must be in one percent (1%)
increments.
ARTICLE IV-DEFERRED COMPENSATION ACCOUNT
4.1 Crediting to Account
The amount of the elective deferrals for a Participant under this Plan
shall be credited to an Account for the Participant on the books of the
Participating Company at the time the Compensation would have been paid in
cash. Any taxes or other amounts due from a Participant with respect to the
deferred Compensation under federal, state or local law, shall be withheld
from nondeferred Compensation payable to the Participant at the time the
deferred amounts are credited to the Account to the extent possible. To the
extent not possible, such amounts shall be withheld from deferred Compensation
with the balance to be credited to the Participant's Account.
4.2 Determination of Accounts
The last day of each calendar month shall be a Determination Date. Each
Participant's Account as of each Determination Date shall consist of the
balance of the Account as of the immediately
PAGE 5 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
preceding Determination Date,
plus the Participant's elective deferrals, and Interest credited under this
Plan, minus the amount of any distributions made from this Plan since the
immediately preceding Determination Date. Interest credited shall be
calculated as of each Determination Date based upon the average daily balance
of the Account since the preceding Determination Date.
4.3 Vesting of Accounts
Account balances in this Plan shall be fully vested at all times.
4.4 Statement of Accounts
The Senior Administrative Officer shall submit to each Participant, after
the close of each calendar quarter and at such other times as determined by
the Senior Administrative Officer, a statement setting forth the balance of
the Account maintained for the Participant.
ARTICLE V - PLAN BENEFITS
5.1 Benefits
(a) ENTITLEMENT TO BENEFITS AT TERMINATION. Benefits under this Plan
shall be payable to a Participant on termination of membership on any and
all Boards of any Participating Companies. The amount of the benefit shall
be the balance of the Participant's Account including Interest to the date
of payment, in the form elected under paragraph 5.3 below.
(b) ENTITLEMENT TO BENEFITS AT DEATH. Upon the death of a
Participant for whom an Account is held under this Plan, a death benefit
shall be payable to the Participant's Beneficiary in the same form as the
Participant elected for payments at termination of service on the Board,
under paragraph 5.3 below. The amount of the benefit shall be the balance
of the Participant's Account including Interest to the date of payment.
5.2 Withdrawals for Financial Emergency
A Participant may withdraw part or all of the Participant's Account for a
Financial Emergency as follows:
(a) DETERMINATION. The existence of a Financial Emergency and the
amount to be withdrawn shall be determined by the Senior Administrative
Officer.
(b) SUSPENSION. A Participant who makes a withdrawal for Financial
Emergency shall be suspended from participation for twelve (12) months
from the date of withdrawal. Compensation payable during such suspension
that would have been deferred under this Plan shall instead be paid to the
Participant.
5.3 Form of Benefit Payment
(a) The Plan benefits attributable to the elective deferrals for any
calendar year shall be paid in one (1) of the forms set out below, as
elected by the Participant in the form of payment designation filed with
the Deferral Election for that year. The forms of benefit payment are:
PAGE 6 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
(i) A lump sum payment; or
(ii) Monthly installment payments in substantially equal payments
of principal and Interest over a period of up to one hundred eighty
(180) months. The amount of the installment payment shall be
redetermined on the first day of the month coincidental with or next
following the anniversary of the date of termination each year, based
upon the then current rate of Interest, the remaining Account balance,
and the remaining number of payment periods.
(iii) In the event the account balance is ten thousand ($10,000)
or less, that benefit will be paid out in a lump sum notwithstanding
the form of benefit payment elected by the Participant.
(b) A Participant may elect to file a change of payment designation
which shall supersede all prior form of payment designations with respect
to the Participant's entire Account. The Participant may redesignate a
combination of lump sum and monthly installments if approved by the Senior
Administrative Officer. If, upon termination, the Participant's most
recent change of payment designation has not been in effect for twelve
(12) full months prior to such termination, then the prior election shall
be used to determine the form of payment. The Senior Administrative
Officer may, in his sole discretion, direct that plan benefits be paid
pursuant to the change of payment designation, notwithstanding the twelve
(12) month requirement.
5.4 Accelerated Distribution
Notwithstanding any other provision of the Plan, a Participant shall be
entitled to receive, upon written request to the Senior Administrative
Officer, a lump sum distribution of all or a portion of the vested Account
balance, subject to the following:
(a) PENALTY.
(i) If the distribution is requested within thirty-six (36)
months following a Change in Control, six percent (6%) of the account
shall be forfeited and ninety-four percent (94%) of the account paid
to the Participant.
(ii) If the distribution is requested at any time other than that
in (i) above, ten percent (10%) of the account shall be forfeited and
ninety percent (90%) of the account paid to the Participant.
(b) SUSPENSION. A Participant who receives a distribution under this
section shall be suspended from participation in this Plan for twelve (12)
calendar months from the date of such distribution. The account balance
shall be as of the Determination Date immediately preceding the date on
which the Senior Administrative Officer receives the written request. The
amount payable under this section shall be paid in a lump sum within
sixty-five (65) days following the receipt of the Participant's written
request by the Senior Administrative Officer.
PAGE 7 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
5.5 Taxes
Each Participating Company shall withhold from payments made hereunder any
taxes required to be withheld from a Participant's Compensation for the
federal or any state or local government. Withholding shall also apply to
Beneficiary, unless an election against withholding is made under Section
3405(a)(2) of the Internal Revenue Code.
5.6 Commencement of Payments
Payment shall commence at the discretion of the Senior Administrative
Officer, but not later than sixty-five (65) days after the end of the month in
which a Participant retires, dies or otherwise terminates membership on the
Board. All payments shall be made as of the first day of the month.
5.7 Full Payment of Benefits
Notwithstanding any other provision of this Plan, all benefits shall be
paid no later than one hundred eighty (180) months following the date payment
to Participant commences.
5.8 Payment to Guardian
If a Plan benefit is payable to a minor or a person declared incompetent
or to a person incapable of handling the disposition of property, the Senior
Administrative Officer may direct payment of such Plan benefit to the
guardian, legal representative or person having the care and custody of such
minor or incompetent person. The Senior Administrative Officer may require
proof of incompetency, minority, incapacity or guardianship as he may deem
appropriate prior to distribution of the Plan benefit. Such distribution shall
completely discharge the Senior Administrative Officer, the Participating
Company and the Company from all liability with respect to such benefit.
ARTICLE VI - BENEFICIARY DESIGNATION
6.1 Beneficiary Designation
Each Participant shall have the right, at any time, to designate one (1)
or more persons or entities as the Participant's Beneficiary, primary as well
as secondary, to whom benefits under this Plan shall be paid in the event of
the Participant's death prior to complete distribution to the Participant of
the benefits due under the Plan. Each Beneficiary designation shall be in a
written form prescribed by the Senior Administrative Officer and will be
effective only when filed with the Senior Administrative Officer during the
Participant's lifetime.
6.2 Amendments
Any Beneficiary designation may be changed by a Participant without the
consent of any Beneficiary by the filing of a new Beneficiary designation with
the Senior Administrative Officer. If a Participant's Compensation is
community property, any Beneficiary designation shall be valid or effective
only as permitted under applicable law.
PAGE 8 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
6.3 No Beneficiary Designation
In the absence of an effective Beneficiary designation, or if all
Beneficiaries predecease a Participant, the Participant's estate shall be the
Beneficiary. If a Beneficiary dies after a Participant and before payment of
benefits under this Plan has been completed, the remaining benefits shall be
payable to the Beneficiary's estate.
6.4 Effect of Payment
Payment to the Beneficiary shall completely discharge the Participating
Company's obligations under this Plan.
ARTICLE VII - ADMINISTRATION
7.1 Senior Administrative Officer; Duties
This Plan shall be administered by a Senior Administrative Officer as
designated by the Committee. Members of the Committee may be participants
under this Plan. The Senior Administrative Officer shall have the authority to
make, amend, interpret and enforce all appropriate rules and regulations for
the administration of this Plan and decide or resolve any and all questions
including interpretations of this Plan as may arise in connection with the
Plan. The Senior Administrative Officer shall report to the Committee on an
annual basis regarding Plan activity, and at such other times as may be
requested by the Committee.
7.2 Agents
In the administration of the Plan, the Senior Administrative Officer may,
from time to time, employ agents and delegate to such agents, including
employees of any Participating Company, such administrative duties as he sees
fit, and may from time to time consult with counsel, who may be counsel to any
Participating Company.
7.3 Binding Effect of Decisions
The decision or action of the Senior Administrative Officer with respect
to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in the Plan.
7.4 Indemnity of Senior Administrative Officer; Committee
Each Participating Company shall indemnify and hold harmless the Senior
Administrative Officer, the Committee and its individual members, against any
and all claims, loss, damage, expense or liability arising from any action or
failure to act with respect to this Plan, except in the case of gross
negligence or willful misconduct.
PAGE 9 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
7.5 Availability of Plan Documents
Each Participant shall receive a copy of this Plan, and the Senior
Administrative Officer shall make available for inspection by any Participant
a copy of the rules and regulations used in administering the Plan.
7.6 Cost of Plan Administration
The Company shall bear all expenses of administration. However, a ratable
portion of the expense shall be charged back to each Participating Company.
ARTICLE VIII - CLAIMS PROCEDURE
8.1 Claim
Any person claiming a benefit, requesting an interpretation or ruling
under the Plan or requesting information under the Plan shall present the
request in writing to the Senior Administrative Officer or his delegatee who
shall respond in writing as soon as practicable.
8.2 Denial of Claim
If the claim or request is denied, the written notice of denial shall
state:
(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information required
and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 Review of Claim
Any person whose claim or request is denied or who has not received a
response within thirty (30) days may request review by notice given in writing
to the Senior Administrative Officer. The claim or request shall be reviewed
by the Senior Administrative Officer, who may, but shall not be required to,
grant the claimant a hearing. On review, the claimant may have representation,
examine pertinent documents and submit issues and comments in writing.
8.4 Final Decision
The decision by the Senior Administrative Officer on review shall normally
be made within sixty (60) days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be notified and the
time limit shall be one hundred twenty (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 bind all parties concerned.
PAGE 10 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment
The Senior Administrative Officer may amend the Plan from time to time as
may be necessary for administrative purposes and legal compliance, provided
however, that no such amendment shall affect the benefit rights of
Participants or Beneficiaries in the Plan. The Committee may amend the Plan at
any time, provided however, that no amendment shall be effective to decrease
or restrict the accrued rights of Participants and Beneficiaries to the
amounts in their Accounts at the time of the amendment.
9.2 Termination
The Board of each Participating Company may at any time, in its sole
discretion, terminate or suspend the Plan in whole or in part. However, no
such termination or suspension shall adversely affect the benefits of
Participants which have accrued prior to such action, the benefits of any
Participant who has previously retired, the benefits of any Beneficiary of a
Participant who has previously died, or already accrued Plan liabilities
between Participating Companies.
9.3 Payment at Termination
Notwithstanding paragraph 5.3 above, if the Plan is terminated, payment of
each Account to Participant or Beneficiary for whom it is held shall commence
within sixty (60) days of Plan termination in the earlier of one (1) of the
following forms:
(a) the form and time of payment designated by the Participant; or
(b) paid in the following form:
Appropriate Account Balance Payout Period
Less than $25,000 Lump Sum
$25,000 but less than $100,000 Monthly Installments Over 2 Years
$100,000 but less than $500,000 Monthly Installments Over 3 Years
$500,000 or more Monthly Installments Over 5 Years
Interest earned on the unpaid balance in Participant's Account shall be
the applicable Interest rate on the Determination Date immediately preceding
the effective date of such termination of the Plan.
PAGE 11 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
ARTICLE X - MISCELLANEOUS
10.1 Unfunded Plan
This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for Outside Directors. This Plan is not
intended to create an investment contract, but to provide retirement benefits
to eligible individuals who have elected to participate in the Plan. Eligible
individuals are directors of the Participating Company, who by virtue of their
position with the Participating Company, are uniquely informed as to the
Participating Company's operations and have the ability to materially affect
the Participating Company's profitability and operations.
10.2 Liability
(a) LIABILITY FOR BENEFITS. Except as otherwise provided in this
paragraph, liability for the payment of a Participant's benefit pursuant
to this Plan shall be borne solely by the Participating Company for which
the Participant serves during the accrual or increase of the Plan benefit,
and no liability for the payment of any Plan benefit shall be incurred by
reason of Plan sponsorship or participation except for the Plan benefits
of a Participating Company's own Outside Directors. Provided, however,
that each Participating Company, by accepting the Board's designation as a
Participating Company under the Plan and formally adopting the Plan,
agrees to assume secondary liability for the payment of any benefit
accrued or increased while a Participant serves on the board of directors
of a Participating Company that is a Direct Subsidiary or Indirect
Subsidiary of the Participating Company at the time such benefit is
accrued or increased. Such liability shall survive any revocation of
designation as a Participating Company with respect to any liabilities
accrued at the time of such revocation. Nothing in this paragraph shall be
interpreted as prohibiting any Participating Company or any other person
from expressly agreeing to the assumption of liability for a Plan
Participant's payment of any benefits under the Plan.
(b) UNSECURED GENERAL CREDITOR. Participants and their
Beneficiaries, heirs, successors and assigns shall have no secured legal
or equitable rights, interest or claims in any property or assets of the
Participating Company, nor shall they be beneficiaries of, or have any
rights, claims or interests in any Policies or the proceeds therefrom
owned or which may be acquired by the Participating Company. Except as
provided in paragraph 10.3, such Policies or other assets of the
Participating Company shall not be held under any trust for the benefit of
Participants, their Beneficiaries, heirs, successors or assigns, or held
in any way as collateral security for the fulfilling of the obligations of
the Participating Company under this Plan. Any and all of the
Participating Company's assets and Policies shall be, and remain, the
general, unpledged, unrestricted assets of the Participating Company.
Participating Company's obligation under the Plan shall be that of an
unfunded and unsecured promise to pay money in the future.
10.3 Trust Fund
At its discretion, each Participating Company, jointly or severally, may
establish one (1) or more trusts, with such trustee as the Board may approve,
for the purpose of providing for the payment of such benefits. Such trust or
trusts may be irrevocable, but the assets thereof shall be subject to the
claims of the Participating Company's creditors. To the extent any benefits
provided under the Plan are actually paid from any such trust, the
Participating Company shall have no further obliga-
PAGE 12 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
tion with respect thereto,
but to the extent not so paid, such benefits shall remain the obligation of,
and shall be paid by the Participating Company.
10.4 Nonassignability
Neither a Participant nor any other person shall have any right to sell,
assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be nonassignable and nontransferable. No part of
the amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency.
