Exhibit 10.3

PACIFICORP

EXECUTIVE VOLUNTARY DEFERRED COMPENSATION PLAN

(as restated effective as of January 1, 2005)

 

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PACIFICORP

EXECUTIVE VOLUNTARY DEFERRED COMPENSATION PLAN

PacifiCorp hereby amends and restates the PacifiCorp Compensation Reduction
Plan, most recently restated effective as of January 1, 2002 (“Plan”) for the
benefit of certain Employees and other Participants. The primary purpose of the
Plan is to provide additional compensation to Participants upon termination of
employment or service with the Employer. The Employer will pay benefits under
the Plan only in accordance with the terms and conditions set forth in the Plan.
This Plan is a restated plan effective as of January 1, 2005, with respect to
all provisions of the Plan necessary to bring the Plan into compliance with Code
§409A, including, but not limited to, the applicable provisions of Sections
2.02, 2.05, Article IV, Section 5.01(A) and Section 6.03, and any applicable
definitions. All other provisions of the Plan shall be effective as of January
1, 2007, and for the period January 1, 2005 through December 31, 2006, the
provisions of the Plan prior to this restatement shall apply.

PREAMBLE

Plan Type. The Plan is an unfunded nonqualified deferred compensation plan
maintained “primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees” (“top-hat plan”).

Possible Nonuniformity. The Employer need not provide the same Plan benefits or
apply the same Plan terms and conditions to all Participants, even as to
Participants who are of similar pay, title and other status with the Employer.
The Employer may create a separate exhibit for one or more Participants,
specifying such terms and conditions as are applicable to a given Participant.
The Employer, in a separate exhibit, may modify any Plan provision with respect
to one or more Participants.

I. DEFINITIONS

1.01 “Account” means the account the Employer establishes under the Plan for
each Participant and as applicable means a Participant’s Elective Deferral
Account, or Employer Contribution Account. An Elective Deferral Account shall
consist of subaccounts as selected by the Participant, and which shall be a
Retirement Account, an In-Service Account and an Education Account.

1.02 “Accrued Benefit” means the total dollar amount credited to a Participant’s
Account.

1.03 “Applicable Guidance” means Treasury Regulations issued pursuant to Code
§409A, or other written Treasury or IRS guidance regarding Code §409A, which is
in addition to IRS Notice 2005-1 (“Notice 2005-1”).

1.04 “Base Salary” means a Participant’s compensation consisting only of regular
annual salary and excluding any other compensation.

1.05 “Beneficiary” means the person or persons entitled to receive Plan benefits
in the event of a Participant’s death.

1.06 “Change in Control” of the Employer means a change: (i) in the ownership of
the Employer; (ii) in the effective control of the Employer; or (iii) in the
ownership of a substantial portion of the assets of the Employer, within the
meaning of Notice 2005-1, Q/As 11-14 or in Applicable Guidance.

1.07 “Change in the Employer’s Financial Health” means an adverse change in the
Employer’s financial condition as described in Applicable Guidance.

1.08 “Code” means the Internal Revenue Code of 1986, as amended.

 

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1.09 “Compensation” means Base Salary, performance awards annual incentive
bonuses (other than Employer long term incentive awards), and fees for serving
as a member of an Advisory Board (See definition of Participant below).
Inclusion of any other forms of compensation is subject to approval of the
Employer.

1.10 “Disability” means a condition of a Participant who by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months: (i) is unable to engage in any substantial gainful activity; or
(ii) is receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering Employees.

1.11 “Deferred Compensation” means the Participant’s Account Balance
attributable to Elective Deferrals and Employer Contributions and includes
Earnings on such amounts. “Compensation Deferred” is Compensation that the
Participant or the Employer has deferred under this Plan.

1.12 “Earnings” means the notional earnings, gain and loss applicable to a
Participant’s Account as described in Section 5.02.

1.13 “Effective Date” of the Plan as amended and restated is January 1, 2005 as
to the provisions relating to compliance with Code §409A and is January 1, 2007
as to all other provisions (See the opening paragraph of the Plan).

1.14 “Elective Deferral” means Compensation a Participant elects to defer into
the Participant’s Account under the Plan.

1.15 “Elective Deferral Account” means the portion of a Participant’s Account
attributable to Elective Deferrals and Earnings thereon (and which shall consist
of Retirement, In-Service and Education subaccounts).

1.16 “Employee” means a person providing services to the Employer in the
capacity of a common law employee of the Employer.

1.17 “Employer” means PacifiCorp, an Oregon corporation.

1.18 “Employer Contribution” means amounts, if any, the Employer contributes or
credits to an Account under the Plan, excluding Elective Deferrals.

