EXHIBIT 10.1

 

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CREDIT AGREEMENT

 

BETWEEN

 

NORTHWEST NATURAL GAS COMPANY

 

and

 

[BANK]

 

Dated as of October 1, 2004

 

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TABLE OF CONTENTS

 

     Page

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SECTION I. DEFINITIONS

    

1.1    Defined Terms

   1

1.2    Other Definitional Provisions

   9

SECTION II. THE LOANS

   9

2.1    Loan Commitment

   9

2.2    Termination or Reduction of Commitments; Extension of Commitment
Termination Date

   10

2.3    Interest Rate Options

   11

2.4    Election Procedures

   12

2.5    Principal and Interest Payments; Prepayments

   13

2.6    Modification to Adjusted LIBOR Rate or Adjusted C/D Rate Calculations

   13

2.7    Unavailability of Certain Loans

   13

2.8    Changes in Law Rendering Certain Loans Illegal

   14

2.9    Capital Adequacy Adjustment

   14

2.10 Commitment and Standby Fees

   14

2.11 Indemnity

   15

2.12 Use of Proceeds

   15

SECTION III. REPRESENTATIONS AND WARRANTIES

   15

3.1    Corporate Existence; Authorization

   15

3.2    Enforceability

   15

3.3    Financial Information

   16

3.4    Compliance with Laws

   16

3.5    No Material Litigation

   16

3.6    Ownership of Property

   16

3.7    Taxes

   16

3.8    Subsidiaries

   17

3.9    Public Utility Holding Company Act

   17

3.10 ERISA

   17

3.11 Environmental

   17

3.12 Ranking

   18

SECTION IV. CONDITIONS PRECEDENT

   18

4.1    Conditions to Closing

   18

4.2    Conditions to All Loans

   18

SECTION V. AFFIRMATIVE COVENANTS

   19

5.1    Financial Statements

   19

5.2    Certificates; Other Information

   19

5.3    Payment of Taxes

   20

5.4    Conduct of Business

   20

5.5    Maintenance of Property; Insurance

   20

5.6    Inspection of Property; Books and Records; Discussions

   20

5.7    Notices

   20

5.8    Debt Rating

   21

 

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SECTION VI. NEGATIVE COVENANTS

   21

6.1    Maintenance of Consolidated Funded Indebtedness to Total Capitalization

   21

6.2    Maintenance of Consolidated Minimum Net Worth

   21

6.3    Limitation on Fundamental Changes

   22

SECTION VII. EVENTS OF DEFAULT

   22

SECTION VIII. MISCELLANEOUS

   23

8.1    Notices

   23

8.2    Waiver; Amendment

   23

8.3    Survival

   24

8.4    Successors and Assigns

   24

8.5    Attorneys’ Fees

   24

8.6    Governing Laws; Jurisdiction

   24

8.7    Counterparts

   25

8.8    Participations

   25

8.9    Entire Agreement

   25

8.10 Receipt of Document

   25

SCHEDULE I Bank Information and Specific Terms

   27

SCHEDULE II Form of Note

   29

SCHEDULE III Borrowing Certificate

   32

SCHEDULE IV Subsidiaries

   34

 

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This CREDIT AGREEMENT (the “Agreement”), between NORTHWEST NATURAL GAS COMPANY,
an Oregon corporation (the “Company” or “Borrower”), and BANK OF AMERICA, N.A.
(“Bank”) is dated as of the Effective Date set forth on such Schedule I.

 

WHEREAS, the parties hereto agree and acknowledge that this Agreement is one of
a series of substantially similar credit agreements with various banks
(collectively, the “Credit Agreements”) evidencing the commitment of each such
bank to lend funds to the Company for general corporate purposes, including
support of the commercial paper programs of the Company and its wholly owned
subsidiary, NNG Financial Corporation; and

 

WHEREAS, certain terms of the Bank’s agreement to lend hereunder shall be set
forth on Schedule I hereto and such Schedule may be amended from time to time;

 

NOW, THEREFORE, in order to induce the Bank to make loans hereunder, and in
consideration thereof and of the mutual covenants and agreements set forth
herein, the parties hereto agree as follows:

 

SECTION I. DEFINITIONS

 

1.1 Defined Terms. As used in this Agreement, the following terms have the
following meanings:

 

“Adjusted C/D Rate”: with respect to any Interest Period for a C/D Rate Loan, a
rate per annum (rounded, if necessary, to the next higher 1/100th of one percent
(0.01%) determined by the following formula:

 

Adjusted C/D Rate

   =   

Base C/D Rate + Assessment Rate

     

1 - Reserve Factor

 

This rate reflects market rates and published regulatory assessments and
reserves. It does not necessarily reflect the Bank’s cost of funds or any
particular funding source for the Bank.

 

“Adjusted LIBOR Rate”: with respect to any Interest Period for a LIBOR Loan, a
rate per annum (rounded, if necessary, to the next higher 1/16th of one percent)
determined by the following formula:

 

Adjusted LIBOR Rate

 

=

  

Base LIBOR Rate

    

1 - Reserve Factor

 

This rate reflects market rates and published regulatory reserves, if
applicable. It does not necessarily reflect the Bank’s cost of funds or any
particular funding source for the Bank.

 

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“Agreement”: this Credit Agreement, entered into with the Bank identified on
Schedule I hereto, as amended, supplemented or modified from time to time.

 

“Assessment Rate”: with respect to any Interest Period for a C/D Rate Loan, the
maximum assessment rate per annum (rounded, if necessary, to the next higher
1/100th of one percent (0.01%)) imposed by the Federal Deposit Insurance
Corporation (or any successor) upon U.S. commercial banks for the insurance of
domestic, U.S. Dollar denominated time deposits in effect on the date of the
Notice of Election.

 

“Available Commitment”: at a particular time, an amount equal to the difference
between (a) the aggregate amount of the Bank’s Commitment Amount at such time,
including only such portion of the Bank’s Excess Line Commitment, if any, which
the Company has requested be available in accordance with subsection 2.1 (b)
hereof, and (b) the aggregate principal amount of the Loans outstanding at such
time.

 

“Base C/D Rate”: with respect to any Interest Period for a C/D Rate Loan, the
rate of interest per annum (rounded upward to the next higher 1/100th of one
percent) determined by the Bank to be the current rate for secondary market
certificates of deposit in the approximate amount of such C/D Rate Loan and
having a maturity approximately equal to such Interest Period at the time
selected by the Bank on the first day of such interest period.

 

“Base LIBOR Rate”: with respect to any Interest Period for a LIBOR Loan, the
rate (rounded to the nearest 1/16th of one percent determined by the Bank to be
the current rate at which United States dollar deposits are offered by the Bank
to first-class banks in the London Interbank market in the approximate amount of
such LIBOR Loan and having a maturity approximately equal to such Interest
Period, as of approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.

 

“Borrowing Date”: any Business Day specified in a Notice of Election as a date
on which the Company requests the Bank to make a Loan hereunder.

 

“Business Day”: a day other than a Saturday, Sunday or other day on which the
Bank is authorized or required by law to close or a LIBOR Business Day as
defined herein and, if such date relates to a LIBOR loan, means a LIBOR Business
Day.

 

“Business of the Company”: the businesses described in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2003 and the Company’s 2003
Annual Report to Shareholders, and other businesses related to, growing out of,
or compatible with, such businesses.

 

“C/D Margin”: the rate per annum added to the Adjusted CD Rate as set forth on
Schedule I hereto.

 

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“C/D Rate Loans”: Loans hereunder at such time as they are made and/or are being
maintained at a rate of interest based upon the Adjusted C/D Rate.

 

“Closing Date”: the date on which the conditions specified in subsection 4.1 are
satisfied in full.

 

“Code”: the Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment”: the Bank’s obligation to extend credit to the Company by making
Loans to the Company in accordance with the terms and conditions of this
Agreement.

 

“Commitment Amount”: the aggregate amount set forth on Schedule I which is the
maximum amount which the Bank shall be committed to have outstanding at any one
time in Loans under this Agreement under its Primary Line Commitment and Excess
Line Commitment, if any.

 

“Commitment Period”: the period from and including the date hereof to but not
including the Commitment Termination Date or such earlier date as the Commitment
shall terminate as provided herein.

 

“Commitment Termination Date”: the date that is the last day of the Commitment
Period set forth on Schedule I of this Agreement, or such later date to which
the Commitment Termination Date shall be extended pursuant to subsection 2.2 or,
if any such date is not a Business Day, the Business Day next preceding such
date.

 

“Credit Agreements”: as defined in the Recitals hereto.

 

“Default”: any of the events specified in Section VII, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

 

“Dollars” and “$”: dollars in lawful currency of the United States of America.

