Document:

dex10c.htm

    

    NORTHWEST
NATURAL GAS COMPANY

    

    SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

    

    2010
RESTATEMENT

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE OF CONTENTS

    
    

     

    
      	 1.	 Purpose:
      Effective Date	 1
	 	 	 
	 2.	 Eligibility	 1
	 	 	 
	 3.	 Years of
      Participation; Separation of Service	 1
	 	 	 
	 4.	 Normal
      Retirement Benefit	 1
	 	 	 
	 5.	 Early
      Retirement Benefit	 2
	 	 	 
	 6.	 Termination
      Benefit	 2
	 	 	 
	 7.	 Time and Form
      of Payment to Participant	 2
	 	 	 
	 8.	 Death
      Benefit	 3
	 	 	 
	 9.	 Change in
      Control	 4
	 	 	 
	 10.	 Administration	 10
	 	 	 
	 11.	 Claims
      Procedure	 11
	 	 	 
	 12.	 Amendment and
      Termination of the Plan	 12
	 	 	 
	 13.	 Miscellaneous	 13

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      INDEX OF TERMS

      
        	 	 	 
	 Term	 Section      	 Page
	 	 	 
	 Board	 1	 1
	 	 	 
	 Change in
      Control Severance Benefit	 9(b)	 4
	 Committee	 10(a)	 4
	 Company	 1	 1
	 	 	 
	 Deferred Comp
      Plan	 4(e)(ii)	 1
	 Disability -
      SERP	 6(e)	 2
	 	 	 
	 Early
      Retirement Date	 5(a)	 2
	 Effective
      Date	 1	 1
	 Eligibility
      Date	 2	 1
	 ESRIP	 1	 1
	 	 	 
	 Final Average
      Pay	 4(c)	 1
	 	 	 
	 Normal
      Retirement Date	 4(a)	 1
	 	 	 
	 Participant	 2	 1
	 Pension
      Offset	 4(e)	 2
	 Plan
      -SERP	 1	 1
	 	 	 
	 Qualified
      Plan	 1	 1
	 	 	 
	 Separation
      from Service	 3	 1
	 Short Service
      Factor	 4(d)	 1
	 	 	 
	 Tier 1
      Participant	 2	 1
	 Tier 2
      Participant	 2	 1
	 	 	 
	 Year of
      Participation	 3	 1
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    NORTHWEST NATURAL GAS
COMPANY

    SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

    

    2010
RESTATEMENT

    

    

    1. Purpose; Effective
Date.  The Board of Directors (the “Board”) of Northwest
Natural Gas Company (the “Company”) adopts this Supplemental Executive
Retirement Plan (the “Plan”) in order to attract and retain highly effective
executives by providing retirement benefits in excess of those provided by the
Northwest Natural Gas Company Retirement Plan for Non-Bargaining Unit Employees
(the “Qualified Plan”). The Plan shall not apply to executives already covered
by the Company’s Executive Supplemental Retirement Income Plan (the “ESRIP”).
The Plan is intended to constitute an unfunded plan maintained for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees. The Plan was adopted effective as of September 1,
2004 (the “Effective Date”) and previously restated effective December 1,
2006.  In order to comply with changes in applicable law and to
clarify existing provisions, the Company adopted the 2007 Restatement effective
December 20, 2007, except the changes to the second sentence of 3, to 5(b), and
to 6(b) were effective September 1, 2004 as though included in the original
Plan.  The Plan is further amended by this 2010 Restatement on
December __, 2009 effective as of January 1, 2010.

     

    2. Eligibility.  Each
executive officer of the Company hired into such office after the Effective Date
and each other executive employee of the Company designated by the Organization
and Executive Compensation Committee of the Board shall be eligible to
participate in the Plan (a “Participant”). “Eligibility Date” means the date as
of which the Participant became an executive officer of the Company or the
effective date of designation to participate in the Plan, whichever applies. A
Participant with an Eligibility Date before December 1, 2006 (a “Tier 1
Participant”) shall be provided full benefits under the Plan and a Participant
with an Eligibility Date on or after that date (a “Tier 2 Participant”) shall be
provided with Make-Up Benefits as described in 4(f), 5(d), 6(d), 7(d), and 8(d).
Participants in the ESRIP shall not be eligible to participate in the
Plan.

     

    3. Years of Participation;
Separation from Service.  Vesting of benefits, accrual of
benefits, and eligibility for retirement shall be based on the Participant’s
Years of Participation. “Year of Participation” means a 12-month period elapsed
between the Participant’s Eligibility Date and Separation from Service,
including fractions of a year for any completed one-month periods.  If
participation is not continuous, whole and fractional months shall be aggregated
and any remaining fractional month shall be disregarded.  “Separation
from Service”, when used in this Plan, shall have the meaning ascribed to such
term in Treasury Regulations §1.409A-1(h).

     

    4. Normal Retirement
Benefit.

     

    (a) Normal Retirement
Date.  A Participant’s “Normal Retirement Date” is the first of
the month following Separation from Service at or after attainment of age 65 and
completion of five Years of Participation.

     

    (b) Amount of
Benefit.  A Tier 1 Participant’s benefit upon Normal Retirement
Date shall be a lump sum equal to six times Final Average Pay (FAP) times the
Short Service Factor (SSF) minus the Pension Offset (PO) as
follows:

     

    Lump sum
= (6 x FAP x SSF) - PO

    

    (c) Final Average
Pay.  “Final Average Pay” means the annual average determined
by taking the sum of the Participant’s Total Compensation for the five (5)
consecutive Compensation Years out of the Participant’s final ten (10)
Compensation Years with the Company which produce the highest five (5) year
total amount, and dividing such sum by five (5).

     

    (i) Total Compensation
for any Compensation Year means the sum of (A) plus (B):

     

    (A)           The
annual salary approved by the Board and in effect during the Compensation Year;
provided, however, that if a Participant’s salary is changed during a
Compensation Year, the salary amount included in Total Compensation for that
Compensation Year shall be the total amount of salary the Participant earned for
services during that Compensation Year or would have earned for services during
that Compensation Year if employment had continued at his or her final salary
level for the full Compensation Year.