1.19 “Employer Contribution Account” means the portion of a Participant’s
Account attributable to Employer Contributions and Earnings thereon.

1.20 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

1.21 “Participant” means an Employee of the Employer who has met the eligibility
requirements of Section 2.01 and who has accrued a benefit under the Plan, and
Participant also means a member of the Rocky Mountain Power Regional Advisory
Board and a member of the Pacific Power Regional Advisory Board (together the
“Advisory Boards”) and who has accrued a benefit under the Plan.

1.22 “Performance-Based Compensation” means such amounts described in Applicable
Guidance.

1.23 “Plan” means the PacifiCorp Executive Voluntary Deferred Compensation Plan.
For purposes of applying Code §409A requirements: (i) this Plan is an account
balance plan under Notice 2005-1; (ii) this plan constitutes a separate plan for
each Participant; and (iii) except as the Plan otherwise provides, all Deferred
Compensation for a Participant is aggregated with that Participant’s deferrals
under any other account balance nonqualified deferred compensation plan of the
Employer in which the Participant participates.

 

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1.24 “Retirement Age” means a Participant’s attainment of age 55 or, for any
Participant who was a Participant in the Plan on December 31, 2006, age 50 with
5 “Years of Participation” in the PacifiCorp Supplemental Executive Retirement
Plan (the “SERP”), as such term is defined in the SERP, and 15 “Years of
Service” in the PacifiCorp Retirement Plan, as such term is defined in the
PacifiCorp Retirement Plan.

1.25 “Separation from Service” means an Employee’s termination of employment
with the Employer or as otherwise defined in Applicable Guidance.

1.26 “Specified Employee” means a Participant who is described in Code §416(i),
disregarding paragraph (5) thereof. However, a Participant is not a Specified
Employee unless any stock of the Employer (or of a member of the same group of
controlled entities as Employer) is publicly traded on an established securities
market or otherwise.

1.27 “Specified Time or Pursuant to a Fixed Schedule” means a specific time or
schedule (but not the occurrence of an event) as a Participant or Employer
payment election may specify, and otherwise as described in Applicable Guidance.

1.28 “State” means: (i) one of the fifty states of the United States or the
District of Columbia, or (ii) a political subdivision of a State, or any agency
or instrumentality of a State or its political subdivision. A State does not
include the federal government or an agency or instrumentality thereof.

1.29 “Substantial Risk of Forfeiture” means as to 409A Amounts (described in
Article VII), Deferred Compensation which is payable conditioned: (i) on the
performance of substantial future services by any person including the
Participant; or (ii) on the occurrence of a condition related to a purpose of
the Deferred Compensation, and where under clause (i) or (ii) the possibility of
forfeiture is substantial. A Substantial Risk of Forfeiture does not include any
addition of a condition after commencement of the service period to which the
Deferred Compensation relates or to the extension of any period to which a
Substantial Risk of Forfeiture applies. Deferred Compensation is not subject to
a Substantial Risk of Forfeiture merely because payment is conditioned on the
Participant’s refraining from performing services. A Substantial Risk of
Forfeiture also means those events or cirucmstances as described in Notice
2005-1, Q/A-10 or in Applicable Guidance.

1.30 “Taxable Year” means the 12 consecutive month period ending each December
31.

1.31 “Trust” means a trust described in Section 5.01.

1.32 “Unforeseeable Emergency” means: (i) a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant, the Participant’s spouse or a dependent (as defined in Code
§152(a)) of the Participant; (ii) loss of the Participant’s property due to
casualty; or (iii) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the Participant’s control. The amount of
the distribution may not exceed the amount necessary to satisfy the
Unforeseeable Emergency plus taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which the hardship may be
relieved through reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets, to the extent that liquidation of such
assets would not itself cause severe financial hardship.

1.33 “Valuation Date” means the last day of each calendar month and such other
dates as the Employer may determine.

1.34 “Vested” means Deferred Compensation which is not subject to a Substantial
Risk of Forfeiture or to a requirement to perform further services for the
Employer.

II. PARTICIPATION

2.01 Participant Designated. The Chairman of the Board of Directors of the
Employer shall designate and approve the Employees who are eligible to
participate in the Plan, such designation to be either by name, job title or
other classification. The Chairman may also notify any Participant, including
any Advisory Board member, that he or she is no longer eligible to make future
deferrals into the Plan. Such termination of eligibility shall be effective as
of January 1 following such written notification by the Chairman to the
individual.