10.5 Protective Provisions
A Participant will cooperate with the Participating Company by furnishing
any and all information requested by the Participating Company, in order to
facilitate the payment of benefits hereunder, and by taking such physical
examination as the Participating Company may deem necessary and taking such
other action as may be requested by the Participating Company.
10.6 Governing Law
The provisions of this Plan shall be construed and interpreted according
to the laws of the State of Oregon, except as preempted by federal law.
10.7 Terms
In this Plan document, unless the context clearly indicates the contrary,
the masculine gender will be deemed to include the feminine gender, and the
singular shall include the plural.
10.8 Validity
In case any provision of this Plan shall be held illegal or invalid for
any reason, such illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.
10.9 Notice
Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail to the Senior
Administrative Officer, or to Secretary of the Participating Company. Notice
mailed to the Participant shall be at such address as is given in the records
of the Participating Company. Notice to the Senior Administrative Officer, if
mailed, shall be addressed to the principal executive offices of the Company.
Notices shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
10.10 Successors
The provisions of this Plan shall bind and inure to the benefit of each
Participating Company and its successors and assigns. The term successors as
used herein shall include any corporate or
PAGE 13 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
other business entity which shall,
whether by merger, consolidation, purchase or otherwise, acquire all or
substantially all of the business and assets of a Participating Company, and
successors of any such corporation or other business entity.
10.11 Not a Contract of Service
The terms and conditions of this Plan shall not be deemed to constitute a
contract of service between a Participating Company and a Participant and
neither a Participant nor a Participant's Beneficiary shall have any rights
against a Participating Company except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained on the Board of a Participating Company
nor shall it interfere with the Participant's right to terminate his
directorship at any time.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its officers thereunto duly authorized, as of the ____ day of May, 1996.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Donald F. Kielblock
Senior Administrative Officer and
Vice President, Human Resources
PAGE 14 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
PORTLAND GENERAL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1996 RESTATEMENT
Effective January 1, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I - PURPOSE 1
1.1 Purpose 1
1.2 Effective Date 1
ARTICLE II - DEFINITIONS 1
2.1 Actuarially Equivalent 1
2.2 Basic Plan 1
2.3 Basic Plan Offset 1
2.4 Board 2
2.5 Cause 2
2.6 Change in Control 2
2.7 Committee 3
2.8 Company 3
2.9 Credited Service 3
2.10 Dependent 3
2.11 Direct Subsidiary 4
2.12 Disability 4
2.13 Earnings 4
2.14 Employment 4
2.15 Final Average Earnings 4
2.16 Indirect Subsidiary 4
2.17 Other Retirement Income 4
2.18 Participant 5
2.19 Participating Employer 5
2.20 Plan 5
2.21 Retirement 5
2.22 Senior Administrative Officer 5
2.23 Senior Officer 5
2.24 Spouse 5
ARTICLE III - ELIGIBILITY 6
3.1 Eligibility 6
3.2 Retirement 6
3.3 Forfeitures 6
3.4 Claims Procedure After Change in Control 7
(i)
TABLE OF CONTENTS
PAGE
ARTICLE IV - AMOUNT, FORM AND PAYMENT OF SUPPLEMENTAL BENEFIT 8
4.1 Normal Retirement Benefit 8
4.2 Early Retirement Benefit 8
4.3 Separation from Service Benefit 9
4.4 Postponed Retirement Benefit 9
4.5 Retention of Accrued Benefit 9
4.6 Reduction of Benefits 9
4.7 Unreduced Benefit Date 9
4.8 Commencement of Benefits 10
4.9 Form of Benefit 10
4.10 Benefit Increases for Retirees 10
4.11 Accelerated Distribution 10
ARTICLE V - PRERETIREMENT SURVIVOR BENEFITS 10
5.1 Survivor Benefit 10
5.2 Benefit Payment 11
5.3 Dependent Benefit 11
5.4 Cessation of Benefit Upon Remarriage 11
ARTICLE VI - DISABILITY BENEFITS 11
6.1 Disability Retirement 11
6.2 Disability Benefit 11
6.3 Form and Commencement of Benefits 11
6.4 Survivor and Dependent Benefits 12
6.5 Evidence of Continued Disability 12
ARTICLE VII - ADMINISTRATION 12
7.1 Senior Administrative Officer; Duties 12
7.2 Agents 12
7.3 Binding Effect of Decisions 12
7.4 Indemnity of Senior Administrative Officer; Committee 12
7.5 Availability of Plan Documents 13
7.6 Cost of Plan Administration 13
ARTICLE VIII - CLAIMS PROCEDURE 13
8.1 Claim 13
8.2 Denial of Claim 13
8.3 Review of Claim 13
8.4 Final Decision 13
(ii)
TABLE OF CONTENTS
PAGE
ARTICLE IX - TERMINATION OR AMENDMENT 14
9.1 Amendment 14
9.2 Termination 14
ARTICLE X - MISCELLANEOUS 14
10.1 Unfunded Plan 14
10.2 Liability 14
10.3 Trust Fund 15
10.4 Nonassignability 15
10.5 Payment to Guardian 15
10.6 Not a Contract of Employment 15
10.7 Protective Provisions 16
10.8 Terms 16
10.9 Governing Law 16
10.10 Validity 16
10.11 Notice 16
10.12 Successors 16
(iii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
A
Actuarially Equivalent: 2.1 1
Annual Supplemental Benefit: 4.1(a) 8
B
Basic Plan: 2.2 1
Basic Plan Offset: 2.3 1
Board: 2.4 2
C
Cause: 2.5 2
Change in Control: 2.6 2
Committee: 2.7 3
Company: 2.8 3
Credited Service: 2.9 3
D
Dependent: 2.10 3
Direct Subsidiary: 2.11 4
Disability: 2.12 4
E
Earnings: 2.13 4
Employment: 2.14 4
ERISA: 10.1 14
Exchange Act: 2.6(a) 2
F
Final Average Earnings: 2.15 4
I
Indirect Subsidiary: 2.16 4
O
Other Retirement Income: 2.17 4
P
Participant: 2.18 5
Participating Employer: 2.19 5
PGC: 2.6(a) 2
PGE: 2.6(a) 2
Plan: 2.20 5
(iv)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
R
Retirement: 2.21 5
S
Senior Administrative Officer: 2.22 5
Senior Officer: 2.23 5
Spouse: 2.24 5
T
Temporary Social Security Supplement: 4.2(b) 8
U
Unreduced Benefit Date: 4.7 9
(v)
PORTLAND GENERAL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1996 RESTATEMENT
ARTICLE I - PURPOSE
1.1 Purpose
The principal objectives of this Supplemental Executive Retirement Plan
are to provide key executives with competitive retirement benefits, protect
against reductions in retirement benefits due to tax law limitations on
qualified plans and to facilitate early retirement. The Plan is designed to
provide a benefit which, when added to other retirement income of the
executive, will meet this objective. This Plan was originally effective on
July 1, 1983.
1.2 Effective Date
This 1990 Restatement is adopted to make amendments to the Plan effective
January 1, 1996.
ARTICLE II - DEFINITIONS
2.1 Actuarially Equivalent
"Actuarially Equivalent" shall mean the equivalence in value between two
(2) or more forms and/or times of payment based upon a determination by an
actuary chosen by the Senior Administrative Officer using a discount rate
equal to the 30-Year Treasury Bill rate on the January 1st of the year in
which the determination occurs plus one percent (1%) and the unisex mortality
table chosen by the actuary, which choice shall be binding on all parties.
2.2 Basic Plan
"Basic Plan" shall mean the Participating Employers' Pension Plan or
Plans, as may be amended from time to time, and any successor defined benefit
retirement income plan or plans maintained by the Participating Employers
which qualify under Section 401(a) of the Internal Revenue Code.
2.3 Basic Plan Offset
"Basic Plan Offset" shall mean the amount of benefit that would be paid
from the Basic Plan to a Participant, assuming eligible compensation used to
calculate such benefit includes amounts deferred under any Participating
Employer sponsored nonqualified deferred compensation plan, in the form of a
straight life annuity from the Early, Normal, Disability or Postponed
Retirement Date, regardless of the amount actually paid or the actual method
of payment under the Basic Plan.
PAGE 1 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
2.4 Board
"Board" shall mean the Board of Directors of Portland General Corporation.
2.5 Cause
Prior to a Change in Control, "Cause" shall mean:
(a) Employee engages in an act of dishonesty or moral turpitude
(including but not limited to conviction of a felony) which materially
injures or damages Employer,
(b) Employee willfully fails to substantially perform his or her
duties hereunder and such willful failure results in demonstrable material
injury and damage to Employer,
(c) A determination that Employee has misrepresented or concealed a
material fact for the purpose of securing employment, or
(d) Employee's performance is substantially below the standard of
performance which can reasonably be expected from an individual occupying
Employee's position or Employee substantially fails to meet performance
objectives, including without limitation guiding behaviors, which have
been previously agreed to between Employee and Employer, such as
performance objectives relating to profit.
Following a Change in Control, Cause shall mean:
(a) Employee engages in an act of dishonesty or moral turpitude
(including but not limited to conviction of a felony) which materially
injures or damages Employer, or
(b) Employee willfully fails to substantially perform his or her
duties hereunder and such willful failure results in demonstrable material
injury and damage to Employer.
2.6 Change in Control
A "Change in Control" shall mean:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Portland General Corporation ("PGC") or Portland General
Electric ("PGE"), any trustee or other fiduciary holding securities under
an employee benefit plan of PGC or PGE, or any Employer owned, directly or
indirectly, by the stockholders of PGC or PGE in substantially the same
proportions as their ownership of stock of PGC or PGE), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities representing thirty percent (30%) or
more of the combined voting power of PGC's or PGE's then outstanding
voting securities;
(b) During any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with PGC to effect a transaction described in clause (a), (c) or (d) of
this paragraph) whose election by the Board or nomination for election by
PGC's stockhold-
PAGE 2 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ers was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors as of the
beginning of the period of whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof;
(c) The stockholders of PGC or PGE approve a merger or consolidation
of PGC or PGE with any other corporation, other than:
(i) A merger or consolidation which would result in the voting
securities of PGC or PGE outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of the voting
securities of PGC or PGE or such surviving entity outstanding
immediately after such merger or consolidation, or
(ii) A merger or consolidation effected to implement a
recapitalization of PGC or PGE (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than thirty percent
(30%) of the combined voting power of PGC's or PGE's then outstanding
securities; or
(d) The stockholders of PGC or PGE approve a plan of complete
liquidation of PGC or PGE or an agreement for the sale or disposition by
PGC or PGE of sixty percent (60%) or more of PGC's or PGE's assets
(including stock of subsidiaries) to a person or entity that is not a
subsidiary or parent corporation. For purposes of determining whether a
sale or other disposition of sixty percent (60%) of PGE's assets has
occurred, only long-term assets shall be considered. Assets shall not be
considered long-term assets if they constitute "regulatory assets,"
"stranded investments" or abandoned or nonoperational projects. Projects
in economy shutdown shall be considered long-term assets.
2.7 Committee
"Committee" shall mean the Human Resources Committee of the Board.
2.8 Company
"Company" shall mean Portland General Corporation, an Oregon Corporation.
2.9 Credited Service
"Credited Service" shall mean a Participant's Years of Credited Service or
Benefit Service as defined in the Basic Plan. Credited Service shall continue
to accrue during a Participant's period of Disability.
2.10 Dependent
"Dependent" shall mean an unmarried child of the Participant until the age
of nineteen (19) (age twenty-six (26) if a full-time student). An unmarried
child may also qualify as a Dependent by reason of mental retardation or
physical handicap for as long as the condition exists, if such child qualifies
as a dependent under regulations set forth by the Internal Revenue Service by
reason of such mental retardation or physical handicap.
PAGE 3 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
2.11 Direct Subsidiary
"Direct Subsidiary" shall mean any corporation of which a Participating
Employer owns at least eighty percent (80%) of the total combined voting power
of all classes of its stock entitled to vote.
2.12 Disability
"Disability" shall mean the inability of a Participant to perform with
reasonable continuity the material duties of any gainful occupation for which
the Participant is reasonably fitted by education, training and experience.
2.13 Earnings
"Earnings" shall mean total annual base salary, before any reductions
pursuant to voluntary deferrals by the employee under Participating Employer-
sponsored plans; plus any cash annual incentive compensation awards; plus any
cash long-term incentive awards earned prior to January 1, 1987, but excluding
any other long-term incentive awards. For purposes of determining Earnings for
any particular year, Earnings for the year shall consist of base salary, cash
annual incentive compensation awards, and cash long-term incentive awards
earned prior to January 1, 1987, earned during that year.
2.14 Employment
"Employment" shall mean the period or periods during which an individual
is an employee of one or more Participating Employers.
2.15 Final Average Earnings
"Final Average Earnings" shall mean a Participant's highest average of any
three consecutive years' Earnings during the final ten (10) years of
Employment. If the Participant has fewer than three (3) years of Employment,
then his Final Average Earnings shall be determined based on the average of
the actual Employment period.
2.16 Indirect Subsidiary
"Indirect Subsidiary" shall mean any corporation of which a Participating
Employer directly and constructively owns at least eighty percent (80%) of the
total combined voting power of all classes of its stock entitled to vote. In
determining the amount of stock of a corporation that is constructively owned
by a Participating Employer, stock owned, directly or constructively, by a
corporation shall be considered as being owned proportionately by its
shareholders according to such shareholders' share of voting power of all
classes of its stock entitled to vote.
2.17 Other Retirement Income
"Other Retirement Income" shall mean retirement income payable to a
Participant as set forth below:
(a) FOR OTHER THAN DISABILITY RETIREMENT. Any periodic income
continuance, severance payments or other defined benefit retirement
payments from a Participating Employer.
PAGE 4 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(b) FOR DISABILITY RETIREMENT. Income from the Portland General
Corporation Long-Term Disability Plan or any other long-term disability
plan sponsored by a Participating Employer.
2.18 Participant
"Participant" shall mean an employee of a Participating Employer, who is
also a Senior Officer as defined in Paragraph 2.23 and designated in writing
as a Participant by the Senior Administrative Officer.
2.19 Participating Employer
"Participating Employer" shall mean Company or any affiliated or
subsidiary company designated by the Board as a Participating Employer under
the Plan, as long as such designation has become effective and continues to be
in effect. The designation as a Participating Employer shall become effective
only upon the acceptance of such designation and the formal adoption of the
Plan by a Participating Employer. A Participating Employer may revoke its
acceptance of designation as a Participating Employer at any time, but until
it makes such revocation, all of the provisions of this Plan and any
amendments thereto shall apply to the Participants and their Beneficiaries of
the Participating Employer.
