SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____
FORM 10-K
(Check One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from ___________ to____________
Commission file number 0-994
NORTHWEST NATURAL GAS COMPANY
(Exact name of registrant as specified in its charter)
Oregon 93-0256722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
220 N.W. Second Avenue, Portland, Oregon 97209
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 226-4211
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Shares outstanding on February 28, 1995
------------------- ---------------------------------------
Common Stock, $3 1/6 par value 14,622,386
Preference Stock, without par value 295,069
Preferred Stock, without par value 159,504
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ]
No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ X ].
The aggregate market value of the shares of voting stock (common stock)
held by non-affiliates of the registrant at February 28, 1995 was:
$440,173,000
DOCUMENTS INCORPORATED BY REFERENCE
List documents incorporated by reference and the Part of the Form 10-K
into which the document is incorporated.
Portions of the Proxy Statement of Company, dated April 14, 1995, are
incorporated by reference in Part III.
<PAGE>
NORTHWEST NATURAL GAS COMPANY
Annual Report to Securities and Exchange Commission
on Form 10-K
for the year 1994
Table of Contents
PART I Page
------ ----
Item 1. Business
General. . . . . . . . . . . . . . . . . . . . . . . 1
Gas Supply . . . . . . . . . . . . . . . . . . . . . 2
Transportation . . . . . . . . . . . . . . . . . . . 7
Regulation and Rates . . . . . . . . . . . . . . . . 7
Competition and Marketing. . . . . . . . . . . . . . 10
Construction and Financing Programs. . . . . . . . . 13
Environment. . . . . . . . . . . . . . . . . . . . . 13
Employees. . . . . . . . . . . . . . . . . . . . . . 13
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . 13
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders . . 15
Additional Item
Executive Officers of the Registrant. . . . . . . . . . 15
PART II
-------
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . 17
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 20
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . 21
Item 8. Financial Statements and Supplementary Data . . . . . . 35
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . 72
PART III
--------
Items
10. - 13. Incorporated by Reference to Proxy Statement . . . . 72
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . . . 72
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 78
<PAGE>
NORTHWEST NATURAL GAS COMPANY
PART I
ITEM 1. BUSINESS
General
-------
Northwest Natural Gas Company (the Company) was
incorporated under the laws of Oregon in 1910. The Company and
its predecessors have supplied gas service to the public since
1859.
The Company is principally engaged in the distribution
of natural gas. The Oregon Public Utility Commission (OPUC) has
allocated to the Company as its exclusive service area a major
portion of western Oregon, including the Portland metropolitan
area, most of the fertile Willamette Valley and the coastal area
from Astoria to Coos Bay. The Company also holds certificates
from the Washington Utilities and Transportation Commission
(WUTC) granting it exclusive rights to serve portions of three
Washington counties bordering the Columbia River. Gas service is
provided in 94 cities, together with neighboring communities, in
16 Oregon counties, and in nine cities, together with neighboring
communities, in three Washington counties. At year-end 1994, the
Company's service areas had a population of nearly 2,700,000,
including about 78 percent of the population of the State of
Oregon. The City of Portland, Oregon is the principal retail and
manufacturing center in the Columbia River Basin. It is a major
port and growing nucleus for trade with Pacific Rim nations such
as Japan and Korea.
At year-end 1994, the Company had about 347,000
residential customers, 44,000 commercial customers, and 600
industrial customers. Industries served include pulp, paper and
other forest products; the processing of farm and food products;
lumber and plywood; the production of various mineral products;
the manufacture of electronic, electrochemical and
electrometallurgical products; metal fabrication and casting; and
the production of machine tools, machinery and textiles.
The Company has four subsidiaries, each of which is
incorporated in the State of Oregon: Oregon Natural Gas
<PAGE>
Development Corporation (Oregon Natural), NNG Financial
Corporation (Financial Corporation), NNG Energy Systems, Inc.
(Energy Systems) and Pacific Square Corporation (Pacific Square).
Oregon Natural is engaged in natural gas exploration,
development and production in Oregon and other western states,
and, through its wholly-owned subsidiary, Canor Energy Ltd.
(Canor), an Alberta corporation, also engages in natural gas and
oil exploration, development and production in Alberta and
Saskatchewan, Canada. Oregon Natural also holds an equity
investment in a Boeing 737-300 aircraft. (See Part I, Item 2,
and Part II, Item 8, Notes 2 and 10.)
Financial Corporation holds financial investments as a
limited partner in four solar electric generating plants, four
wind power electric generation projects and a hydroelectric
project, all located in California, and in a low-income housing
project in Portland. Financial Corporation also arranges short-
term financing for the Company's operating subsidiaries. (See
Part II, Item 8, Notes 2, 6 and 10.)
Energy Systems, through its wholly-owned subsidiary,
Agrico Cogeneration Corporation (Agrico), formerly owned a 25
megawatt cogeneration plant near Fresno, California. Neither
Energy Systems nor Agrico now has any operating activities. (See
Part I, Item 2, and Part II, Item 8, Note 2.)
Until 1994, Pacific Square was engaged in real estate
management, principally in connection with two office buildings
in Portland and other Company-owned properties adjacent to those
buildings. During 1994, Pacific Square sold its partnership
interests in these buildings and now has no operating activities.
(See Part I, Item 2, and Part II, Item 8, Note 2.)
Gas Supply
----------
General
-------
The Company meets the needs of its core market
(residential, commercial and firm industrial) customers through
natural gas purchases from a variety of suppliers. The Company
has a diverse portfolio of short-, medium- and long-term firm gas
<PAGE>
supply contracts. During periods of peak demand, supplies under
these contracts are supplemented with gas from storage facilities
either owned by or contractually committed to the Company.
Natural gas for the Company's core market is
transported by Northwest Pipeline Corporation (NPC), primarily
under a contract expiring September 30, 2013, providing for firm
transportation capacity of up to 2,460,440 therms(1) per day.
NPC's rates for this service are established by the Federal
Energy Regulatory Commission (FERC) under NPC's primary firm
transportation rate schedule, as amended or superseded from time
to time.
The Company also has a contract expiring April 1, 2008
for 500,000 therms per day of firm transportation capacity for
its core market through participation in an expansion of NPC's
system, and an expansion of Pacific Gas Transmission's (PGT)
pipeline through central Oregon, southeastern Washington and
northern Idaho. In combination, this additional firm
transportation capacity provides a connection through Alberta
Natural Gas Company Ltd.'s (ANG) system to producing regions of
Alberta, Canada.
The cost to the Company of gas to supply its core
market consists of the purchase price paid to suppliers plus
charges paid to pipelines to transport such gas to the Company's
distribution system. While the rates for pipeline transportation
and peaking services are regulated, the purchase price of gas is
not. Although pipeline costs have increased by 44 percent since
1992, the effect of such increases on core market customers has
been largely offset by lower gas prices. In addition the Company
[FN]
----------------
(1) For gas quantities expressed in therms, one therm is
equivalent to 100 cubic feet of natural gas at an assumed heat
content of 1,000 British Thermal Units (Btu's) per cubic foot.
MMBtu means one million Btu's, or 10 therms. For gas quantities
expressed in cubic feet, unless otherwise indicated, all volumes
are stated at a pressure base of 14.73 pounds per square inch
absolute at 60 degrees Fahrenheit, and in some instances are
rounded to the nearest major multiple. Mcf means one thousand
cubic feet, Mmcf means one million cubic feet and Bcf means one
billion cubic feet.
has been able to offset firm transportation charges, in part, by
making off-system sales in periods when core market customers do
not fully utilize firm pipeline capacity.
