Document:

Form of amended and restated executive change in control severance agreement

 EXHIBIT 10.1 
  
 FORM OF EXECUTIVE CHANGE IN CONTROL SEVERANCE AGREEMENT 
  
 December 15, 2005 
  
 ______________________ 
  

	______________________	

  
 ______________________ 
  
 Re: Change in Control
Severance Agreement 
  
 Dear
                    : 
  
 Northwest Natural Gas Company, an Oregon corporation (the “Company”), considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of the Company. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that
such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company, its customers and its shareholders. Accordingly, the Board
of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without
distraction in circumstances arising from the possibility of a change in control of the Company. 
  
 In order to induce you to remain in the employ of the Company, this letter agreement, which has been approved by the Board, sets forth severance benefits
which the Company agrees will be provided to you in the event your employment with the Company is terminated in connection with a Change in Control (as defined in Section 3 hereof) under the circumstances described below. The Company and you
have entered into a prior letter agreement regarding change in control severance benefits dated                     , 2001. Upon your
signature of this letter agreement, the prior agreement shall be amended and restated in its entirety in the form of this agreement. 
  
 1. Agreement to Provide Services; Right to Terminate. 
  
 (i) Except as otherwise provided in paragraph (ii) below, the Company or you may terminate your employment at any time, subject to the Company’s
providing the benefits hereinafter specified in accordance with the terms hereof. 

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 (ii) In the event of a Potential Change in Control (as defined in Section 3 hereof), you agree that
you will not leave the employ of the Company (other than as a result of Disability, as such term is hereinafter defined) and will render the services contemplated in the recitals to this Agreement until the earliest of (a) a date which is 270
days from the occurrence of such Potential Change in Control, or (b) a termination of your employment pursuant to which you become entitled under this Agreement to receive the benefits provided in Section 5(iii) below. 
  
 2. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect until December 31, 2006; provided, however, that commencing on January 1, 2007 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at
least 90 days prior to such January 1 date, the Company or you shall have given notice that this Agreement shall not be extended (provided that no such notice may be given by the Company during the pendency of a Potential Change in Control);
and provided, further, that this Agreement shall continue in effect for a period of twenty-four (24) months beyond the term provided herein if a Change in Control shall have occurred during such term. Notwithstanding anything in this
Section 2 to the contrary, this Agreement shall terminate automatically if you or the Company terminate your employment prior to the earlier of Shareholder Approval (as defined in Section 3 hereof), if applicable, or the Change in Control.
In addition, the Company may terminate this Agreement during your employment if, prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, you cease to hold your current position with the Company, except by reason of a
promotion. 
  
 3. Change in Control; Potential Change in
Control; Shareholder Approval; Person. 
  
 (i) For purposes
of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events: 
  
 (A) The consummation of: 
  
 (1) any consolidation, merger or plan of share exchange involving the Company (a “Merger”) as a result of which the holders of
outstanding securities of the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) immediately prior to the Merger do not continue to hold at least 50% of the combined voting power of the
outstanding Voting Securities of the surviving corporation or a parent corporation of the surviving corporation immediately after the Merger, disregarding any Voting Securities issued to or retained by such holders in respect of securities of any
other party to the Merger; or 
  
 (2) any sale,
lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company; 

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 (B) At any time during a period of two consecutive years, individuals who at the
beginning of such period constituted the Board (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof; provided, however, that the term “Incumbent Director” shall also include each new
director elected during such two-year period whose nomination or election was approved by two-thirds of the Incumbent Directors then in office; or 
  
 (C) Any Person (as hereinafter defined) shall, as a result of a tender or exchange offer, open market purchases or privately negotiated
purchases from anyone other than the Company, have become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing twenty percent (20%) or more
of the combined voting power of the then outstanding Voting Securities. 
  