2.20 Plan
"Plan" shall mean the Portland General Corporation Supplemental Executive
Retirement Plan, as may be amended from time to time.
2.21 Retirement
"Retirement" and "Retire" shall mean the termination of a Participant's
Employment with Portland General Corporation and any and all Direct or
Indirect Subsidiaries of Portland General Corporation on one of the Retirement
dates specified in Paragraph 3.2.
2.22 Senior Administrative Officer
"Senior Administrative Officer" shall mean the employee in the management
position designated by the Committee to administer the Plan.
2.23 Senior Officer
"Senior Officer" shall mean the Chief Executive Officer, the President,
Division Presidents, all Senior Vice Presidents, all Vice Presidents, the
Treasurer and the Controller of the Participating Employer, all as elected or
appointed by the Board of Directors of the Participating Employer.
2.24 Spouse
"Spouse" shall mean an individual who is a spouse as defined under the
Basic Plan.
PAGE 5 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE III - ELIGIBILITY
3.1 Eligibility
Eligibility to participate shall be limited to those employees who have
attained the position of Senior Officer and are designated in writing as a
Participant by the Senior Administrative Officer, or those employees who have
previously been selected as Participants.
3.2 Retirement
Each Participant is eligible to Retire and receive a benefit under this
Plan beginning on one of the following dates:
(a) NORMAL RETIREMENT DATE, which is the first day of the month
following the month in which the Participant reaches age sixty-five (65);
(b) EARLY RETIREMENT DATE, which is the first day of any month
following the month in which the Participant reaches age fifty-five (55)
and has completed five (5) years of Employment with Portland General
Corporation and any Direct and Indirect Subsidiaries of Portland General
Corporation;
(c) POSTPONED RETIREMENT DATE, which is the first day of the month
following the Participant's Normal Retirement Date in which the
Participant terminates Employment with Portland General Corporation and
any and all Direct and Indirect Subsidiaries of Portland General
Corporation; or
(d) DISABILITY RETIREMENT DATE, which is the first day of the month
following six (6) months of Disability as certified by the Senior
Administrative Officer.
3.3 Forfeitures
A Participant who is receiving, or may be entitled to receive, a benefit
shall forfeit any right to receive benefits if one of the following occurs:
(a) The Participant is discharged for Cause prior to a Change in
Control, as determined by the Committee;
(b) The Participant is discharged for Cause following a Change in
Control, as determined by the Committee, provided, however, that in lieu
of the Claims Procedure provided in Article VIII, the Participant shall be
entitled to proceed pursuant to Section 3.4.
(c) The Participant performs services for an organization where there
is a conflict of interest which is adverse to the Company's interest, as
determined by the Committee; or
(d) The Participant voluntarily terminates employment without
providing for transition in disregard of the Company's best interests, as
determined by the Committee.
PAGE 6 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
3.4 Claims Procedure After Change in Control
(a) If the Participant is discharged for Cause following a Change in
Control, and the Participant, in good faith, believes this Plan has failed
to pay or provide payment of any amounts required to be paid or provided
for hereunder, the Participant shall be entitled to consult with
independent counsel, and the Plan agrees to pay the reasonable fees and
expenses of such counsel for the Participant, advising him or her in
connection therewith or in bringing any proceedings, or in defending any
proceedings, including any appeal arising from any proceeding, involving
the Participant's rights under this Plan, such right to reimbursement to
be immediate upon the presentment by the Participant of written billings
of such reasonable fees and expenses. The Participant shall be entitled to
the prime rate of interest established from time to time at United States
National Bank of Oregon or its successor for any payments of such
expenses, or any other payments under this Plan, that are overdue.
(b) Because it is agreed that time will be of the essence in
determining whether any payments are due to Participant under this Plan
following a Change in Control, Participant may, if he or she desires,
submit any claim for payment under this Plan or dispute regarding the
interpretation of this Plan to arbitration. This right to select
arbitration shall be solely that of Participant, and Participant may
decide whether or not to arbitrate in his or her discretion. The "right to
select arbitration" is not mandatory on Participant, and Participant may
choose in lieu thereof to bring an action in an appropriate civil court.
Once an arbitration is commenced, however, it may not be discontinued
without the mutual consent of both parties to the arbitration.
(c) Any claim for arbitration shall be filed in writing with an
arbitrator of Participant's choice who is selected by the method described
in the next four (4) sentences. The first step of the selection shall
consist of Participant submitting a list of five (5) potential arbitrators
to the Plan. Each of the five (5) arbitrators must be either 1) a member
of the National Academy of Arbitrators located in the State of Oregon, or
2) a retired Oregon Federal District Court, Oregon Supreme Court or Oregon
Court of Appeals judge. Within one (1) week after receipt of the list, the
Plan shall select one (1) of the five (5) arbitrators as the arbitrator
for the dispute in question. If the Plan fails to select an arbitrator in
a timely manner, Participant shall then designate one (1) of the five (5)
arbitrators as the arbitrator for the dispute in question.
(d) The arbitration hearing shall be held within seven (7) days (or
as soon thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent of
Participant and the Plan. Absence from or nonparticipation at the hearing
by either party shall not prevent the issuance of an award. Hearing
procedures which will expedite the hearing may be ordered at the
arbitrator's discretion, and the arbitrator may close the hearing in his
or her sole discretion when he or she decides he or she has heard
sufficient evidence to satisfy issuance of an award.
(e) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than one (1) week after the close of the
hearing. In the event the arbitrator finds that Participant was not
terminated for Cause, he or she shall order the Plan to immediately take
the necessary steps to remedy the breach. The award of the arbitrator
shall be final and binding upon the parties. The award may be enforced in
any appropriate court as soon as possible after its rendition. If an
action is brought to confirm the award, both the Plan and Participant
agree that no appeal shall be taken by either party from any decision
rendered in such action.
PAGE 7 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(f) Solely for purposes of determining the allocation of the costs
described in this subsection, the Plan will be considered the prevailing
party in a dispute if the arbitrator determines 1) Participant was
terminated for Cause, and 2) the claim by Participant was not made in good
faith. Otherwise, Participant will be considered the prevailing party. In
the event that the Plan is the prevailing party, the fee of the arbitrator
and all necessary expenses of the hearing (excluding any attorneys' fees
incurred by the Plan) including stenographic reporter, if employed, shall
be paid by Participant. In the event that Participant is the prevailing
party, the fee of the arbitrator and all necessary expenses of the hearing
(INCLUDING all attorneys' fees incurred by Participant in pursuing his or
her claim), including the fees of a stenographic reporter if employed,
shall be paid by the Plan.
ARTICLE IV-AMOUNT, FORM AND PAYMENT OF
SUPPLEMENTAL BENEFIT
4.1 Normal Retirement Benefit
The annual benefit payable at a Normal Retirement Date under the Plan
shall equal:
(a) Three percent (3%) of Final Average Earnings for each of the
first fifteen (15) years of Credited Service, plus one and one half
percent (1-1/2%) of Final Average Earnings for each of the next ten (10)
years of Credited Service, plus, for service accrued prior to March 1,
1988, three-quarters of one percent (3/4%) for each year of Credited
Service in excess of twenty-five (25) ("Annual Supplemental Benefit");
(i) less any Basic Plan Offset;
(ii) less any Other Retirement Income.
4.2 Early Retirement Benefit
(a) The annual benefit payable at an Early Retirement Date shall
equal the Annual Supplemental Benefit based on Credited Service to the
Early Retirement Date, reduced in accordance with Paragraph 4.6 as
appropriate;
(i) less any Basic Plan Offset;
(ii) less any Other Retirement Income.
(b) An additional benefit ("Temporary Social Security Supplement")
shall be payable to a Participant who commences benefits on an Early
Retirement Date which is prior to the earliest date the Participant is
eligible for retirement benefits under the Social Security Act. Such
Temporary Social Security Supplement shall not be payable during any
period when the Participant is eligible to collect Social Security
disability benefits. Such Temporary Social Security Supplement shall equal
the Social Security benefit payable at such earliest date based on
calculation procedures in the Basic Plan. Such amount shall be payable
until the earlier of:
(i) the earliest date the Participant is eligible for Social
Security retirement benefits; or
PAGE 8 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(ii) the Participant's date of death.
4.3 Separation from Service Benefit
The annual benefit payable at a date of separation from service other than
as a result of Retirement, Disability, or Termination upon a Change in Control
shall equal:
(a) Annual Supplemental Benefit based on Credited Service and Final
Average Earnings as of the Participant's date of separation from service,
reduced in accordance with Paragraph 4.6 as appropriate;
(i) less any Basic Plan Offsets;
(ii) less any Other Retirement Income.
(b) The benefit shall commence on the first day of the month
following such date that would have constituted an Early Retirement Date
had the Participant remained employed.
4.4 Postponed Retirement Benefit
The annual benefit payable at a Postponed Retirement Date shall be equal
to the benefit determined in accordance with Paragraph 4.1 based on Credited
Service and Final Average Earnings as of the Participant's Postponed
Retirement Date.
4.5 Retention of Accrued Benefit
In the event a Participant is transferred to an employer who is not a
Participating Employer, the benefit payable at Retirement Date shall be
calculated based on Credited Service and Final Average Earnings with all
Participating Employers and as of the last date of Employment with a
Participating Employer. In the event a Participant is transferred to a
position other than that of Senior Officer, the benefit payable at Retirement
Date shall be calculated based on Credited Service and Final Average Earnings
as a Senior Officer as of the last day such Senior Officer status was held
with all Participating Employers.
4.6 Reduction of Benefits
In the event that a benefit calculated under Paragraphs 4.2 or 4.3 is to
commence prior to the Unreduced Benefit Date such benefit shall be reduced by
seven-twelfths of one percent (7/12%) for each month by which the date of
benefit commencement precedes the Unreduced Benefit Date.
4.7 Unreduced Benefit Date
"Unreduced Benefit Date" shall mean the earlier of:
(a) The first of the month following the date the Participant attains
age sixty-two (62), or
(b) The earliest date when the sum of the Participant's age and
Credited Service would total eighty-five (85) years.
PAGE 9 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
4.8 Commencement of Benefits
Benefits payable in accordance with Paragraph 4.1, 4.2 and 4.4 shall
commence on the first day of the month following the Participant's Retirement
and shall continue to be paid on the first day of each succeeding month until
the first day of the month following the later of the death of the Participant
or the death of the Participant's Spouse.
4.9 Form of Benefit
The benefits under this Plan shall be payable as follows:
(a) If the Participant is unmarried when benefits begin, a straight
life annuity; or
(b) If the Participant is married when benefits begin, an annuity in
the same amount as 4.9(a) for the life of the Participant and an annuity
of fifty percent (50%) of that amount continuing to the Participant's
Spouse for the life of Participant's Spouse, if the Participant
predeceases the Spouse.
4.10 Benefit Increases for Retirees
Benefits payable to retirees receiving benefits under this Plan shall be
increased in the same manner and at the same time as benefits are increased
for retirees under the Basic Plan.
4.11 Accelerated Distribution
Notwithstanding any other provision of the Plan, a Participant shall be
entitled to receive, upon written request to the Senior Administrative
Officer, a lump-sum distribution equal to the Actuarially Equivalent of the
vested benefits under this Plan on the date the written request was received,
subject to the following:
(a) PENALTY. Ten percent (10%) of the account shall be forfeited and
ninety percent (90%) of the account paid to the Participant.
(b) SUSPENSION. A Participant who receives a distribution under this
section shall be suspended from participation in this Plan and shall have
no future benefit accruals under this Plan.
(c) PAYMENT. The amount payable under this section shall be paid in
a lump sum within sixty-five (65) days following the receipt of the
Participant's written request by the Senior Administrative Officer.
ARTICLE V - PRERETIREMENT SURVIVOR BENEFITS
5.1 Survivor Benefit
If a Participant should die before actual Retirement, the Spouse will
receive a benefit equal to:
PAGE 10 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(a) Fifty percent (50%) of the amount of the Participant's Annual
Supplemental Benefit determined in accordance with Paragraph 4.1, based on
the Final Average Earnings at death but assuming Credited Service
continued to accrue until Normal Retirement Date;
(b) Less any benefits to such Spouse actually payable from the Basic
Plan.
5.2 Benefit Payment
Spouse benefits will be payable monthly, and will commence on the first
day of the month following the month in which the Participant dies. The last
payment will be on the first day of the month in which the Spouse dies, or
such other date pursuant to the provisions of Paragraph 5.4. Payments may
commence to eligible Dependents pursuant to Paragraph 5.3.
5.3 Dependent Benefit
If no eligible Spouse survives the Participant, or if the surviving Spouse
who was eligible for payment under this Section dies with eligible Dependents
remaining, the benefit determined in Paragraph 5.1 above shall be payable to
any eligible Dependents in equal shares. Such monthly benefit shall be paid
each Dependent until such person fails to qualify as a Dependent.
5.4 Cessation of Benefit Upon Remarriage
In the event a Spouse receiving benefits under this Plan remarries, such
Spouse will stop receiving, as of the date of remarriage, any further monthly
benefits from this Plan (including future benefits to any Dependents).
However, in lieu of any further monthly benefits from this Plan, a Spouse will
receive six (6) months of benefits in a lump sum within forty-five (45) days
after the Senior Administrative Officer is notified of such remarriage.
ARTICLE VI - DISABILITY BENEFITS
6.1 Disability Retirement
In the event a Participant suffers a Disability after completing two (2)
years of Employment, the Participant shall be entitled to Retire on a
Disability Retirement Date.
6.2 Disability Benefit
The annual Disability benefit shall be equal to the benefit determined in
accordance with Paragraph 4.1, based on projected years of Credited Service to
Normal Retirement and based on Final Average Earnings determined as of the
last day of Employment with Participating Employer before commencement of
Disability.
6.3 Form and Commencement of Benefits
Disability benefits will be payable monthly and will commence on the
Participant's Disability Retirement Date. The last Disability payment will be
as of the first day of the month during which a disabled Participant either
recovers, dies or retires under the Basic Plan. In the case of a disabled
Participant, recovery will be determined by the Senior Administrative Officer.
If the Participant retires under the Basic Plan, retirement benefits shall be
payable pursuant to Paragraph 4.1, 4.2 or 4.4 of this
PAGE 11 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Plan based on years of
Credited Service at Retirement date and Final Average Earnings assuming no
change in Earnings at his Disability Retirement Date.
6.4 Survivor and Dependent Benefits
In the event a disabled Participant dies, the Participant's Spouse and
Dependents shall be eligible for Preretirement Survivor Benefits as set out in
Article V.
6.5 Evidence of Continued Disability
The Senior Administrative Officer may require, no more frequently than
once per calendar year, that a disabled Participant submit medical evidence of
continued Disability satisfactory to the Senior Administrative Officer. The
Disability benefit may be discontinued based on a consideration of such
evidence or lack thereof.