The Company supplies many of its non-core customers
(larger industrial interruptible customers with full or partial
dual fuel capabilities) through gas transportation service,
delivering gas purchased by these customers directly from
suppliers. (See "Transportation".)
Core Market Basic Supply
-------------------------
The Company purchases gas for its core market from a
variety of suppliers located in the western United States and
Canada. At January 1, 1995, the Company had 14 contracts with 12
suppliers with original terms of from four months to 15 years
which provided for a maximum of 2,468,790 therms of firm gas per
day during the peak winter season and 1,543,300 therms per day
during the remainder of the year. About three-fourths of this
supply comes from Canada.
The terms of the Company's principal purchase
agreements are summarized as follows:
An agreement expiring November 1, 2003 with CanWest Gas
Supply, Inc. (CanWest), an aggregator for gas producers in
British Columbia, Canada, entitles the Company to purchase up to
approximately 960,000 therms of firm gas per day. This agreement
contains a demand and commodity pricing structure and a provision
for annual renegotiations of the commodity price to reflect
then-prevailing market prices. The demand charges reflect the
reservation of firm transportation space on the Westcoast Energy,
Inc. pipeline system in British Columbia. These demand charges
are subject to change as approved by the Canadian National Energy
Board (NEB) in rate proceedings similar to those conducted in the
United States by the FERC. This contract contains minimum
purchase obligations.
An agreement also expiring November 1, 2003 with Amoco
Canada Petroleum Company, Ltd., on terms similar to the CanWest
agreement, entitles the Company to purchase up to approximately
83,300 therms of firm gas per day. This gas is aggregated from
production in Alberta and the Canadian Yukon and Northwest
Territories. This contract contains minimum purchase
obligations.
An agreement with Poco Petroleums, Ltd. (Poco), a
Canadian producer, expiring September 30, 2003, entitles the
<PAGE>
Company to purchase up to 155,160 therms per day during the
winter and up to 110,000 therms per day during the summer of gas
produced in Alberta.
Two agreements expiring September 30, 2003 with
Westcoast Gas Services entitle the Company to purchase up to
140,000 therms per day year-round, plus up to 92,750 therms per
day as winter season supply, of gas produced in Alberta. Pricing
for supplies under these agreements can be renegotiated annually.
The current pricing arrangement includes demand charges for
upstream capacity on the Canadian pipeline systems and a monthly
reservation charge. The commodity pricing consists of a portion
of the daily contract quantity at a fixed price and the remaining
daily contract quantity tied to a monthly Canadian index.
An agreement expiring October 31, 1996 with Poco
entitles the Company to purchase up to 200,000 therms of firm gas
per day. This agreement contains a demand and commodity pricing
structure, a provision for annual renegotiations of the commodity
price, minimum purchase obligations and a pro rata market share
commitment. The demand charge is subject to NEB regulation.
This gas is produced in Alberta and British Columbia.
An agreement expiring October 31, 2000 with Summit
Resources Ltd. entitles the Company to purchase up to 77,580
therms per day during the winter and up to 50,000 therms per day
during the summer of gas produced in Alberta. Pricing for
supplies under this agreement can be renegotiated annually. The
current pricing arrangement includes demand charges for upstream
capacity on NOVA Corporation of Alberta's system and commodity
charges that are separated into two tiers.
During 1994, new purchase agreements for firm gas were
entered into with seven suppliers which provided for a total of
760,000 therms per day. These agreements were similarly
structured, as follows: each was for a four-month term, from
November 1, 1994 through February 28, 1995; each provided volumes
based on a combination of reservation charges and indexed
commodity prices; and all but one had a minimum volume obligation
at a fixed price. All of the gas purchased under these
agreements was produced in the United States Rocky Mountain and
San Juan Basin regions. The Company intends to enter new
purchase agreements for equivalent volumes of gas with these or
other similar suppliers to be available during the winter season
extending from November 1, 1995, until February 29, 1996.
<PAGE>
During 1994, less than one percent of the Company's
purchases for its core market was from the spot market (30 days
or less).
The Company's goal in purchasing gas for its core
market is to meet customers' needs at reasonable prices. The
Company believes that gas supplies available from suppliers in
the western United States and Canada are adequate to serve its
core market customers for the foreseeable future, and that the
cost of such gas generally will track market prices.
Core Market Peaking Supply
--------------------------
During peak demand periods, the Company supplements its
firm gas supplies with gas from Company-owned or contracted
peaking facilities in which gas is stored during periods of low
demand for use during periods of peak demand. In addition to
enabling the Company to meet its peak demand, these facilities
make it possible to lower the annual average cost of gas by
allowing the Company both to reduce its pipeline transportation
contract demand and to purchase gas for storage during the summer
months when prices are generally at their lowest.
The Company has contracts with NPC which expire in 2004
for firm storage services from the underground gas storage field
at Jackson Prairie near Centralia, Washington, and the liquefied
natural gas (LNG) facility at Plymouth, Washington. Together,
these facilities provide a daily deliverability of 831,380 therms
and a total seasonal capacity of 13,082,647 therms. In addition,
the Company has a contract with NPC which expires in 1996 for an
additional daily deliverability of 94,670 therms and an
additional seasonal capacity of 2,779,970 therms from the Jackson
Prairie storage field.
The Company owns and operates two LNG plants which
liquefy gas during the summer months for use during the peak
winter season. These two plants, one located in Portland and the
other near Newport, Oregon, provide a maximum daily
deliverability of 1,800,000 therms and a total seasonal capacity
of 17,000,000 therms. The Company also owns and operates an
underground gas storage facility at Mist, Oregon. This facility
has a maximum daily deliverability of 1,000,000 therms and a
total seasonal working gas capacity of 70,000,000 therms.
<PAGE>
The Company has a contract with Portland General
Electric Company (PGE) expiring in 2010 that provides the Company
with additional winter peaking supply. With certain limitations,
the Company may interrupt gas deliveries to PGE, use that gas for
the Company's core customers, and compensate PGE for its cost of
replacement fuel oil. The daily deliverability under this
contract is 300,000 therms, increasing to 760,000 therms in
November 1995.
Transportation
--------------
Between 1988 and 1992, most of the Company's large
industrial interruptible customers switched from sales service to
transportation service whereby they purchased gas directly from
suppliers and shipped the gas on the Company's system and those
of its pipeline suppliers for a fee. Since 1992, more than half
of these customers have returned to sales service, primarily
because the Company's industrial sales rates were lower than
those customers' costs of purchasing and shipping their own gas.
The ability of industrial customers to switch between sales
service and transportation service has made it possible for the
Company to retain most of these customers. Because
transportation charges typically are the same as the margin on an
equivalent sale of gas, switching between sales service and
transportation service by industrial interruptible customers has
not had a material effect on the Company's results of operations.
(See "Competition and Marketing" and Part II, Item 7.)
Regulation and Rates
--------------------
The Company is subject to regulation with respect to,
among other matters, rates, systems of accounts and issuance of
securities by the OPUC and the WUTC. In 1994, 92.1 percent of
the Company's gas deliveries and 94.4 percent of its utility
operating revenues were derived from Oregon customers and the
balance from Washington customers. The Company is exempt from
the provisions of the Natural Gas Act by order of the Federal
Power Commission (now the FERC).
The Company's most recent general rate case in Oregon,
which was effective in 1989, authorized rates designed to produce
a return on common equity of 13.25 percent. The most recent
general rate increase in Washington, which was effective in 1986,
<PAGE>
authorized rates also designed to produce a return on common
equity of 13.25 percent. Actual revenues resulting from the
OPUC's and WUTC's general rate orders are dependent on weather,
economic conditions, customer growth, competition and other
factors affecting gas usage in the Company's service area. The
Company has no plans to file general rate cases in either Oregon
or Washington in 1995. The Company's returns on average common
equity from utility operations were 15.9 percent in 1993 and 11.3
percent in 1994. Its returns from consolidated operations
(including subsidiary results) were 13.7 percent in 1993 and 12.2
percent in 1994.