 Notwithstanding anything in the foregoing to the contrary, unless otherwise determined by the Board, no Change in Control shall be deemed to have occurred for purposes of this Agreement if (1) you acquire (other than on the same basis
as all other holders of shares of Common Stock of the Company) an equity interest in an entity that acquires the Company in a Change in Control otherwise described under subparagraph (A) above, or (2) you are part of a group that
constitutes a Person which becomes a beneficial owner of Voting Securities in a transaction that otherwise would have resulted in a Change in Control under subparagraph (C) above. 
  
 (ii) For purposes of this Agreement, a “Potential Change in Control” shall be deemed to have occurred if:

  
 (A) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control; 
  
 (B) any Person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; or 
  
 (C) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred. 
  
 (iii) For purposes of this Agreement, “Shareholder Approval” shall be deemed to have occurred if the shareholders of the Company approve an agreement entered into by the Company, the consummation of which would result in the
occurrence of a Change in Control. 
  
 (iv) For purposes of this
Agreement, the term “Person” shall mean and include any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”), other than the Company or any employee benefit plan sponsored by the Company. 

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 4. Termination Following Shareholder Approval or Change in Control. If a Change in Control occurs,
you shall be entitled to the benefits provided in Section 5(iii) hereof in the event that (x) a Date of Termination (as defined in Section 4(v) below) of your employment with the Company occurred or occurs after the earlier of
Shareholder Approval, if applicable, or the Change in Control and no later than twenty-four (24) months after the Change in Control, or (y) your employment with the Company is terminated by you for Good Reason (as defined below) based on
an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control and your Notice of Termination (as defined in Section 4(iv) below) in connection therewith shall have been given no
later than twenty-four (24) months after the Change in Control; provided, however, that if any such termination is (a) because of your death, (b) by the Company for Cause (as defined below) or Disability, or (c) by you other than
for Good Reason based on an event occurring concurrent with or subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control, then you shall not be entitled to the benefits provided in Section 5(iii) hereof.

  
 (i) Disability. Termination by the Company of your
employment based on “Disability” shall mean termination because of your absence from your duties with the Company on a full-time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or
mental illness, unless within thirty (30) days after Notice of Termination is given to you following such absence you shall have returned to the full-time performance of your duties. 
  
 (ii) Cause. Termination by the Company of your employment for “Cause” shall mean termination upon
(a) the willful and continued failure by you to perform substantially your assigned duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness) after a demand for substantial
performance is delivered to you by the Chairman of the Board or President of the Company which specifically identifies the manner in which such executive believes that you have not substantially performed your duties or (b) the willful engaging
by you in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph (ii), no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you
in knowing bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board
or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held
for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above in (a) or
(b) of this paragraph (ii) and specifying the particulars thereof in detail. 

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 (iii) Good Reason. Termination by you of your employment with the Company for “Good
Reason” shall mean termination by you of your employment with the Company based on any of the following events provided you give Notice of Termination after the occurrence of any of the following events and no later than 30 days after the later
of (1) notice to you of such event, or (2) the Change in Control: 
  
 (A) a change in your status, title, position(s) or responsibilities as an officer of the Company which does not represent a promotion from your status, title, position(s) and responsibilities as in effect immediately
prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, or the assignment to you of any duties or responsibilities which are inconsistent with such status, title or position(s), or any removal of you from or any
failure to reappoint or reelect you to such position(s), except in connection with the termination of your employment for Cause or Disability or as a result of your death or by you other than for Good Reason; 
  
 (B) a reduction by the Company in your base salary as in
effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control; 
  
 (C) the failure by the Company to continue in effect any Plan (as hereinafter defined) in which you are participating immediately prior to
the earlier of Shareholder Approval, if applicable, or the Change in Control (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in
effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect your continued participation in any of such
Plans on at least as favorable a basis to you as is the case immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control or which would materially reduce your benefits in the future under any of such Plans or
deprive you of any material benefit enjoyed by you immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control; 
  
 (D) the failure by the Company to provide and credit you with the number of paid vacation days to which you are then entitled in
accordance with the Company’s normal vacation policy as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control; 
  