     

    (B)           The
annual performance award for the prior calendar year approved by the Board by
the beginning of the Compensation Year; provided, however, that the amount of
the annual performance award included in Total Compensation for any calendar
year after 2009 shall not exceed 125% of the Participant’s target award;
provided further, however, that if a Participant has a Separation from Service
during the last 61 days of any Compensation Year, Total Compensation for each of
the Participant’s final ten (10) Compensation Years shall also be calculated as
the sum of the salary in effect for such Compensation Year as determined under
(A) plus the annual performance award for the calendar year that ended during
such Compensation Year, and these alternate Total Compensation calculations
shall be used if the resulting Final Average Pay is higher.

     

    (ii) Compensation Year
means the twelve (12) month period from March 1 to February 28/29, including any
partial portion of such period preceding a Separation from Service.

     

    (d) Short Service
Factor.  “Short Service Factor” means a percentage calculated
by dividing the Tier 1 Participant’s Years of Participation at Separation from
Service by 15, not to exceed 100 percent.

     

    (e) Pension
Offset.  “Pension Offset” means a lump sum amount equal to the
combined actuarial equivalent value of the following:

     

    (i) The Tier
1 Participant’s benefit payable at age 65 under the Qualified Plan in the normal
form provided by that plan;

     

    (ii) The
make-up benefit payable at age 65 provided by any elective nonqualified deferred
compensation plan of the Company (a “Deferred Comp Plan”) on account of the
reduction in benefits under the Qualified Plan and under Social Security
resulting from deferral of compensation under the Deferred Comp Plan;
and

     

    (iii) The Tier
1 Participant’s Social Security benefit payable at age 65, as estimated by the
Committee based on the Tier 1 Participant’s total compensation in the most
recent full calendar year and an assumed rate of increase over a full working
career.

    (f) Make-Up
Benefit.  A Tier 2 Participant’s benefit upon Normal Retirement
Date shall be equal to the amount, if any, by which the Tier 2 Participant’s
benefit under the Qualified Plan would be greater than the actual benefit
payable under the Qualified Plan upon Normal Retirement Date in the absence of
both the following limits:

    

    (i) The limit
provided by Section 401(a)(17) of the Internal Revenue Code on compensation
counted under the Qualified Plan.

     
 

    (ii) The limit
provided by Section 415(b) of the Internal Revenue Code on benefits payable
under the Qualified Plan.

     

    
      
        
        

      

      
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    (g) Deferred
Compensation.  The Tier 2 Participant’s Qualified Plan benefit
calculated without the limits in (f)(i) and (ii) shall treat salary and
bonus deferred by the Tier 2 Participant under the Northwest Natural Gas Company
Deferred Compensation Plan for Directors and Executives or the predecessor to
such plan as though it had been paid to or received by the Tier 2 Participant in
the year when the deferral occurred, but only to the extent such salary and
bonus is not counted in the calculation of a supplemental retirement benefit
payable to the Tier 2 Participant under Section 8 of such
plan.

     

    5. Early Retirement
Benefit.

     

    (a) Early Retirement
Date.  A Participant’s “Early Retirement Date” is the first of
the month following Separation from Service at or after attainment of age 55 and
completion of 15 Years of Participation and before attainment of age
65.

     

    (b) Amount of
Benefit.  A Tier 1 Participant’s benefit upon Early Retirement
Date shall be a lump sum determined under the same formula in 4(b) as the
benefit at Normal Retirement Date, with the same defined terms, subject to the
following additional detail in the definition of Pension Offset.  The
value of the Qualified Plan benefit and the make-up benefit provided by the
Deferred Comp Plan shall be based on the value at age 65 of the benefits payable
at age 65, even if those benefits start before age 65. The value of the Social
Security benefit shall be determined as of the later of the Tier 1
Participant’s  Early Retirement Date or the date the Tier 1
Participant will attain age 62 assuming payments commence on that determination
date and, if determined as of a future date, based on the assumptions of no
earnings after Early Retirement Date and future increases in the national
average wage index used to calculate Social Security benefits based on the
intermediate assumptions in the most recent report of the Social Security
trustees.

     

    (c) Reduction for Commencement
Before Age 60.  The Tier 1 Participant’s benefit upon Early
Retirement Date shall be reduced by five percent for each year by which Early
Retirement Date precedes the first of the month following the Tier 1
Participant’s 60th birthday, with interpolation for a partial year based on
one-twelfth of the full five percent for each month.

     

    (d) Make-Up
Benefit.  A Tier 2 Participant’s benefit upon Early Retirement
Date shall be the same as the Tier 2 Participant’s benefit upon Normal
Retirement Date, except the calculation shall be based on the Qualified Plan
benefit as of the Early Retirement Date without the limits described in 4(f)(i)
and (ii) and based on deferred salary and bonus as provided in
4(g).

     

    6. Termination
Benefit.

     

    (a) Vesting.  A
Participant shall become vested in benefits under the Plan upon completing five
Years of Participation, upon suffering a Disability, or when entitled to a
Change in Control Severance Benefit as provided in 9(a). A Participant whose
employment with the Company terminates prior to vesting shall forfeit any right
to benefits under the Plan, subject to reinstatement of such right upon rehire
into a position with the Company eligible to participate in the Plan. A
Participant whose Separation from Service with the Company occurs after becoming
vested and before qualifying for Early or Normal Retirement Date shall be paid a
termination benefit.

     

    (b) Amount of
Benefit.  A Tier 1 Participant’s termination benefit shall be
determined under the same formula in 4(b) as the benefit at Normal Retirement
Date, with the same defined terms, subject to the following additional detail in
the definition of Pension Offset.  The Pension Offset shall be
calculated the same as on Early Retirement Date, except the value of Social
Security benefits shall be determined as of the date the Tier 1 Participant will
attain age 65 assuming that payments commence on that date and based on the
assumptions of future earnings continuing at the Participant’s last pay rate
with the Company and future cost of living adjustments and increases in the
national average wage index used to calculate Social Security benefits based on
the intermediate assumptions in the most recent report of the Social Security
trustees.