 

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

“Excess Line Commitment”: the amount, if any, set forth as such on Schedule I
hereto, which shall represent the portion of the Bank’s Commitment above its
Primary Line Commitment that it will make available for Loans to the Company on
a monthly basis upon request in accordance with subsection 2.1(b) of this
Agreement.

 

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“Event of Default”: any of the events specified in Section VII, provided that
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act has been satisfied.

 

“Fed Funds Margin”: a rate per annum added to the Fed Funds Rate as set forth on
Schedule I hereto.

 

“Fed Funds Rate”: with respect to any Interest Period, a fluctuating rate of
interest equal for each day during such period to (a) the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the immediately preceding Business Day)
by the Federal Reserve Lender Bank of New York or (b) if such rate is not so
published for any day the average of the quotations at approximately 11:00 a.m.
New York time on such day on such transactions received by the Bank from three
Federal Funds brokers of recognized standing selected by the Bank in its sole
discretion.

 

“Fed Funds Rate Loan”: Loans hereunder at such time as they are made and/or are
being maintained at a rate of interest based on the Fed Funds Rate.

 

“Funded Indebtedness”: of a Person, at a particular date, all Indebtedness,
whether secured or unsecured, which matures (or which by the terms thereof is
renewable or extendible at the option of the obligor for a period ending) more
than one year after such date.

 

“GAAP”: generally accepted accounting principles in the United States of America
in effect from time to time.

 

“Governmental Authority”: any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“Indebtedness”: of a Person, at a particular date, the sum (without duplication)
at such date of (a) indebtedness for borrowed money or for the deferred purchase
price of property or services (except trade accounts payable arising in the
ordinary course of business) in respect of which such Person is liable, as
obligor, (b) obligations of such Person under capitalized leases and (c) any
non-contingent reimbursement obligations of such Person in respect of letters of
credit, acceptances, or similar obligations issued or created for the account of
such Person.

 

“Interest Payment Date”: (a) as to any Prime Rate Loan or Fed Funds Rate Loan,
the last day to occur while such Loan is outstanding and, if earlier, the end of
each calendar quarter, (b) as to any LIBOR Loans in respect of which the Company
has selected an Interest Period of one, two or three months or any C/D Rate
Loans in respect of which the Company has selected an Interest Period of 30, 60
or 90 days, the last day of such Interest Period, (c) as to any LIBOR Loan or
C/D Rate Loan in respect of which the Company has selected, if

 

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available, a longer Interest Period than that described in clause (b), each date
which is three months or 90 days, respectively, or a whole multiple thereof,
from the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Negotiated Rate Loan the dates agreed to by the Company
and the Bank.

 

“Interest Period”:

 

(a) initially, the period commencing on the Borrowing Date, or on the date of
conversion of a Loan from a fluctuating rate to a fixed rate, with respect to
any Loan and ending on the last day of the period selected by the Company as
permitted by Schedule I in its Notice of Election given with respect thereto;
and

 

(b) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Loan and ending on the last day of the period
selected by the Company in a Notice of Election;

 

Subject to the following:

 

(i) if any Interest Period pertaining to a LIBOR Loan would otherwise end on a
day that is not a LIBOR Business Day, that Interest Period shall be extended to
the next succeeding LIBOR Business Day unless the result of such extension would
be to carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding LIBOR Business Day;

 

(ii) if any Interest Period pertaining to any other Loan would otherwise end on
a day that is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day;

 

(iii) if any Interest Period pertaining to a LIBOR Loan that begins on the last
LIBOR Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last LIBOR Business Day of a calendar month; and

 

(iv) the Company shall select no Interest Period that would otherwise extend
beyond the Commitment Termination Date.

 

“Investment”: of a Person means any loan, advance, extension of credit (other
than accounts receivable arising in the ordinary course of business on terms
customary in the trade), deposit account or contribution of capital by such
Person or any investment in, or other acquisition of, the stock, partnership
interest, notes, debentures, or other securities of any other Person made by
such Person.

 

“LIBOR Business Day”: any Business Day on which dealings in foreign currencies
and exchange between banks may be carried on in London, England and in New York
City.

 

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“LIBOR Loans”: Loans hereunder at such time as they are made and/or are being
maintained at a rate of interest based upon the Adjusted LIBOR Rate.

 

“LIBOR Margin”: a rate per annum added to the Adjusted LIBOR Rate as set forth
on Schedule I hereto.

 

“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any capitalized lease, and the filing of any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing).

 

“Loans”: the collective reference to the loans made by the Bank to the Company
hereunder.

 

“Moody’s”: Moody’s Investors Service, Inc., or its successor.

 

“Negotiated Rate Loans”: Loans hereunder at such time as they are made and/or
are being maintained at a fixed rate of interest negotiated by the Company and
the Bank in accordance with subsection 2.3(e) of this Agreement.

 

“Net Income”: the Company’s net income for a specified period as reported in the
Consolidated Statements of Income in the Company’s reports to the Securities and
Exchange Commission on Form 10-Q or in the Quarterly Financial Information in
the Company’s reports to the Securities and Exchange Commission on Form 10-K.

 

“Net Worth”: the Company’s total common stock equity as of a specified date as
reported on the Consolidated Balance Sheets in the Company’s reports to the
Securities and Exchange Commission on Form 10-K or Form 10-Q.

 

“Note”: the note entered into by the Company in connection with this Agreement
in the form of Schedule II hereto.

 

“Notice of Election”: as set forth in subsection 2.4 hereof.

 

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.

 

“Person”: an individual, partnership, corporation, business trust, joint stock
company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

 

“Plan”: means an employee pension benefit plan that is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
as to which the Company or any member of the Controlled Group may have any
liability.

 

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“Primary Line Commitment”: the portion of the Bank’s Commitment identified as
such on Schedule I.

 

“Prime Rate”: at any particular date, the rate of interest publicly announced or
otherwise established from time to time by the Bank as its prime, corporate
base, or reference rate. The prime, corporate base, or reference rate is not
intended to be the lowest rate of interest charged by the Bank in connection
with extensions of credit to debtors.

 

“Prime Rate Loans”: Loans hereunder at such time as they are made and/or are
being maintained at a rate of interest based upon the Prime Rate.

 

“Rating Level Margin”: the rates per annum, if any, set forth as such on
Schedule I hereto as applicable to C/D Rate Loans, LIBOR Loans or Fed Funds Rate
Loans.

 

“Rating Level I”: exists on any date if, on such date, the Company’s senior
unsecured debt is rated A or higher by S&P and A2 or higher by Moody’s; or is
rated at this level by one of the rating agencies and no lower than A- or A3 by
the other rating agency.

 

“Rating Level II”: exists on any date if, on such date, the Company’s senior
unsecured debt is rated A- by S&P and A3 by Moody’s; or is rated at this level
by one of the rating agencies and no lower than BBB+ or Baa1 by the other rating
agency.

 

“Rating Level III”: exists on any date if, on such date, the Company’s senior
unsecured debt is rated BBB+ by S&P and Baa1 by Moody’s; or is rated at this
level by one of the rating agencies and no lower than BBB or Baa2 by the other
rating agency.

 

“Rating Level IV”: exists on any date if, on such date, the Company’s senior
unsecured debt is rated BBB by S&P and Baa2 by Moody’s; or is rated at this
level by one of the rating agencies and no lower than BBB- or Baa3 by the other
rating agency.

 

“Rating Level V”: exists on any date if, on such date the Company’s senior
unsecured debt is rated BBB- or lower by S&P and Baa3 or lower by Moody’s, only
one rating agency (S&P or Moody’s) provides a long-term debt rating for the
Company, or neither S&P nor Moody’s provides a long-term debt rating for the
Company.

 

“Reportable Event”: means a reportable event as defined in Section 4043 of ERISA
and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the

 

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requirements of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

 

“Regulation D”: means Regulation D of the Board of Governors of the Federal
Reserve System, as amended from time to time.

 

“Requirement of Law”: as to any Person, the Certificate of Incorporation and
Bylaws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

 

“Reserve Factor”: means, with respect to any Interest Period of any LIBOR Loan
or C/D Rate Loan, the maximum aggregate reserve percentage (expressed as a
decimal, rounded to the nearest 1/100th of one percent) in effect which may be
imposed under regulations issued from time to time by the Federal Reserve Board
for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurodollar
deposits (in the case of LIBOR Loans) or non-personal time deposits (in the case
of C/D Rate Loans) with a maturity and size comparable to that of the applicable
Interest Period as in effect on the date of the Notice of Election.

 

“Responsible Officer”: the President, any Senior Vice President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.