 

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2.02 Elective Deferrals. Participants may make separate Elective Deferrals to
their Accounts with respect to Base Salary and Compensation that is not Base
Salary. All elections to defer shall terminate upon Separation from Service,
Disability or a distribution based on an Unforeseeable Emergency.

(A) Limitations. The maximum Elective Deferral for Base Salary is 50%. There is
no limit for Compensation that is not Base Salary. The minimum Elective Deferral
for any type of Compensation is 1%.

(B) Form and Timing. A Participant must make his/her Elective Deferral election
on an election form the Employer provides for that purpose. A Participant must
deliver his/her election to the Employer prior to the beginning of the Taxable
Year for which it is to go into effect (or at such other time as Applicable
Guidance may provide).

(C) New Participant. If an Employee first becomes a Participant on a date which
is not the first day of a Taxable Year, the Participant must make and deliver
his/her Elective Deferral election for that Taxable Year not later than 30 days
after the Participant becomes a Participant. The election may apply only to
Compensation for services the Participant performs subsequent to the date the
Participant delivers the election to the Employer. For Compensation that is
earned for a specified performance period, including an annual bonus, and where
the new Participant makes an Elective Deferral election after the service period
commences, the Employer will pro rate the election by multiplying the
performance based Compensation by the ratio of the number of days left in the
performance period at the time of the election, over the total number of days in
the entire performance period.

(D) Performance-Based Compensation. As to any Performance-Based Compensation
based on services performed over a period of at least 12 months, a Participant
may elect for a period up to 6 months before the end of the service period to
defer such Compensation, provided that the Participant: (i) continuously must
perform services from a date no later than the date the Employer establishes the
performance criteria and at least through the date of the Participant’s
election; and (ii) may not make an election after the Compensation has become
substantially certain to be paid and is readily ascertainable.

(E) Election Duration. A Participant’s Elective Deferral election applies only
to the Participant’s Compensation earned in the next Taxable Year following the
Taxable Year in which the Participant makes the election. A Participant, subject
to Plan requirements regarding election timing, including those in Article VII,
may make a new election, or revoke or modify an existing election effective no
earlier than for the next Taxable Year.

2.03 Employer Contributions. In each Taxable Year, the Employer may make
discretionary Employer Contributions for any or all Participants, which need not
be uniform among Participants.

2.04 Allocation Conditions. There are no conditions generally applicable to
receive an allocation of Employer Contributions, unless the Employer establishes
conditions with respect to a particular discretionary Employer Contribution.

2.05 Timing. The Employer may elect to make any Employer Contribution for a
Taxable Year at such times as Code §409A or Applicable Guidance may permit.

2.06 Administration. The Employer will administer all Employer Contributions in
the same manner as Elective Deferrals, except as the Plan otherwise provides.
The Employer will credit any Elective Deferrals to a Participant’s Account as
soon as practicable after the date the amount of the Elective Deferral would
otherwise have become due and payable to the Participant and will credit any
Employer Contributions to a Participant’s Account as soon as practicable after
the date of the amount of the Employer Contribution is determined. Any Employer
Contribution is not subject to an immediate Participant right to elect a cash
payment in lieu of the Employer Contribution and such amounts are payable only
in accordance with the Plan terms.

 

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III. VESTING AND FORFEITURE

3.01 Vesting Schedule. Participants shall always be immediately one hundred
percent (100%) vested in their Elective Deferral Accounts. The Employer may
separately establish a vesting schedule for any Employer Contributions.

3.02 Application of Forfeitures. A Participant will forfeit any non-Vested
Accrued Benefit upon Separation from Service. The Employer will keep all
forfeitures.

IV. BENEFIT PAYMENTS

4.01 Separation from Service or Death. The Plan will pay to the Participant the
Vested Accrued Benefit held in the Participant’s Account following the earlier
of the Participant’s Separation from Service or death. Payment will commence at
the time and payment will be made in the form and method specified under Section
4.03. In the event of the Participant’s death, the Plan will pay to the
Participant’s Beneficiary the Participant’s Vested Accrued Benefit or any
remaining amount thereof if benefits to the Participant already have commenced,
in accordance with the Participant’s election.

(A) Distribution to Specified Employees. Notwithstanding anything to the
contrary in the Plan or in a Participant or Employer payment election, the Plan
may not distribute to a Specified Employee, based on Separation from Service,
earlier than 6 months following Separation from Service (or if earlier, upon the
Specified Employee’s death).

4.02 Other Payment Events. In addition to the payment events under Section 4.01,
the Plan will pay to a Participant all or any part of the Participant’s Account:
(i) at a Specified Time or Pursuant to a Fixed Schedule elected by the
Participant with respect to Education and In-Service subaccounts; or (ii) based
upon an Unforeseeable Emergency. Payment will commence at the time and payment
will be made in the form and method specified under Section 4.03.