     

    (c) Reduction for Commencement
Before Age 60.  The Tier 1 Participant’s termination benefit
shall be reduced by five percent for each year by which the first of the month
following Separation from Service precedes the first of the month following the
Participant’s 60th birthday, with interpolation for a partial year based on
one-twelfth of the full five percent for each month. This paragraph
(c) shall not reduce the Tier 1 Participant’s benefit below 40 percent
of the amount payable at age 60.

     

    (d) Make-Up
Benefit.  A Tier 2 Participant’s termination benefit shall be
the same as the Tier 2 Participant’s benefit upon Normal Retirement Date, except
the calculation shall be based on the Qualified Plan benefit, without the limits
described in 4(f)(i) and (ii) and based on deferred salary and bonus as
provided in 4(g), as of the date the Tier 2 Participant’s benefit commences as
provided in 7(d).

     

    (e) Disability.  “Disability”
means a termination of employment because of absence from duties with the
Company for 180 consecutive days as a result of the Participant’s incapacity due
to physical or mental illness or injury, unless within 30 days after a
written notice of termination is given following such absence the Participant
returns to full-time performance of Company duties.

     

    7. Time and Form of Payment to
Participant.

     

    (a) Lump
Sum.  Except as provided in (b), (c), and (f), benefits shall
be paid to a Tier 1 Participant in a lump sum of cash within 30 days
following the Tier 1 Participant’s Separation from Service.

     

    (b) Optional Annuity
Forms.  A Tier 1 Participant can receive payment of the Normal
Retirement benefit described in Section 4 or the Early Retirement benefit
described in Section 5 in any of the standard or optional annuity forms of
benefit described in 6.01 and 6.02 of the Qualified Plan, other than a joint and
survivor annuity upon marriage or remarriage after the annuity starting
date.

     

    (c) Election of Annuity
Form.  A Tier 1 Participant may elect to receive payment of the
benefit amounts described in Sections 4 or 5 in an annuity form of benefit in
lieu of a lump sum at any time by delivering written notice of the election to
the Committee.  The election shall take effect 12 months following the
date on which it is delivered to the Committee.  If the Tier 1
Participant has a Separation from Service less than 12 months following the date
the election is delivered or if the total benefit is no more than the applicable
dollar amount under Internal Revenue Code section 402(g)(1)(B) (which is $16,500
in 2010), benefits shall be paid in a lump sum.  An election to
receive an annuity form of benefit must specify a date for commencement of
annuity payments that is at least five years after Separation from
Service.  However, a Tier 1 Participant may elect no later than
December 31, 2008, to receive an annuity form of benefit in lieu of a lump sum
commencing with the first month following Separation from Service without a
five-year delay in commencement and such election shall be effective immediately
without a 12-month delay in effectiveness.  A Tier 1 Participant who
has elected to receive an annuity form of benefit may choose which of the
annuity forms described in (b) will be paid, and to change such choice, at any
time at least 30 days before the first day of the month in which annuity
payments commence.  If the Tier 1 Participant does not make a timely
election under this 7(c), the annuity benefit shall be paid in the default
annuity form applicable to the Tier 1 Participant under the Qualified
Plan.

     

    
      
        
        

      

      
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    (d) Make-Up
Benefit.  Except as provided in (f) and (g), benefits shall be
paid to a Tier 2 Participant in one of the standard or optional annuity forms of
benefit described in 6.01 and 6.02 of the Qualified Plan, other than a joint and
survivor annuity upon marriage or remarriage after the annuity starting date, as
selected by the Tier 2 Participant in accordance with the rules of the Qualified
Plan, commencing upon a Separation from Service as follows:

     

    (i) If the
Tier 2 Participant is eligible to receive normal retirement benefits under the
Qualified Plan based on having reached age 62 at the time of Separation from
Service, and therefore receives an amount of benefits under this Plan calculated
consistently therewith, the annuity shall commence with the first month
following the Separation from Service.

     

    (ii) If the
Tier 2 Participant is eligible to receive early retirement benefits under the
Qualified Plan based on having satisfied the Rule of 70 at the time of
Separation from Service, and therefore receives an amount of benefits under this
Plan calculated consistently therewith, the annuity shall commence with the
first month following the later of the Tier 2 Participant’s 55th
birthday or the Tier 2 Participant’s Separation from Service.

     

    (iii) Disability
retirement benefits have been eliminated under the Qualified Plan effective as
of January 1, 2010.  If at any time before January 1, 2011, the Tier 2
Participant is eligible to receive disability retirement benefits under the
terms of the Qualified Plan as in effect prior to January 1, 2010, the annuity
under this Plan shall be calculated as if the Qualified Plan had not been
amended to eliminate disability retirement benefits, and the annuity shall
commence with the first month following the later of the Tier 2 Participant’s
55th
birthday or the Tier 2 Participant’s Separation from Service.  If a
Tier 2 Participant becomes disabled on or after January 1, 2011, this 7(d)(iii)
shall not apply.

     

    (iv) If the
Tier 2 Participant is not eligible to receive normal retirement benefits, early
retirement benefits or disability retirement benefits as referred to in (i),
(ii) or (iii), but is eligible to receive termination benefits under this Plan,
the annuity shall commence with the first month following the Tier 2
Participant’s 62nd
birthday.

     

    (v) If the
Tier 2 Participant’s surviving spouse is eligible to receive death benefits
under the Qualified Plan as a result of the Tier 2 Participant’s death before
commencement of benefits under this Plan, the annuity shall commence in the
month that benefits would have commenced as provided in this 7(d) if the Tier 2
Participant had a Separation from Service on the date of death (or on the Tier 2
Participant’s actual Separation from Service, if earlier) and then survived
until benefits had commenced.