 

“S&P”: Standard & Poor’s Corporation or its successor.

 

“Schedules”: means Schedules I, II, III and IV hereto which are hereby
incorporated and made part of this Agreement.

 

“Significant Subsidiary”: a Subsidiary which is a “significant subsidiary” as
that term is defined in Rule 1-02(w) of Regulation S-X promulgated by the
Securities and Exchange Commission (as in effect on the date of this Agreement).

 

“Single Employer Plan”: means a Plan maintained by the Company or any member of
the Controlled Group for employees of the Company or any member of the
Controlled Group.

 

“Subsidiary”: as to any Person, a corporation of which shares of stock having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or

 

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other managers of such corporation are at the time owned, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company.

 

“Total Capitalization”: the sum of Funded Indebtedness, capital stock,
additional paid-in capital and retained earnings of the Company and its
Subsidiaries, taken on a consolidated basis after eliminating all intercompany
items.

 

“Total Equity”: the remainder of Total Capitalization minus Funded Indebtedness.

 

“Type”: as to any Loan, its nature as a Prime Rate Loan, LIBOR Loan, C/D Rate
Loan, Fed Funds Rate Loan or Negotiated Rate Loan.

 

“Unfunded Liabilities”: means the amount (if any) by which the present value of
all vested nonforfeitable benefits under all Single Employer Plans exceeds the
fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.

 

1.2 Other Definitional Provisions. (a) Unless otherwise specified herein, all
terms defined in this Agreement shall have the defined meanings when used in the
Note, Schedule I or any Exhibits or any certificate or other document made or
delivered pursuant hereto.

 

(b) As used herein and in the Notes, and any certificate or other document made
or delivered pursuant hereto, accounting terms relating to the Company and its
Subsidiaries not defined in subsection 1.1 and accounting terms partly defined
in subsection 1.1 to the extent not defined, shall have the respective meanings
given to them under GAAP.

 

(c) The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and section, subsection, schedule
and exhibit references are to this Agreement unless otherwise specified.

 

SECTION II. THE LOANS

 

2.1 Loan Commitment. (a) Subject to the terms and conditions hereof, the Bank
agrees to make Loans to the Company from time to time during the Commitment
Period in an aggregate principal amount at any one time outstanding not to
exceed its Available Commitment. During the Commitment Period the Company may
use the Commitment by borrowing, prepaying the Loans in whole or in part and
reborrowing, all in accordance with the terms and conditions hereof.

 

(b) Any Excess Line Commitment of the Bank shall be a part of the Bank’s
Available Commitment to the extent that the Company has given notice to the Bank
on or prior to the first day of any month that the Company requests that the
Bank

 

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make that portion of the Excess Line Commitment available, in increments of
$500,000, to the Company during such month; provided, however, that at any time
as there may exist any outstanding Loans under the Excess Line Commitment, the
Company shall be deemed to have given notice requesting availability under the
Excess Line Commitment.

 

(c) The Loans may be, to the extent any such Type is available in accordance
with Schedule I hereto, either (i) LIBOR Loans, (ii) Prime Rate Loans, (iii) C/D
Rate Loans (iv) Fed Funds Rate Loans, (v) Negotiated Rate Loans or (vi) a
combination thereof, provided that no LIBOR Loan or C/D Rate Loan shall be made
within the period commencing one month or 30 days, respectively, prior to the
Commitment Termination Date but excluding such date.

 

(d) The Loans made by the Bank shall be evidenced by a promissory note of the
Company, substantially in the form of Schedule II, with appropriate insertions,
payable to the order of the Bank and representing the obligation of the Company
to pay the aggregate unpaid principal amount of all Loans made by the Bank with
interest thereon as prescribed in subsection 2.3. Each Note shall (i) be dated
the Closing Date, (ii) be stated to mature on the Commitment Termination Date
and (iii) bear interest for the period from the date thereof until paid in full
on the unpaid principal amount thereof from time to time outstanding at the
applicable interest rate per annum determined as provided in, and payable as
specified in, subsections 2.3 and 2.5. The Bank is hereby authorized to record
the date, Type and amount of each Loan made by the Bank, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each prepayment of principal thereof, and, in the case of LIBOR
Loans, C/D Rate Loans or Negotiated Rate Loans, the length of each Interest
Period and the interest rate with respect thereto, on the schedule annexed to
and constituting a part of its Note, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded; provided,
however, that the failure of the Bank to make any such recordation or any error
in any such recordation shall not affect the obligations of the Company
hereunder or under such Note; provided, further, however, that in the absence of
any such recordation, the loan accounts and records of the Bank shall constitute
prima facie evidence of the outstanding amount of any Loans and interest accrued
thereon.

 

2.2 Termination or Reduction of Commitments; Extension of Commitment Termination
Date. (a) The Company shall have the right, upon not less than three Business
Days’ notice to the Bank, to terminate the Commitment or, from time to time,
reduce the amount of the Commitment, provided that (i) no such reduction or
termination shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the then
outstanding principal amount of the Loans would exceed the amount of the
Commitment then in effect and (ii) any termination of the Commitment while LIBOR
Loans or C/D Rate Loans are outstanding and any reduction of the aggregate
amount of the Commitment that reduces the amount of the Commitment below the
principal amount of the LIBOR Loans or C/D Rate Loans then outstanding may be
made only on the last day of the respective Interest Period for such LIBOR Loans
or C/D Rate Loans. Termination of the Commitment shall also terminate the
obligation of the Bank to make Loans.

 

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(b) The Commitment once terminated or reduced may not be reinstated.

 

(c) The Company may deliver to the Bank not earlier than 45 and not later than
15 days prior to the Commitment Termination Date a written notice requesting
that the Bank extend the Commitment Termination Date for an additional 364-day
period. The Bank will review such request and will make an independent credit
decision in its sole discretion as to whether to agree to such extension. If the
Bank agrees to grant such extension, it will so inform the Company in writing on
(and not before) the Commitment Termination Date that such 364-day extension of
the Bank’s Commitment has been granted.

 

2.3 Interest Rate Options. The Company shall have the options set forth on
Schedule I hereto from which to choose interest rates payable on amounts
outstanding under the Loans, as the Company shall specify in the related Notice
of Election. The interest rate options to be made available by the Bank at the
time of any requests for Loans shall include at least two and as many as all of
the following:

 

(a) Prime Rate Loans.

 

A Prime Rate Loan shall bear interest at the per annum rate equal to the Bank’s
Prime Rate, fully floating, and each change in said rate to become effective on
the effective date of each change announced by the Bank. Interest shall be
computed on the outstanding principal amount on the basis of a 365-day or
366-day year, as applicable, and actual days elapsed. If at any time there is no
interest rate option in effect for an amount outstanding hereunder, the Company
shall be deemed to have elected the Prime Rate for such amount.

 

(b) C/D Rate Loans.

 

A C/D Rate Loan shall bear interest at the Adjusted C/D Rate plus the applicable
Rating Level Margin set forth on Schedule I for each Interest Period. Interest
shall be computed on the outstanding principal amount for the actual number of
days elapsed from the first day of the applicable Interest Period to, but not
including, the last day thereof, on the basis of a 360-day year.

 

(c) LIBOR Loans.

 

A LIBOR Loan shall bear interest at the Adjusted LIBOR Rate plus the applicable
Rating Level Margin for each Interest Period set forth on Schedule I . Interest
shall be computed on the outstanding principal amount for the actual number of
days elapsed from the first day of the applicable Interest Period to, but not
including, the last day thereof, on the basis of a 360-day year.

 

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(d) Fed Funds Rate Loans.

 

A Fed Funds Rate Loan shall bear interest at the Fed Funds Rate, fully floating,
plus the applicable Rating Level Margin for each Interest Period set forth on
Schedule I. Interest shall be computed on the outstanding principal amount on
the basis of a 360-day year, as applicable, and actual days elapsed.

 

(e) Negotiated Rate Loans.

 

The Company may request the Bank to provide a bid stating the lowest fixed rate
at which the Bank would be willing to make a Loan to the Company for the
Interest Period, with the Interest Payment Dates and method of interest
calculation, and in the amount requested. Such request for a bid may be made by
the Company at any time prior to the proposed Borrowing or conversion of
outstanding Loans. Any Loan made at such bid rate shall be a Negotiated Rate
Loan. The Bank shall advise Company of its bid rate and the Company may choose
to accept such rate in its sole discretion by electing a Negotiated Rate Loan in
its Notice of Election. Interest on a Negotiated Rate Loan shall be computed on
the basis of a 360-day year, as applicable, and actual days elapsed.