ARTICLE VII - ADMINISTRATION
7.1 Senior Administrative Officer; Duties
This Plan shall be administered by the Senior Administrative Officer
appointed by the Committee. The Senior Administrative Officer may be a
Participant under the Plan. The Senior Administrative Officer shall have the
authority to make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of the Plan and decide or resolve any and
all questions, including interpretations of the Plan, as may arise in
connection with the Plan. The Senior Administrative Officer shall report to
the Committee on an annual basis regarding Plan activity and at such other
times as may be requested by the Committee.
7.2 Agents
In the administration of this Plan, the Senior Administrative Officer may,
from time to time, employ agents and delegate to such agents, including
employees of any Participating Employer, such administrative duties as he sees
fit, and may from time to time consult with counsel who may be counsel to any
Participating Employer.
7.3 Binding Effect of Decisions
The decision or action of the Senior Administrative Officer with respect
to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.
7.4 Indemnity of Senior Administrative Officer; Committee
Each Participating Employer shall indemnify and hold harmless the Senior
Administrative Officer, the Committee, and its individual members against any
and all claims, loss, damage, expense or liability arising from any action or
failure to act with respect to this Plan, except in the case of gross
negligence or willful misconduct.
PAGE 12 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
7.5 Availability of Plan Documents
Each Participant shall receive a copy of this Plan, and the Senior
Administrative Officer shall make available for inspection by any Participant
a copy of the rules and regulations used in administering the Plan.
7.6 Cost of Plan Administration
The Company shall bear all expenses of administration of this Plan.
However, a ratable portion of the expense shall be charged back to each
Participating Employer.
ARTICLE VIII - CLAIMS PROCEDURE
8.1 Claim
Any person claiming a benefit, requesting an interpretation or ruling
under the Plan or requesting information under the Plan shall present the
request in writing to the Senior Administrative Officer or his delegatee who
shall respond in writing as soon as practicable.
8.2 Denial of Claim
If the claim or request is denied, the written notice of denial shall
state:
(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information required
and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 Review of Claim
Any person whose claim or request is denied or who has not received a
response within thirty (30) days may request review by notice given in writing
to the Senior Administrative Officer. The claim or request shall be reviewed
by the Senior Administrative Officer, who may, but shall not be required to,
grant the claimant a hearing. On review, the claimant may have representation,
examine pertinent documents and submit issues and comments in writing.
8.4 Final Decision
The decision by the Senior Administrative Officer on review shall normally
be made within sixty (60) days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be notified and the
time limit shall be one hundred twenty (120) days. The decision shall be in
writing and shall state the reasons and relevant plan provisions. All
decisions on review shall be final and bind all parties concerned.
PAGE 13 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE IX - TERMINATION OR AMENDMENT
9.1 Amendment
The Senior Administrative Officer may amend the Plan from time to time as
may be necessary for administrative purposes and legal compliance of the Plan,
provided, however, that no such amendment shall affect the benefit rights of
Participants or Beneficiaries in the Plan. The Committee may amend the Plan at
any time, provided, however, that no amendment shall be effective to decrease
or restrict the rights of Participants and Beneficiaries to the benefit
accrued at the time of the amendment.
9.2 Termination
The Board of each Participating Employer may at any time, in its sole
discretion, terminate or suspend the Plan in whole or in part for that
Participating Employer. However, no such termination or suspension shall
adversely affect the benefits of Participants which have accrued prior to such
action, the benefits of any Participant who has previously retired, the
benefits of any Beneficiary of a Participant who has previously died, or
already accrued Plan liabilities between Participating Employers.
ARTICLE X - MISCELLANEOUS
10.1 Unfunded Plan
This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly-compensated employees" within the meaning of Sections 201, 301, and 401
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title I
of ERISA. Accordingly, the Board may terminate the Plan, subject to Paragraph
9.2 of this Plan, or remove certain employees as Participants if it is
determined by the United States Department of Labor or a court of competent
jurisdiction that the Plan constitutes an employee pension benefit plan within
the meaning of Section 3(2) of ERISA (as currently in effect or hereafter
amended) which is not so exempt.
10.2 Liability
(a) LIABILITY FOR BENEFITS. Except as otherwise provided in this
paragraph, liability for the payment of a Participant's benefit pursuant
to this Plan shall be borne solely by the Participating Employer that
employs the Participant and reports the Participant as being on its
payroll during the accrual or increase of the Plan benefit, and no
liability for the payment of any Plan benefit shall be incurred by reason
of Plan sponsorship or participation except for the Plan benefits of a
Participating Employer's own employees. Provided, however, that each
Participating Employer, by accepting the Board's designation as a
Participating Employer under the Plan and formally adopting the Plan,
agrees to assume secondary liability for the payment of any benefit
accrued or increased while a Participant is employed and on the payroll of
a Participating Employer that is a Direct Subsidiary or Indirect
Subsidiary of the Participating Employer at the time such benefit is
accrued or increased. Such liability shall survive any revocation of
designation as a Participating Employer with respect to any liabilities as
accrued at the time of such revocation. Nothing in this paragraph shall be
interpreted as prohibiting
PAGE 14 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
any Participating Employer or any other person
from expressly agreeing to assumption of liability for a Plan
Participant's payment of any benefits under the Plan.
(b) UNSECURED GENERAL CREDITOR. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no secured legal
or equitable rights, interest or claims in any property or assets of
Participating Employer, nor shall they be Beneficiaries of, or have any
rights, claims or interests in any life insurance policies, annuity
contracts or the proceeds therefrom owned or which may be acquired by
Participating Employer. Except as provided in Section 10.3, such policies,
annuity contracts or other assets of Participating Employer shall not be
held under any trust for the benefit of Participants, their Beneficiaries,
heirs, successors or assigns, or held in any way as collateral security
for the fulfilling of the obligations of Participating Employer under this
Plan. Any and all of Participating Employer's assets and policies shall
be, and remain, the general, unpledged, unrestricted assets of
Participating Employer. Participating Employer's obligation under the Plan
shall be that of an unfunded and unsecured promise to pay money in the
future.
10.3 Trust Fund
At its discretion, each Participating Employer, jointly or severally, may
establish one or more trusts, with such trustees as the Board may approve, for
the purpose of providing for the payment of such benefits. Such trust or
trusts may be irrevocable, but the assets thereof shall be subject to the
claims of Participating Employer's creditors. To the extent any benefits
provided under the Plan are actually paid from any such trust, Participating
Employer shall have no further obligation with respect thereto, but to the
extent not so paid, such benefits shall remain the obligation of, and shall be
paid by a Participating Employer.
10.4 Nonassignability
Neither a Participant nor any other person shall have any right to sell,
assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be nonassignable and nontransferable. No part of
the amount payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency.
10.5 Payment to Guardian
If a Plan benefit is payable to a minor or a person declared incompetent
or to a person incapable of handling the disposition of property, the Senior
Administrative Officer may direct payment of such Plan benefit to the
guardian, legal representative or person having the care and custody of such
minor or incompetent person. The Senior Administrative Officer may require
proof of incompetency, minority, incapacity or guardianship as he may deem
appropriate prior to distribution of the Plan benefit. Such distribution shall
completely discharge the Senior Administrative Officer, the Participating
Employer and the Company from all liability with respect to such benefit.
10.6 Not a Contract of Employment
The terms and conditions of this Plan shall not be deemed to constitute a
contract of employment between Participating Employer and the Participant, and
the Participant (or the Partici-
PAGE 15 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
pant's Beneficiary) shall have no rights
against Participating Employer except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of Participating Employer
or to interfere with the right of Participating Employer to discipline or
discharge a Participant at any time.
10.7 Protective Provisions
A Participant shall cooperate with Participating Employer by furnishing
any and all information requested by Participating Employer, in order to
facilitate the payment of benefits hereunder, and by taking such physical
examinations as Participating Employer may deem necessary and taking such
other action as may be requested by Participating Employer.
10.8 Terms
In this Plan document, unless the context clearly indicates the contrary,
the masculine gender will be deemed to include the feminine gender, and the
singular shall include the plural.
10.9 Governing Law
The provisions of this Plan shall be construed and interpreted according
to the laws of the State of Oregon, except as preempted by federal law.
10.10 Validity
If any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.
10.11 Notice
Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail, to the Senior
Administrative Officer or the Secretary of the Participating Employer. Notice
mailed to the Participant shall be at such address as is given in the records
of the Participating Employer. Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
10.12 Successors
The provisions of this Plan shall bind and inure to the benefit of
Participating Employer and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise, acquire all or
substantially all of the business and assets of Participating Employer, and
successors of any such corporation or other business entity.
PAGE 16 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
IN WITNESS WHEREOF, and pursuant to resolution of the Board, the Company
has caused this instrument to be executed by its officers thereunto duly
authorized, as of the 1st day of April, 1996.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Its: Vice President
PAGE 17 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
PORTLAND GENERAL CORPORATION
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
1996 RESTATEMENT
Effective January 1, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I - PURPOSE 1
1.1 Purpose 1
1.2 Effective Date 1
1.3 Plan Sponsor 1
ARTICLE II - DEFINITIONS 1
2.1 Actuarially Equivalent 1
2.2 Benefit Service 1
2.3 Board 1
2.4 Change in Control 2
2.5 Committee 3
2.6 Company 3
2.7 Compensation 3
2.8 Dependent 3
2.9 Direct Subsidiary 3
2.10 Effective Date 3
2.11 Indirect Subsidiary 3
2.12 Marriage 3
2.13 Outside Director 3
2.14 Participant 4
2.15 Participating Company 4
2.16 Plan 4
2.17 Retirement Date 4
2.18 Senior Administrative Officer 4
2.19 Spouse 4
2.20 Suspension Date 4
2.21 Termination 4
ARTICLE III - RETIREMENT BENEFITS 5
3.1 Eligibility 5
3.2 Benefit Upon Retirement 5
3.3 Form of Benefit Payment 5
3.4 Commencement of Payment 6
ARTICLE IV - BENEFITS AFTER CHANGE IN CONTROL 6
4.1 Benefit Upon a Change in Control 6
4.2 Form of Payment 6
4.3 Commencement of Payment 6
(i)
TABLE OF CONTENTS
PAGE
ARTICLE V - SURVIVOR BENEFITS 6
5.1 Survivor Benefit 6
5.2 Cessation of Benefit Upon Remarriage 7
ARTICLE VI - ADMINISTRATION 7
6.1 Senior Administrative Officer; Duties 7
6.2 Agents 7
6.3 Binding Effect of Decisions 7
6.4 Indemnity of Senior Administrative Officer; Committee 7
6.5 Availability of Plan Documents 8
6.6 Cost of Plan Administration 8
ARTICLE VII - CLAIMS PROCEDURE 8
7.1 Claim 8
7.2 Denial of Claim 8
7.3 Review of Claim 8
7.4 Final Decision 8
ARTICLE VIII - AMENDMENT AND TERMINATION OF PLAN 9
8.1 Amendment 9
8.2 Termination 9
ARTICLE IX - MISCELLANEOUS 9
9.1 Unfunded Plan 9
9.2 Liability 9
9.3 Trust Fund 10
9.4 Nonassignability 10
9.5 Payment to Guardian 10
9.6 Terms 10
9.7 Protective Provisions 10
9.8 Governing Law 11
9.9 Validity 11
9.10 Notice 11
9.11 Successors 11
9.12 Not a Contract of Service 11
(ii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
A
Actuarial Equivalent: 2.1 1
B
Benefit Service: 2.2 1
Board: 2.3 1
C
Change in Control: 2.4 2
Committee: 2.5 3
Company: 2.6 3
Compensation: 2.7 3
D
Dependent: 2.8 3
Direct Subsidiary: 2.9 3
E
Effective Date: 2.10 3
Exchange Act: 2.4(a) 2
I
Indirect Subsidiary: 2.11 3
M
Marriage: 2.12 3
O
Outside Director: 2.13 3
P
Participant: 2.14 4
Participating Company: 2.15 4
PGC: 2.4(a) 2
PGE: 2.4(a) 2
Plan: 2.16 4
R
Retirement Date: 2.17 4
(iii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
S
Senior Administrative Officer: 2.18 4
Spouse: 2.19 4
Suspension Date: 2.20 4
T
Termination: 2.21 4
(iv)
PORTLAND GENERAL CORPORATION
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
1996 RESTATEMENT
ARTICLE I - PURPOSE
1.1 Purpose
The Portland General Corporation Retirement Plan for Outside Directors is
designed to enhance the Participating Companies' ability to attract and retain
competent and experienced Directors by providing retirement benefits for
certain Directors who retire after the Effective Date. The Plan became
effective on January 1, 1985 and was amended by the 1990 Restatement
1.2 Effective Date
This 1996 Restatement is effective January 1, 1996.
1.3 Plan Sponsor
The Plan is maintained for the benefit of Outside Directors of Portland
General Corporation, an Oregon corporation, and Outside Directors of any
corporations or other entities affiliated with or subsidiary to it, if such
corporations or entities are selected by the Board.
ARTICLE II - DEFINITIONS
2.1 Actuarially Equivalent
"Actuarially Equivalent" shall mean the equivalence in value between two
(2) or more forms and/or times of payment based upon a determination by an
actuary chosen by the Senior Administrative Officer using a discount rate
equal to the 30-year Treasury Bill rate on the January 1st of the year in
which the determination occurs plus one percent (1%) and the unisex mortality
table chosen by the actuary, which choice shall be binding on all parties.
2.2 Benefit Service
"Benefit Service" shall mean the continuous amount of time, in completed
months, as an Outside Director. Benefit Service shall commence on the Outside
Director's first election to the Board as an Outside Director and shall end at
the last Board or committee meeting the Outside Director attends. Concurrent
service on more than one Participating Company's Board shall be counted only
once as actual months of service.
2.3 Board
"Board" shall mean the Board of Directors of Portland General Corporation.
