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