4.03 Form, Timing and Method/ Payment Election. All distributions will be in
cash. Subject to the provisions of this paragraph, a Participant shall make an
initial payment election as to the method of payment under Section 4.03(A) and
may make a change to an election under Section 4.03(B). Until the Plan
completely distributes a Participant’s Vested Accrued Benefit, the Plan will
continue to credit the Participant’s Account with Earnings, in accordance with
Section 5.02. Except as provided below, a Participant may elect either a lump
sum payment or substantially equal annual installments (not to exceed 10) with
respect to a Retirement subaccount and an In-Service subaccount. If no election
is made as to method, payment shall be made in a lump sum. Distribution from an
Education subaccount may only be made in 4 substantially equal annual
installments. Distributions from a Retirement Account as a result of Separation
from Service after Retirement Age shall be made (or commence) in January
following the calendar year in which Separation from Service occurs.
Distributions from an In-Service subaccount, an Education subaccount, or a
Retirement subaccount, when a Separation from Service occurs prior to Retirement
Age (including death prior to Retirement Age), shall be made as soon as
administratively practicable following the date of Separation from Service (or
death), and shall be made in a lump sum payment (except that payments from the
remaining account balance in an Education subaccount or In-Service subaccount,
where payments have already commenced prior to Separation from Service, shall
continue to be made under the schedule then in effect). Payments made because of
Unforeseeable Emergency shall be made (or commence) as soon as administratively
practicable following such event. Disability shall not be treated as a
distribution event. In the event of death after attaining Retirement Age or
after payments from an Account have begun, a lump sum payment to the Beneficiary
shall be made as soon as administratively practical after date of death if the
Participant had previously elected a lump sum distribution to the Beneficiary
pursuant to Section 4.03(A) (initial payment election) or pursuant to Section
4.03(B)(1) (change to payment election).

(A) Initial Payment Election. A Participant, as to an In-Service subaccount
shall make an initial payment election with respect to a Specified Time and a
Fixed Schedule at the time of the Participant’s first Elective Deferral election
into such subaccount. A Participant, as to an Education subaccount, shall make
an initial election with respect to a Specified Time at the time of the
Participant’s first Elective Deferral election into such subaccount (the Fixed
Schedule being 4 substantially equal annual payments). As to a Retirement
subaccount, a Participant shall make an initial payment election as to a method
of payment (Fixed Schedule) at the time of his or her first deferred election
into such subaccount (the Specified Time being upon Separation of Service as
provided in Section 4.03 above). A Participant shall make any permissible
initial payment election on a form the Employer provides for that purpose. At
the time of any such first Elective Deferral election into any Account, a
Participant may elect to have a lump sum payment made to his or her Beneficiary
in lieu of the form of payment that otherwise has been selected for payout
during the Participant’s life.

 

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(B) Changes to Payment Election. A Participant may change the Participant’s
initial payment election (or change election) as to any or all Deferred
Compensation, including any Plan default payment applicable in the absence of an
election. Any such change election must comply with this Section 4.03(B). A
Participant must make any change election on a form the Employer provides for
such purpose.

(1) Conditions on Changes to Payment Elections. Any Participant change election:
(i) may not take effect until at least 12 months following the date of the
change election; (ii) must result in the first payment under the change election
being made not earlier than 5 years following the date upon which the
originally-elected payment would have been made (except if payment is on account
of death, or Unforeseeable Emergency); and (iii) if the change election relates
to a Participant’s previous election of a Specified Time or Fixed Schedule, the
Participant must make the change election not less than 12 months prior to the
date of the first scheduled payment under the election being changed (or, in the
case of installment payments treated as a single payment, 12 months prior to the
date the first amount was scheduled to be paid).

(2) Definition of “Payment.” Except as otherwise provided in Section 4.03(B)(3),
a “payment” for purposes of applying Section 4.03(B)(1) is each separately
identified amount the Plan is obligated to pay to a Participant on a
determinable date and includes amounts paid for the benefit of the Participant.
An amount is “separately identified” only if the Employer can objectively
determine the amount. A payment includes the provision of any taxable benefit,
including payment in cash or in-kind. A payment includes, but is not limited to,
the transfer, cancellation or reduction of an amount of Deferred Compensation in
exchange for benefits under a welfare benefit plan, fringe benefits excludible
under Code §§119 or 132, or any other benefit that is excluded from gross
income.