 (E) the Company’s requiring you to be based more than 30 miles from where your office is located
immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control except for required travel on the Company’s business to an extent substantially consistent with the business travel obligations which you
undertook on behalf of the Company prior to the earlier of Shareholder Approval, if applicable, or the Change in Control; 

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 (F) the failure by the Company to obtain from any Successor (as hereinafter defined) the
assent to this Agreement contemplated by Section 7 hereof; 
  
 (G) any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (iv) below (and, if applicable, paragraph
(ii) above); and for purposes of this Agreement, no such purported termination shall be effective; or 
  
 (H) the failure by the Company to pay you any portion of your current compensation, to credit your Deferred Compensation Plan account in
accordance with your previous election, or to pay you any portion of an installment of deferred compensation under any Plan in which you participated, within seven (7) days of the date such compensation is due. 
  
 For purposes of this Agreement, “Plan” shall mean any compensation plan such as an
incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, deferred compensation, medical, disability, accident, life insurance, or relocation plan or policy or any other plan, program or
policy of the Company intended to benefit employees. 
  
 (iv)
Notice of Termination. Any purported termination by the Company or by you (other than termination due to your death, which shall terminate your employment automatically) following the earlier of Shareholder Approval, if applicable, or a
Change in Control shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. 
  
 (A) With respect to any Notice of Termination given by you for Good Reason, such Notice of Termination may
indicate that such termination for Good Reason shall be conditioned upon, and postponed until, the date on which it is finally determined, either by mutual written agreement of the parties or by the arbitrators in a proceeding as provided in
Section 13 hereof, that Good Reason exists for such termination. If a Notice of Termination given by you for Good Reason indicates that such termination shall be so conditioned and postponed, then, if the Company disputes the existence of Good
Reason, the Company shall, within thirty (30) days after the Notice of Termination is given, notify you that a dispute exists concerning the termination, whereupon Section 13 hereof shall apply to such dispute. If no such notice is given
by the Company within such 30-day period, then a final determination that Good Reason exists shall be deemed to have occurred on the date thirty (30) days after the Notice of Termination for Good Reason is given. 

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 (B) Notwithstanding anything to the contrary in this Agreement: 
  
 (1) if, at any time before the Date of Termination
determined pursuant to this Agreement with respect to any purported termination by you of your employment with the Company, there exists a basis for the Company to terminate your employment for Cause, then the Company may, regardless of whether or
not you have given Notice of Termination for Good Reason and regardless of whether or not Good Reason exists, terminate your employment for Cause, in which event you shall not be entitled to the benefits provided in Section 5(iii) hereof, and

  
 (2) if you die or your employment is
terminated based on Disability after you have given Notice of Termination for Good Reason and before the Date of Termination determined under this Agreement with respect to that Notice of Termination, and it is subsequently finally determined that
Good Reason existed at the time your employment terminated, then termination of your employment shall be deemed to have occurred for Good Reason (and not due to your death or Disability) and you shall be entitled to the benefits provided in
Section 5(iii) hereof. 
  
 (v) Date of Termination.
“Date of Termination” shall mean the date your employment with the Company is terminated following the earlier of Shareholder Approval, if applicable, or a Change in Control, which date shall be determined as follows: 
  
 (A) if your employment is to be terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that, if you shall have returned to the performance of your duties on a full-time basis during such thirty (30) day period, then the termination for Disability contemplated by
the Notice of Termination shall not occur), 
  
 (B) if your employment is terminated due to your death, the date of your death, 
  
 (C) if your employment is to be terminated by the Company other than for Disability, or if your employment is to be terminated by you
without a claim of Good Reason, the date specified in the Notice of Termination, and 
  
 (D) if your employment is to be terminated by you for Good Reason, the date ninety (90) days after the date on which a Notice of
Termination is given, unless either: 
  