 

2.4 Election Procedures.

 

(a) The Company shall give notice of each proposed Borrowing and/or interest
rate election (“Notice of Election”) to the Bank in writing or by telephone, and
confirmed as soon as practicable in writing. Such Notice is to be received by
the Bank no later than 10:00 a.m., Pacific time, on the proposed date of the
Loan and/or commencement date of the Interest Period; except that Notice of
Election to borrow or convert to (i) a LIBOR Loan shall be received no later
than 10:00 a.m. (Pacific time) three Business Days prior to the proposed date of
the Loan or conversion or, (ii) a C/D Rate Loan shall be received by the Bank no
later than two Business Days prior to the proposed date of the Loan or
conversion. The Bank shall be entitled to rely on any Notice of Election given
on behalf of the Company by any Responsible Officer or any other person
authorized in writing by a Responsible Officer to give such Notice.

 

Each Notice of Election shall specify the amount (and how much of said amount is
a conversion of an outstanding Loan) and date of the Loan, Interest Rate Option,
and, in the case of a requested C/D Rate Loan, or LIBOR Loan the Interest
Period, and in the case of a Negotiated Rate Loan for which a bid is being
accepted the Interest Period and the Interest Payment Date(s).

 

(b) Each C/D Rate Loan, or LIBOR Loan shall be in the principal amount of Five
Hundred Thousand and No/100 Dollars ($500,000.00) or an amount greater by
multiples of One Hundred Thousand and No/100 Dollars ($100,000.00). In the case
of Prime Rate Loans or Negotiated Rate Loans, the Company may borrow in any
principal amount up to the amount of the Available Commitment.

 

(c) On the date of a proposed Loan, the Bank shall transfer to the Company the
principal amount of the Loan to such account in such bank as the Company
instructs the Bank in writing. Loans shall be made and repaid in immediately
available funds unless the Company and the Bank may otherwise agree in writing
in their sole discretion.

 

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2.5 Principal and Interest Payments; Prepayments.

 

(a) The aggregate unpaid principal amount of all Loans outstanding under this
Agreement, together with unpaid accrued interest thereon, shall be due and
payable in full on the Commitment Termination Date. The Company may from time to
time prepay any Prime Rate Loan or Fed Funds Rate Loan in whole or in part
without premium or penalty. Borrower may not prepay a Negotiated Rate Loan, C/D
Rate Loan or LIBOR Loan prior to the last day of the applicable Interest Period.
Interest on each Loan shall be payable in arrears on each Interest Payment Date
with respect thereto.

 

(b) All payments shall be made by the Company to the Bank not later than 12:00
Noon, Pacific time, on the date due, at the office of the Bank designated on
Schedule I for such purpose, or such other place as the Bank may designate in
writing.

 

(c) If any payment of principal or interest falls due on a day which is not a
Business Day, then such due date shall be extended to the next following
Business Day, subject to clause (i) of the definition of “Interest Period.”
Additional interest shall accrue and be payable for the period of any such
extension. All payments hereunder shall be applied first to interest, then to
principal.

 

(d) Any overdue principal on any of the Loans, and to the extent permitted by
law, overdue interest thereon, shall bear interest, payable on demand, for each
day from the date on which payment was due until the date of payment at a rate
per annum equal to the Prime Rate plus 1.5% per annum (computed on the basis of
a 360-day year and the actual number of days elapsed).

 

2.6 Modification to Adjusted LIBOR Rate or Adjusted C/D Rate Calculations. If
after the date of this Agreement there is a change in any law, rule or
regulation, or in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency, or compliance by the
Bank with any request or direction (whether or not having the force of law) of
any such authority, central bank or comparable agency that subjects the Bank to
additional costs in, or reduces, in the Bank’s opinion, the amount of any
payment received or receivable by the Bank under this Agreement or under the
Note by reason of obtaining funds in the LIBOR or domestic C/D markets, through
imposition of additional taxes, reserves or any other conditions, then the
formulas for calculating the Adjusted LIBOR Rate and Adjusted C/D Rate for LIBOR
or C/D Rate Loans shall immediately be modified to reflect and include the
impact of such change whether or not the Bank purchases funds in the applicable
LIBOR or domestic C/D markets. The Bank shall provide the Company with a
statement detailing any modification of calculation.

 

2.7 Unavailability of Certain Loans. If, with respect to any Interest Period for
a C/D Rate Loan or LIBOR Loan, the Bank determines that deposits in dollars are
not being offered in the relevant market for such Interest Period, or that

 

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adequate and reasonable means do not exist for ascertaining the applicable rate
for a LIBOR Loan or C/D Rate Loan, then the Bank shall promptly notify the
Company thereof by telephone, confirmed in writing, and any request by the
Company for such C/D Rate Loan or such LIBOR Loan shall be deemed to be
rescinded. In the case of any outstanding C/D Rate Loans or LIBOR Loans so
affected, on the last day of the then current Interest Period for such Loans,
Borrower shall either repay the Loans in full or the Loans shall automatically
be converted into Prime Rate Loans, or at the Company’s election, Loans of
another available Type. Thereafter, the obligation of the Bank to make C/D Rate
Loans or LIBOR Loans, as the case may be, shall be suspended until the Bank
revokes the notice to the Company referenced in this subsection 2.7.

 

2.8 Changes in Law Rendering Certain Loans Illegal. If after the date of this
Agreement there is a change in any law (including the adoption of any new law),
rule or regulation or in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency that renders it
illegal for the Bank to make or maintain C/D Rate Loans or LIBOR Loans, or makes
it illegal for the Bank to fund itself in the applicable LIBOR or C/D markets,
then the Bank shall promptly so notify the Company, and upon the effective date
of such event, suspend availability of the LIBOR option or C/D Rate option for
the duration of the illegality. If Bank requests, as may be required by the
relevant law, rule, regulation, interpretation or administration, the Company
shall repay or convert to another Type any such LIBOR Loan or C/D Rate Loan.

 

2.9 Capital Adequacy Adjustment. If, after the date hereof, the adoption or
effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change in any existing law, rule or regulation or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Bank’s capital or assets as a consequence of
the Bank’s Commitment, Loans, credits or obligations under this Agreement to a
level below that which the Bank could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration the Bank’s
policies with respect to capital adequacy), and the Bank demonstrates that the
amount of the reduction reasonably attributable to such adoption, effectiveness,
change or compliance is material to the Bank, then from time to time, within
fifteen (15) days after demand by the Bank, the Company shall (a) pay to the
Bank such additional amount or amounts as will compensate the Bank for such
reduction or (b) prepay the outstanding balance hereunder without premium or
penalty except as required in subsection 2.11. In determining such amount(s),
the Bank may use any reasonable averaging and attribution methods.

 

2.10 Commitment, Standby and Upfront Fees. During the term of this Agreement,
the Company shall pay to the Bank commitment fees, standby fees and upfront fees
computed at the rates set forth in Schedule I. The commitment fees and standby
fees shall be computed for the actual number of days elapsed on the basis of a
360-day year, as applicable, and shall be due and payable quarterly in arrears
on the

 

14

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last day of March, June, September and December and on the Commitment
Termination Date, unless payment terms are otherwise provided on Schedule I. The
upfront fees shall be due and payable upon execution of this Agreement. Payment
of fees shall be made at the office of Bank designated by Bank on Schedule I for
the purpose of payment.

 

2.11 Indemnity. The Company agrees to indemnify the Bank and to hold the Bank
harmless from any loss or expense which such Bank may sustain or incur as a
consequence of (a) default by the Company in payment when due of the principal
amount of or interest on any Loan, (b) default by the Company in making a
borrowing or conversion after the Company has given a Notice of Election in
accordance with subsection 2.4, and/or (c) the making by the Company of a
payment of any LIBOR Loan or C/D Rate Loan on a day which is not the last day of
the Interest Period pertaining thereto, including, without limitation, any such
loss or expense arising from the reemployment of funds obtained by it to
maintain its Loans hereunder or from fees payable to terminate the deposits from
which such funds were obtained, but excluding loss of margin for the period
after a prepayment described in clause (c) above and, as to clauses (a), (b) and
(c) of this subsection 2.11, excluding any consequential damages. This covenant
shall survive termination of this Agreement and payment of the Note.

 

2.12 Use of Proceeds. The proceeds of the Loans shall be used for general
corporate purposes of the Company. The Company will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Loans to purchase or carry any
“Margin Stock” (as defined in Regulation U of the Board of Governors of the
Federal Reserve System, as amended from time to time).