In Oregon, the Company has a Purchased Gas Cost
Adjustment (PGA) tariff under which the Company's net income
derived from Oregon operations is affected only within defined
limits by changes in purchased gas costs. The PGA tariff
provides for periodic revisions in rates due to changes in the
Company's cost of purchased gas. Costs included in the PGA
adjustments are based on the Company's gas requirements for the
12-month period ended each June 30. Any resulting rate
adjustments, derived from gas prices negotiated for the gas
supply contract year commencing on the following November 1, are
made effective on the following December 1.
The PGA tariff also provides that 80 percent of any
difference between actual gas commodity costs and related costs
incorporated into rates will be deferred for amortization in
subsequent periods. If actual gas commodity costs exceed those
incorporated in rates, the Company subsequently will adjust its
rates upward to recover 80 percent of the deficiency from core
market customers. Similarly, if actual gas commodity costs are
lower than those reflected in rates, rates will be adjusted
downward to refund to core customers 80 percent of such gas
commodity cost savings.
In Washington, the Company is permitted to track
increases and decreases in gas commodity costs coincidental with
their incurrence, with the result that net income is not directly
affected by changes in gas commodity costs.
In October 1994, the Company filed under its Oregon PGA
tariff to reduce rates for Oregon customers by an average of
5.6 percent. In a similar filing in Washington in November 1994,
the Company filed to reduce its rates by an average of
7.0 percent. The OPUC and WUTC approved the respective filings
<PAGE>
effective December 1, 1994. The decreases pass through
reductions in gas costs and remove temporary adjustments to rates
which were put into effect on December 1, 1993 for the
amortization of prior gas cost savings.
In March 1994, the Company filed for rate decreases in
Oregon to refund to customers savings from lower property taxes
resulting from voter approval of an initiative measure which
reduced property taxes. Effective April 15, 1994, all core
market and cost-based transportation rate schedules for Oregon
customers were reduced by an average of 1.1 percent.
In December 1994, the Company filed with the OPUC to
recover higher revenues from core customers through monthly
service charges with an offsetting lower revenue recovery through
volumetric rates. These rate redesign changes, which are
intended to reduce earnings variability due to weather
fluctuations, were approved by the OPUC effective January 1,
1995.
Effective December 1, 1994, the Company terminated its
Interruptible Sales Adjustment (ISA) tariff schedule in Oregon.
This tariff had provided a mechanism to level margin fluctuations
which resulted from the volatility of sales to large industrial
interruptible customers caused by price competition between
natural gas and residual fuel oil and the migration of such
customers from one rate schedule to another. Through
negotiation, the OPUC and the Company agreed to a permanent
resetting of core market rates to reflect the ISA tariff's
experience during the most recent two-year period. This
agreement will result in a $1.8 million reduction in core market
rates which will be phased in over two years, commencing
December 1, 1994.
During 1994, the Company filed with the OPUC, and the
OPUC approved, revisions to the Company's tariffed policy
relating to the extension of Company facilities which are
required to serve new customers. The prior policy based costs
for connecting new customers on system-wide average costs and
granted such customers an allowance for the cost of constructing
Company facilities to serve them which was based on the number of
gas appliances installed. Under the new policy approved by the
OPUC, installation charges are based on the actual distance and
difficulty of the installation, and the estimated gas usage from
all gas appliances to be installed. From this estimate, a margin
<PAGE>
revenue estimate is derived which is used to determine what
amount, if any, the customer must contribute toward the cost of
installing Company facilities. It is not expected that the new
policy will limit future customer growth since most new space and
water heating customers should continue to qualify for gas
service without incurring installation charges for connecting
Company facilities. The new policy encourages the installation
of multiple gas appliances and enables the Company to restrict
the addition of new customers to those that are profitable to
serve, while retaining the right of other potential customers to
contribute to construction costs if they desire gas service.
The OPUC and WUTC have approved transportation tariffs
under which the Company may contract with customers to deliver
customer-owned gas. Under these tariffs, revenues from the
transportation of customer-owned gas, except that of large
industrial customers having the capability of bypassing the
Company's system, generally are equivalent to the margins that
would have been realized from sales of Company-owned gas. (See
"Transportation" and "Competition and Marketing".)
The OPUC and WUTC have implemented "least-cost
planning" processes under which utilities develop plans defining
alternative growth scenarios and resource acquisition strategies.
In 1994, the OPUC and WUTC acknowledged and accepted the
Company's submissions of its second Least Cost Plan. Elements of
the Plan included an evaluation of supply and demand resources;
the consideration of uncertainties in the planning process and
the need for flexibility to respond to changes; a primary goal of
"least cost" service; and consistency with state energy policy.
Although the OPUC's order acknowledging the Least Cost Plan does
not constitute ratemaking approval of any specific resource
acquisition or expenditure, the OPUC indicated that it would give
considerable weight in prudency reviews to utility actions which
are consistent with acknowledged integrated resource plans.
Competition and Marketing
-------------------------
The Company has no direct competition in the territory
it serves from other natural gas utility distributors. However,
it competes with NPC to serve large industrial customers; with
oil and, to a lesser extent, electricity, for industrial uses;
with oil, electricity and wood for residential use; and with oil
and electricity for commercial uses. Competition among these
<PAGE>
forms of energy is based on price, reliability, efficiency and
performance. In 1994, the Company maintained its competitive
price advantage over electricity and approximate price parity
with fuel oil in both the residential and commercial markets.
Throughout 1994, natural gas rates continued to be substantially
lower than rates for electricity provided by the investor-owned
utilities which serve approximately 75 percent of the homes in
the Company's Oregon service area. The Company believes that
this rate advantage will continue for the foreseeable future. As
a result of price increases in recent years by the Bonneville
Power Administration, the wholesale supplier of much of the
electricity sold by publicly-owned electric utilities in the
Pacific Northwest, the price of natural gas for home heating in
most cases is competitive with the price of electricity provided
by public utility districts.
The relatively low (estimated at between 30 and 35
percent) residential (single family and attached dwelling)
saturation of natural gas in the Company's service territory,
together with the price advantage of natural gas compared with
electricity and its operating convenience over fuel oil, provides
the potential for continuing growth in the residential conversion
market. In 1994, 17,793 net (after subtracting disconnected or
terminated services) residential customers were added, including
7,983 units of existing residential housing which were
reconnected to the system or were converted from oil or electric
appliances to natural gas. Of the new heating conversions from
other fuels, more than half also use gas for water heating. In
addition, 1,421 net commercial customers were connected in 1994.
The net total of all new customers added in 1994 was 19,211.
This constituted a growth rate of 5.2 percent, nearly double the
national average for local distribution companies as reported by
the American Gas Association.
Natural gas sales volumes to residential and commercial
customers during 1994 decreased 5.5 percent to 454.6 million
therms from 481.3 million therms in 1993, largely due to warmer
weather. For the year 1994, temperatures in the Company's
service territory, based on heating degree days, were 10 percent
warmer than those of 1993, and were seven percent warmer than the
20-year average. In 1994, 78.3 percent of total utility
operating revenues and 45.9 percent of the total therms delivered
were derived from deliveries to residential and commercial
customers. (See Part II, Item 7.)
<PAGE>
Natural gas sales and transportation deliveries to
industrial firm customers during 1994 totalled 99.2 million
therms which was 0.6 percent below the 1993 level of 99.8 million
therms. In 1994, 10.4 percent of total utility operating
revenues and 10.0 percent of total therms delivered were derived
from deliveries to industrial firm customers.