 (1) an
earlier date has been agreed to by the Company either in advance of, or after, receiving such Notice of Termination (in which case such earlier date shall be the Date of Termination), 
  
 (2) pursuant to and in accordance with Section 4(iv) you have indicated in your Notice of Termination
that you are conditioning your termination upon (and postponing such termination until) the date on which it is 

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finally determined that Good Reason exists for such termination (in which case the later of such date as determined in accordance with Section 4(iv)
above, or the date otherwise determined under this Section 4(v)(D), shall be the Date of Termination), 
  
 (3) the Company shall not have notified you within fifteen (15) days after a Notice of Termination for Good Reason is given that it
intends to fully correct the circumstances giving rise to Good Reason (in which case the date fifteen (15) days after the Notice of Termination shall be the Date of Termination), or 
  
 (4) if the Company gives notice as provided in Section 4(v)(D)(3) and if the circumstances giving rise
to Good Reason are fully corrected on or prior to the date that is ninety (90) days after such Notice of Termination was given, then the termination for Good Reason contemplated by such Notice of Termination shall not occur. 
  
 5. Compensation Upon Termination or During Disability. 
  
 (i) During any period following the earlier of Shareholder Approval, if
applicable, or a Change in Control that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your full base salary at the rate then in effect and any benefits or awards under any
Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with Sections 4(i) and 4(v) hereof. Thereafter, your benefits shall be determined in
accordance with the Plans then in effect. 
  
 (ii) If your
employment shall be terminated for Cause or as a result of death following the earlier of Shareholder Approval, if applicable, or a Change in Control, the Company shall pay you your full base salary through the Date of Termination at the rate in
effect just prior to the time a Notice of Termination is given plus any benefits or awards which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you. Thereupon the Company shall have no
further obligations to you under this Agreement. 
  
 (iii) If a
Change in Control occurs and either (a) after the earlier of Shareholder Approval, if applicable, or the Change in Control and no later than twenty-four (24) months after the Change in Control, a Date of Termination of your employment with
the Company occurred or occurs as a result of a termination by the Company other than for Cause or Disability, or (b) your employment with the Company is terminated by you for Good Reason based on an event occurring concurrent with or
subsequent to the earlier of Shareholder Approval, if applicable, or the Change in Control and your Notice of Termination in connection therewith shall have been given no later than twenty-four (24) months after the Change in Control, then, by
no later than the fifth day following the later of the Date of Termination or the Change in Control (except as 

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may otherwise be provided), you shall be entitled, without regard to any contrary provisions of any Plan, to a severance benefit as follows: 
  
 (A) the Company shall pay your full base salary through the
Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you;
provided, however, that with respect to a termination of your employment for Good Reason based on a reduction by the Company in your base salary as in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in
Control, the Company shall pay your full base salary through the Date of Termination at the rate in effect just prior to such reduction plus any benefits or awards which pursuant to the terms of any Plans have been earned or become payable, but
which have not yet been paid to you; 
  
 (B) as
severance pay and in lieu of any further salary for periods subsequent to the Date of Termination, the Company shall pay to you in a single payment an amount in cash equal to      times the sum of (1) the greater of
(i) your annual rate of base salary in effect on the Date of Termination or (ii) your annual rate of base salary in effect immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control and (2) the
greater of (i) the average of the last three annual bonuses (annualized in the case of any bonus paid with respect to a partial year) paid to you preceding the Date of Termination or (ii) the average of the last three annual bonuses
(annualized in the case of any bonus paid with respect to a partial year) paid to you preceding the earlier of Shareholder Approval, if applicable, or the Change in Control; and 
  
 (C) for a
                     (    ) month period after the Date of Termination, the Company shall arrange to provide you,
your spouse and your dependents with life, accident and health insurance benefits substantially similar to those which you were receiving immediately prior to the earlier of Shareholder Approval, if applicable, or the Change in Control.
Notwithstanding the foregoing, the Company shall not provide any benefit otherwise receivable by you pursuant to this subparagraph (C) to the extent that a similar benefit is actually received by you from a subsequent employer during such
                     (    ) month period, and any such benefit actually received by you shall be reported to the
Company. 
  