PAGE 1 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
2.4 Change in Control
A "Change in Control" shall mean:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Portland General Corporation ("PGC") or Portland General
Electric ("PGE"), any trustee or other fiduciary holding securities under
an employee benefit plan of PGC or PGE, or any Employer owned, directly or
indirectly, by the stockholders of PGC or PGE in substantially the same
proportions as their ownership of stock of PGC or PGE), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities representing thirty percent (30%) or
more of the combined voting power of PGC's or PGE's then outstanding
voting securities;
(b) During any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with PGC to effect a transaction described in clause (a), (c) or (d) of
this paragraph) whose election by the Board or nomination for election by
PGC's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors as of the
beginning of the period of whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof;
(c) The stockholders of PGC or PGE approve a merger or consolidation
of PGC or PGE with any other corporation, other than:
(i) A merger or consolidation which would result in the voting
securities of PGC or PGE outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of the voting
securities of PGC or PGE or such surviving entity outstanding
immediately after such merger or consolidation, or
(ii) A merger or consolidation effected to implement a
recapitalization of PGC or PGE (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than thirty percent
(30%) of the combined voting power of PGC's or PGE's then outstanding
securities; or
(d) The stockholders of PGC or PGE approve a plan of complete
liquidation of PGC or PGE or an agreement for the sale or disposition by
PGC or PGE of sixty percent (60%) or more of PGC's or PGE's assets
(including stock of subsidiaries) to a person or entity that is not a
subsidiary or parent corporation. For purposes of determining whether a
sale or other disposition of sixty percent (60%) of PGE's assets has
occurred, only long-term assets shall be considered. Assets shall not be
considered long-term assets if they constitute "regulatory assets,"
"stranded investments" or abandoned or nonoperational projects. Projects
in economy shutdown shall be considered long-term assets.
PAGE 2 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
2.5 Committee
"Committee" shall mean the Human Resources Committee of the Board.
2.6 Company
"Company" shall mean Portland General Corporation, an Oregon Corporation.
2.7 Compensation
"Compensation" shall mean the greater of actual annual retainer and fees
for attendance at Board and various committee meetings that the Outside
Director earned in the last 12 months of Benefit Service, or one-third (1/3)
of the total annual retainer and fees earned in the last thirty-six (36)
months of Benefit Service.
2.8 Dependent
"Dependent" shall mean an unmarried child of the Outside Director until
the age of nineteen (19) (age twenty-six (26) if a full-time student). An
unmarried child shall also qualify as a Dependent by reason of mental
retardation or physical handicap for as long as the condition exists, if such
child qualifies as a dependent under regulations set forth by the Internal
Revenue Service by reason of such mental retardation or physical handicap.
2.9 Direct Subsidiary
"Direct Subsidiary" means any corporation of which a Participating Company
owns at least eighty percent (80%) of the total combined voting power of all
classes of its stock entitled to vote.
2.10 Effective Date
"Effective Date" shall mean January 1, 1985.
2.11 Indirect Subsidiary
"Indirect Subsidiary" means any corporation of which a Participating
Company directly and constructively owns at least eighty percent (80%) of the
total combined voting power of all classes of its stock entitled to vote. In
determining the amount of stock of a corporation that is constructively owned
by a Participating Company, stock owned, directly or constructively, by a
corporation shall be considered as being owned proportionately by its
shareholders according to such shareholders' share of voting power of all
classes of its stock entitled to vote.
2.12 Marriage
"Marriage" shall mean the Marriage or Remarriage of a Participant prior to
their separation from service on the Board.
2.13 Outside Director
"Outside Director" shall mean a member of the Board who is not an employee
of Portland General Corporation or any Direct Subsidiary or Indirect
Subsidiary of Portland General Corporation.
PAGE 3 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
2.14 Participant
"Participant" shall mean any eligible Outside Director elected to the
Board prior to the Suspension Date.
2.15 Participating Company
"Participating Company" shall mean the Company or any affiliated or
subsidiary company designated by the Board as a Participating Company under
the Plan, as long as such designation has become effective and continues to be
in effect. The designation as a Participating Company shall become effective
only upon acceptance of such designation and the formal adoption of the Plan
by a Participating Company. A Participating Company may revoke its acceptance
of designation as a Participating Company at any time, but until it makes such
revocation, all of the provisions of this Plan and any amendments thereto
shall apply to the Outside Directors of the Participating Company and their
Beneficiaries.
2.16 Plan
"Plan" shall mean the Portland General Corporation Retirement Plan for
Outside Directors.
2.17 Retirement Date
"Retirement Date" shall mean the first day of the month coincident with or
next following the date of separation from service as an Outside Director,
other than by death, after the earlier of age seventy (70) or ten (10) years
of Benefit Service.
2.18 Senior Administrative Officer
"Senior Administrative Officer" shall mean the employee in the management
position designated by the Committee to administer the Plan.
2.19 Spouse
"Spouse" shall mean the person to whom the Outside Director was legally
married at the Outside Director's date of death.
2.20 Suspension Date
"Suspension Date" shall mean January 1, 1996.
2.21 Termination
"Termination" shall mean removal from the Board by shareholders during a
current term of office.
PAGE 4 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
ARTICLE III - RETIREMENT BENEFITS
3.1 Eligibility
Each Participant who reaches a Retirement Date on or after the Effective
Date shall be eligible for retirement benefits under this Plan.
3.2 Benefit Upon Retirement
(a) The annual benefit payable under this Plan shall equal five
percent (5%) of Compensation for each of the first ten (10) years of
Benefit Service plus two and one-half percent (2.5%) of Compensation for
each of the next ten (10) years of Benefit Service up to a maximum benefit
of seventy-five percent (75%) of Compensation for years of Benefit Service
completed prior to the Suspension Date. No further accruals shall be made
following the Suspension Date.
(b) All Participants shall be vested in their accrued benefit as of
the Suspension Date.
3.3 Form of Benefit Payment
The benefits shall be paid in the form elected by the Participant at the
time the Outside Director becomes a Participant in the Plan. Except in the
case of Marriage of a Participant (in which case a Participant may reelect),
this election shall be made one time and shall be irrevocable. The election
shall be in the form prescribed by the Company and filed with the Senior
Administrative Officer. The following options shall be available:
(a) If the Participant is unmarried as of the Retirement Date, the
benefit shall be paid:
(i) As a straight life annuity; or
(ii) Over a length of time equal to the lesser of the Outside
Director's Benefit Service or the Outside Director's lifetime.
(b) If the Participant is married as of the Retirement Date, the
benefit may be paid:
(i) As a straight life annuity; or
(ii) As a fifty percent (50%) joint and survivor annuity; or
(iii) As a one hundred percent (100%) joint and survivor
annuity; or
(iv) Over a period of time equal to the Outside Director's
Benefit Service so long as the Outside Director or Spouse is living;
or
(v) Over a length of time equal to the lesser of the Outside
Director's Benefit Service or the Outside Director's lifetime, or upon
death, survivor benefit payable for the lesser of Spouse's life,
twelve (12) months, or Outside Director's Benefit Service.
Benefits paid in a form other than pursuant to Section 3.3(a)(ii) or
(b)(v) shall be calculated on an Actuarially Equivalent basis. In the event an
election is not on file at the time benefit payments
PAGE 5 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
commence, benefits shall
be paid as a straight life annuity if the Participant is unmarried or a fifty
percent (50%) joint and survivor annuity if the Participant is married. One-
twelfth (1/12) of the annual benefit shall be payable monthly on the first day
of each month.
(c) If the benefit to be paid is less than ten thousand dollars
($10,000) as of the Suspension Date, a lump-sum payment shall be paid
notwithstanding the form elected.
3.4 Commencement of Payment
Benefit payments shall commence within thirty (30) days following
separation from service on the Board.
ARTICLE IV - BENEFITS AFTER CHANGE IN CONTROL
4.1 Benefit Upon a Change in Control
Upon the Termination of a Participant within three (3) years following a
Change in Control, the following shall apply to the benefits for each
Participant who is an Outside Director at the time such Change in Control
occurs:
(a) A benefit shall be payable regardless of the Outside Director's
Benefit Service, Retirement Date, or age.
(b) The annual benefit payable shall equal five percent (5%) of
Compensation for each of the first ten (10) years of Benefit Service plus
two and one-half percent (2.5%) of Compensation for each of the remaining
years of Benefit Service, up to ten (10) years of Benefit Service, for
years of Benefit Service completed prior to the Suspension Date, except
that the Participant's total benefit shall not exceed seventy-five percent
(75%) of Compensation.
4.2 Form of Payment
A benefit, Actuarially Equivalent to the benefit payable over the lesser
of twenty (20) years or years of service on the Board as computed under
4.1(c), shall be paid in a lump sum.
4.3 Commencement of Payment
Benefit payment shall be made within sixty (60) days following Termination
of the Outside Director.
ARTICLE V - SURVIVOR BENEFITS
5.1 Survivor Benefit
If an Outside Director, who is eligible for a retirement benefit, dies
while serving on the Board, a survivor's benefit equal to the Participant's
monthly Retirement benefit shall be paid to the Spouse of the Outside
Director. Such benefit shall be the Actuarially Equivalent amount payable
under this Plan, as of the Suspension Date, as if the Outside Director had
retired on the first day of the
PAGE 6 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
month in which he or she died and had been
receiving the benefit as elected under Section 3.3 (b) (ii), (iii), (iv), or
(v).
5.2 Cessation of Benefit Upon Remarriage
In the event a Spouse receiving benefits under this Plan remarries, such
Spouse will stop receiving, as of the date of remarriage, any further monthly
benefits from this Plan . However, in lieu of any further monthly benefits
from this Plan, a Spouse will receive the lesser of the remaining monthly
benefits or six (6) months of benefits in a lump sum within forty-five (45)
days from the date of such remarriage. In the event the Senior Administrative
Officer is not notified of such remarriage within six (6) months, no benefit
shall be payable under this Section.
ARTICLE VI - ADMINISTRATION
6.1 Senior Administrative Officer; Duties
This Plan shall be administered by the Senior Administrative Officer, as
designated by the Committee. Members of the Committee may be Participants
under this Plan. The Senior Administrative Officer shall have the authority to
make, amend, interpret and enforce all appropriate rules and regulations for
the administration of this Plan and decide or resolve any and all questions
including interpretations of this Plan as may arise in connection with the
Plan. The Senior Administrative Officer shall report to the Committee on an
annual basis regarding Plan activity and at such other times as may be
requested by the Committee.
6.2 Agents
In the administration of the Plan, the Senior Administrative Officer may,
from time to time, employ agents and delegate to such agents, including
employees of any Participating Company, such administrative duties as it sees
fit, and may, from time to time, consult with counsel, who may be counsel to
any Participating Company.
6.3 Binding Effect of Decisions
The decision or action of the Senior Administrative Officer with respect
to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in the Plan.
6.4 Indemnity of Senior Administrative Officer; Committee
Each Participating Company shall indemnify and hold harmless the Senior
Administrative Officer and the Committee and its individual members against
any and all claims, loss, damage, expense or liability arising from any action
or failure to act with respect to this Plan, except in the case of gross
negligence or willful misconduct.
PAGE 7 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
6.5 Availability of Plan Documents
Each Participant shall receive a copy of this Plan, and the Senior
Administrative Officer shall make available for inspection by any Participant
a copy of the rules and regulations used in administering the Plan.
6.6 Cost of Plan Administration
The Company shall bear all expenses of administration. However, a ratable
portion of the expense shall be charged back to each Participating Company.
ARTICLE VII - CLAIMS PROCEDURE
7.1 Claim
Any person claiming a benefit, requesting an interpretation or ruling
under the Plan or requesting information under the Plan shall present the
request in writing to the Senior Administrative Officer or his delegatee who
shall respond in writing as soon as practicable.
7.2 Denial of Claim
If the claim or request is denied, the written notice of denial shall
state:
(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.
(b) A description of any additional material or information required
and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
7.3 Review of Claim
Any person whose claim or request is denied or who has not received a
response within thirty (30) days may request review by notice given in writing
to the Senior Administrative Officer. The claim or request shall be reviewed
by the Senior Administrative Officer, who may, but shall not be required to,
grant the claimant a hearing. On review, the claimant may have representation,
examine pertinent documents and submit issues and comments in writing.
7.4 Final Decision
The decision of the Senior Administrative Officer on review shall normally
be made within sixty (60) days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be notified and the
time limit shall be one hundred twenty (120) days. The decision shall be in
writing and shall state the reasons and relevant Plan provisions. All
decisions on review shall be final and bind all parties concerned.
PAGE 8 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
ARTICLE VIII - AMENDMENT AND TERMINATION OF PLAN
8.1 Amendment
The Senior Administrative Officer may amend the Plan from time to time as
may be necessary for administrative purposes and legal compliance, provided,
however, that no such amendment shall affect the benefit rights of
Participants or Beneficiaries in the Plan. The Committee may amend the Plan at
any time, provided, however, that no amendment shall be effective to decrease
or restrict the rights of Participants and Beneficiaries to the benefit
accrued at the time of the amendment.
8.2 Termination
The Board of each Participating Employer may at any time, in its sole
discretion, terminate or suspend the Plan in whole or in part for that
Participating Employer. However, no such termination or suspension shall
adversely affect the benefits of Participants which have accrued prior to such
action, the benefits of any Participant who has previously retired, the
benefits of any Beneficiary of a Participant who has previously died, or
already accrued Plan liabilities between Participating Employers.
ARTICLE IX - MISCELLANEOUS
9.1 Unfunded Plan
This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of Outside
Directors.
9.2 Liability
(a) LIABILITY OF BENEFITS. Except as otherwise provided in this
paragraph, liability for the payment of a Participant's benefit pursuant
to this Plan shall be borne solely by the Participating Company for which
the Participant serves during the accrual or increase of the Plan benefit,
and no liability for the payment of any Plan benefit shall be incurred by
reason of Plan sponsorship or participation except for the Plan benefits
of a Participating Company's own Outside Directors. Provided, however,
that each Participating Company, by accepting the Board's designation as a
Participating Company under the Plan and formally adopting the Plan,
agrees to assume secondary liability for the payment of any benefit
accrued or increased while a Participant serves on the Board of a
Participating Company that is a Direct Subsidiary or Indirect Subsidiary
of the Participating Company at the time such benefit is accrued or
increased. Such liability shall survive any revocation of designation as a
Participating Employer with respect to any liabilities accrued at the time
of such revocation. Nothing in this paragraph shall be interpreted as
prohibiting any Participating Company or any other person from expressly
agreeing to the liability for a Plan Participants' payment of any benefits
under the Plan.
(b) UNSECURED GENERAL CREDITOR. Participants of this Plan, and any
Spouse, Dependents, heirs, successors, and assigns shall have no secured
legal or equitable rights, interest or claims in any property or assets of
Participating Company, nor shall they be beneficiaries of, or have any
rights, claims or interests in any life insurance policies, annuity
contracts or the proceeds therefrom owned or which may be acquired by
Participating Company. Except as
PAGE 9 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
provided in Section 9.3, such policies,
annuity contracts or other assets of Participating Company shall not be
held under any trust for the benefit of any Participant, Spouse,
Dependents, heirs, successors or assigns, or held in any way as collateral
security for the fulfilling of the obligations of Participating Company
under this Plan. Any and all of Participating Company's assets and
policies shall be, and remain, the general, unpledged, unrestricted assets
of Participating Company. Participating Company's obligation under the
Plan shall be that of an unfunded and unsecured promise to pay money in
the future.