 

SECTION III. REPRESENTATIONS AND WARRANTIES

 

In order to induce the Bank to enter into this Agreement and to extend credit
hereunder, the Company hereby represents and warrants to the Bank that:

 

3.1 Corporate Existence; Authorization. The Company (a) has been duly
incorporated and is validly existing as a corporation under the laws of its
jurisdiction of incorporation, (b) has the requisite corporate power and
authority to execute and deliver this Agreement, the Note and any other
documents required hereunder and perform its obligations hereunder and
thereunder and (c) has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement, the Note and any other
documents required hereunder.

 

3.2 Enforceability. This Agreement and the Note are legal, valid and binding
obligations of the Company, enforceable against it in accordance with their
terms, and any other instrument or agreement required hereunder, when executed
and delivered, will be similarly valid, binding and enforceable, except to the
extent that the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, or other similar laws generally affecting creditors’ rights and
principles of equity applicable to the availability of the remedy of specific
performance.

 

15

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3.3 Financial Information. All fiscal year-end financial statements furnished by
the Company to the Bank have been prepared in accordance with GAAP consistently
applied, except as noted therein, and fairly present the consolidated financial
position and the consolidated results of operations of the Company as of the
dates and for the periods presented. Financial statements and other information
and data furnished to the Bank other than fiscal year-end statements of the
Company are in reasonable detail and present fairly the consolidated financial
position and consolidated results of operations of the Company, subject to
year-end audit adjustments.

 

3.4 Compliance with Laws. The operations of the Company and its Significant
Subsidiaries are in compliance with all Requirements of Law, (a) except to the
extent that the failure to comply therewith could not, in the aggregate, be
reasonably expected to have a material adverse effect on the ability of the
Company to perform its obligations under this Agreement or the Note or (b)
except as disclosed in the Company’s periodic reports filed prior to the date of
this Agreement with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. Neither the execution and delivery of this Agreement and
the Note, nor the consummation of the transactions therein contemplated, will
violate any Requirement of Law.

 

3.5 No Material Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Company, threatened by or against the Company or any of its Subsidiaries
or against any of its or their respective properties or revenues:

 

(a) with respect to this Agreement or the Note or any of the transactions
contemplated hereby; or

 

(b) except as disclosed in the Company’s periodic reports filed with the
Securities and Exchange Commission prior to the date of this Agreement under the
Securities Exchange Act of 1934 which could, insofar as the Company may
reasonably foresee, have a material adverse effect on the operations, business
or financial condition of the Company and its subsidiaries as a whole.

 

3.6 Ownership of Property. Each of the Company and its Significant Subsidiaries
has title in fee simple to or valid leasehold interests in all its real property
material to the operation of its business, and title to or valid leasehold
interests in all its other property useful and necessary in its business.

 

3.7 Taxes. Each of the Company and its Significant Subsidiaries has filed or
caused to be filed all tax returns which to the knowledge of the Company are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Company or its Subsidiaries, as the case may be); and no material
tax liens have been filed and, to the knowledge of the Company, no material
claims are being asserted with respect to any such taxes, fees or other charges.

 

16

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3.8 Subsidiaries. Schedule IV hereto contains an accurate list of all of the
presently existing Subsidiaries of the Company, setting forth their respective
jurisdictions of incorporation and the percentage of their respective capital
stock owned by the Company or other Subsidiaries. All of the issued and
outstanding shares of capital stock of such Subsidiaries have been duly
authorized and issued and are fully paid and nonassessable.

 

3.9 Public Utility Holding Company Act. Neither the Company nor any Subsidiary
is (a) a “holding company” or a “subsidiary company” of a “holding company,” or
an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (b) an “Investment Company” within the meaning of the Investment
Company Act of 1940. Except for an order of the Public Utility Commission of
Oregon, which order is in full force and effect, no authorizations, approvals or
consents of, and no filings or registrations with, any Governmental Authority
are necessary for the execution, delivery or performance by the Company of this
Agreement or the Note or for the validity or enforceability hereof or thereof.

 

3.10 ERISA. Borrower is in compliance in all material respects with all
applicable provisions of ERISA; Borrower has not violated any provision of any
Plan maintained or contributed to by Borrower; no Reportable Event, as defined
in ERISA, has occurred and is continuing with respect to any Plan initiated by
Borrower; Borrower has met its minimum funding requirements under ERISA with
respect to each Plan; and each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan documents and under
generally accepted accounting principles.

 

3.11 Environmental. In the ordinary course of its business, the Borrower
conducts an ongoing review of the effect of environmental laws on the business,
operations, and properties of the Borrower, in the course of which it identifies
and evaluates associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
properties presently or previously owned or operated, any capital or operating
expenditures required to achieve or maintain compliance with environmental
protection standards imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of these reviews, the Borrower has reasonably concluded
that environmental laws are unlikely to have a material adverse effect on the
business, financial condition, results of operations, or prospects of the
Borrower. The Company hereby represents and warrants that its business and
assets and those of its subsidiaries are operated in compliance with applicable
environmental laws and that no enforcement action in respect thereof is
threatened or pending. The Company covenants to continue to so operate. The
Company further indemnifies and holds harmless the Bank and each of its
directors, officers, employees, and agents from and against any and all
environmental claims, damages, losses, liabilities, reasonable costs or expenses
whatsoever which the Bank or any such director, officer, employee, or agent may
incur (or which may be claimed against such entity) by reason of or in
connection with the execution of the Credit Agreement and advancement of any
Loans hereunder.

 

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3.12 Ranking. All obligations and liabilities of the Company under this
Agreement and the Note will constitute direct, unconditional and general
obligations of the Company and will rank in right of payment at pari passu to
all other Indebtedness of the Company under the Credit Agreements, including
such Indebtedness under the Credit Agreements which is preferred as a result of
being secured (but then only to the extent of such security).

 

SECTION IV. CONDITIONS PRECEDENT

 

4.1 Conditions to Closing. The obligations of the Bank hereunder are subject to
the satisfaction of the following conditions precedent on the Closing Date:

 

(a) Note. The Bank shall have received a Note dated the Closing Date, conforming
to the requirements hereof and executed by a duly authorized officer of the
Company.

 

(b) Borrowing Certificate. The Bank shall have received a Borrowing Certificate
of the Company dated the Closing Date, substantially in the form of Schedule
III, with appropriate insertions and attachments, satisfactory in form and
substance to the Bank, executed by the President, any Vice President, the
Treasurer or any Assistant Treasurer and the Secretary or any Assistant
Secretary of the Company.

 

(c) Opinion of Counsel. The Bank shall have received a written opinion of the
Company’s counsel addressed to the Bank in form and substance satisfactory to
the Bank, opining as to the matters set forth in subsections 3.1, 3.2 and 3.9
hereof.

 

(d) Governmental Approvals. All approvals, authorizations, consents,
adjudications or orders of any governmental or regulatory authority required to
be obtained in connection with the execution and delivery of this Agreement, the
Note and any other documents required hereunder shall have been obtained. In the
event that the approval of the Oregon Public Utility Commission or the
Washington Utilities and Transportation Commission (the Commissions) is required
for the Company to enter into an agreement with the Banks for a Commitment
Period longer than 364 days, then the portion of this Agreement providing for a
Commitment Period of 364 days from the effective date of the Agreement may
proceed to closing and shall become effective as of that date, and the portion
of this Agreement providing for a Commitment Period longer than 364 days shall
be deemed to have closed and shall become effective upon the issuance of orders
by the Commissions approving the Agreement.

 

4.2 Conditions to All Loans. The obligation of the Bank to make or convert any
Loan to be made by it hereunder (including, without limitation, the initial
Loan) is subject to the satisfaction of the following conditions precedent on
the relevant Borrowing Date:

 

(a) No Existing Default. No Default or Event of Default shall have occurred and
be continuing hereunder on the Borrowing Date with respect to such Loan or after
giving effect to the Loans to be made on such Borrowing Date, and

 

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(b) Representations and Warranties. The representations and warranties of the
Company set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.9, 3.10 and 3.11 are true
and correct as of such Borrowing Date, as though restated on and as of such
date. Each borrowing by the Company hereunder shall constitute a representation
and warranty by the Company hereunder as of the date of each such borrowing that
the foregoing conditions of this subsection 4.2 have been satisfied.

 

SECTION V. AFFIRMATIVE COVENANTS

 

The Company hereby agrees that, so long as the Commitment remains in effect, the
Note remains outstanding and unpaid or any other amount is owing to the Bank
hereunder, the Company shall satisfy the covenants herein.