     

    (vi) If the
Tier 2 Participant elects a form of annuity benefit under the Qualified Plan at
least 30 days prior to the first day of the month in which the benefit under
this 7(d) is required to commence, the annuity benefit shall be paid in the same
annuity form as selected under the Qualified Plan.  If the Tier 2
Participant does not make a timely election under this 7(d), the annuity benefit
shall be paid in the default annuity form applicable to the Tier 2 Participant
under the Qualified Plan.

     

    (e) Actuarial
Equivalency.  The amount payable in any of the annuity forms
provided in (b) shall be the actuarial equivalent of the lump sum in (a),
or of the amount described in 4(f), 5(d), or 6(d), based on the actuarial
assumptions used for determining equivalent benefits under the Qualified Plan at
the time of the Participant’s commencement of benefits.

     

    (f) 6-Month Delay for Specified
Employees.  For a Participant who is a key employee as defined
in Section 416(i) of the Internal Revenue Code for the plan year of
Separation from Service, payment of a lump sum or commencement of monthly
annuity benefits shall be postponed until the first day of the seventh calendar
month following the Participant’s Separation from Service.  All
amounts due before the first day of the seventh calendar month shall be paid to
the Participant as soon as practicable after that day together with interest
from the date each payment otherwise would have been payable until the date
actually paid.  Interest for any period will be paid at the same rate
applicable for that period under Section 6(f) of the Company’s Deferred
Compensation Plan for Directors and Executives.

     

    (g) Small Benefit Cash
Out.  If the actuarial equivalent lump sum present value of a
Tier 2 Participant’s benefits, based on the actuarial assumptions used for
determining equivalent benefits under the Qualified Plan at the time of the
Participant’s commencement of benefits, is no more than the applicable dollar
amount under Internal Revenue Code section 402(g)(1)(B) (which is $16,500 in
2010), the benefit shall be paid as a lump sum in such amount at the time
annuity payments would have otherwise commenced under 7(d).

     

    8. Death
Benefit.

     

    (a) Beneficiary.  If
a Tier 1 Participant dies before Separation from Service, a death benefit shall
be paid to the Beneficiary designated by the Tier 1 Participant on a written
form prescribed by the Committee. A designation made by the Tier 1 Participant
shall remain in effect until changed by a subsequent designation. If no
Beneficiary has been designated or no person designated by the Tier 1
Participant survives, the Beneficiary shall be the following in order of
priority:

     

    (i) The
Participant’s surviving spouse.

     

    (ii) The
Participant’s surviving children in equal shares.

     

    (iii) The
Participant’s estate.

     

    (b) Amount of
Benefit.  The death benefit shall have a lump sum value equal
to 50 percent of the amount determined under the formula in 4(b) for the
benefit at Normal Retirement Date, calculated on the basis of the Tier 1
Participant’s Final Average Pay, Years of Participation, and Pension Offset
determined as of the day before death.

     

    (c) Form of
Payment.  The amount calculated under (b) shall be
converted to an actuarial equivalent single life annuity for the life of the
Beneficiary commencing on the first of the month following the date of death,
except as follows.  If the lump sum value is no more than the
applicable dollar amount under Internal Revenue Code section 402(g)(1)(B) (which
is $16,500 in 2010), the lump sum shall be paid to the Beneficiary within
30 days after the date of death in lieu of a life
annuity.  Actuarial equivalency shall be based on the actuarial
assumptions used for determining equivalent benefits under the Qualified Plan at
the time of the Tier 1 Participant’s death.

     

    
      
        
        

      

      
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    (d) Make-Up
Benefit.  If a Tier 2 Participant dies with a surviving spouse
entitled to a death benefit under the Qualified Plan, a death benefit shall be
payable to the surviving spouse commencing at the date determined under 7(d)
equal to the amount, if any, by which the Qualified Plan death benefit would be
greater than the actual death benefit calculated as of that date under the
Qualified Plan in the absence of the limits in 4(f)(i) and (ii) and based
on deferred salary and bonus as provided in 4(g).

     

    9. Change in
Control.

     

    (a) Enhancements.  Each
Participant who becomes entitled to a Change in Control Severance Benefit shall
be provided enhanced benefits as follows:

     

    (i) All
Participants shall be fully vested in benefits under the Plan, regardless of
Years of Participation.

     

    (ii) Tier 1
Participants shall be credited with three additional Years of Participation
beyond those the Participant has actually completed.

     

    (iii) The
make-up benefit provided for Tier 2 Participants under 4(f), 5(d), 6(d), 7(d),
and 8(d) shall be calculated by subtracting the Tier 2 Participant’s Qualified
Plan benefit calculated as of the applicable benefit commencement date under
7(d) from a Qualified Plan benefit that is calculated as of the same date
without the limits described in 4(f)(i) and (ii), that counts deferred salary
and bonus as provided in 4(g), and that is based on the Tier 2 Participant’s
actual years of service credited for benefits under the Qualified Plan plus
three additional years.

     

    (b) Change in Control Severance
Benefit.  “Change in Control Severance Benefit” means, for any
Participant who is party to a Change in Control Severance Agreement with the
Company, the severance benefit provided for in such agreement; provided,
however, that such severance benefit is a “Change in Control Severance Benefit”
for purposes of the Plan only if, under the terms of the Participant’s Change in
Control Severance Agreement, the Participant becomes entitled to the severance
benefit (i) after a change in control of the Company has occurred,
(ii) because the Participant’s employment with the Company has been
terminated by the Participant for good reason in accordance with the terms and
conditions of the Change in Control Severance Agreement or by the Company other
than for cause or disability, and (iii) because the Participant has
satisfied any other conditions or requirements specified in the Change in
Control Severance Agreement and necessary for the Participant to become entitled
to receive the severance benefit. Under no circumstances will a Participant who
is not party to a Change in Control Severance Agreement be deemed to become
entitled to a Change in Control Severance Benefit for purposes of the Plan. For
purposes of this Section 9(b), the terms “change in control,” “good
reason,” “cause” and “disability” shall have the meanings as may be set forth in
the Participant’s Change in Control Severance Agreement, if any.