Total natural gas sales and transportation deliveries
to industrial interruptible customers during 1994 totalled 436.5
million therms which was 5.6 below the 1993 level of
462.5 million therms. These deliveries included the
transportation of 18.6 million therms to an electric generating
plant in 1994, down from 29.3 million therms transported to two
plants in 1993. In 1994, 11.1 percent of total utility operating
revenues and 44.1 percent of total therms delivered were derived
from sales and transportation deliveries to industrial
interruptible customers.
The Company and most of its largest industrial
customers have entered into high-volume interruptible
transportation agreements. These agreements are designed to
provide rates that are competitive with the costs of alternative
fuels, such as heavy oil, by reducing the per-therm
transportation rate. They also are designed to provide rates
competitive with "bypass" (direct connection to interstate
pipelines) by applying fixed charges that are equivalent to the
capital and operating costs of direct connections to NPC's
system. These agreements prohibit bypass during their terms.
The Company does not expect a significant number of its large
customers to bypass its system in the foreseeable future. (See
Part II, Item 7.)
During 1994, the OPUC authorized the Company to enter
into agreements with industrial customers, without OPUC approval,
releasing, at negotiated rates, the Company's rights to portions
of its firm pipeline capacity and pipeline transportation
services. In its order authorizing the Company to enter into
such agreements, the OPUC concluded that rate flexibility was
warranted because competition for such services exists. The
OPUC's order, which implements legislation adopted by the Oregon
legislature in 1993, allows the Company to compete effectively
with independent gas marketers. Eighty percent of all positive
net revenues (gross revenues less the actual cost of gas or
pipeline capacity) generated from these agreements will be
credited to core customer gas costs. In a related order issued
<PAGE>
in February 1995, the OPUC eliminated its previously-mandated
requirement that the OPUC make an annual determination that these
markets are subject to competition.
Construction and Financing Programs
-----------------------------------
See Part II, Item 7, Management's Discussion and
Analysis of Results of Operations and Financial Condition.
Environment
-----------
The Company is subject to air, water and other
environmental regulation by state and federal authorities and has
complied in all material respects with applicable regulations.
Compliance with these regulations has had no material effect upon
the capital expenditures, earnings or the competitive position of
the Company.
The Company owns property in Linnton, Oregon and
previously owned property in Salem, Oregon that were sites of
former gas manufacturing plants. Both sites are under
investigation for potential remediation. (See Part II, Item 7,
and Item 8, Note 12.)
Employees
---------
At year-end 1994, the Company had 1,338 employees, of
which 975 were members of the Office and Professional Employees
International Union, Local No. 11. These union employees
approved a five-year Joint Accord covering wages, benefits and
working conditions effective April 1, 1992.
ITEM 2. PROPERTIES
The Company's natural gas distribution system consists
of 9,639 miles of mains, as well as service pipes, meters and
regulators, and gas regulating and metering stations. The mains
and feeder lines are located in municipal streets or alleys
pursuant to valid franchise or occupation ordinances, in county
roads or state highways pursuant to valid agreements or permits
granted pursuant to statute, or on lands of others pursuant to
valid easements obtained from the owners of such lands. The
<PAGE>
Company also holds all necessary permits for the crossing of the
Willamette River and a number of small rivers by its mains.
The Company owns service facilities in Portland, as
well as various satellite service centers, garages, warehouses,
and other buildings necessary and useful in the conduct of its
business. It leases office space in Portland for its corporate
headquarters. District offices are maintained on owned or leased
premises at convenient points in the distribution system. The
Company owns LNG facilities in Portland and near Newport, Oregon,
and also owns two natural gas reservoirs at Mist, Oregon.
The Company considers all of its properties currently
used in its operations, both owned and leased, to be well
maintained, in good operating condition, and adequate for its
present and foreseeable future needs.
The Company's Mortgage and Deed of Trust constitutes a
first mortgage lien on substantially all of the real property
constituting its utility plant.
Oregon Natural holds interests in United States oil and
gas leases covering 113,062 net acres located in Oregon,
California, Wyoming, and Colorado. Canor holds interests in
Canadian gas and oil leases covering 128,489 net acres in Alberta
and Saskatchewan. Most Canadian gas production is sold under
long-term contracts to markets in both Canada and the United
States. Oregon Natural also holds an equity investment in a
Boeing 737-300 aircraft.
Energy Systems formerly owned a 25 megawatt
cogeneration plant near Fresno, California, through its
wholly-owned subsidiary, Agrico, which filed a voluntary petition
for reorganization under Chapter 11 of the U.S. Bankruptcy Code
in December 1991. The U.S. Bankruptcy Court confirmed Agrico's
reorganization plan in January 1994, allowing the sale in
February 1994 of Agrico's assets to Wellhead Electric Company,
the contract operator of the cogeneration plant. Neither Energy
Systems nor Agrico now owns any property. (See Part II, Item 7,
and Item 8, Note 2.)
During 1994, Pacific Square, the Company's subsidiary
engaged in real estate management, completed the sale of its
partnership interests in One Pacific Square, a 227,000 square
<PAGE>
foot office building in Northwest Portland, and an adjacent
31,000 square foot office building, to its joint venture partner.
Under the terms of the agreement, the joint venture partner
assumed all of the partnership's joint obligations. Pacific
Square no longer owns any property.
ITEM 3. LEGAL PROCEEDINGS
The Company is party to certain legal actions in which
claimants seek material amounts. Although it is impossible to
predict the outcome with certainty, based upon the opinions of
legal counsel, management does not expect disposition of these
matters to have a material adverse effect on the Company's
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders, through the solicitation of proxies or otherwise, during
the fourth quarter of the year ended December 31, 1994.
ADDITIONAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
Age at
December 31, Positions held during
Name 1994 last five years
------------------ ---------- -------------------------------
Robert L. Ridgley 60 President and Chief Executive
Officer (1985- ); Director
(1984- );
Chairman of the Executive
Committee of the Board (1985-
95).
Bruce R. DeBolt 47 Senior Vice President, Finance,
and Chief Financial Officer
(1990- );
Senior Vice President, Finance
and Administration (1987-90);
General Counsel (1983-90).
Dwayne L. Foley 49 Senior Vice President, Operations
and Information Services
(1992- );
Senior Vice President, Gas
Operations and Information
<PAGE>
Services (1990-92);
Vice President, Gas Supply and
Pipeline Relations (1985-90).
Paul L. Hathaway 60 Senior Vice President, Districts
and Administrative Services
(1992- );
Senior Vice President,
Marketing, Districts and
Administrative Services (1990-
92); Senior Vice President,
Market Services and Human
Resources (1987-90).
Michael S. McCoy 51 Senior Vice President, Customer
Services Division (1992- );
Vice President, Operations
(1990-92); Vice President,
Districts (1984-90).
Bruce B. Samson 59 Senior Vice President, Public
Affairs (1990- ); General
Counsel (1990- );
Senior Vice President,
Regulatory Affairs (1990);
President-Public Policy, U. S.
WEST Communications (1989).
Diana J. Johnston 50 Vice President, Human Resources
(1992- );
Manager, Customers Office
Department (1989-92).
C. J. Rue 49 Secretary (1982- ); Assistant
Treasurer (1987- ).
D. James Wilson 55 Treasurer and Controller
(1987- ).
Each executive officer serves successive annual terms;
present terms end May 25, 1995.
There are no family relationships among the Company's
executive officers.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) The outstanding common stock of the Company is
traded in the over-the-counter market and its price and volume
data are reported by the National Association of Securities
Dealers Automated Quotation (Nasdaq) system. The Company's common
stock is included in the Nasdaq National Market through which the
high, low and closing transaction prices, as well as volume data,
are reported.