 (iv) The amount of any payment provided for in this
Section 5 shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. Your entitlements under
Section (5)(iii) are in addition to, and not in lieu of, any rights, benefits or entitlements you may have under the terms or provisions of any Plan. 

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 6. Tax Gross-Up Payments. 
  
 (i) Whether or not your employment is terminated, if any of the payments provided for in Section 5(iii) or any other
payment or benefit received or to be received by you in connection with a Change in Control or the termination of your employment (collectively, the “Change in Control Payments”) will be subject to the tax imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), or any similar tax that may hereafter be imposed (the “Excise Tax”), the Company shall pay to you at the time any such Change in Control Payment is paid an additional amount
(the “Gross-Up Payment”) such that the net amount retained by you, after deduction of any Excise Tax on the Change in Control Payments and any federal, state and local income tax and Excise Tax upon the Gross-Up Payment, shall be equal to
the Change in Control Payments. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of your residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, you shall repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined the portion of the Gross-Up Payment directly and indirectly attributable to such reduction plus interest on the amount of such repayment at the rate provided for in section 1274(d) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder (including by reason of any Change in Control Payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest payable to the taxing authorities with respect to such excess) at the time that the amount of such excess is finally determined. 
  
 (ii) The Company shall withhold the Excise Tax determined under paragraph
(i) above in accordance with section 4999(b) of the Code, and shall withhold federal, state and local income taxes from Change in Control Payments and Gross-Up Payments as required by law. 
  
 7. Successors; Binding Agreement. 
  
 (i) Upon your written request, the Company will seek to have any Successor
(as hereinafter defined), by agreement in form and substance satisfactory to you, assent to the fulfillment by the Company of its obligations under this Agreement. For purposes of this Agreement, “Successor” shall mean any Person that
succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company’s business directly, by merger, consolidation or purchase of assets, or indirectly, by purchase of the Company’s Voting
Securities or otherwise. 

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 (ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate. 
  
 8. Fees and Expenses. The Company shall pay to you all legal fees and related expenses incurred by you in good faith
as a result of (i) your termination following the earlier of Shareholder Approval, if applicable, or a Change in Control (including all such fees and expenses, if any, incurred in contesting or disputing in good faith any such termination) or
(ii) your seeking to obtain or enforce in good faith any right or benefit provided by this Agreement. 
  
 9. Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6, 7(ii), 8 and 13 of this
Agreement shall survive termination of this Agreement, but only with respect to a Change in Control occurring during the term of this Agreement. 
  
 10. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid and addressed to the address of the respective party set forth on the first page of this Agreement, provided that
all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be effective only upon receipt. 
  
 11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to
in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon. 

 
 12. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 
  
 13. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in
Portland, Oregon by three arbitrators in 

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accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award, which award shall
be a final and binding determination of the dispute or controversy, in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses of the arbitrators arising in connection with any arbitration proceeding pursuant to this Section 13.

  
 14. Related Agreements. To the extent that any
provision of any other agreement between the Company or any of its subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the
provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish
such purpose. 
  
 15. Counterparts. This Agreement may be
executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument. 
  
 If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject. 
  

			
	Sincerely,
	
	NORTHWEST NATURAL GAS COMPANY
		
	By	 	  

	 	 	Mark S. Dodson
	 	 	President and CEO

  

	
	Agreed to this      day
	of                     , 2005.Non-Employee Directors Stock Compensation Plan, as amended

 EXHIBIT 10.2 
  
 NORTHWEST NATURAL GAS COMPANY 
 NON-EMPLOYEE DIRECTORS STOCK COMPENSATION PLAN 
  
 January 1, 1989 
  

			
	Northwest Natural Gas Company an Oregon corporation	  	 
	220 NW Second Avenue	  	 
	Portland, OR 97209	  	the Company

  
 The Company believes
it desirable that members of its board of directors, who represent the Company’s shareholders, be themselves shareholders. To supplement the efforts of the directors towards this end, the Company wishes to increase the ownership interest of
non-employee directors through awards of Company Common Stock. The Company, however, recognizes that a director may believe that he or she has a sufficient ownership interest in Company Common Stock, and therefore permits directors to receive awards
under the plan in the form of deferred cash rather than stock. 
  