(3) Installment Payments. A series of installment payments will be treated as a
single payment. For purposes of this Section 4.03(B)(3), a “series of
installment payments” means payment of a series of substantially equal periodic
amounts to be paid over a predetermined number of years, except to the extent
that any increase in the payment amounts reflects reasonable Earnings through
the date of payment.

(4) Coordination with Anti-Acceleration Rule. In applying Section 4.03(C),
“payment” means as described in Sections 4.03(B)(2) and (3). A Participant under
a change payment election may change the form of payment to a more rapid
schedule (including a change from installments to a lump-sum payment) without
violating Section 4.03(C), provided any such change remains subject to the
change payment election provisions under this Section 4.03(B). Accordingly, if
the Participant’s payment change election modifies the payment method from
installments to a lump-sum payment, a change payment election must satisfy
Section 4.03(B)(1) measured from the first installment payment. If a change
payment election only modifies the timing of an installment payment, the change
payment election must apply to each installment and must satisfy Section 4.03(B)
measured from each installment payment.

(C) No Acceleration. Neither the Employer nor the Participant may accelerate the
time or schedule of any Plan payment except as Applicable Guidance may permit.
For this purpose, the following are not an acceleration: (i) a payment required
under a domestic relations order under Code §414(p)(1)(B); (ii) a payment
required under a certificate of divestiture under Code §1043(b)(2); or (iii) a
payment to pay the FICA tax (and income tax withholding related to the FICA) on
the Deferred Compensation.

(D) Cash-Out Upon Separation. Notwithstanding a Participant’s payment election
or any contrary Plan terms, the Plan will distribute in a single cash payment
the entire Vested Accrued Benefit of a Participant who has incurred a Separation
from Service (including Grandfathered and 409A Amounts) where the Participant’s
Vested Accrued Benefit does not exceed $10,000. The Employer will make any
payment under this Section 4.03(D) in January in the calendar year following the
calendar year of the Participant’s Separation from Service.

 

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4.04 Withholding. The Employer will withhold from any payment made under the
Plan and from any amount taxable under Code §409A, all applicable taxes, and any
and all other amounts required to be withheld under federal, state or local law,
including Notice 2005-1 and Applicable Guidance.

4.05 Beneficiary Designation. A Participant may designate a Beneficiary
(including one or more primary and contingent Beneficiaries) to receive payment
of any Vested Accrued Benefit remaining in the Participant’s Account at death.
The Employer will provide each Participant with a form for this purpose and no
designation will be effective unless made on that form and delivered to the
Employer. A Participant may modify or revoke an existing designation of
Beneficiary by executing and delivering a new designation to the Employer. In
the absence of a properly designated Beneficiary, the Employer will pay a
deceased Participant’s Vested Accrued Benefit to the Participant’s surviving
spouse and if no spouse, to the Participant’s children, including adopted
children, in equal shares, and if no spouse or children, to the Participant’s
estate. If a Beneficiary is a minor or otherwise reasonably determined by the
Employer to be legally incompetent, the Employer may cause the Plan or Trust to
pay the Participant’s Vested Accrued Benefit to a guardian, trustee or other
proper legal representative of the Beneficiary. Payment by the Employer of the
deceased Participant’s Vested Accrued Benefit to the Beneficiary or proper legal
representative of the Beneficiary completely discharges the Employer, the Plan
and Trust of all further obligations under the Plan.

4.06 Administration of Payment Date(s). The Employer may cause the Plan or Trust
to pay a Participant’s Vested Accrued Benefit on any date that is
administratively practicable following any Plan specified payment date or the
date specified in any valid payment election.

V. TRUST ELECTION AND PLAN EARNINGS

5.01 Unfunded Plan/Trust Election. The Employer intends this Plan to be an
unfunded plan that is wholly or partially exempt under ERISA. No Participant,
Beneficiary or successor thereto has any legal or equitable right, interest or
claim to any property or assets of the Employer, including assets held in any
Account under the Plan except as the Plan otherwise permits. The Employer’s
obligation to pay Plan benefits is an unsecured promise to pay. If the Employer
elects to create a Trust, the applicable provisions of the Plan continue to
apply, including those of this Section 5.01. The Trustee will pay Plan benefits
in accordance with the Plan terms or upon the Employer’s direction consistent
with Plan terms. The Employer intends to make notional contributions in lieu of
actual contributions to the Plan, and the Employer, therefore, may elect not to
invest any Plan contributions. If the Employer elects to invest any Plan
contributions, such investments may be held for the Employer’s benefit in
providing for the Employer’s obligations under the Plan or for such other
purposes as the Employer may determine. Any assets held in Plan Accounts remain
subject to claims of the Employer’s general creditors and no Participant’s or
Beneficiary’s claim to Plan assets has any priority over any general unsecured
creditor of the Employer.