The Company's common stock is included on the Federal
Reserve Board's list of over-the-counter securities determined to
be subject to margin requirements under the Board's regulations.
The quarterly high and low closing trades for the
Company's common stock, as quoted on the Nasdaq National Market
and published in the Wall Street Journal, were as follows:
-------------------
<PAGE>
<TABLE>
<CAPTION>
1994 1993
------------------- ------------------
Quarter Ended High Low High Low
------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
March 31 $36-1/2 $33-3/4 $31-1/2 $28-1/2
June 30 34-3/4 29-3/4 34 30-3/4
September 30 32 29 38 34
December 31 32 28-1/2 36-3/4 32
</TABLE>
The closing quotation for the common stock on
December 30, 1994 was $29-1/2. On December 31, 1993 the closing
quotation was $34-1/4.
The Company's convertible preference stock $2.375
Series is traded in the over-the-counter market. Because of the
small number of shares of this Series outstanding trading is
infrequent. On October 11, 1994, this Series was removed from
the Nasdaq system because the Series no longer met the
requirements for inclusion in the Nasdaq Stock Market. Prior to
such removal, the quarterly high and low closing bid price
quotations reported by Nasdaq were as follows:
<TABLE>
<CAPTION>
Bid Prices
------------------------------------------
1994 1993
----------------- -----------------
Quarter Ended High Low High Low
------------- ---- --- ---- ---
<S> <C> <C> <C> <C>
March 31 $56-3/4 $ 54 $51 $47-1/2
June 30 55-3/4 48-1/2 55-1/4 49-3/4
September 30 49 47-1/2 59 55-1/4
December 31 N/A N/A 59 52-1/2
</TABLE>
The closing quotations for the convertible preference
stock $2.375 Series on October 10, 1994 (the last date quotations
were provided by Nasdaq for this Series) and December 31, 1993
were $49 Bid, $53 Ask and $53-1/2 Bid, $57-1/2 Ask, respectively.
Outstanding shares are convertible into shares of common stock at
a rate of 1.6502 shares of common stock for each share of
convertible preference stock. The Company intends to give notice
on March 31, 1995, of the redemption of the convertible preference
stock $2.375 Series effective May 15, 1995.
(b) As of January 31, 1995 there were 12,348 holders of
record of the Company's common stock and 79 holders of record of
its convertible preference stock.
(c) The Company has paid quarterly dividends on its
common stock in each year since the stock first was issued to the
public in 1951. Annual common dividend payments have increased
each year since 1956. Dividends per share paid during the past
two years were as follows:
Payment Date 1994 1993
------------ ---- -----
February 15 $0.44 $0.43
May 16 0.44 0.44
August 15 0.44 0.44
November 15 0.44 0.44
----- -----
Total per share $1.76 $1.75
===== =====
It is the intention of the Board of Directors to
continue to pay cash dividends on the Company's common stock on a
quarterly basis. However, future dividends will be dependent upon
the Company's earnings, its financial condition and other factors.
The Company's Dividend Reinvestment and Stock Purchase
Plan permits registered owners of common stock to reinvest all or
a portion of their quarterly dividends in additional shares of the
Company's common stock at the current market price. Shareholders
also may invest cash on a monthly basis, up to $50,000 per
calendar year, in additional shares at the current market price.
During 1994, with about 55 percent of the Company's shareholders
participating, dividend reinvestments and optional cash
investments under the Plan aggregated $5.5 million and resulted in
the issuance of 173,994 shares of common stock. During the
seventeen years the Plan has been available the Company has issued
and sold 2,850,791 shares of common stock which produced
$54.6 million in additional capital.
<PAGE>
<TABLE>
Item 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data concerning the
Company's operations
and financial condition.
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Operating revenues and cost of sales ($000):
<S> <C> <C> <C> <C> <C>
Sales revenues:
Residential $176,510 $168,217 $124,834 $142,056 $129,830
Commercial 108,452 103,476 78,614 90,263 84,463
Industrial - firm 34,443 31,340 24,867 25,222 24,603
- interruptible 27,361 18,884 6,920 3,352 5,273
-------- -------- -------- -------- --------
Total gas revenues 346,766 321,917 235,235 260,893 244,169
Transportation 14,702 17,892 25,564 29,424 30,423
Unbilled revenues (5,571) 5,153 2,603 (9,362) 9,268
Other 829 2,890 2,781 118 66
-------- -------- -------- -------- --------
Total utility operating
revenues 356,726 347,852 266,183 281,073 283,926
Cost of gas 163,026 138,833 101,733 107,398 110,605
-------- -------- -------- -------- --------
Net utility operating
revenues 193,700 209,019 164,450 173,675 173,321
Non-utility net operating
revenues 11,773 10,865 8,000 11,664 8,905
-------- -------- -------- -------- --------
Net operating revenues $205,473 $219,884 $172,450 $185,339 $182,226
======== ======== ======== ======== ========
Net income $ 35,461 $ 37,647 $ 15,775 $ 14,377 $ 30,724
Preferred and preference stock
dividend requirements 2,983 3,488 2,560 2,593 2,729
-------- -------- -------- -------- --------
Earnings applicable to
common stock $ 32,478 $ 34,159 $ 13,215 $ 11,784 $ 27,995
======== ======== ======== ======== ========
Average common shares outstanding
(000) 13,295 13,074 11,909 11,698 11,522
====== ====== ====== ====== ======
Primary earnings per share of
common stock $2.44 $2.61 $1.11* $1.01* $2.43
===== ===== ===== ===== =====
Dividends per share of common
stock $1.76 $1.75 $1.72 $1.69 $1.65
===== ===== ===== ===== =====
Total assets - at end of period
($000) $889,304 $849,036 $731,834 $731,494 $687,835
======== ======== ======== ======== ========
Capitalization - at end of period ($000):
Common stock equity $274,408 $258,565 $241,538 $216,280 $219,446
Preference stock 26,252 26,633 26,766 1,869 2,025
Redeemable preferred stock 15,950 17,041 28,218 29,148 30,102
Long-term debt 291,076 272,931 253,766 252,995 215,230
-------- -------- -------- -------- --------
Total capitalization $607,686 $575,170 $550,288 $500,292 $466,803
======== ======== ======== ======== ========
Gas sales and transportation
deliveries (000 therms):
Residential 260,218 267,818 206,131 233,079 208,940
Commercial 201,925 209,642 169,406 189,384 173,508
Industrial - firm 81,348 80,588 67,847 65,535 62,252
- interruptible 89,899 66,370 22,399 13,155 13,554
-------- -------- -------- -------- --------
Total gas sale 633,390 624,418 465,783 501,153 458,254
Transportation 364,461 415,367 595,397 591,171 532,703
Unbilled therms (7,519) 3,844 4,163 (16,943) 18,774
------- --------- --------- --------- ---------
Total volumes delivered 990,332 1,043,629 1,065,343 1,075,381 1,009,731
======= ========= ========= ========= =========
Customers (average for period):
Residential 338,053 320,186 303,585 288,610 274,069
Commercial 43,367 41,906 40,481 38,954 37,286
Industrial - firm 398 388 374 366 350
- interruptible 148 122 75 57 91
Transportation 66 100 153 173 177
------- ------- ------- ------- -------
Total customers 382,032 362,702 344,668 328,160 311,973
======= ======= ======= ======= =======
Customer statistics:
Heat requirements**
Actual degree days 4,020 4,452 3,662 4,248 4,208
20-year average degree days 4,324 4,313 4,354 4,379 4,391
Average annual use per customer in therms:
Residential 776 844 685 812 769
Commercial 4,680 5,029 4,214 4,874 4,670
Gas purchased cost per therm
(cents) 23.44 23.11 23.76 21.91 22.67
===== ===== ===== ====== =====
* Includes loss of $0.24 per share in 1992 (see Part II, Item 8, Note
2 to the Consolidated Financial Statements) and $1.23 per share in 1991 on
Agrico Cogeneration Corporation.