 The following plan is therefore adopted: 
  
 1.
Administration. 
  
 Unless otherwise determined pursuant
to this section, this plan shall be administered by the corporate secretary of the Company (the Administrator), who may delegate all or part of that authority and responsibility. The Administrator shall interpret the plan, arrange for the purchase
and delivery of shares, determine forfeitures, and otherwise assume general responsibility for administration of the plan. Any decision by the Administrator shall be final and bind all parties. The Administrator may be replaced from time to time in
the discretion of the chief executive officer of the Company. 
  
 2. Awards. 
  
 2.1 Each non-employee director of
the Company, including those directors who have been employees of the Company in the past but are not employees at the time of any award under this plan, shall receive awards under this plan as of the following award dates: 
  
 (a) January 1, 1989; or 
  
 (b) In the case of (i) directors elected after January 1, 1989 and
(ii) persons who become non-employee directors after January 1, 1989 by ceasing to be employees of the Company, the date on which such director is first elected, whether by the shareholders or board of directors of the Company, or ceases
to be an employee of the Company, as the case may be; and 

 (c) On January 1 of each year thereafter, commencing with January 1, 1998; 
  
 provided, however, that this plan shall terminate as to new awards on, and no award shall be
made under this plan on or after, January 1, 2005. 
  
 2.2 As
of each award date, a participant shall receive an award calculated in the following manner. The “Number of Award Months” shall be determined by subtracting the number of full or partial calendar months remaining until all, if any,
previous awards to the participant under this plan will be vested from the number of full or partial calendar months remaining until the fifth year end after the award date; provided, however, that if, assuming the participant were reelected, a
participant’s term as a director would end because of age before the fifth year end after the award date, the “Number of Award Months” shall be determined by subtracting the number of full or partial calendar months remaining until
all, if any, previous awards to the participant under this plan will be vested from the number of full or partial calendar months remaining until the participant’s term will end because of age. The amount awarded shall then be calculated by
multiplying the Number of Award Months by an amount that, effective as of October 1, 2002, shall be $1,666.67. For purposes of this plan, “full or partial calendar months remaining” for any period includes the calendar month in which
the award date falls and the calendar month in which the last day of the period falls and all calendar months in between. 
  
 2.3 As of each award date, the dollar amount calculated under 2.2 shall be awarded to the participant as follows: 
  
 (a) With respect to award dates after February 26, 2004, each
participant may elect at any time prior to an award date to receive the entire amount to be awarded on that date in deferred cash rather than in Company Common Stock. No partial elections shall be permitted. Any such election must be in writing
delivered to the Administrator prior to the award date. If such an election is made, the dollar amount calculated under 2.2 shall be credited to the participant’s Cash Account under the Company’s Deferred Compensation Plan for Directors
and Executives (the “DCP”) effective as of the award date. The deferred cash amounts shall be subject to vesting under 3, but any interest credited with respect to these amounts under the DCP shall be fully vested and nonforfeitable at all
times. The deferred cash amounts shall otherwise be subject to all of the terms and conditions of the DCP. 
  
 (b) If a participant does not timely elect to receive an award in deferred cash, the dollar amount calculated under 2.2 shall be awarded to the
participant in Common Stock as follows: 
  
 (i) As soon as
practicable after the award date, the Administrator shall deliver cash in the amount of the award and applicable commissions to one or more brokers or other persons with instructions to purchase Company Common Stock in the open market. It is
understood that market conditions or regulations affecting the purchases by a corporation of its own shares may extend the period of purchase over several days or weeks. 
  