     

    (c) Possible Benefit
Recalculation.  With respect to any Participant who is party to
a Change in Control Severance Agreement, it may be the case that (i) the
Participant’s employment with the Company is terminated prior to a “change in
control” of the Company (as defined in the Participant’s Change in Control
Severance Agreement), (ii) a change in control of the Company occurs after
such termination, and (iii) the Participant then becomes entitled to a
Change in Control Severance Benefit. If, after such termination of employment
and prior to the time that the Participant becomes entitled to a Change in
Control Severance Benefit, benefit payments to the Participant have started
under the Plan, then, at such time thereafter as the Participant becomes
entitled to a Change in Control Severance Benefit, the benefits payable to the
Participant under the Plan shall be retroactively recalculated to reflect the
enhancements described in Section 9(a). To the extent that the amount of
the benefit payments paid to the Participant prior to such recalculation is less
than the amount of such payments as so recalculated, the difference will be paid
to the Participant in a cash lump sum (without interest) as soon as practicable
after the change in control of the Company.

     

    10. Administration.

     

    (a) Committee
Duties.  This Plan shall be administered by the Organization
and Executive Compensation Committee of the Board (the “Committee”). The
Committee shall have responsibility for the general administration of the Plan
and for carrying out its intent and provisions. The Committee shall interpret
the Plan and have such powers and duties as may be necessary to discharge its
responsibilities. The Committee may, from time to time, employ other agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Company.

     

    (b) Binding Effect of
Decisions.  The decision or action of the Committee in respect
of any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.

     

    11. Claims
Procedure.

     

    (a) Claim.  Any
person claiming a benefit, requesting an interpretation or ruling under the
Plan, or requesting information under the Plan shall present the request in
writing to the Committee, which shall respond in writing as soon as
practicable.

     

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

     

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

     

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

     

    (iii) An
explanation of the Plan’s claim review procedure.

     

    (c) Review of
Claim.  Any person whose claim or request is denied or who has
not received a response within 30 days may request review by notice given
in writing to the Committee. The claim or request shall be reviewed by the
Committee who may, but shall not be required to, grant the claimant a hearing.
On review, the claimant may have representation, examine pertinent documents,
and submit issues and comments in writing.

     

    (d) Final
Decision.  The decision on review shall normally be made within
60 days. If an extension of time is required for a hearing or other special
circumstances, the claimant shall be notified and the time limit shall be
120 days. The decision shall be in writing and shall state the reasons and
the relevant Plan provisions. All decisions on review shall be final and bind
all parties concerned.

     

    12. Amendment and Termination of
the Plan.

     

    (a) Amendment.  The
Board may at any time amend the Plan in whole or in part; provided, however,
that no amendment shall without the consent of each affected Participant
(i) decrease the Participant’s benefit accrued under 4 as of the date of
amendment, or (ii) accelerate the payment of benefits under the Plan. The
Board shall have the right to apply an amendment retroactively, including any
amendment necessary to comply with restrictions on nonqualified deferred
compensation provided by Section 409A of the Internal Revenue
Code.

     

    (b) Partial
Termination.  The Board may at any time partially terminate the
Plan if, in its judgment, the tax, accounting, or other effects of the
continuance of the Plan, or potential payments thereunder, would not be in the
best interests of the Company. Upon partial termination, no further benefits
shall accrue under the Plan, which shall continue for the purpose of paying
benefits accrued under the Plan as of the partial termination date as they
become payable.

     

    (c) Complete
Termination.  The Board may completely terminate the Plan,
provided such termination is covered by an exception (set forth in regulations
or other guidance of the Internal Revenue Service) to the prohibition on
acceleration of deferred compensation.  In that event, on the
effective date of the complete termination, the Plan shall cease to operate and
the Company shall determine the lump sum present value of each Participant’s
benefit rights under the Plan as of the close of business on such effective
date.  The Company shall pay out such present value to the Participant
in a single lump sum as soon as practicable after such effective
date.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    13. Miscellaneous.

     

    (a) Unsecured General
Creditor.  Participants and their beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interest or
claims in any property or assets of the Company, nor shall they be beneficiaries
of, or have any rights, claims or interests in any mutual funds, other
investment products or the proceeds therefrom owned or which may be acquired by
the Company. Except as provided in (b), any and all of the Company’s assets
shall be, and remain, the general, unpledged, unrestricted assets of the
Company. The Company’s obligation under the Plan shall be that of an unfunded
and unsecured promise to pay money in the future, and the rights of Participants
and beneficiaries shall be no greater than those of unsecured general creditors
of the Company.

     

    (b) Trust
Fund.  The Company shall be responsible for the payment of all
benefits provided under the Plan. The Company shall establish one or more
trusts, with such trustees as the Board may approve, for the purpose of
providing for the payment of such benefits, but the Company shall have no
obligation to contribute to such trusts except as specifically provided in the
applicable trust documents. Such trust or trusts shall be irrevocable, but the
assets thereof shall be subject to the claims of the Company’s creditors. To the
extent any benefits provided under the Plan are actually paid from any such
trust, the Company shall have no further obligation with respect thereto, but to
the extent not so paid, such benefits shall remain the obligation of, and shall
be paid by, the Company.

     

    (c) Non-assignability.  Neither
a Participant nor any other person shall have the right to commute, sell,
assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be non-assignable and nontransferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.

     

    (d) Not a Contract of
Employment.  The terms and conditions of this Plan shall not be
deemed to constitute a contract of employment between the Company and any
Participant, and the Participants (and their Beneficiaries) shall have no rights
against the Company except as may otherwise be specifically provided herein.
Moreover, nothing in this Plan shall be deemed to give a Participant the right
to be retained in the service of the Company or to interfere with the right of
the Company to discipline or discharge the Participant at any time.