 

5.1 Financial Statements. The Company shall furnish to the Bank:

 

(a) as soon as practicable, but in any event within 120 days after the end of
each fiscal year of the Company, a copy of the consolidated balance sheet of the
Company and its audited consolidated Subsidiaries as at the end of such year and
the related consolidated statements of income, of earnings invested in the
business and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, audited by independent
certified public accountants of nationally recognized standing; and

 

(b) as soon as practicable, but in any event not later than 60 days after the
end of each of the first three quarterly periods of each fiscal year of the
Company, the Form 10-Q as filed by the Company with the Securities and Exchange
Commission for each such fiscal quarter, certified by a Responsible Officer as
being complete and correct (subject to normal year-end audit adjustments); and

 

(c) together with the financial statements required hereunder, a compliance
certificate in form and substance satisfactory to the Bank signed by its chief
financial officer showing the calculations necessary to determine compliance
with this Agreement, including its calculation of maintenance of Consolidated
Indebtedness to Total Capitalization, and stating that no Default or Event of
Default exists, or if any Default or Event of Default exists, stating the nature
and status thereof; all such financial statements to be prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein (except as approved by such accountants or officer, as the
case may be, and disclosed therein).

 

5.2 Certificates; Other Information. The Company shall furnish to the Bank as
soon as practicable, but in any event within ten days after the same are sent,
copies of all financial statements and reports which the Company sends to its
shareholders, and within ten days after the same are filed, copies of all
financial statements and reports which the Company may make to, or file with,
the Securities and Exchange Commission or any successor or analogous
Governmental Authority.

 

19

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5.3 Payment of Taxes. The Company shall, and shall cause each of its
Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all taxes, except when the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings, and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Company or its Subsidiaries, or
such Subsidiary, as the case may be.

 

5.4 Conduct of Business. The Company shall, and shall cause each of its
Subsidiaries to, (i) carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted, and (ii) comply with all
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, have a material adverse effect on the ability of the
Company to perform its obligations under this Agreement or the Note.

 

5.5 Maintenance of Property; Insurance. The Company shall, and shall cause each
of its Subsidiaries to, keep all property useful and necessary in its business
in good working order and condition; maintain with financially sound and
reputable insurance companies insurance on such property in at least such
amounts and against at least such risks as are usually insured against in the
same general area by companies engaged in the same or a similar business; and
furnish to the Bank, upon written request, full information as to the insurance
carried.

 

5.6 Inspection of Property; Books and Records; Discussions. The Company shall,
and shall cause each of its Subsidiaries to, keep proper books of records and
accounts in which entries in conformity with GAAP shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of the Bank, at the Bank’s expense, to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
upon reasonable notice and during regular working hours, and to discuss the
business, operations, properties and financial and other condition of the
Company and its Subsidiaries with officers and employees of the Company and its
Subsidiaries, except that the rights available under this subsection shall not
apply to such properties, documents or information as are classified in good
faith as secret pursuant to federal governmental requirements.

 

5.7 Notices. The Company shall promptly give notice to the Bank:

 

(a) of the occurrence of any Default or Event of Default;

 

(b) of any litigation, investigation or proceeding involving the Company or any
of its Subsidiaries which, if not cured or if adversely determined, as the case
may be, would have a material adverse effect on the operations, business or
financial condition of the Company and its Subsidiaries as a whole; and

 

20

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(c) of any change of its senior unsecured debt rating by either Moody’s or S&P.

 

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.

 

5.8 Debt Rating. The Company shall maintain at all times a senior unsecured debt
rating from both Moody’s and S&P. If either Moody’s or S&P no longer provides a
senior unsecured debt rating for the Company, then the Bank and Company will use
the remaining rating service until they can negotiate an alternative agreement.

 

SECTION VI. NEGATIVE COVENANTS

 

The Company hereby agrees that, so long as the Commitment remains in effect, the
Note remains outstanding and unpaid or any other amount is owing to the Bank
hereunder, the Company shall not, directly or indirectly cause the following to
occur.

 

6.1 Maintenance of Consolidated Funded Indebtedness to Total Capitalization. As
at the end of any fiscal quarter of the Company, permit on a consolidated basis
the sum of (i) Consolidated Funded Indebtedness, plus (ii) all notes and other
Indebtedness incurred through the borrowing of money or the obtaining of credit,
payable on demand or maturing within one year from the date of determination and
which is not renewable or extendable at the option of the debtor to a date more
than one year from the date of such determination, plus (iii) all other final
maturities, prepayment and sinking fund payments required to be made within one
year after such date of determination, in respect of any Indebtedness incurred
through the borrowing of money or the obtaining of credit (including the Notes),
to be greater than 65% of Total Capitalization plus the amounts of (ii) and
(iii), above.

 

6.2 Maintenance of Consolidated Minimum Net Worth. As of the end of any fiscal
quarter of the Company, permit on a consolidated basis the Company’s Net Worth
to be lower than the sum of (i) the Company’s Net Worth as of the September 30
immediately prior to the effective date of the Commitment shown on Schedule I,
times 80%, plus (ii) 50% of the Company’s Net Income for each subsequent fiscal
quarter.

 

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6.3 Limitation on Fundamental Changes. With respect to the Company or any
Significant Subsidiary, without the consent of the Bank, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve (or suffer any liquidation or dissolution), convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or substantially all of its assets, except for sales, leases
or rentals of property or assets in the ordinary course of business, and except
that:

 

(a) any consolidated Subsidiary of the Company may be merged or consolidated
with or into the Company (provided that the Company shall be the continuing or
surviving corporation) or with any one or more Subsidiaries of the Company
(provided that if any such transaction shall be between a Subsidiary and a
wholly-owned Subsidiary, the wholly-owned Subsidiary shall be the continuing or
surviving corporation);

 

(b) any Subsidiary may sell, lease, transfer or otherwise dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the Company or
another wholly-owned Subsidiary of the Company; and

 

(c) the Company may be merged with any other Person if (i) the Company is the
surviving corporation, (ii) immediately after giving effect to such merger,
there shall exist no condition or event which constitutes an Event of Default or
which, with the giving of notice or lapse of time or both, would constitute an
Event of Default, and (iii) all representations and warranties contained in
Section III hereof are true and correct on and as of the date of the
consummation of such merger, and after giving effect thereto, as though restated
on and as of such date.

 

SECTION VII. EVENTS OF DEFAULT

 

Upon the occurrence and continuance of any of the following events:

 

(a) The Company shall fail to pay any principal of the Note when due in
accordance with the terms thereof or hereof; or the Company shall fail to pay
any interest on the Note, or any other amount payable to the Bank hereunder,
within five days after any such amount becomes due in accordance with the terms
thereof or hereof; or

 

(b) Any representation or warranty made or deemed made by the Company herein
shall prove to have been incorrect in any material respect on or as of the date
made; or

 

(c) The Company shall default in the observance or performance of any other
agreement or covenant contained in this Agreement, and such default shall
continue unremedied for a period of 30 days after written notice thereof shall
have been given to the Company by the Bank; or

 

(d) The Company shall default in any payment of principal of or interest on any
Indebtedness for borrowed money under any one of the Credit Agreements; or

 

(e) The Company shall fail to make any payment in respect of any Funded
Indebtedness (other than the Notes) having singly or in the aggregate an
outstanding amount in excess of $15 million when due or within any applicable
grace period: or

 

(f)(i) The Company is insolvent or is unable to pay its debts generally as they
come due, or shall file or have filed against it any petition or other request
for relief

 

22

--------------------------------------------------------------------------------

under any bankruptcy, reorganization, insolvency or moratorium law, or any other
law or laws for the relief of, or relating to, debtors; or any such proceeding
shall be instituted against the Company which is not dismissed within ninety
(90) days after the institution thereof; or the Company shall take any corporate
action to authorize any of the actions set forth above in this paragraph (f)(i);
or (ii) A receiver, custodian or trustee shall be appointed to take possession
of any assets of the Company, unless such appointment is set aside or withdrawn
or ceases to be in effect within thirty (30) days from the date of said filing
or appointment;

 

Then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Company,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the Note shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) the Bank may, by notice to the Company declare the Commitment to
be terminated, whereupon the Commitment shall immediately terminate; and (ii)
the Bank may, by notice of default to the Company, declare the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Note to be due and payable whereupon the same shall immediately become
due and payable. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Company.

 

SECTION VIII. MISCELLANEOUS

 

8.1 Notices. Except as otherwise expressly provided herein, any communications
between the parties hereto or notices to be given hereunder shall be given in
writing by personal delivery, telefax, or mailing the same, postage prepaid, to
the Bank at its address for notices set forth on Schedule I hereto, and to the
Company at 220 N.W. Second Avenue, Portland, Oregon 97209, Telephone
503/226-4211, Facsimile 503/220-2584 Attention: Treasurer, or to such other
addresses as either party may hereafter indicate.