(A) Restriction on Trust Assets. If an Employer establishes, directly or
indirectly, a Trust (or any other arrangement Applicable Guidance may describe),
the Trust and the Trust assets must be and must remain located within the United
States, except with respect to a Participant who performs outside the United
States substantially all services giving rise to the Deferred Compensation, in
which case the Employer may, in its sole discretion, choose to establish a Trust
outside the United States to cover the obligations of Participants who perform
outside the United States substantially all services giving rise to the Deferred
Compensation . The Trust may not contain any provision limiting the Trust assets
to the payment of Plan benefits upon a Change in the Employer’s Financial
Health, even if the assets remain subject to claims of the Employer’s general
creditors. For this purpose, the Employer, upon a Change in the Employer’s
Financial Health, may not transfer Deferred Compensation to the Trust. Any Trust
the Employer establishes under this Plan shall be further subject to Applicable
Guidance, compliance with which is necessary to avoid the transfer of assets to
the Trust being treated as a transfer of property under Code § 83.

5.02 Notional Earnings. The Employer, under the Plan, periodically will credit
notional Plan contributions with a determinable amount of notional Earnings (at
a specified fixed or floating interest rate or other specified index or indices
based on established and published financial investment benchmarks) to each
Participant’s Account. The Participant has the right to direct the investment of
the Participant’s Account pursuant to conditions established by the Employer.
This right is limited strictly to investment direction and the Participant will
not be entitled to the distribution of any Account asset except as the Plan
otherwise permits. Except as otherwise provided in the Plan or Trust, all Plan
assets, including all incidents of ownership, at all times will be the sole
property of the Employer.

 

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VI. MISCELLANEOUS

6.01 No Assignment. Except with respect to a payment required under a domestic
relations order under Code §414(p)(l)(B), no Participant or Beneficiary has the
right to anticipate, alienate, assign, pledge, encumber, sell, transfer,
mortgage or otherwise in any manner convey in advance of actual receipt, the
Participant’s Account. Prior to actual payment, a Participant’s Account is not
subject to the debts, judgments or other obligations of the Participant or
Beneficiary and is not subject to attachment, seizure, garnishment or other
process applicable to the Participant or Beneficiary.

6.02 Not Employment Contract. This Plan is not a contract for employment between
the Employer and any Employee who is a Participant. This Plan does not entitle
any Participant to continued employment with the Employer, and benefits under
the Plan are limited to payment of a Participant’s Vested Accrued Benefit in
accordance with the terms of the Plan.

6.03 Amendment and Termination.

(A) Amendment. The Chairman of the Board of Directors of the Company reserves
the right to amend the Plan at any time to comply with Code §409A, Notice
2005-1, Prop. Treas. Reg. §1.409A and other Applicable Guidance or for any other
purpose, provided that such amendment will not result in taxation to any
Participant under Code §409A. Except as the Plan and Applicable Guidance
otherwise may require, the Chairman may make any such amendments effective
immediately.

(B) Termination. The Employer, by action of the Board, may terminate, but is not
required to terminate, the Plan and distribute Plan Accounts under the following
circumstances; provided, however, that with respect to termination under
subsections (2), (3) and (4) below, the Employer must receive written approval
of such termination from any Participant who was a Participant in the Plan on
the effective date of the closing of the transaction that resulted in the
acquisition of the Employer by MidAmerican Energy Holdings Company, and provided
further that failure to obtain approval from any such Participant shall result
only in the continuation of the Plan for such Participant and shall not affect
termination of the Plan with respect to all other Participants (This proviso
shall not limit the Employer from terminating the right to make future
contributions to the Plan.):

(1) Dissolution/Bankruptcy. The Employer may terminate the Plan within 12 months
following a dissolution of a corporate Employer taxable under Code §331 or with
approval of a Bankruptcy court under 11 U.S.C. §503(b)(1)(A), provided that the
Deferred Compensation is paid to the Participants and is included in the
Participants’ gross income in the latest calendar year: (i) in which the plan
termination occurs; (ii) in which the amounts no longer are subject to a
Substantial Risk of Forfeiture; or (iii) in which the payment is
administratively practicable.

(2) Change in Control. The Employer may terminate the Plan within the 30 days
preceding or the 12 months following a Change in Control provided the Employer
distributes all Plan Accounts (and must distribute the accounts under any
substantially similar Employer plan which plan the Employer also must terminate)
within 12 months following the Plan termination.