9.3 Trust Fund
At its discretion, each Participating Company, jointly or severally, may
establish one or more trusts, with such trustees as the Board may approve, for
the purpose of providing for the payment of such benefits. Such trust or
trusts may be irrevocable, but the assets thereof shall be subject to the
claims of Participating Company's creditors. To the extent any benefits
provided under the Plan are actually paid from any such trust, Participating
Company shall have no further obligation with respect thereto, but to the
extent not so paid, such benefits shall remain the obligation of, and shall be
paid by, Participating Company.
9.4 Nonassignability
Neither a Participant of this Plan nor any other person shall have any
right to sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to
which are, expressly declared to be nonassignable and nontransferable. No part
of the amount payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency.
9.5 Payment to Guardian
If a Plan benefit is payable to a minor or a person declared incompetent
or to a person incapable of handling the disposition of property, the Senior
Administrative Officer may direct payment of such Plan benefit to the
guardian, legal representative or person having the care and custody of such
minor or incompetent person. The Senior Administrative Officer may require
proof of incompetency, minority, incapacity or guardianship as he may deem
appropriate prior to distribution of the Plan benefit. Such distribution shall
completely discharge the Senior Administrative Officer, the Committee and the
Company from all liability with respect to such benefit.
9.6 Terms
In this Plan document, unless the context clearly indicates the contrary,
the masculine gender will be deemed to include the feminine gender, and the
singular shall include the plural.
9.7 Protective Provisions
A Participant shall cooperate with Participating Company by furnishing any
and all information requested by Participating Company, in order to facilitate
the payment of benefits hereunder, and by taking such physical examinations as
Participating Company may deem necessary and taking such other action as may
be requested by Participating Company.
PAGE 10 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
9.8 Governing Law
The provisions of this Plan shall be construed and interpreted according
to the laws of the State of Oregon, except as preempted by federal law.
9.9 Validity
If any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.
9.10 Notice
Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail, to the Senior
Administrative Officer or the Secretary of Company. Notice, if mailed, shall
be addressed to the principal executive offices of Company. Notice mailed to
the Participant shall be at such address as is given in the records of the
Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.
9.11 Successors
The provisions of this Plan shall bind and inure to the benefit of
Participating Company and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise, acquire all or
substantially all of the business and assets of Participating Company, and
successors of any such corporation or other business entity.
9.12 Not a Contract of Service
The terms and conditions of this Plan shall not be deemed to constitute a
contract of service between a Participating Company and a Participant, and
neither a Participant nor a Participant's Spouse or Dependent shall have any
rights against a Participating Company except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained on the Board of a Participating Company
nor shall it interfere with the Participant's right to terminate his
directorship at any time.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its officers thereunto duly recognized, as of the 1st day of January, 1996.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Its Vice President
Dated: May 7, 1996
PAGE 11 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
Effective January 1, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I - PURPOSE 1
1.1 Purpose 1
1.2 Effective Date 1
ARTICLE II - DEFINITIONS 1
2.1 Board 1
2.2 Cash Value 1
2.3 Cause 1
2.4 Change in Control 1
2.5 Committee 2
2.6 Company 2
2.7 Date of Participation 2
2.8 Direct Subsidiary 3
2.9 Indirect Subsidiary 3
2.10 Insurer 3
2.11 Net Single Premium 3
2.12 Outside Director 3
2.13 Participant 3
2.14 Participant's Share 3
2.15 Participating Company 3
2.16 Participating Company's Share of Premium 4
2.17 Plan 4
2.18 Policy 4
2.19 Retirement 4
2.20 Senior Administrative Officer 4
ARTICLE III - PARTICIPATION 4
3.1 Eligibility 4
3.2 Election to Participate 4
ARTICLE IV - POLICY TITLE AND OWNERSHIP 4
4.1 Policy Title 4
4.2 Participating Company's Security Interest 5
ARTICLE V - PREMIUM PAYMENT 5
5.1 Participating Company's Premium Payment 5
5.2 Payment of the Participant's Share 5
(i)
TABLE OF CONTENTS
PAGE
ARTICLE VI - PARTICIPATING COMPANY'S INTEREST IN THE POLICY 5
6.1 Collateral Assignment 5
6.2 Limitations 5
ARTICLE VII - PARTICIPANT'S INTEREST IN THE POLICY 6
7.1 Upon Surrender or Cancellation 6
7.2 Upon Death 6
7.3 Ownership of Cash Surrender Value 6
ARTICLE VIII - PLAN BENEFITS 6
8.1 Upon Termination of Participation in the Plan 6
8.2 Upon Termination of Service 6
8.3 Upon Change in Control 7
8.4 Upon Retirement 7
8.5 Timely Transfer of Ownership 7
ARTICLE IX - DURATION OF THE PLAN 7
9.1 Plan Continuation 7
9.2 Termination of Arrangement 8
ARTICLE X - AMENDMENT AND TERMINATION OF PLAN 8
10.1 Amendment 8
10.2 Termination 8
ARTICLE XI - INSURER NOT A PARTY TO PLAN 8
ARTICLE XII - NAMED FIDUCIARY 8
12.1 Senior Administrative Officer; Committee 8
12.2 Indemnity of Senior Administrative Officer; Committee 9
12.3 Availability of Plan Documents 9
12.4 Cost of Plan Administration 9
ARTICLE XIII - CLAIMS PROCEDURE 9
13.1 Claim 9
13.2 Denial of Claim 9
13.3 Review of Claim 9
13.4 Final Decision 10
(ii)
TABLE OF CONTENTS
PAGE
ARTICLE XIV - MISCELLANEOUS 10
14.1 Liability for Benefits 10
14.2 Allocation of Asset 10
14.3 Protective Provisions 10
14.4 Transfer of Participant's Interest in the Policy 11
14.5 Terms 11
14.6 Governing Law 11
14.7 Validity 11
14.8 Notice 11
14.9 Successors 11
14.10 Not a Contract of Service 11
SCHEDULE I
Death Benefits Payable Under Portland General Corporation
Outside Directors' Life Insurance Benefit Plan
EXHIBIT A
Collateral Assignment
(iii)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
B
Board: 2.1 1
C
Cash Value: 2.2 1
Cause: 2.3 1
Change in Control: 2.4 1
Committee: 2.5 2
Company: 2.6 2
D
Date of Participation: 2.7 2
Direct Subsidiary: 2.8 3
E
Exchange Act: 2.4(a) 1
I
Indirect Subsidiary: 2.9 3
Insurer: 2.10 3
N
Named Fiduciary: 12.1 8
Net Single Premium: 2.11 3
O
Outside Director: 2.12 3
P
Participant: 2.13 3
Participant's Share: 2.14 3
Participating Company: 2.15 3
Participating Company's Share of Premium: 2.16 4
PGC: 2.4(a) 1
PGE: 2.4(a) 1
Plan: 2.17 4
Policy: 2.18 4
(iv)
INDEX OF TERMS
TERM AND PROVISION NUMBER PAGE
R
Retirement: 2.19 4
S
Senior Administrative Officer: 2.20 4
(v)
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
ARTICLE I - PURPOSE
1.1 Purpose
This Plan has been established to provide Outside Directors of Portland
General Corporation and Participating Companies with supplemental life
insurance protection for their families in the event of death under a split
dollar life insurance arrangement. This Plan became effective on January 1,
1987 and was restated effective December 1, 1988.
1.2 Effective Date
This 1996 Restatement is adopted to make amendments to the Plan effective
January 1, 1996.
ARTICLE II - DEFINITIONS
Whenever used in this document, the following terms shall have the
meanings set forth in this Article unless a contrary or different meaning is
expressly provided:
2.1 Board
"Board" shall mean the Board of Directors of Portland General Corporation.
2.2 Cash Value
"Cash Value" shall mean the Policy's cash value as that term is defined in
the Policy.
2.3 Cause
"Cause" shall mean a breach of fiduciary duty while a member of the Board.
2.4 Change in Control
A "Change in Control" shall mean:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Portland General Corporation ("PGC") or Portland General
Electric ("PGE"), any trustee or other fiduciary holding securities under
an employee benefit plan of PGC or PGE, or any Employer owned, directly or
indirectly, by the stockholders of PGC or PGE in substantially the same
proportions as their ownership of stock of PGC or PGE), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities representing thirty
PAGE 1 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
percent (30%) or
more of the combined voting power of PGC's or PGE's then outstanding
voting securities;
(b) During any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with PGC to effect a transaction described in clause (a), (c) or (d) of
this paragraph) whose election by the Board or nomination for election by
PGC's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors as of the
beginning of the period of whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof;
(c) The stockholders of PGC or PGE approve a merger or consolidation
of PGC or PGE with any other corporation, other than:
(i) A merger or consolidation which would result in the voting
securities of PGC or PGE outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of the voting
securities of PGC or PGE or such surviving entity outstanding
immediately after such merger or consolidation, or
(ii) A merger or consolidation effected to implement a
recapitalization of PGC or PGE (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than thirty percent
(30%) of the combined voting power of PGC's or PGE's then outstanding
securities; or
(d) The stockholders of PGC or PGE approve a plan of complete
liquidation of PGC or PGE or an agreement for the sale or disposition by
PGC or PGE of sixty percent (60%) or more of PGC's or PGE's assets
(including stock of subsidiaries) to a person or entity that is not a
subsidiary or parent corporation. For purposes of determining whether a
sale or other disposition of sixty percent (60%) of PGE's assets has
occurred, only long-term assets shall be considered. Assets shall not be
considered long-term assets if they constitute "regulatory assets,"
"stranded investments" or abandoned or nonoperational projects. Projects
in economy shutdown shall be considered long-term assets.
2.5 Committee
"Committee" shall mean the Human Resources Committee of the Board.
2.6 Company
"Company" shall mean Portland General Corporation, an Oregon corporation.
2.7 Date of Participation
"Date of Participation" shall mean the earlier of the date on which the
Policy is issued or the date on which the Insurer agrees to bind coverage.
PAGE 2 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
2.8 Direct Subsidiary
"Direct Subsidiary" means any corporation of which a Participating Company
owns at least eighty percent (80%) of the total combined voting power of all
classes of its stock entitled to vote.
2.9 Indirect Subsidiary
"Indirect Subsidiary" means any corporation of which a Participating
Company directly and constructively owns at least eighty percent (80%) of the
total combined voting power of all classes of its stock entitled to vote. In
determining the amount of stock of a corporation that is constructively owned
by a Participating Company, stock owned, directly or constructively, by a
corporation shall be considered as being owned proportionately by its
shareholders according to such shareholders' share of voting power of all
classes of its stock entitled to vote.
2.10 Insurer
"Insurer" shall mean any insurance company issuing a Policy under this
Plan.
2.11 Net Single Premium
"Net Single Premium" shall mean the amount calculated by an enrolled
actuary selected by the Senior Administrative Officer, required to obtain the
level death benefit promised in Table I, calculated using the 1983 Group
Annuity Table male rates and employing continuous functions.
2.12 Outside Director
"Outside Director" shall mean a member of the Board who is not an employee
of Portland General Corporation or any Direct Subsidiary or an Indirect
Subsidiary of Portland General Corporation.
2.13 Participant
"Participant" shall mean an Outside Director who has elected to
participate in the Plan and was an Outside Director on or before January 1,
1996.
2.14 Participant's Share
"Participant's Share" shall mean the aggregate portion of premiums
contributed by the Participant.
2.15 Participating Company
"Participating Company" shall mean the Company or any affiliated or
subsidiary company designated by the Board as a Participating Company under
the Plan, as long as such designation has become effective and continues to be
in effect. The designation as a Participating Company shall become effective
only upon the acceptance of such designation and the formal adoption of the
Plan by a Participating Company. A Participating Company may revoke its
acceptance of designation as a Participating Company at any time, but until it
makes such revocation, all of the provisions of this Plan and any amendments
thereto shall apply to the Participants and their beneficiaries of the
Participating Company.
PAGE 3 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
2.16 Participating Company's Share of Premium
"Participating Company's Share of Premium" shall mean the aggregate amount
of insurance premium paid by the Participating Company less the Participant's
Share.
2.17 Plan
"Plan" shall mean the Portland General Corporation Outside Directors' Life
Insurance Benefit Plan, as may be amended from time to time.
2.18 Policy
"Policy" shall mean each life insurance policy which is issued by an
insurer on the life of the Participant.
2.19 Retirement
"Retirement" shall mean separation from service on the Board as an Outside
Director, at the earlier of age seventy (70) or ten (10) years of Benefit
Service, as defined in the Company's Retirement Plan for Outside Directors.
2.20 Senior Administrative Officer
"Senior Administrative Officer" shall mean the employee in the management
position designated by the Committee to administer the Plan.
ARTICLE III - PARTICIPATION
3.1 Eligibility
Eligibility shall be limited to Outside Directors who served on the Board
on or before January 1, 1996.
3.2 Election to Participate
An Outside Director may elect to participate in the Plan by completing
such documents as may be prescribed by the Senior Administrative Officer.
ARTICLE IV - POLICY TITLE AND OWNERSHIP
4.1 Policy Title
The Participant, or his transferee, shall be the owner of the Policy and
may exercise all ownership rights granted to the owner by the terms of the
Policy, except as herein provided. These shall include, but are not limited
to, the right to assign his interest in the Policy, the right to change the
beneficiary of that portion of the proceeds to which he is entitled under
Article VII, and the right to exercise settlement options.
PAGE 4 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
4.2 Participating Company's Security Interest
The only rights in and to the Policy granted to a Participating Company
shall be limited to its security interest in the cash value of the Policy, as
defined in the collateral assignment attached as Exhibit A, and a portion of
the death benefit, as hereinafter provided under Article VI.
ARTICLE V - PREMIUM PAYMENT
5.1 Participating Company's Premium Payment
Each premium on the Policy shall be paid by the Participating Company as
it becomes due.
5.2 Payment of the Participant's Share
At the time of each premium payment by the Participating Company, the
Participant shall pay to the Participating Company an amount equal to the
economic benefit of said Policy enjoyed by the Participant. The economic
benefit shall be equal to the lesser of the Insurer's one-year term cost or
the PS-58 rate.
ARTICLE VI - PARTICIPATING COMPANY'S INTEREST IN THE POLICY
6.1 Collateral Assignment
Each Participant shall assign the Policy to the Participating Company as
collateral, under the form of collateral assignment attached as Exhibit A. The
assignment gives the Participating Company the limited power to enforce its
right to recover the Participating Company's Share of Premium on the Policy
and/or a portion of the death benefit thereof.