 

Any communication or notice so addressed and mailed shall be deemed to be given
five (5) days after mailing. Any communication or notice otherwise delivered
shall be deemed to be given or upon delivery or receipt. If notice is telexed,
receipt shall be deemed to occur when telex is answered-back. If notice is
telecopied, receipt shall be deemed to occur upon delivery as evidenced by
confirmation sheet.

 

8.2 Waiver; Amendment.

 

(a) No delay or omission to exercise any right, power or remedy accruing to the
Bank upon any breach or Default by the Company under this Agreement shall impair
any such right, power or remedy of the Bank, nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or Default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of the Bank of any breach or Default under
this Agreement or any

 

23

--------------------------------------------------------------------------------

waiver on the part of the Bank of any provision or condition of this Agreement
must be in writing and shall be effective only to the extent in such writing
specifically set forth. All remedies, either under this Agreement or by law or
otherwise afforded to Bank, shall be cumulative and not alternative.

 

(b) Neither this Agreement nor any provision hereof may be amended, waived,
discharged or terminated orally, but only by an instrument in writing, signed by
the Company and the Bank.

 

8.3 Survival. All warranties, representations and covenants made by the Company
herein or in any certificate or other instrument delivered by it or on its
behalf under this Agreement shall be considered to have been relied upon by the
Bank and shall survive the making of any Loan hereunder and delivery to the Bank
of the Note, regardless of any investigation made by the Bank or on its behalf.
All statements in any such certificate or other instrument shall constitute
warranties and representations by the Company hereunder.

 

8.4 Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties except that the
Company shall not have the right to assign its rights hereunder or any interest
herein.

 

8.5 Attorneys’ Fees. In the event of any action at law or suit in equity based
in contract and arising out of this Agreement, the Note, or any other instrument
or agreement required or contemplated hereunder, the prevailing party, in
addition to all other sums which the other party may be called upon to pay,
shall be entitled to recover such additional sum for the prevailing party’s
attorneys’ fees (including the allocated cost of internal counsel), incurred
therein, as the trial court or any appellate court adjudges reasonable in said
suit or action.

 

8.6 Governing Laws; Jurisdiction.

 

(a) This Agreement, the Note, and any other instrument or agreement required or
contemplated hereunder, shall be governed by, and construed under, the laws of
the State of Oregon without regard to principles of conflicts of law. Any suit
or action in regard to or arising out of the terms or conditions of this
Agreement shall be litigated in the state or federal courts situated in the
State of Oregon, and the Company and the Bank hereby submit to the jurisdiction
of those courts.

 

(b) The Company and the Bank hereby irrevocably submit to the jurisdiction of
any state or federal court sitting in Portland, Oregon, for any action or
proceeding relating to this Agreement. The Company waives any objection which it
may now or hereafter have to a laying of venue in any such action or proceeding
in any such forums, and also waives any claim that any such forum is an
inconvenient forum. The Company and the Bank agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or any other manner provided by law. The
Company agrees that it shall not bring suit or action arising out of this
Agreement in the courts of any other jurisdiction, and the Bank agrees that it
will not bring suit or action against the Company in any other jurisdiction
provided that the Company maintains its corporate headquarters and a substantial
business presence in Oregon.

 

24

--------------------------------------------------------------------------------

8.7 Counterparts. This Agreement may be executed in as many counterparts as may
be deemed necessary or convenient, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute but one and the
same instrument.

 

8.8 Participations.

 

(a) Bank may grant participations to one or more banks or other entities in all
or any part of any Loan or Loans owing to the Bank hereunder and also the Note
held by the Bank.

 

(b) In the event that Bank grants, assigns, or sells any of its interest in this
Agreement or the Note, including the sale of a participation herein, such
grantee, assignee, purchaser or participant is hereby granted the right of
setoff against any and all property which may come into its possession to the
same extent as if it were the Bank; provided that such rights are employed
solely to reduce the amount of the Company’s obligations hereunder. The Bank
shall have no liability for any setoff or action taken by any participant
without the Bank’s consent.

 

8.9 Entire Agreement. This Agreement, together with the Note and the other
documents and agreements required hereunder, embodies the entire agreement and
understanding between the Company and the Bank, and supersedes all prior and
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof. Terms and conditions
of the Agreement relating, but not limited to, the term, security matters,
events of Default, conditions to lend and affirmative and negative covenants
shall not be amended, modified, or changed without the express written consent
of each of the Banks that have executed Credit Agreements.

 

8.10 Receipt of Document. The Company and the Bank hereby acknowledge receipt of
a copy of this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized officers as of the date first above written.

 

25

--------------------------------------------------------------------------------

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE BANK
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED

 

SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND
BE SIGNED BY THE BANK TO BE ENFORCEABLE.

 

BANK:

 

[BANK]

   

By

 

 

--------------------------------------------------------------------------------

   

Title

 

 

--------------------------------------------------------------------------------

COMPANY:

 

NORTHWEST NATURAL GAS COMPANY

   

By

 

 

--------------------------------------------------------------------------------

   

Title

 

 

--------------------------------------------------------------------------------

 

26

--------------------------------------------------------------------------------

SCHEDULE l

Page 1 of 2

 

BANK INFORMATION AND SPECIFIC TERMS

 

BANK: [Bank]

 

Lines of Commitment (364-day)

 

a.

   Amount of Primary Line Commitment:    $ 20,000,000

b.

   Amount of Excess Line Commitment:      —            

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

c.

   Total Commitment Amount:    $ 20,000,000          

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Period of Primary & Excess Line Commitment      10-1-04 to 9-30-05          

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

Interest Rate Options

  ü If Available                           Rating Level Spread (bp)         I  
II   III   IV   V

Prime Rate

                       

Adjusted C/D Rate

                       

Adjusted LIBOR Rate

                       

Fed Funds Rate

                       

Negotiated Rate

                       

 

Commitment fees and upfront fee (in basis points per $1 million)

 

a.

   Primary Line Commitment fees    10.0 basis points          

--------------------------------------------------------------------------------

b.

   Primary Line Upfront fee    NA          

--------------------------------------------------------------------------------

 

Additional Terms & Conditions (if any):

   None

 

Terms used in this Schedule I have meanings ascribed thereto in the Credit
Agreement.

 

Schedule Accepted:   Effective Date: October 1, 2004

NORTHWEST NATURAL GAS CO.

  [BANK] By:  

 

--------------------------------------------------------------------------------

  By:  

 

--------------------------------------------------------------------------------

Title:   Treasurer and Controller   Title:  

 

--------------------------------------------------------------------------------

            Address for Notices: Please Indicate Corrections

 

27

--------------------------------------------------------------------------------

SCHEDULE l

Page 2 of 2

 

BANK INFORMATION AND SPECIFIC TERMS

 

BANK: [Bank]

 

Lines of Commitment (Three-year)

 

a.

   Amount of Primary Line Commitment:    $ 20,000,000

b.

   Amount of Excess Line Commitment:      —            

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

c.

   Total Commitment Amount:    $ 20,000,000          

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Period of Primary & Excess Line Commitment

     10-1-04 to 9-30-07          

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

Interest Rate Options

  ü If Available                       Rating Level Spread (bp)         I   II  
III   IV   V

Prime Rate

                       

Adjusted C/D Rate

                       

Adjusted LIBOR Rate

                       

Fed Funds Rate

                       

Negotiated Rate

                       

 

Commitment fees and upfront fee (in basis points per $1 million)

 

c.

   Primary Line Commitment fees    12.0 basis points          

--------------------------------------------------------------------------------

d.

   Primary Line Upfront fee    6.0 basis points          

--------------------------------------------------------------------------------

 

Additional Terms & Conditions (if any):

   None

 

Terms used in this Schedule I have meanings ascribed thereto in the Credit
Agreement.

 

Schedule Accepted:   Effective Date: October 1, 2004 NORTHWEST NATURAL GAS CO.  
[BANK] By:  

 

--------------------------------------------------------------------------------

  By:  

 

--------------------------------------------------------------------------------

Title:   Treasurer and Controller   Title:  

 

--------------------------------------------------------------------------------

            Address for Notices: Please Indicate Corrections

 

28

--------------------------------------------------------------------------------

SCHEDULE II

Page 1 of 3

 

Portland, Oregon

October 1, 2004

 

NOTE

 

FOR VALUE RECEIVED, the undersigned, NORTHWEST NATURAL GAS COMPANY (the
“Company”) hereby unconditionally promises to pay to the order of
                     (the “Bank”), in lawful money of the United Sates of
America and in immediately available funds, on September 30, 2005, or such
earlier date as may be determined pursuant to the Agreement (as hereinafter
defined), or such later date to which the commitment Termination Date (as
defined in the Agreement) may be extended, the aggregate unpaid principal amount
of all Loans made by the Bank to the undersigned pursuant to such Agreement, but
not to exceed the Bank’s maximum commitment of $20,000,000. Such payment shall
be made for the account of the Bank located at Portland, Oregon. The undersigned
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time from the date hereof at the applicable
rates per annum and on the dates specified in Section II of the Agreement, until
paid in full (both before and after judgment).