 2 

 (ii) When several participants have the same award date, all of the stock shall be purchased and then
divided among the participants in proportion to their respective awards, regardless of any changes in price that occur while purchases are being carried out. 
  
 (iii) When all of the stock has been purchased with respect to any award date, certificates in the names of the participants for their respective shares
shall be delivered to the Administrator. Each participant shall deliver to the Administrator a blank stock power duly executed in a form satisfactory to the Administrator for each certificate for shares issued in the participant’s name.

  
 (iv) The Administrator shall hold the certificates and stock
powers until the shares are vested and released as provided in 3.4. 
  
 2.4 Upon any amendment of this plan to increase the dollar amount of awards set forth in 2.2, each participant shall receive an additional award in accordance with the procedures set forth in 2.3. The amount of the additional award for each
participant shall be determined by multiplying the amount of the increase in the award amount by the number of full or partial calendar months remaining until the participant’s most recent prior award under this plan will be fully vested. The
resulting dollar amount shall then be either used to purchase Common Stock for the participant or credited under the DCP as set forth in 2.3. 
  
 3. Vesting; Delivery of Shares; Forfeitures. 
  
 3.1 For each award under 2.2 and 2.3, the number of awarded shares or the amount of awarded cash, as applicable, that will vest per month shall be
determined by dividing the number of awarded shares or the amount of awarded cash by the Number of Award Months. This monthly amount shall vest as of the first day of each calendar month commencing with the later of the month in which the award is
made or the first month after all previous awards to the participant under this plan shall have vested. If an award is made other than on the first day of a month, the award date shall be considered the first day of that month for purposes of 3.1
and 3.2. 
  
 3.2 For each award under 2.3 and 2.4, the number of
awarded shares or the amount of awarded cash, as applicable, that will vest per month shall be determined by dividing the number of awarded shares or the amount of awarded cash by the number of full or partial calendar months remaining until the
participant’s most recent prior award under 2.2 and 2.3 will be fully vested. This monthly amount shall vest as of the first day of each calendar month commencing with the month in which the award is made. 
  
 3.3 Notwithstanding 3.1 and 3.2, all awarded shares and awarded cash of all
participants shall vest upon a change in control of the Company, and all awarded shares and awarded cash of any participant shall vest upon the death or disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code) of the
participant. For purposes of this plan, a “change in control” of the Company shall mean the occurrence of any of the following events: 
  

 3 

 (a) The consummation of: 
  
 (1) any consolidation, merger or plan of share exchange involving the Company (a “Merger”) as a
result of which the holders of outstanding securities of the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) immediately prior to the Merger do not continue to hold at least 50% of the
combined voting power of the outstanding Voting Securities of the surviving corporation or a parent corporation of the surviving corporation immediately after the Merger, disregarding any Voting Securities issued to or retained by such holders in
respect of securities of any other party to the Merger; or 
  
 (2) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company; 
  
 (b) At any time during a period of two consecutive years, individuals who at
the beginning of such period constituted the board of directors of the Company (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof; provided, however, that the term “Incumbent Director”
shall also include each new director elected during such two-year period whose nomination or election was approved by two-thirds of the Incumbent Directors then in office; or 
  
 (c) Any person (as such term is used in Section 14(d) of the Securities Exchange Act of 1934, other than the Company
or any employee benefit plan sponsored by the Company) shall, as a result of a tender or exchange offer, open market purchases or privately negotiated purchases from anyone other than the Company, have become the beneficial owner (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing twenty percent (20%) or more of the combined voting power of the then outstanding Voting Securities. 
  
 3.4 The certificate and stock power for vested shares shall be delivered to
the participant or in accordance with 5.2 as soon as practicable after the participant ceases to be a director of the Company or, if earlier, as soon as practicable after a change in control of the Company. Payment of vested deferred cash shall be
governed by the terms of the DCP. 
  