6.2 Limitations
The interest of the Participating Company in and to the Policy shall be
specifically limited to the following rights in and to the Cash Value and a
portion of the death benefit:
(a) the right to recover the Participating Company's Share of
Premium, in the event the Policy is surrendered or canceled by the
Participant, as provided in Paragraph 7.1;
(b) the right to recover, upon the death of the Participant, all of
the Policy proceeds, in excess of that portion of the Policy proceeds
payable to the Participant's beneficiary or beneficiaries as provided in
Paragraph 7.2;
(c) the right to recover the Participating Company's Share of
Premium, or to receive ownership of the Policy, in the event of
termination by the Participant in the Plan, or in the event of termination
of service on the Board of a Participating Company as provided in
Paragraphs 8.1 and 8.2.
PAGE 5 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
ARTICLE VII - PARTICIPANT'S INTEREST IN THE POLICY
7.1 Upon Surrender or Cancellation
Upon surrender or cancellation of the Policy, the Participating Company
shall be entitled to receive a portion of the cash surrender value equal to
the Participating Company's Share of Premium. The balance of the cash
surrender value, if any, shall belong to the Participant.
7.2 Upon Death
Upon the death of the Participant, the beneficiary or beneficiaries
designated by the Participant shall be entitled to receive that portion of the
Policy proceeds equal to the amount set forth in Schedule I of this Plan.
7.3 Ownership of Cash Surrender Value
Notwithstanding any other provision in the Plan to the contrary, the
Participant shall at all times own a portion of the cash surrender value of
the Policy equal to the Participant's Share to the extent said cash surrender
value exceeds the Participating Company's Share of Premium.
ARTICLE VIII - PLAN BENEFITS
8.1 Upon Termination of Participation in the Plan
In the event the Participant terminates participation in the Plan prior to
leaving service on the Board of any Participating Company, the Participant
shall execute any and all instruments that may be required to vest ownership
of said Policy in the Participating Company. Participating Employer shall
purchase from the Participant the Participant's interest in the cash surrender
value set forth in paragraph 7.3 above for an amount equal to the
Participant's Share. Thereafter, the Participant shall have no further
interest in the Policy or this Plan.
8.2 Upon Termination of Service
(a) In the event of termination of service on the Board of any
Participating Company for Cause (as determined by the Committee) before
Retirement, the Participant shall execute any and all instruments that may
be required to vest ownership of said Policy in the Participating Company.
The Participating Employer shall purchase from the Participant the
Participant's interest in the cash surrender value set forth in paragraph
7.3 above for an amount equal to the Participant's Share. Thereafter, the
Participant shall have no further interest in the Policy or this Plan.
(b) In the event of termination of service on the Board of any
Participating Company because of accepting a position of public service,
or other reason not considered for Cause before Retirement, the
Participant may elect either to:
(i) reimburse the Participating Company an amount equal to the
Participating Company's Share of Premium, whereupon receipt of payment
from the Participant, the Company shall release the collateral
assignment and thereafter shall have no further interest in the
Policy, or
PAGE 6 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
(ii) execute any and all instruments that may be required to vest
ownership of said Policy in the Participating Company. The
Participating Company shall purchase from the Participant the
Participant's interest in the cash surrender value set forth in
paragraph 7.3 above for an amount equal to the Participant's Share.
Thereafter, the Participant shall have no further interest in the
Policy or this Plan.
8.3 Upon Change in Control
In the event of a Change in Control, within sixty (60) days of such Change
in Control, the Participating Company shall:
(a) determine to what extent the cash value exceeds the Net Single
Premium and recover the excess, if any; and
(b) upon recovery of the excess, release the collateral assignment
and thereafter have no further interest in the Policy; and
(c) pay to each Participant an amount equal to the excess, if any, of
the Net Single Premium over the cash value released to the Participant in
(b) above.
8.4 Upon Retirement
In the event of termination from service on the Board of a Participating
Company at or after Retirement, the Participant may elect either to:
(a) reimburse the Participating Company an amount equal to the
Participating Company's Share of Premium, whereupon receipt of payment
from the Participant, the Company shall release the collateral assignment
and thereafter shall have no further interest in the Policy, or
(b) continue participation in the Plan with the Company continuing to
pay premiums, and the Participant continuing to pay the Participant's
Share pursuant to Article V.
8.5 Timely Transfer of Ownership
When, under the terms of Article VIII, ownership of the Policy transfers
from the Participant to the Participating Employer, the Participant shall
execute any and all instruments that may be required to vest such ownership of
said Policy in the Participating Employer within ninety (90) days following
receipt of notice from the Participating Company.
ARTICLE IX - DURATION OF THE PLAN
9.1 Plan Continuation
Subject to the provisions of Article VIII, this Plan shall continue with
respect to each Participant until such time as the Cash Value of the Policy on
a Participant is sufficient to permit:
(a) the Participating Company to recover the Participating Company's
Share of Premium; and
PAGE 7 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
(b) the Participant to recover an amount equal to the federal and
state income tax he will incur as a result of termination of the split
dollar arrangement; and
(c) the death benefit to continue to the Participant's age ninety-
five (95) with no further premium outlay based upon then current interest
assumptions.
9.2 Termination of Arrangement
When the standard required by Paragraph 9.1 is achieved and upon the
Participating Company's receiving the Participating Company's Share of
Premium, the split dollar arrangement with that Participant shall terminate.
The Participating Company shall release the collateral assignment and
thereafter, shall have no further interest in the Policy.
ARTICLE X - AMENDMENT AND TERMINATION OF PLAN
10.1 Amendment
The Senior Administrative Officer may amend the Plan from time to time as
may be necessary for administrative purposes and legal compliance, provided,
however, that no such amendment shall affect the benefit rights of
Participants or Beneficiaries in the Plan. Prior to achieving the standard
required by Paragraph 9.1, the Committee may not amend, modify or revoke this
Plan in a manner that reduces the rights of the Participant under this Plan.
10.2 Termination
The Board of each Participating Company may at any time, in its sole
discretion, terminate the Plan in whole or in part for that Participating
Company, such that no future Participants will be allowed into the Plan.
However, no such termination shall adversely affect the benefits of
Participants which have accrued prior to such action, the benefits of any
Participant who has previously retired, the benefits of any beneficiary of a
Participant who has previously died, or already accrued Plan liabilities
between Participating Companies.
ARTICLE XI - INSURER NOT A PARTY TO PLAN
An Insurer shall be bound only by the provisions of and endorsements on
the Policy, and any payments made or action taken by an Insurer in accordance
therewith shall fully discharge it from all claims, suits and demands of all
persons whatsoever. Except as specifically provided by endorsement on the
Policy, it shall in no way be bound by the provisions of this Plan.
ARTICLE XII - NAMED FIDUCIARY
12.1 Senior Administrative Officer; Committee
The Senior Administrative Officer is hereby designated the "Named
Fiduciary" until removal by the Committee. As Named Fiduciary, the Senior
Administrative Officer shall be responsible for the management, control and
administration of the Plan established herein. The Senior Administrative
Officer may allocate to others certain aspects of the management and operation
responsibilities of the
PAGE 8 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
Plan, including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
12.2 Indemnity of Senior Administrative Officer; Committee
Each Participating Company shall indemnify and hold harmless the Senior
Administrative Officer and the Committee and its individual members against
any and all claims, loss, damage, expense or liability arising from any action
or failure to act with respect to this Plan, except in the case of gross
negligence or willful misconduct.
12.3 Availability of Plan Documents
Each Participant shall receive a copy of this Plan, and the Senior
Administrative Officer shall make available for inspection by any Participant
a copy of the rules and regulations used in administering the Plan.
12.4 Cost of Plan Administration
The Company shall bear all expenses of administration. However, a ratable
portion of the expense shall be charged back to each Participating Company.
ARTICLE XIII - CLAIMS PROCEDURE
13.1 Claim
Claims for any benefits due under the Plan or upon surrender of the Policy
shall be made in writing by the Participating Company, and the Participant or
his designated beneficiary or beneficiaries, as the case may be, to the Named
Fiduciary or his delegatee who shall respond in writing as soon as
practicable.
13.2 Denial of Claim
In the event a claim is denied or disputed, the Named Fiduciary shall,
within a reasonable period of time after receipt of the claim, notify the
Participating Company, and the Participant or his designated beneficiary or
beneficiaries, as the case may be, of such denial or dispute listing:
(a) the reasons for the denial or dispute; with specific reference to
the Plan provisions upon which the denial or dispute is based;
(b) a description of any additional material or information necessary
and an explanation of why it is necessary; and
(c) an explanation of the Plan's claim review procedure.
13.3 Review of Claim
Within sixty (60) days of denial or notice of claim under the Plan, a
claimant may request that the claim be reviewed by the Named Fiduciary. The
claim or request shall be reviewed by the
PAGE 9 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
Named Fiduciary, who may, but shall
not be required to, grant the claimant a hearing. On review, the claimant may
have representation, examine pertinent documents and submit issues and
comments in writing.
13.4 Final Decision
The decision of the Senior Administrative Officer on review shall normally
be made within sixty (60) days. If an extension of time is required for a
hearing or other special circumstances, the claimant shall be notified and the
time limit shall be one hundred twenty (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 bind all parties concerned.
ARTICLE XIV - MISCELLANEOUS
14.1 Liability for Benefits
Except as otherwise provided in this paragraph, liability for the payment
of a Participant's benefit pursuant to this Plan shall be borne solely by the
Participating Company for which the Participant serves during the accrual or
increase of the Plan benefit, and no liability for the payment of any Plan
benefit shall be incurred by reason of Plan sponsorship or participation
except for the Plan benefits of a Participating Company's own Board members.
Provided, however, that each Participating Company, by accepting the Board's
designation as a Participating Company under the Plan and formally adopting
the Plan, agrees to assume secondary liability for the payment of any benefit
accrued or increased while a Participant serves on the Board of a
Participating Company that is a Direct Subsidiary or Indirect Subsidiary of
the Participating Company at the time such benefit is accrued or increased.
Such liability shall survive any revocation of designation as a Participating
Employer with respect to any liabilities accrued at the time of such
revocation. Nothing in this paragraph shall be interpreted as prohibiting any
Participating Company or any other person from expressly agreeing to
assumption of liability for a Plan Participant's payment of any benefits under
the Plan.
14.2 Allocation of Asset
The interests of each Participating Company in and to the Policy as
described in paragraph 6.2 shall be allocated, if applicable, pro rata among
those Participating Companies who employed the Participant and reported the
Participant as being on their payroll during the accrual or increase of the
Plan benefit. Such allocation of asset shall survive any revocation of
designation as a Participating Company or termination of the Plan with respect
to any asset accrued at the time of such revocation or termination.
14.3 Protective Provisions
A Participant will cooperate with the Participating Company by furnishing
any and all information requested by the Participating Company, in order to
facilitate the payment of benefits hereunder, and by taking such physical
examination as the Participating Company may deem necessary and taking such
other action as may be requested by the Participating Company.
PAGE 10 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
14.4 Transfer of Participant's Interest in the Policy
In the event a Participant shall transfer all of his interest in the
Policy, then all of a Participant's interest in the Policy shall be vested in
his transferee, who shall be substituted as a party hereunder, and a
Participant shall have no further interest in the Policy.
14.5 Terms
In this Plan document, unless the context clearly indicates the contrary,
the masculine gender will be deemed to include the feminine gender, and the
singular shall include the plural.
14.6 Governing Law
The provisions of this Plan shall be construed and interpreted according
to the laws of the State of Oregon, except as preempted by federal law.
14.7 Validity
In case any provision of this Plan shall be held illegal or invalid for
any reason, such illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.
14.8 Notice
Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail to the Senior
Administrative Officer or to Secretary of Company. Notice to the Senior
Administrative Officer, if mailed, shall be addressed to the principal
executive offices of the Participating Company. Notice mailed to the
Participant shall be at such address as is given in the records of the
Participating Company. Notices shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.
14.9 Successors
The provisions of this Plan shall bind and inure to the benefit of each
Participating Company and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise, acquire all or
substantially all of the business and assets of the Participating Company, and
successors of any such corporation or other business entity.
14.10 Not a Contract of Service
The terms and conditions of this Plan shall not be deemed to constitute a
contract of service between a Participating Company and a Participant, and
neither a Participant nor a Participant's Spouse or Dependent shall have any
rights against a Participating Company except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained on the Board of a Participating Company
nor shall it interfere with the Participant's right to terminate his
directorship at any time.
PAGE 11 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its officers thereunto duly authorized, as of the ___ day of May, 1996.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Its: Senior Administrative Office
PAGE 12 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
SCHEDULE I
Death Benefits Payable Under
Portland General Corporation
Outside Directors' Life Insurance Benefit Plan
1996 Restatement
Effective January 1, 1996
Outside Directors $200,000
EXHIBIT A
Collateral Assignment
THIS ASSIGNMENT, made and entered into and effective this ______ day of
_____________, 19___, by the undersigned as owner (the "Owner") of that
certain Life Insurance Policy No. ___________ issued by
________________________ ("Insurer") and any supplementary contracts issued
in connection therewith (said policy and contracts being herein called the
"Policy"), upon the life of ________________ ("Insured"), to Portland
General Corporation, an Oregon corporation (the "Assignee").
WITNESSETH:
WHEREAS, the Insured is a Director of the Assignee; and
WHEREAS, said Assignee desires to provide the Insured with supplemental
life insurance protection by contributing a portion of the annual premium
due on the Policy, as more specifically provided for in the split dollar
arrangement set forth in the Outside Directors' Life Insurance Benefit Plan
(the "Plan"); and adopted as restated by the Assignee on December 1, 1988,
a copy of which is attached hereto, incorporated by reference and made a
part hereof; and
WHEREAS, in consideration of the Assignee agreeing to pay a portion of
the premiums, the Owner agrees to grant the Assignee an interest in the
policy as security for the recovery of the Assignee's premium outlay.
NOW THEREFORE, for value received, the undersigned hereby assigns,
transfers and sets over to the Assignee, its successors and assigns, the
following specific rights in the Policy, subject to the following terms and
conditions:
1. This Assignment is made, and the Policy is to be held, as
collateral security for the premium payments made by Assignee, pursuant to
the terms of the Plan.
2. The Assignee's interest in the Policy shall further be limited to:
(a) The right to recover the aggregate amount of insurance premium
paid by the Assignee less the aggregate portion contributed by the
Participant (the "Assignee's Share of Premium") in the event the Policy
is surrendered or canceled by the Owner as provided in Section 7.1 of
the Plan,
(b) The right to recover, upon the death of the Participant, all
proceeds in excess of the death benefit promised in Schedule I of the
Outside Directors' Life Insurance Benefit Plan,
(c) The right to recover the Assignee's Share of Premium, the
right to recover the excess of cash value over the Net Single Premium,
or the right to receive ownership of the Policy in the event of
termination of the split dollar arrangement as provided in Article VIII
of the Plan.