** A degree day is the measure of the coldness of the weather
experienced, based on the extent to which the average of the high and low
temperatures for a day falls below 65 degrees Fahrenheit.
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Northwest Natural Gas Company's (Northwest Natural)
consolidated wholly-owned subsidiaries consist of Oregon Natural
Gas Development Corporation (Oregon Natural); NNG Energy Systems,
Inc. (Energy Systems); NNG Financial Corporation (Financial
Corporation); and Pacific Square Corporation (Pacific Square)
(see "Subsidiary Operations" below and Note 2 to the Consolidated
Financial Statements). Together, Northwest Natural and these
subsidiaries are referred to herein as the "Company."
The following is management's assessment of the
Company's financial condition including the principal factors
that affect results of operations. The discussion refers to the
consolidated activities of the Company for the three years ended
December 31, 1994.
Earnings and Dividends
-----------------------
The Company earned $2.44 per share in 1994, compared to
$2.61 per share in 1993 and $1.11 per share in 1992. The results
for 1994 were affected by warmer weather which was partially
offset by improved subsidiary results. Higher earnings in 1993
were due to cooler weather. The Company's earnings for 1992 were
depressed by the effects of record-setting warm weather and a
loss related to Agrico Cogeneration Corporation (Agrico), a
subsidiary of Energy Systems.
The Company earned $2.08 per share from utility
operations in 1994, compared to $2.72 per share and $1.41 per
share in 1993 and 1992, respectively. Weather conditions in the
Company's service territory in 1994 were seven percent warmer
than normal and 10 percent warmer than in 1993. The Company
estimates that the weather-related reduction in margin during
1994 was equivalent to about $0.51 per share compared to a
similar period with normal weather, and $1.06 per share compared
to actual conditions during 1993. These estimates are derived
from the Company's internal planning model. The model calculates
expected sales to, and revenues from, residential and commercial
customers for "base usage," representing gas use for water
heaters, ranges, and other appliances not sensitive to outside
temperatures. The model also calculates expected sales to, and
revenues from, these customers for "heat sensitive" usage,
<PAGE>
primarily furnaces, as a function of heating degree days (the
difference between 65 degrees Fahrenheit and the average of a
day's high and low temperatures). The model then estimates the
earnings effect of the difference between expected sales and
revenues under actual temperature conditions, and expected sales
and revenues under average weather conditions.
Subsidiary earnings for 1994 were equivalent to $0.36
per share, compared to losses equivalent to $0.11 per share and
$0.30 per share in 1993 and 1992, respectively. Improved
subsidiary performance in 1994 resulted primarily from a one-time
gain from the sale of Pacific Square's investments, equivalent to
$0.14 per share, and improved operating performance of Financial
Corporation's investments in windpower electric generating
projects in California equivalent to $0.12 per share in 1994,
compared to a loss equivalent to $0.06 per share in 1993.
1994 was the 39th consecutive year in which the
Company's dividends paid have increased. In 1994, dividends paid
on common stock were $1.76 per share compared with $1.75 in 1993
and $1.72 in 1992.
Results of Operations
---------------------
Regulatory Matters
------------------
Northwest Natural provides utility gas service in
Oregon and Washington, with Oregon representing approximately 95
percent of its revenues. Future earnings and cash flows from
utility operations will be determined for the most part by
continued growth in the residential and commercial markets, by
Northwest Natural's ability to remain price competitive in the
large industrial market, and by the ability of management to
control expenses.
In 1994, the Oregon Public Utility Commission (OPUC)
approved new tariffs for recovery of Demand Side Management (DSM)
programs to encourage energy conservation. Also, the OPUC
approved a new service line and main extension policy which
supports Northwest Natural's strategy of promoting profitable
growth. Prospective customers are required by this policy to
contribute the amount which exceeds a construction allowance
based upon estimated annual margin revenue.
<PAGE>
In 1994, Northwest Natural redesigned certain non-
traditional industrial services to meet the changing demands of
the industrial market. The result was OPUC and Washington
Utilities and Transportation Commission (WUTC) approval for a new
service to industrial customers combining natural gas from
Northwest Natural's supply contracts with pipeline transmission
capacity released from Northwest Natural's firm transportation
contract with Northwest Pipeline Corporation (NPC). These new
industrial services were made possible by the Federal Energy
Regulatory Commission's (FERC) Order No. 636, which completed a
restructuring of the interstate natural gas pipeline industry,
and Northwest Natural's revision of its own gas procurement
policies and practices.
Effective April 15, 1994, the OPUC approved rate
decreases averaging 1.1 percent for Northwest Natural's
residential, commercial and industrial rate schedules. The rate
decreases pass through Northwest Natural's lower property tax
expenses due to Oregon Ballot Measure 5, an initiative measure
adopted in Oregon which reduced property tax expenses. Effective
December 1, 1994, the OPUC and WUTC approved rate decreases
averaging 5.6 percent and 7.0 percent, respectively. These rate
decreases pass through reductions in gas costs and remove
temporary adjustments to rates which were put into effect on
December 1, 1993, for the amortization of prior gas cost savings.
None of the above rate decreases has a material effect on net
income.
Comparison of Gas Operations
----------------------------
The following table summarizes the composition of
utility gas volumes and revenues for the three years ended
December 31:
<PAGE>
<TABLE>
<CAPTION>
Thousands 1994 1993
1992
---------------------------------------------------------------------------------------
Gas Sales and Transportation Volumes (Therms):
----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Residential and commercial sales 462,143 477,460 375,537
Unbilled volumes (7,519) 3,844 4,163
------- --------- ---------
Weather-sensitive volumes 454,624 46% 481,304 46% 379,700 36%
Industrial firm sales 81,348 8% 80,588 8% 67,847 6%
Industrial interruptible sales 89,899 9% 66,370 6% 22,399 2%
------- --------- ---------
Total gas sales 625,871 628,262 469,946
Transportation deliveries 364,461 37% 415,367 40% 595,397 56%
------- ---- --------- ---- --------- ----
Total volumes sold and delivered 990,332 100% 1,043,629 100% 1,065,343 100%
======= ==== ========= ==== ========= ====
Utility Operating Revenues:
---------------------------
Residential and commercial
revenues $284,962 $271,693 $203,448
Unbilled revenues (5,571) 5,153 2,603
-------- -------- --------
Weather-sensitive revenues 279,391 78% 276,846 80% 206,051 77%
Industrial firm sales revenues 34,443 10% 31,340 9% 24,867 9%
Industrial interruptible sales
revenues 27,361 8% 18,884 5% 6,920 3%
-------- -------- -------
Total gas sales revenues 341,195 327,070 237,838
Transportation revenues 14,702 4% 17,892 5% 25,564 10%
Other revenues 829 - 2,890 1% 2,781 1%
-------- ---- -------- ---- -------- ----
Total utility operating revenues $356,726 100% $347,852 100% $266,183 100%
======== ==== ======== ==== ======== ====
Cost of gas $163,026 $138,833 $101,733
======== ======== ========
Total number of customers
(end of period) 391,600 372,400 353,000
======== ======== =======
Actual degree days 4,020 4,452 3,662
======== ======== =======
20-year average degree days 4,324 4,313 4,354
======== ======== =======
</TABLE>
<PAGE>
Residential and Commercial
--------------------------
Typically, 75 percent or more of the Company's annual
utility operating revenues are derived from gas sales to weather-
sensitive residential and commercial customers. Accordingly,
shifts in temperatures from one period to the next can
significantly affect volumes of gas sold to these customers.