     

    (e) Withholding; Payroll
Taxes.  The Company shall withhold from payments made hereunder
any taxes required to be withheld from such payments under federal, state or
local law. When the value of a Participant’s benefits under the Plan becomes
subject to FICA tax, as determined by applicable law, the Participant’s share of
FICA shall be withheld from other non-deferred compensation payable to the
Participant. Any amount not covered by such withholding shall be paid by the
Participant to the Company out of other funds.

     

    (f) Payment to
Guardian.  If a benefit under the Plan is payable to a minor or
a person declared incompetent or to a person incapable of handling the
disposition of his property, the Committee may direct payment of such Plan
benefit to the guardian, legal representative or person responsible for the care
and custody of such minor, incompetent or person. The Committee may require
proof of incompetence, minority, incapacity or guardianship as it may deem
appropriate prior to distribution of the Plan benefit. Such distribution shall
completely discharge the Committee and the Company from all liability with
respect to such benefit.

     

    (g) Governing
Law.  The provisions of this Plan shall be construed and
interpreted according to the laws of the State of Oregon, except as preempted by
federal law.

     

    (h) Validity.  In
case any provision of this Plan shall be held illegal or invalid for any reason,
said illegality or invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal and invalid
provisions had never been inserted herein.

     

    (i) Notice.  Any
notice or filing required or permitted to be given to the Company or the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the Secretary of the Company. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.

     

    (j) Successors.  The
provisions of this Plan shall bind and inure to the benefit of the Company and
its successors and assigns. The term successors as used herein shall include any
corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially all of the
business and assets of the Company, and successors of any such corporation or
other business entity.

     

    The
foregoing 2010 Restatement was approved by the Board of Directors of Northwest
Natural Gas Company on December 17, 2009.

     

    NORTHWEST NATURAL GAS
COMPANY

    

    

    By:    __________________________                                                  

    

    

    Attest:        _______________________________dex10h.htm

    NON-STATUTORY
STOCK OPTION AGREEMENT

     

    RESTATED
STOCK OPTION PLAN

     

    THIS
AGREEMENT is made as of the ____ day of __________, 201_, between Northwest
Natural Gas Company, an Oregon corporation (the “Company”), and «FirstName»
«LastName» (the “Optionee”).

     

    Pursuant
to the Company’s Restated Stock Option Plan (the “Plan”), the Organization and
Executive Compensation Committee of the Board of Directors (the “Committee”) has
voted to grant the Optionee an option to purchase common stock of the Company
(“Common Stock”) in the amount indicated below, conditioned on the Optionee’s
agreement to the terms of this Agreement including amendments to all prior
options granted to the Optionee under the Plan.  In consideration of
the promises and mutual covenants herein contained, the Company and the Optionee
agree as follows:

     

    1.           Option Grant.  The
Company grants to the Optionee on the terms and conditions stated below the
right and option (the “Option”) to purchase an aggregate of «Shares» shares of
the Company’s authorized but unissued or reacquired Common Stock at a price of
$_______ per share.  The Option is a Non-Statutory Stock Option as
defined in the Plan.

     

    2.           Terms.  The Option
is granted on the following terms:

     

    2.1           Duration of
Option.  Subject to reductions in the Option period as provided
in section 2.5, the Option shall continue in effect for 10 years and seven days
from the date hereof.

     

    2.2           Vesting.  Except as
provided in section 2.5, the Option shall not be exercisable for any shares in
the first year after the date hereof and thereafter may be exercised from time
to time in the amounts as set forth on attached Schedule A.

     

    2.3           Limitations on Rights to
Exercise.  Except as provided in section 2.5, the Option may
not be exercised unless when exercised the Optionee is employed by the Company
and shall have been so employed continuously since the Option was
granted.  For purposes of this Agreement, the Optionee is considered
to be employed by the Company if the Optionee is employed by any parent or
subsidiary of the Company.  Absence on leave or on account of illness
or disability under rules established by the Committee shall not be deemed an
interruption of employment for this purpose.  Vesting of the Option as
set forth on Schedule A shall continue during a medical, family or military
leave of absence, whether paid or unpaid, and vesting of the Option shall be
suspended during any other unpaid leave of absence.

     

    2.4           Nonassignability.  The
Option is nonassignable and nontransferable by the Optionee except by will or by
the laws of descent and distribution of the state or country of the Optionee’s
domicile at the time of death, and it is exercisable during the Optionee’s
lifetime only by the Optionee.

     

    2.5           Termination of
Employment.

     

    (a)           General Rule.  If
employment of the Optionee by the Company is terminated for any reason other
than in the circumstances specified in subsection (b) or (c) below, the Option
may be exercised at any time prior to its expiration date or the expiration of
three months after the date of termination of employment, whichever is the
shorter period, but only if and to the extent the Optionee was entitled to
exercise the Option on the date of termination.

     

    (b)           Termination because of Retirement,
Death or Total Disability.  If the Optionee’s employment by the
Company is terminated because of retirement (as defined below), the Option may
be exercised for all remaining shares subject thereto, free of any limitation on
the number of shares for which the Option may be exercised in any period, at any
time prior to its expiration date or the expiration of 36 months after the date
of termination, whichever is the shorter period.  The term
“retirement” means termination of employment after the Optionee is (a) age 62
with at least five years of service as an employee of the Company, or (b) age 55
with age plus years of service (including fractions) as an employee of the
Company totaling at least 70.  If the Optionee’s employment by the
Company is terminated because of death or total disability (as defined below),
the Option may be exercised for all remaining shares subject thereto, free of
any limitation on the number of shares for which the Option may be exercised in
any period, at any time prior to its expiration date or the expiration of 12
months after the date of termination, whichever is the shorter period. If the
Optionee’s employment is terminated by death, the Option shall be exercisable
only by the person or persons to whom the Optionee’s rights under the Option
shall pass by the Optionee’s will or by the laws of descent and distribution of
the state or country of the Optionee’s domicile at the time of
death.  The term “total disability” means a medically determinable
mental or physical impairment that is expected to result in death or has lasted
or is expected to last for a continuous period of 12 months or more and that, in
the opinion of the Company and two independent physicians, causes the Optionee
to be unable to perform duties as an employee, director, or officer of the
Company and unable to be engaged in any substantial gainful
activity.  Total disability shall be deemed to have occurred on the
first day after the two independent physicians have furnished their written
opinion of total disability to the Company and the Company has reached an
opinion of total disability.