(3) Other. The Employer may terminate the Plan for any other reason in the
Employer’s discretion provided that: (i) the Employer also terminates all
Aggregated Plans in which any Participant also is a participant; (ii) the Plan
makes no payments in the 12 months following the Plan termination date other
than payments the Plan would have made irrespective of Plan termination; (iii)
the Plan makes all payments within 24 months following the Plan termination
date; and (iv) the Employer within 5 years following the Plan termination date
does not adopt a new plan covering any Participant that would be an Aggregated
Plan.

(4) Applicable Guidance. The Employer may terminate the Plan under such other
circumstances as Applicable Guidance may permit.

 

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(C) Effect on Vesting. Any Plan amendment or termination will not reduce the
Vested Accrued Benefit held in any Participant Account at the date of the
amendment or termination and also may not accelerate vesting except as may be
permitted without subjecting any Participant to taxation under Code §409A.

(D) Cessation of Future Contributions. The Employer may elect at any time to
amend the Plan to cease future Elective Deferrals as of a specified date. In
such event, the Plan remains in effect (except those provisions permitting the
frozen contribution type) until all Accounts are paid in accordance with the
Plan terms, or, if earlier, upon the Employer’s termination of the Plan.

6.04 Severability. If any provision of the Plan is determined by a proper
authority to be invalid, the remaining portions of the Plan will continue in
effect and will be interpreted consistent with the elimination of the invalid
provision.

6.05 Notice and Elections. Any notice given or election made under the Plan must
be in writing and delivered (electronically, by facsimile, or by mail), to the
Employer or to the Participant or Beneficiary as appropriate. The Employer will
prescribe the form of any Plan notice or election to be given to or made by
Participants. Any notice or election will be deemed given or made as of the date
of actual receipts, or if given or made by certified mail, as of 3 business days
after mailing.

6.06 Administration. This Plan shall be administered by a committee
(“Committee”). The Chairman of the Board of Directors of the Employer shall
constitute the sole member of the Committee unless the Chairman appoints one or
more other individuals to serve on the Committee. The Committee shall have a
chair, who shall be chosen from among its members or who is the sole member of
the Committee. As a condition of receiving any Plan benefit to which a
Participant or Beneficiary otherwise may be entitled, a Participant or
Beneficiary will provide such information and perform such other acts as the
Employer reasonably may request. The Committee may retain agents to assist in
the administration of the Plan and may delegate to agents or to an officer of
the Employer such duties as it sees fit. The decision of the Committee or its
designee concerning the administration of the Plan is final and is binding upon
all persons having any interest in the Plan. The Employer will indemnify, defend
and hold harmless members of the Committee and any Employee designated by the
Committee to assist in the administration of the Plan from any and all loss,
damage, claims, expense or liability with respect to this Plan (collectively,
“claims”) except claims arising from the intentional acts or gross negligence of
the Committee member or Employee designated to assist in the administration of
the Plan.

6.07 Account Statements. The Employer will provide each Participant with a
statement of the Participant’s Vested Accrued Benefit at least annually as of
the last Valuation Date in the Plan Year. The Employer also will provide Account
statements to any Beneficiary of a deceased Participant with a Vested Accrued
Benefit remaining in the Plan.

6.08 Accounting. The Employer will maintain for each Participant as is necessary
for proper administration of the Plan, an Elective Deferral Account (and
Retirement, In-Service and Education subaccounts.

6.09 Costs and Expenses. The Employer will pay the costs, expenses and fees
associated with the operation of the Plan, excluding those incurred by
Participants or Beneficiaries. The Employer will pay costs, expenses or fees
charged by or incurred by the Trustee only as provided in the Trust or other
agreement between the Employer and the Trustee.

6.10 Reporting. The Employer will report on Form W-2 Deferred Compensation for
Participants who were Employees when compensation was deferred and will report
on Form 1099-MISC Deferred Compensation for Participants who were not Employees
when compensation was deferred, all in accordance with Notice 2005-1 and
Applicable Guidance.

 

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6.11 Claims Procedure.

(A) Claim. Any person or entity claiming a benefit, requesting an interpretation
or ruling under the Plan (hereinafter referred to as “Claimant”), or requesting
information under the Plan shall present the request in writing to the Employer,
which shall respond in writing as soon as practicable.

(B) Denial of Claim. If the claim or request is denied, the written notice of
denial shall state:

 

1)

The reasons for denial, which specific reference to the Plan provisions on which
the denial is based;

 

2)

A description of any additional material or information required and an
explanation of why it is necessary; and

 

3)

An explanation of the Plan’s claim review procedure.