<PAGE>
Normal weather conditions are based upon a 20 year average
measured by degree days. Weather conditions were seven percent
warmer than normal in 1994, three percent cooler than normal in
1993, and 16 percent warmer than normal in 1992. Weather was
10 percent warmer in 1994 compared to 1993, and 22 percent cooler
in 1993 compared to 1992.
Higher rates in effect during most of the year and the
addition of 19,200 customers, offset by the effects of warmer
weather, combined to produce a one percent increase in revenues
from residential and commercial customers in 1994 compared to
1993. Therm deliveries to these customers were six percent lower
than in 1993. Cooler weather in 1993, combined with 19,400
customer additions and OPUC and WUTC approved rate increases,
produced a 34 percent increase in residential and commercial
revenues compared to 1992, on 27 percent higher therm deliveries.
Northwest Natural's residential and commercial customer
growth has continued at a steady pace. In the last three years,
over 55,000 of these customers have been added to the system,
representing an average growth rate of 5.2 percent.
Industrial, Transportation and Other
------------------------------------
The combined net operating revenues (margin) from
industrial firm and interruptible sales and transportation
customers remained relatively stable at $44.0 million in 1994
compared to $44.4 million in 1993. Since other revenues are
primarily regulatory adjustments to industrial sales amounts (see
Note 1 to the Consolidated Financial Statements), they are
treated in this discussion as a component of industrial revenue.
Total volumes delivered to these customers were 26.6 million
therms lower in 1994 than in 1993, while corresponding revenues
and related adjustments from such deliveries were $6.3 million
higher. Contributing to the lower volumes was a 28 million therm
reduction in transportation deliveries to the James River
Corporation's paper mill in Camas, Washington, which placed a
direct (bypass) connection to NPC's system into operation in
October 1993. Northwest Natural does not expect a significant
number of its other large customers to bypass its system in the
foreseeable future, since these customers are served under
tariffs which are designed to be competitive with the capital and
operating costs of direct connections to NPC's system.
<PAGE>
Although volumes decreased, Northwest Natural's
revenues and related adjustments from industrial firm sales and
industrial interruptible sales and transportation deliveries were
9 percent higher in 1994 compared to 1993, and 29 percent higher
than in 1992. The revenue increase was primarily due to a higher
level of industrial interruptible sales and a correspondingly
lower level of transportation deliveries for these same periods.
Since 1992, over half of Northwest Natural's transportation
customers have switched to sales service. These customers, which
have the option of purchasing gas directly from suppliers and
shipping it on the systems of Northwest Natural and its pipeline
suppliers for a fee, select the option which, from time to time,
provides the lowest cost. The migration from transportation to
sales tariffs by these customers reflects the fact that Northwest
Natural's industrial sales tariffs were lower than the cost to
these customers of purchasing and shipping their own gas. Since
transportation charges typically are the same as the margin on an
equivalent sale of gas, the increase in revenue attributable to
the migration from transportation to sales tariffs was
substantially offset by an increase in Northwest Natural's cost
of gas.
Cost of Gas
-----------
Northwest Natural has a Purchased Gas Cost Adjustment
(PGA) tariff under which its net income from Oregon operations is
affected only within defined limits by changes in purchased gas
costs. The cost of gas sold during 1994 was 17 percent greater
than in 1993. Total gas volumes delivered to sales customers in
1994 were equivalent to 1993. However, there was an 18 percent
increase in the cost of gas per therm, which includes purchased
gas costs, related tariff adjustments, and line loss. Increased
gas costs resulted from higher commodity prices, as well as
higher demand charges placed into effect in April 1993 by NPC,
Northwest Natural's primary pipeline supplier, pursuant to FERC
Order No. 636.
The cost of gas sold during 1993 was 36 percent greater
than in 1992. The primary contributing factors were a 34 percent
increase in total volumes sold and a 2 percent increase in the
cost of gas per therm.
<PAGE>
Subsidiary Operations
---------------------
Consolidated subsidiary earnings for 1994 were
equivalent to $0.36 per share, compared to losses equivalent to
$0.11 per share and $0.30 per share for the years 1993 and 1992,
respectively. The improved subsidiary results for 1994 resulted
primarily from three factors. First, Pacific Square sold its
partnership interests in two office buildings, including the
Company's headquarters building. The Company's gain on the sale
was equivalent to $0.14 per share. As a result of the sale of
these investments, Pacific Square no longer has any operating
activities. Second, Financial Corporation's investments in
windpower electric generating projects in California (see Note 10
to the Consolidated Financial Statements) benefitted from
favorable wind conditions which improved net income. As a
result, Financial Corporation's net income increased $2.2 million
compared to 1993 and $1.7 million compared to 1992. Third, the
Company realized a gain equivalent to $0.03 per share on the sale
of Agrico's assets pursuant to its bankruptcy reorganization
plan.
Results of operations for the individual subsidiaries
for 1994 were net income of: $0.3 million for Energy Systems;
$0.4 million for Oregon Natural; $1.8 million for Financial
Corporation; and $2.2 million for Pacific Square.
The subsidiaries' results for 1993 reflect a fourth
quarter write-down in the value of unproven gas and oil reserves
equivalent to $0.11 per share and increased federal income tax
expense equivalent to $0.05 per share (see "Depreciation,
Depletion and Amortization" and "Income Taxes" below). The 1992
loss resulted primarily from charges equivalent to $0.24 per
share related to Agrico (see Note 2 to the Consolidated Financial
Statements).
The following discussion summarizes operating expenses,
other income, interest charges, income taxes, and preferred and
preference stock dividend requirements.
<PAGE>
Operating Expenses
------------------
Operations and Maintenance
--------------------------
Northwest Natural's operations and maintenance expenses
were $0.5 million lower for 1994 compared to 1993, while
subsidiary operations and maintenance expense increased $0.7
million. The reduction in utility operations and maintenance
expense was primarily due to a $0.6 million decrease in accruals
for estimated employee bonuses. Increased subsidiary operations
and maintenance expense was primarily due to increased production
expenses related to Oregon Natural's Canadian operations.
The Company's operations and maintenance expenses were
$6.5 million, or 10 percent, higher in 1993 than in 1992.
Northwest Natural's expenses constituted $6.2 million of this
increase including a $3.1 million, or 10 percent, increase in
payroll expenses; a $1.3 million increase in employee benefit
costs, including an increase of $0.7 million resulting from the
adoption of Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions;" a $1.2 million increase in the allowance for
uncollectible accounts primarily due to higher residential and
commercial gas sales; and a $0.5 million accrual for estimated
environmental investigation costs (see Note 12 to the
Consolidated Financial Statements).
Taxes Other Than Income
-----------------------
Northwest Natural's property taxes were $1.9 million
lower in 1994 compared to 1993 but were $0.6 million higher in
1994 compared to 1992. The increasing trend in property taxes
has resulted primarily from increased plant additions to serve
new customers. Between these same years, property taxes
fluctuated due to a non-recurring accrual of $0.9 million in 1993
related to a dispute with the OPUC over the amount of prior-year
savings on property taxes, which must be refunded to Oregon
customers, resulting from voter approval of Oregon Ballot
Measure 5.
Partially offsetting the decline in property taxes in
1994 was an increase in franchise taxes based on higher utility
<PAGE>
operating revenues. Franchise taxes increased $0.6 million in
1994 compared to 1993 and $1.8 million in 1993 compared to 1992.