 3.5 If a participant ceases
to be a director (other than pursuant to death, disability or a simultaneous change in control of the Company), awarded shares and awarded cash remaining unvested shall be forfeited. The Administrator, acting for the participant pursuant to the
executed stock power, shall transfer the unvested shares to the Company, and these shares shall be cancelled. The participant or the participant’s representative shall execute any documents reasonably requested by the Administrator to
facilitate the transfer. The participant’s Cash Account under the DCP shall be reduced by the amount of unvested cash that is forfeited. 
  

 4 

 4. Status Before Full Vesting; Transfer of Shares. 
  
 4.1 Each participant shall be a shareholder of record with respect to all
shares awarded, whether or not vested, and shall be entitled to all of the rights of such a holder, except that a participant’s share certificates shall be held by the Administrator until delivered in accordance with 3.4. 
  
 4.2 Any dividends or communications to shareholders received by the
Administrator with respect to shares held by the Administrator shall promptly be transmitted to the participant. 
  
 4.3 No participant may transfer any interest in unvested shares to any person other than the Company. 
  
 4.4 No participant may transfer any interest in any shares awarded under this
plan, whether vested or not, until he or she ceases to be a director of the Company. 
  
 4.5 Notwithstanding 2.3(b)(iv), 3.4, 4.1, 4.3 and 4.4, if a participant in the DCP elects under the DCP to defer shares of Company Common Stock awarded to the participant under this plan, promptly after the deferral
election becomes irrevocable the Administrator shall cause the Common Stock subject to such irrevocable deferral to be transferred to the trustee of the Northwest Natural Gas Company Supplemental Trust. The Common Stock so transferred shall
nevertheless remain subject to forfeiture under 3.5 if the participant ceases to be a director prior to vesting of the shares. 
  
 5. Death of a Participant. 
  
 5.1 Any shares held by the Administrator for a participant who has died shall be delivered as soon as practicable to the participant’s death
beneficiary under 5.2. 
  
 5.2 Any shares to be delivered on death
of a participant under 5.1 shall go to a participant’s beneficiary in the following order of priority: 
  
 (a) To the surviving beneficiary designated by the participant in writing to the Administrator; 
  
 (b) To the participant’s surviving spouse; or 
  
 (c) To the participant’s estate. 
  
 6. Amendment or Termination; Miscellaneous. 
  
 6.1 The board of directors of the Company may amend or terminate this plan
at any time. No amendment or termination shall adversely affect any outstanding award. 
  

 5 

 6.2 Subject to the rights of amendment and termination in 6.1, this plan shall continue indefinitely and
future awards will be made in accordance with 2.1. 
  
 6.3 Nothing
in this plan shall create any obligation on the part of the board of directors of the Company to nominate any director for reelection by the shareholders or the board of directors. 
  
 Adopted by the board of directors of Northwest Natural Gas Company on November 17, 1988, effective January 1,
1989. Amended by the board of directors of Northwest Natural Gas Company on May 23, 1991, effective July 1, 1991. Amended by the board of directors of Northwest Natural Gas Company on July 24, 1997, effective July 1, 1997.
Amended by the board of directors of Northwest Natural Gas Company on December 18, 1997, effective January 1, 1998. Amended by the board of directors of Northwest Natural Gas Company on September 26, 2002, effective October 1,
2002. Amended by the board of directors of Northwest Natural Gas Company on February 26, 2004, effective February 26, 2004. Amended by the board of directors of Northwest Natural Gas Company on September 23, 2004, effective
January 1, 2005. Amended by the board of directors of Northwest Natural Gas Company on November 17, 2004, effective January 1, 2005. Amended by the board of directors of Northwest Natural Gas Company on April 28, 2005, effective
April 28, 2005. Amended by the board of directors of Northwest Natural Gas Company on December 15, 2005, effective December 15, 2005. 
  

 6

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