     

    (c)           Termination for
Cause.  If the Optionee’s employment is terminated by the
Company for cause (as defined below), the Option shall immediately
terminate.  If at any time (including after a notice of exercise has
been delivered) either the Committee or the Chief Executive Officer of the
Company reasonably believes that the Optionee may have committed an act that
would constitute cause, the Committee or the Chief Executive Officer may suspend
the Optionee’s right to exercise the Option pending a final determination of
whether cause for termination exists.  The term “cause” means (i) the
willful and continued failure by the Optionee to perform substantially the
Optionee’s assigned duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness) after a demand for
substantial performance is delivered to the Optionee by the Company which
specifically identifies the manner in which the Optionee has not substantially
performed such duties, (ii) willful commission by the Optionee of an act of
fraud or dishonesty resulting in economic or financial injury to the Company,
(iii) willful misconduct by the Optionee that substantially impairs the
Company’s business or reputation, or (iv) willful gross negligence by the
Optionee in the performance of his or her duties.

     

    (d)           Failure to Exercise
Option.  In the event of the termination of employment of the
Optionee, to the extent the Option is not exercised within the limited periods
provided above, all further rights to purchase shares pursuant to the Option
shall terminate at the expiration of such periods.

     

    2.6           Purchase of
Shares.  Shares may be purchased or acquired pursuant to the
Option only by notice in writing from the Optionee to the Company of the
Optionee’s binding commitment to exercise the Option, specifying the number of
shares the Optionee will purchase and the date on which the Optionee will
complete the transaction, which may not be more than 30 days after delivery of
the notice.  On or before the date specified for completion of the
purchase, the Optionee must pay the Company the full purchase price in cash (or
by check), in shares of Common Stock previously acquired by the Optionee, valued
at fair market value, or in any combination of cash (or check) and shares of
Common Stock.  Payment in shares of Common Stock may be made by
delivery to the Company of (a) certificate(s) representing the shares or (b) an
attestation in a form acceptable to the Company regarding shares that are deemed
delivered to the Company.  For purposes of this paragraph, the fair
market value shall be deemed to be the closing price for the Common Stock as
reported on the New York Stock Exchange and published in the Wall Street Journal
for the day preceding the date specified for completion of the purchase, or such
other fair market value of the Common Stock as determined by the Committee. The
Optionee shall, on notification of the amount due, if any, and prior to or
concurrently with delivery of the certificates representing the shares
purchased, pay to the Company amounts necessary to satisfy any applicable
federal, state, and local withholding tax requirements.  If additional
withholding becomes required beyond any amount deposited before delivery of the
certificates, the Optionee shall pay such amount to the Company on
demand.  In the absence of such payment, the Company may withhold such
amount from any funds owed by the Company to the Optionee.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.7           Changes in Capital
Structure.

     

    (a)           Stock Splits, Stock
Dividends.  If the outstanding Common Stock of the Company is
hereafter increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of any
stock split, combination of shares, dividend payable in shares, recapitalization
or reclassification, appropriate adjustment shall be made by the Company in (i)
the number and kind of shares subject to the Option, or the unexercised portion
thereof, and (ii) the Option price per share, so that the Optionee’s
proportionate interest before and after the occurrence of the event is
maintained.   Notwithstanding the foregoing, the Company shall
have no obligation to effect any adjustment that would or might result in the
issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Company.  Any such adjustments made by the Company shall be
conclusive.

     

    (b)           Mergers, Reorganizations,
Etc.  In the event of a merger, consolidation, plan of
exchange, acquisition of property or stock, split-up, split-off, spin-off,
reorganization or liquidation to which the Company is a party or any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the  assets of the
Company (each, a “Transaction”), the Company shall, in its sole discretion and
to the extent possible under the structure of the Transaction, select one of the
following alternatives for treating the Option:

     

    (i)           The
Option shall remain in effect in accordance with its terms.

     

    (ii)           The
Option shall be converted into an option to purchase stock in one or more of the
corporations, including the Company, that are the surviving or acquiring
corporations in the Transaction.  The amount, type of securities
subject thereto and exercise price of the converted Options shall be determined
by the Company, taking into account the relative values of the companies
involved in the Transaction and the exchange rate, if any, used in determining
shares of the surviving corporation(s) to be held by holders of shares of the
Company following the Transaction.  The converted Option shall be
vested only to the extent that the vesting requirements relating to the Option
have been satisfied.

     

    (iii)           The
Company shall provide a period of 30 days or less before the completion of
the Transaction during which the Option may be exercised in full notwithstanding
section 2.2, and upon the expiration of that period, the Option shall
immediately terminate.

     

    (c)           Dissolution.  In the
event of the dissolution of the Company, the Company shall provide a period of
30 days or less before the dissolution of the Company during which the
Option may be exercised in full notwithstanding section 2.2, and upon the
expiration of that period, the Option shall immediately terminate.

     

    3.           Recoupment On Misconduct Affecting
Stock Price.

     

    3.1           If
the Committee determines that the Optionee engaged in any Misconduct (as defined
below) after the date of this Agreement and prior to the sale of any shares
acquired upon exercise of the Option (the “Tainted Shares”), and this
determination is made before a Change in Control (as defined below) and within
three years after the Optionee purchased the Tainted Shares, the Optionee shall
repay to the Company the Excess Option Proceeds (as defined
below).  The Committee may, in its sole discretion, reduce the amount
of Excess Option Proceeds to be repaid by the Optionee to take into account the
tax consequences of such repayment or any other factors.  The return
of Excess Option Proceeds is in addition to and separate from any other relief
available to the Company due to the Optionee’s Misconduct.