 

The holder of this Note is authorized to endorse the date, type, amount and
Interest Period of all loans made by the Bank to the undersigned pursuant to the
Agreement, and the date and amount of all payments and prepayments of principal
of such loans, on the schedule annexed hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part hereof, and
any such endorsement shall constitute prima facie evidence of the accuracy of
the information so endorsed. No failure to make or error in making any such
endorsement as authorized hereby shall affect the validity of the obligation to
repay the unpaid principal amount of this Note with interest thereon as provided
in the Agreement or the validity of any payment thereof made by the Company.

 

This Note is the Note referred to in the Credit Agreement dated as of October 1,
2004 as from time to time amended, supplemented or otherwise modified (the
“Agreement”) between the undersigned and the Bank and is entitled to the
benefits thereof and is subject to optional and mandatory prepayment in whole or
in part as provided therein.

 

Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be immediately due and payable, all as provided therein.

 

NORTHWEST NATURAL GAS COMPANY

By:

 

 

--------------------------------------------------------------------------------

Title:

  Treasurer & Controller

 

29

--------------------------------------------------------------------------------

SCHEDULE II

Page 2 of 3

 

Portland, Oregon

October 1, 2004

 

NOTE

 

FOR VALUE RECEIVED, the undersigned, NORTHWEST NATURAL GAS COMPANY (the
“Company”) hereby unconditionally promises to pay to the order of
                     (the “Bank”), in lawful money of the United Sates of
America and in immediately available funds, on September 30, 2007, or such
earlier date as may be determined pursuant to the Agreement (as hereinafter
defined), or such later date to which the commitment Termination Date (as
defined in the Agreement) may be extended, the aggregate unpaid principal amount
of all Loans made by the Bank to the undersigned pursuant to such Agreement, but
not to exceed the Bank’s maximum commitment of $20,000,000. Such payment shall
be made for the account of the Bank located at Portland, Oregon. The undersigned
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time from the date hereof at the applicable
rates per annum and on the dates specified in Section II of the Agreement, until
paid in full (both before and after judgment).

 

The holder of this Note is authorized to endorse the date, type, amount and
Interest Period of all loans made by the Bank to the undersigned pursuant to the
Agreement, and the date and amount of all payments and prepayments of principal
of such loans, on the schedule annexed hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part hereof, and
any such endorsement shall constitute prima facie evidence of the accuracy of
the information so endorsed. No failure to make or error in making any such
endorsement as authorized hereby shall affect the validity of the obligation to
repay the unpaid principal amount of this Note with interest thereon as provided
in the Agreement or the validity of any payment thereof made by the Company.

 

This Note is the Note referred to in the Credit Agreement dated as of October 1,
2004 as from time to time amended, supplemented or otherwise modified (the
“Agreement”) between the undersigned and the Bank and is entitled to the
benefits thereof and is subject to optional and mandatory prepayment in whole or
in part as provided therein.

 

Upon the occurrence of any one or more of the Events of Default specified in the
Agreement, all amounts then remaining unpaid on this Note shall become, or may
be declared to be immediately due and payable, all as provided therein.

 

NORTHWEST NATURAL GAS COMPANY

By:

 

 

--------------------------------------------------------------------------------

Title:

  Treasurer and Controller

 

30

--------------------------------------------------------------------------------

SCHEDULE II

Page 3 of 3

 

SCHEDULE OF LOANS

 

Date of

Loan

--------------------------------------------------------------------------------

   Amount of
Loan

--------------------------------------------------------------------------------

  

Type of

Loan

--------------------------------------------------------------------------------

   Interest Paid

--------------------------------------------------------------------------------

   Interest Rate,
if Fixed

--------------------------------------------------------------------------------

   Amount of
Loan Repaid

--------------------------------------------------------------------------------

   Unpaid
Principal
Balance

--------------------------------------------------------------------------------

   Notation
Made By

--------------------------------------------------------------------------------

                                                                                
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                                
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                                
                                                                              
                                                                              
                                                                              
                                                                              
              

 

31

--------------------------------------------------------------------------------

SCHEDULE III

Page 1 of 2

 

BORROWING CERTIFICATE

 

Pursuant to subsection 4.1 of the Credit Agreement dated as of October 1, 2004,
between NORTHWEST NATURAL GAS COMPANY (the “Company”) and
                                                  (the “Bank”) identified on
Schedule I thereto (the “Agreement”; the terms defined therein being used herein
as therein defined), the Company hereby certifies as follows:

 

  1. The representations and warranties of the Company set forth in Section III
of the Agreement are true and correct in all material respects on and as of the
date hereof with the same effect as if made on the date hereof;

 

  2. The conditions precedent set forth in subsection 4.1 of the Agreement have
been or will be satisfied prior to or concurrently with the making of the
initial Loans under the Agreement; and

 

  3. No Default or Event of Default (both as defined in Section VII of the
Agreement) has occurred or is continuing under the Agreement on the date
thereof;

 

and the undersigned Stephen P. Feltz, Treasurer & Controller, and C. J. Rue,
Secretary, of the Company hereby certify as follows:

 

  4. C. J. Rue is and at all times since October 1, 1993 has been the duly
elected and qualified Secretary of the Company;

 

and the undersigned Secretary of the Company hereby certifies as follows:

 

  5. Attached hereto as Exhibit A is a true and complete copy of resolutions
duly adopted by the Board of Directors of the Company on September 22, 2004;
such resolutions have not in any way been amended, modified, revoked or
rescinded and have been in full force and effect since their adoption to and
including the date hereof and are now in full force and effect; such resolutions
are the only corporate proceedings of the Company now in force relating to or
affecting the matters referred to therein; attached hereto as Exhibit B is a
true and complete copy of the Bylaws of the Company as in effect at the date
hereof; and attached hereto as exhibit C is a true and complete copy of the
Restated Articles of Incorporation of the Company as amended to the date hereof;
and

 

32

--------------------------------------------------------------------------------

SCHEDULE III

Page 2 of 2

 

  6. The following persons are now duly elected and qualified officers of the
Company, holding the offices indicated next to their respective names below, and
such officers have held such offices with the Company at all times since May 27,
2004, to and including the date hereof, and the signatures appearing opposite
their respective names below are the true and genuine signatures of such
officers, and each of such officers is duly authorized to execute and deliver on
behalf of the Company the Agreement and the Notes of the Company to be issued
pursuant thereto and any certificate or other document to be delivered by the
Company pursuant to the Agreement:

 

Name

--------------------------------------------------------------------------------

 

Office

--------------------------------------------------------------------------------

 

Signature

--------------------------------------------------------------------------------

Mark S. Dodson

 

President and Chief Executive Officer

 

 

--------------------------------------------------------------------------------

David H. Anderson

 

Senior Vice President and Chief Financial Officer

 

 

--------------------------------------------------------------------------------

Stephen P. Feltz

 

Treasurer & Controller

 

 

--------------------------------------------------------------------------------

C. J. Rue

 

Secretary & Assistant Treasurer

 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have hereunto set our names in the
capacities indicated.

 

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

Title: Treasurer & Controller   Title: Secretary

 

Date: October 1, 2004

 

33

--------------------------------------------------------------------------------

SCHEDULE IV

Page 1 of 1

 

SUBSIDIARIES

 

At Oct. 1, 2004, the Company had two wholly-owned subsidiaries: NNG Financial
Corporation (Financial Corporation) and Northwest Energy Corporation (Northwest
Energy).

 

NNG Financial Corporation

 

Financial Corporation has several financial investments, including investments
as a limited partner in solar electric generating systems, windpower electric
generating projects and low-income housing projects.

 

Financial Corporation is incorporated in Oregon. All of its common stock is
owned by the Company. Financial Corporation had about $8.1 million of assets as
of June 30, 2004.

 

Northwest Energy Corporation

 

Northwest Energy was formed in 2001 to serve as the holding company for NW
Natural and Portland General Electric Company (PGE) if the acquisition of PGE
had been completed. However, in May 2002, NW Natural and Enron Corp. (Enron)
entered into a Termination Agreement providing for the termination, effective as
of July 1, 2002, of a Stock Purchase Agreement whereby NW Natural was to have
acquired all of the issued and outstanding common stock of PGE, a wholly-owned
subsidiary of Enron. Northwest Energy had no assets and no active operations as
of June 30, 2004.

 

34