(C) Review of Claim. Any Claimant whose claim or request is denied or who has
not received a response within sixty (60) days may request a review by notice
given in writing to the Employer. Such request must be made within sixty (60)
days after receipt by the Claimant of the written notice of denial, or in the
event Claimant has not received a response sixty (60) days after receipt by the
Employer of Claimant’s claim or request. The claim or request shall be reviewed
by the Board of Directors which 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.

(D) Final Decision. The decision on review shall normally be made within sixty
(60) days after the Employer’s receipt of Claimant’s claim or request. 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.

VII. 2005, 2006 AND 2007 TRANSITION RULES AND PROVISIONS APPLICABLE

BECAUSE PLAN WAS EFFECTIVE BEFORE 2005

7.01 Code §409A Amounts. The terms of this Plan control as to any Compensation
Deferred prior to January 1, 2005, in addition to all Compensation Deferred
after December 31, 2004. Thus, all amounts under the Plan are considered “409A
Amounts”.

7.02 2005, 2006 and 2007 Operational Rules. The following provisions apply to
the Plan during the 2005 and 2006 Taxable Years, as specifically provided in
each subsection.

(A) Good Faith. As to 409A Amounts, the Employer will operate the Plan during
the 2005 and 2006 Taxable Years in good faith compliance in accordance with: (i)
Notice 2005-1; (ii) Code §409A; and (iii) any Applicable Guidance as of the
effective date hereof. The Employer also may operate the Plan consistent with
the Prop. Treas. Reg. §1.409A before such regulations become effective and may
apply such regulations to the extent that they are inconsistent with Notice
2005-1. Although the Employer intends this Plan document to comply with the
provisions of Notice 2005-1 and of Prop. Treas. Reg. §1.409A, the Employer will
not apply any Plan provision which is inconsistent therewith and, by December
31, 2007, will amend any such provision to comply with Applicable Guidance. The
Employer and the Participants may not exercise discretion under the Plan in a
manner that would violate Code §409A.

(B) Participant’s Revised Deferral Election. A Participant, on or before
December 31, 2007, may make a new payment election as to any previously deferred
409A Amount, except that a Participant cannot in 2006 change payment elections
with respect to payments that the Participant would otherwise receive in 2006,
or to cause payments to be made in 2006, and a Participant cannot in 2007 change
payment elections with respect to payments that the Participant would otherwise
receive in 2007 or to cause payments to be made in 2007. Any such election must
be a permissible election under Section 4.03(A), but an election under this
Section 7.02(B) is not treated as a change in the timing or form of distribution
and need not comply with Section 4.03(B) as it applies to such changes.

 

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(C) 2005 Deferral Election by March 15, 2005. Notwithstanding Section 2.02, if
the Plan was in existence on or before December 31, 2004 (as described in Notice
2005-1, Q/A 21), a Participant may make an Elective Deferral election as to 409A
Amounts earned for service to the Employer through December 31, 2005. A
Participant must make an election under this Section7.05(C) no later than March
15, 2005, and in accordance with the Plan terms as in effect on or before
December 31, 2005. The election applies only as to amounts not paid or payable
to the Participant at the time of the election. Any amounts subject to this
election otherwise are 409A Amounts. This Section applies only to the 2005
Taxable Year and is applicable only if the Employer executed, on or before
January 1, 2006, a separate amendment to the Plan that includes provisions
similar to this subsection.

(D) Cancellation of Election/Participation. A Participant as to 409A Amounts, on
or before December 31, 2005, may elect to cancel any or all existing Elective
Deferral elections. The Plan will distribute to an affected Participant all 409A
Amounts subject to an election under this 7.05(D) and the Participant will
include such amounts in income, in the 2005 Taxable Year, or if later, in the
Taxable Year in which such amounts are Vested. This section is applicable only
if the Employer executed, on or before January 1, 2006, a separate amendment to
the Plan that includes provisions similar to this subsection.

7.03 Incorporation of Applicable Guidance. In the event of Applicable Guidance
that is contrary to any Plan provision, the Employer, as of the effective date
of the Applicable Guidance, will operate the Plan in conformance therewith and
will disregard any inconsistent Plan provision. Any such Applicable Guidance is
deemed to be incorporated by reference into the Plan and to supersede any
contrary provision during any period in which the Employer is permitted to
comply operationally with the Applicable Guidance and before a formal Plan
amendment is required.

IN WITNESS WHEREOF, PacifiCorp has caused this instrument to be signed by its
duly authorized officer on this ___ day of December, 2006.

 

 

 

PACIFICORP

 

By:

 

 

 

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Greg E. Abel, Chairman of the Board of Directors

 

 

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