EXHIBIT A
Collateral Assignment
(Continued)
3. Except as specifically herein granted to the Assignee, the Owner
shall retain all incidents of ownership in the Policy, including, but not
limited to, the right to assign his interest in the Policy, the right to
change the beneficiary of that portion of the proceeds to which he is
entitled under Article VI of the Plan, and the right to exercise all
settlement options permitted by the terms of the Policy. Provided, however,
that all rights retained by the Owner shall be subject to the terms and
conditions of the Plan.
4. The Assignee shall, upon request, forward the Policy to the
Insurer, without unreasonable delay, for endorsement of any designation of
change of beneficiary, any election of optional mode of settlement, or the
exercise of any other right reserved by the Owner hereunder.
5. The Insurer is hereby authorized to recognize the Assignee's claims
to rights hereunder without investigating the reason for any action taken
by the Assignee, the amount of its Share of Premium, the existence of any
default therein, the giving of any notice required herein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee.
The signature of the Assignee shall be sufficient for the exercise
of any rights under the Policy assigned hereby to the Assignee, and the
receipt of the Assignee for any sums received by it shall be a full
discharge and release therefore to the Insurer.
6. The Insurer shall be fully protected in recognizing the requests
made by the Owner for surrender of the Policy with or without the consent
of the Assignee, and, upon such surrender, the Policy shall be terminated
and shall be of no further force or effect.
7. Upon the full payment to the Assignee of its Share of Premium, or
in the event of a Change in Control upon recovery of the excess of cash
value over the Net Single Premium the Assignee shall release the Collateral
Assignment and reassign to the Owner all specific rights included in this
Collateral Assignment.
IN WITNESS WHEREOF, the undersigned Owner has executed this Assignment
the date and year first above written.
Witness Owner
PORTLAND GENERAL CORPORATION
AMENDED AND RESTATED
OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN
Portland General Corporation ("PGC") considers it desirable that
members of its Board of Directors ("Board") who represent shareholders, be
themselves shareholders. In order to supplement the direct efforts of the
Directors themselves toward this end, PGC wishes to increase the ownership
interest of outside Directors through awards of PGC Common Stock ("Common
Stock"). By means of this Outside Directors' Stock Compensation Plan
("Plan") PGC wishes to increase the community of interest of the
shareholders at large and the PGC Directors and to make ownership a
dynamic influence on the attitudes of the Board.
The following Plan was therefore adopted effective April 5, 1989 and
is amended and restated effective February 6, 1996.
1. PARTICIPATION.
1.1 Each outside Director of PGC shall participate in this Plan
as follows:
(a) A member of the Board shall be an outside Director
("Director") if and so long as such member is not an employee of PGC or
any of its subsidiaries or affiliates.
(b) Directors elected or appointed on or before April 6,
1989 shall participate as of such date, and Directors elected or appointed
after April 6, 1989 shall participate as of the fifth business day
subsequent to the date first elected or appointed.
(c) A Director's date of participation shall be the Award
Date.
PAGE 1 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
(d) Each annual meeting of shareholders after the Award
Date shall be an Anniversary Date.
2. TRANSITION.
2.1 All awards made prior to January 1, 1996 ("Five-Year Award")
shall remain in effect and subject to this Plan as provided in Section 8.
Outside Directors who presently have unvested Common Stock under a Five-
Year Award will receive a one-time special award ("Transition Award") of
Common Stock worth $6,500 times the number of years remaining until all of
the Common Stock under their present Five-Year Award is scheduled to vest.
Transition Awards shall be subject to this Plan as provided in Section 8.
2.2 Directors first appointed or elected to the Board after
January 1, 1996 and all other Directors, once the Common Stock under their
Five-Year Awards and Transition Awards fully vests, will be awarded Common
Stock in accordance with the terms and conditions set forth below.
3. AWARDS.
3.1 As of the Award Date a Director shall, subject to Section
3.2, be awarded Common Stock worth $16,500 per year, based on the market
value of the stock on the date of purchase, times the number of years
remaining in the three-year term of the class of directors in which the
Director serves, rounded to the nearest whole share ("Award"), as follows:
(a) As soon as practicable after the Award Date the
Administrator shall deliver cash in the amount of the Award and applicable
commissions to one or more brokers or other third persons with
instructions to purchase Common Stock on the open market. It is
understood that market conditions or regulations affecting open market
purchases by a corporation of its own shares may extend the period of
purchase over several days or weeks when
PAGE 2 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
substantial sums are involved.
Any amount not expended to acquire the Common Stock shall be returned to
the Company.
(b) When several Directors have the same Award Date, all of
the Common Stock shall be purchased and then divided equally among the
Directors so that each receives the same number of whole shares regardless
of any changes in price that occur while purchases are being carried out.
(c) When all of the Common Stock has been purchased,
certificates in the names of the Directors for their respective whole
shares shall be delivered to the Administrator. Each Director shall
deposit with the Administrator a blank stock power, duly executed and
guaranteed, in a form satisfactory to the Administrator for each
certificate for shares of Common Stock standing in the Director's name.
(d) The Administrator shall hold the certificates and stock
powers until the shares of Common Stock are vested and released as
provided in Section 4.
(e) The dividends on all unvested shares of Common Stock
held by the Administrator for the Director shall be reinvested in the PGC
Dividend Reinvestment and Optional Cash Payment Plan ("DRIP") on behalf of
and for the account of the Director. Each Director shall, if requested by
the Administrator, execute an authorization form for participation in the
DRIP. Each Director agrees not to change or rescind the DRIP
authorization with regard to any unvested shares of Common Stock. The
reinvested dividends shall be vested at all times.
3.2 (a) Appointment for a partial year of more than six months
will be treated as a full year unless the Director is
PAGE 3 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
appointed to fill a
vacancy in a class that will be elected at the next annual meeting of
shareholders. In that case:
(i) If the appointment is six months or more before
the next annual meeting of shareholders, the Award will be reduced to
$16,500 worth of Common Stock which will vest at the date of the next
annual meeting of shareholders.
(ii) If the appointment is less than six months before
the next annual meeting of shareholders, the Director will receive a full
Award, none of which will vest until three years later on the date of the
annual meeting of shareholders at which the class in which the Director
serves is again elected.
(b) If, assuming that the Director were reelected, a
Director's service would end because of age limitations imposed by the
Articles or Bylaws of PGC before the third Anniversary Date after an Award
Date, the Award shall be reduced by one-third for each Anniversary Date
that would fall after the date the Director's term ends.
3.3 After all of the shares of Common Stock from an Award
(including Five-Year Awards and Transition Awards) have vested, the
Director shall again receive an Award unless the Board determines to
terminate the Plan. The Award Date for the Award shall be the later of
the date of the PGC Annual Meeting of Shareholders coinciding with the
last Anniversary Date for the prior Award to such Director or six (6)
months after the date of the last preceding sale of any equity security of
PGC by such Director. Such Award shall be subject to all the provisions
of this Plan.
4. VESTING; DELIVERY OF SHARES; FORFEITURES.
4.1 Subject to Sections 3.2(a) and 4.2 through 4.5, shares of
Common Stock in an Award shall vest 100 percent on the
PAGE 4 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
third Anniversary
Date. Five-Year Awards and Transition Awards shall vest and be released
as set forth in Section 8.
4.2 If a Director receives a reduced Award under Section 3.2(b),
vesting shall be accelerated so that the entire award shall vest on the
date the Director's term ends. For example, if the Award were reduced by
one-third ($16,500 worth of Common Stock), all of the remaining shares
($33,000 worth of Common Stock) would vest on the second Anniversary Date.
4.3 If a Director ceases to be such on an Anniversary Date, that
Anniversary Date shall be included in determining the number of shares of
Common Stock vested for that Director.
4.4 If a Director dies, the Director's outstanding Award shall
vest as of the date of death.
4.5 Subject to Section 6, the certificate and stock power
covering vested shares of Common Stock shall be delivered to the Director
as soon as practicable after the shares vest.
4.6 If a Director ceases to be such for any reason other than
death, any unvested Common Stock shall be forfeited. The Administrator,
acting for the Director pursuant to the blank stock power, shall transfer
the unvested Award to PGC. The Director or the Director's representative
shall execute any documents reasonably requested by the Administrator to
facilitate the transfer.
5. STATUS BEFORE FULL VESTING.
5.1 Each Director shall be a shareholder of record with respect
to all shares of Common Stock, whether or not vested, and shall be
entitled to all of the rights of a registered holder, except that a
Director's share certificates shall be held by the Administrator until
delivered in accordance with Section 4.5.
PAGE 5 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
5.2 Any communications to shareholders received by the
Administrator with respect to the shares of Common Stock held by the
Administrator shall be delivered to the Director as soon as practicable.
The Director shall furnish to the Administrator a current mailing address
for such purpose.
5.3 A Director may not transfer any interest in this Plan or any
unvested Common Stock to any person other than as provided in Section 4.6.
6. DEATH OF A DIRECTOR.
The vested Common Stock held by the Administrator for a Director
who has died shall be delivered as soon as practicable to the Director's
beneficiary in the following order of priority:
(a) To the surviving beneficiary designated by the Director in
writing to the Administrator;
(b) To the Director's surviving spouse;
(c) To the Director's estate.
7. CHANGE IN CONTROL.
7.1 Should the PGC shareholders remove a Director from the Board
during a current term of office within three (3) years following a Change
in Control (as defined in Section 7.2), any unvested Common Stock shall
vest up to the numbers of share of Common Stock that would have vested had
the Director completed the current term of office.
7.2 "Change In Control" shall mean an occurrence in which:
(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 thirty percent (30%) of the then outstanding voting
stock of PGC otherwise than through a
PAGE 6 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
transaction arranged by, or
consummated with the prior approval of, the Board; or
(b) During any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board [and
any new Board member whose election by the Board or whose nomination for
election by the shareholders of PGC was approved by a vote of at least
two-thirds (2/3) of the Board members then still in office who either were
Board members 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 thereof.
8. TRANSITION PROVISIONS.
Unless otherwise specifically provided in this Plan, Five-Year
Awards and Transition Awards shall be subject to the following provisions:
(a) Sections 3.1(d) and 3.1(e), 3.3, 4.3, 4.4, 4.5, 4.6, 5, 6,
7, 10, and 11.
(b) Subject to the provisions set forth in Clause (a), Five-Year
Awards shall vest as follows:
Percent Vested Cumulative Percent
Award Date 0% 0%
First Anniversary Date 20% 20%
Second Anniversary Date 20% 40%
Third Anniversary Date 20% 60%
Fourth Anniversary Date 20% 80%
Fifth Anniversary Date 20% 100%
Each year that a portion of the stock under the present
Five-Year Award vests, a one-year portion of the stock under the
Transition Award also shall vest.
PAGE 7 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
9. NUMBER OF SHARES.
The aggregate number of shares of Common Stock that may be issued
pursuant to this Plan shall not exceed 100,000 shares.
10. ADMINISTRATION.
The Plan shall be administered by the Treasurer ("Administrator")
who may delegate all or part of the duties required of the Administrator
hereunder. Administrator shall have no discretion as to the Plan, except
as to the selection of the brokers or other persons to purchase the Common
Stock as required in Section 3.1 and shall perform the duties of the
Administrator strictly in compliance with the Plan.
11. AMENDMENT OR TERMINATION; MISCELLANEOUS.
11.1 The Board may terminate this Plan at any time. The Board
may not amend this Plan, including the designation of a new Administrator,
more than once each six months. No amendment or termination shall
adversely affect any then outstanding Award.
11.2 Subject to the rights of amendment and termination in this
Section 11, this Plan shall continue indefinitely.
11.3 Nothing in this Plan shall create any obligation on the part
of the Board to nominate any Director for reelection by the shareholders
or the Board.
11.4 The awarding of shares of Common Stock under this Plan shall
not be considered or counted in "Compensation" for purposes of the
Portland General Electric Company Retirement Plan for Outside Directors.
The vesting of shares under the Plan shall
PAGE 8 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
not be included as
"Compensation" for purposes of the Portland General Electric Company
Retirement Plan for Outside Directors, effective January 1, 1996.
Portland General Corporation
By: /s/ K. L. Harrison
Dated: April 5, 1989
Amended and Restated: February 6, 1996
PAGE 9 - OUTSIDE DIRECTORS' STOCK COMPENSATION PLAN IPS2-6500
POWER OF ATTORNEY
The undersigned Joseph M. Hirko, in his capacity as Chief Financial
Officer and Chief Accounting Officer of Portland General Corporation (the
"Corporation"), hereby appoints Joseph E. Feltz, Assistant Controller of
the Corporation, as the attorney-in-fact, in any and all capacities stated
herein, to execute on behalf of the undersigned and to file with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, the Portland General Corporation Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996.
Dated: August , 1996
Portland, Oregon
PORTLAND GENERAL CORPORATION
______/s/ Joseph M. Hirko____________
By: Joseph M. Hirko
POWER OF ATTORNEY
POWER OF ATTORNEY
The undersigned Joseph M. Hirko, in his capacity as Chief Financial
Officer and Chief Accounting Officer of Portland General Electric Company
(the "Company"), hereby appoints Joseph E. Feltz, Assistant Controller of
the Company, as the attorney-in-fact, in any and all capacities stated
herein, to execute on behalf of the undersigned and to file with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, the Portland General Electric Company Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996.
Dated: August , 1996
Portland, Oregon
PORTLAND GENERAL ELECTRIC COMPANY
____/s/ Joseph M. Hirko___________________
By: Joseph M. Hirko
POWER OF ATTORNEY
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT
1,000
3-MOS
DEC-31-1996
JUN-30-1996
PER-BOOK
1,747,767
342,314
209,041
1,135,262
0
3,434,384
191,686
576,929
178,873
947,488
30,000
0
857,087
0
0
226,532
64,000
0
7,980
2,542
1,298,755
3,434,384
233,425
24,743
157,007
181,750
51,675
1,984
53,659
19,335
34,324
645
33,679
16,358
64,992
51,178
0.66
0.66
Represents the 12 month-to-date figure ending June 30, 1996.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT
1,000
3-MOS
DEC-31-1996
JUN-30-1996
PER-BOOK
1,747,767
154,139
207,524
1,133,392
0
3,242,822
160,346
469,815
295,610
925,771
30,000
0
857,087
0
0
224,332
34,000
0
7,980
2,542
1,161,110
3,242,822
232,921
24,605
156,466
181,071
51,850
1,748
53,598
18,684
34,914
645
34,269
17,958
62,565
53,742
0
0
Represents the 12 month-to-date figure ending June 30, 1996.