     

    3.2           “Misconduct”
shall mean (a) willful commission by the Optionee of an act of fraud or
dishonesty resulting in economic or financial injury to the Company, (b) willful
misconduct by the Optionee that substantially impairs the Company’s business or
reputation, or (c) willful gross negligence by the Optionee in the performance
of his or her duties; provided, however, that such acts shall only constitute
Misconduct if the Committee determines that such acts contributed to an
obligation to restate the Company’s financial statements for any quarter or year
or otherwise had (or will have when publicly disclosed) an adverse impact on the
market price of the Common Stock.

     

    3.3           “Excess
Option Proceeds” shall mean the excess of (a) the actual aggregate sales
proceeds from the Optionee’s sales of Tainted Shares, over (b) the aggregate
sales proceeds the Optionee would have received from sales of Tainted Shares at
a price per share determined appropriate by the Committee in its discretion to
reflect what the Company’s common stock price would have been if the restatement
had occurred or other Misconduct had been disclosed prior to such sales;
provided, however, that the aggregate sales proceeds determined by the Committee
under this clause (b) shall not be less than the aggregate exercise price paid
by the Optionee for the Tainted Shares.

     

    3.4           The
Company may seek direct repayment from the Optionee of any Excess Option
Proceeds and may, to the extent permitted by applicable law, offset such Excess
Option Proceeds against any compensation or other amounts owed by the Company to
the Optionee.  In particular, Excess Option Proceeds may be recovered
by offset against the after-tax proceeds of deferred compensation payouts under
the Company’s Deferred Compensation Plan for Directors and Executives (“DCP”),
the Company’s Executive Supplemental Retirement Income Plan or the Company’s
Supplemental Executive Retirement Plan at the times such deferred compensation
payouts occur under the terms of those plans.  Excess Option Proceeds
that remain unpaid for more than 60 days after demand by the Company shall
accrue interest at the rate used from time to time for crediting interest under
the DCP.

     

    3.5           “Change
in Control” of the Company shall mean the occurrence of any of the following
events:

     

    (a)           The
consummation of:

     

    (i)           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

     

    (ii)           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 Company’s Board of Directors
(“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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.           Amendment of Prior
Agreements.  The Optionee is a party to one or more
Non-Statutory Stock Option Agreements relating to prior options granted under
the Plan (“Prior Agreements”).  The Optionee acknowledges and agrees
that a condition to the grant of the Option is the Optionee’s agreement to
certain modifications of the Prior Agreements.  The Prior Agreements
are hereby amended as follows:

     

    4.1           Section
2.5(c) of each Prior Agreement is renumbered as section 2.5(d) and the language
of section 2.5(c) of this Agreement is hereby added as section 2.5(c) of each of
the Prior Agreements.  All options granted under the Prior Agreements
shall immediately terminate if the Optionee’s employment is terminated by the
Company for cause.

     

    4.2           The
language of section 3 of this Agreement is hereby added to each of the Prior
Agreements; provided, however, that for purposes of the Prior Agreements the
term “Tainted Shares” shall not include any shares acquired upon exercise of an
option prior to November 1, 2009.

     

    5.           Conditions on
Obligations.  The obligations of the Company under this
Agreement are expressly made subject to the approval of the Oregon Public
Utility Commission, the Washington Utilities and Transportation Commission, and
other state or federal authorities or agencies with jurisdiction in the
matter.  The Company will use its best efforts to take steps required
by state or federal law or applicable regulations, including rules and
regulations of the Securities and Exchange Commission and any stock exchange on
which the Company’s shares may then be listed, in connection with the issuance
or sale of any shares purchased on the exercise of the Option.  The
foregoing notwithstanding, the Company shall not be obligated to issue or
deliver shares of Common Stock if the Company is advised by its legal counsel
that such issuance or delivery would violate applicable state or federal
laws.  The Company shall not be obligated to register shares issuable
on exercise of the Option under the Securities Act of 1933.

     

    6.           No Right to
Employment.  Nothing in the Plan or this Agreement shall confer
on the Optionee any right to be continued in the employment of the Company, or
shall interfere in any way with the right of the Company to terminate the
Optionee’s employment at any time, for any reason, with or without
cause.

     

    7.           Successors of the
Company.  This Agreement shall be binding upon and shall inure
to the benefit of any successor or successors of the Company but except as
hereinabove provided the Option granted shall not be assigned or otherwise
disposed of by the Optionee.

     

    8.           Notices.  Any
notices under this Agreement must be in writing and will be effective when
actually delivered or, if mailed, three days after deposit into the United
States mail by registered or certified mail, postage prepaid.  Notices
shall be directed to the Company, Attention: Corporate Secretary, at its
principal executive offices or to the Optionee at the address of the Optionee in
the Company’s records, or to such other address as a party may designate by 10
days’ advance notice to the other party.

     

    9.           Rights as a
Shareholder.  The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock until the date the
Optionee becomes the holder of record of those shares.  No adjustment
shall be made for dividends or other rights for which the record date occurs
before the date the Optionee becomes the holder of record.

     

    10.           Amendments.  The
Company may at any time amend this Agreement if the amendment does not adversely
affect the Optionee.  Otherwise, this Agreement may not be amended
without the written consent of the Optionee and the Company.

     

    11.           Governing Law.  This
Agreement shall be governed by the laws of the state of Oregon, without regard
to conflicts of law provisions.

     

    12.           Complete
Agreement.  This Agreement constitutes the entire agreement
between the Optionee and the Company, both oral and written concerning the
matters addressed herein, and all prior agreements or representations concerning
the matters addressed herein, whether written or oral, express or implied, are
terminated and of no further effect.

     

    IN
WITNESS WHEREOF, the parties have executed this Non-Statutory Stock Option
Agreement in duplicate as of the day and year first written above.

     

    NORTHWEST
NATURAL GAS COMPANY

     

    

    By:   ________________________                                                                        

    President & CEO

     

    

    Optionee_____________________

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