Depreciation, Depletion and Amortization
----------------------------------------
Northwest Natural's depreciation expense increased $1.9
million, or six percent, in 1994 and $1.9 million, or seven
percent, in 1993, primarily due to additional utility plant in
service. A program for the removal of all of its underground
gasoline tanks accounted for $0.4 million of the increased 1993
expense.
Subsidiary depreciation expense decreased $3.5 million
in 1994 compared to 1993, and increased $4.7 million in 1993
compared to 1992. The 1993 increase resulted primarily from
charges totalling $3.5 million from the write-downs of Oregon
Natural's unproven gas and oil properties (see Note 2 to the
Consolidated Financial Statements).
Other Income
------------
The increase in other income for 1994 compared to 1993
and 1992 resulted primarily from a $3.2 million pre-tax gain
related to the sale of Pacific Square's investments and a $2.5
million increase due to improved operating results from Financial
Corporation's investments.
Interest Charges
----------------
Interest charges remained stable in 1994 compared to
1993 on equivalent total debt balances. Higher short term rates
in 1994 offset lower long term rates resulting from 1993 debt
refinancings (see "Financing Activities" below).
Northwest Natural's interest expense for 1993 decreased
$1.3 million compared to 1992. The decrease was a result of debt
refinancings which reduced interest expense by $0.6 million;
$11.5 million lower average outstanding commercial paper
balances; and a decrease in average interest rates for utility
commercial paper from 3.9 percent in 1992 to 3.3 percent in 1993.
<PAGE>
Subsidiary interest expense for 1993 decreased
$0.3 million compared to 1992 due to a decrease in interest
expense under Financial Corporation's commercial paper program.
Financial Corporation's average outstanding commercial paper
balances decreased $4.4 million from 1992 to 1993. In addition,
Financial Corporation's average interest rates for commercial
paper decreased from 4.1 percent in 1992 to 3.3 percent in 1993.
Income Taxes
------------
The effective corporate income tax rates for 1994,
1993, and 1992 were 37 percent, 37 percent, and 31 percent,
respectively, compared to the Company's statutory tax rates for
these periods of 39 percent, 39 percent, and 38 percent,
respectively. Effective January 1, 1993, the federal income tax
rate for corporations increased from 34 to 35 percent. The
cumulative effect of the tax rate increase was recorded in the
third quarter of 1993 and resulted in additional income tax
expense of $0.6 million, an increase in deferred tax liabilities
of $3.0 million, and an increase in regulatory assets of
$2.6 million.
Preferred and Preference Stock Dividend Requirements
----------------------------------------------------
Preferred and preference stock dividend requirements
for 1994 were lower by $0.5 million, or 14 percent, compared to
1993, due to redemptions and refundings of preferred stock in
1993. The principal amount of preferred and preference stock
outstanding was $1.5 million, or three percent, lower at
December 31, 1994, than at December 31, 1993. Also, effective
December 1, 1993, the Company cancelled the $8.75 Series of
Preferred Stock in exchange for issuance of the $7.125 Series of
Preferred Stock (see "Financing Activities" below).
Financial Condition
-------------------
Capital Structure
-----------------
Northwest Natural's capital expenditures are required
for utility construction resulting from customer growth and
system improvements. Northwest Natural finances these
<PAGE>
expenditures from cash provided by operations, and short-term
borrowings which are periodically refinanced through the sale of
long-term debt or equity securities. In addition to its capital
expenditures, the weather-sensitive nature of gas usage by
Northwest Natural's residential and commercial customers
influences the Company's financing requirements. Short-term
liquidity is satisfied primarily through the sale of commercial
paper, which is supported by commercial bank lines of credit (see
Note 6 to the Consolidated Financial Statements).
The Company's long-term goal is to maintain a capital
structure comprised of 40 to 45 percent common stock equity, 5 to
10 percent preferred and preference stock and 45 to 50 percent
short-term and long-term debt. When additional capital is
required, this target structure is managed by issuing new debt or
equity depending upon market conditions. The Company also uses
these sources to meet long-term debt and preferred stock
redemption requirements (see Notes 3 and 5 to the Consolidated
Financial Statements).
Cash Flows
----------
Operating Activities
--------------------
Cash provided from operating activities was 91 percent
higher in 1994 compared to 1993 primarily due to rate increases
in late 1993 reflecting completion of amortizations of credit
balances in regulatory accounts. Also contributing was the
effect of weather conditions from year to year on accounts
receivable, unbilled revenue, and accounts payable.
Northwest Natural has lease and purchase commitments
related to its operating activities which are financed with cash
flows from operations (see Note 12 to the Consolidated Financial
Statements).
Investing Activities
--------------------
Cash requirements for utility construction, primarily
related to system improvements and customer growth, totalled
$77.7 million, up $7.3 million, or 10 percent, from 1993. 1993
expenditures were up $9.7 million, or 16 percent, from 1992. The
<PAGE>
1994 and 1993 increases include $8.5 million and $6.3 million,
respectively, for the replacement of Northwest Natural's customer
information system. The total cost of the new system, scheduled
for completion in 1997, is estimated at $25 million.
Northwest Natural's construction expenditures are
estimated at $76 million for 1995. Over the five year period
1995 through 1999, these expenditures are estimated at between
$350 and $375 million. It is anticipated that approximately
60 percent of the funds required for these expenditures will be
internally generated, and that the remainder will be funded
through short-term borrowings which will be refinanced
periodically through the sale of long-term debt and equity
securities.
In 1994, subsidiary capital expenditures were primarily
for Oregon Natural's Canadian gas exploration and production
program. In 1993, Oregon Natural received $2.3 million from
sales and exchanges of gas producing properties. Oregon Natural
anticipates investing up to $10 million, in addition to
internally generated cash, in its Canadian gas exploration and
production program during the three years 1995 through 1997.
Investments shown on the Consolidated Balance Sheets
under "Investments and Other" for 1992 included a $5.5 million
restricted cash deposit with a commercial bank which related to
Pacific Square. This deposit was reclassified as a current asset
in 1993 due to the pending sale of Pacific Square's primary real
estate investments. Upon the sale of Pacific Square's
investments in 1994, $4.0 million was collected while the
remaining $1.5 million was secured by a note receivable due no
later than December 1, 1999.
Financing Activities
--------------------
During 1994, Northwest Natural sold $20 million of its
Medium-Term Notes, the proceeds of which were used to repay short
term debt incurred to fund Northwest Natural's construction
program.
During 1993 and 1992, Northwest Natural sold $100
million and $45 million, respectively, of its Medium-Term Notes.
Of the proceeds from the 1993 sales, $82.6 million was used to
redeem higher-cost long-term debt, and the remainder was used to
<PAGE>
pay the cost of Northwest Natural's construction program and to
reduce short-term borrowing incurred for such purpose. Of the
proceeds from the 1992 sales, $30.2 million was used to redeem
higher-cost long-term debt and $15 million was used to reduce
short-term borrowing. As a result of these transactions, the
average interest rate on long-term debt declined from 9.7 percent
at December 31, 1991 to 8.3 percent at December 31, 1993.
In order to pay the cost of Northwest Natural's
construction program, to refund higher-cost Preferred Stock, and
to increase its equity ratios, Northwest Natural sold $25 million
of Preference Stock and $28.5 million, or 990,000 shares, of
Common Stock during the fourth quarter of 1992. In January 1993,
approximately $9 million of the proceeds from the sale of
Preference Stock was used to redeem all of the outstanding shares
of Northwest Natural's $8.00 and $2.42 Series of Preferred Stock.
In 1993, Northwest Natural also redeemed all of the outstanding
shares of its $6.875 Series of Preferred Stock.
In 1993, Northwest Natural refinanced $15 million of
its $8.75 Series of Preferred Stock with an equivalent amount of
the $7.125 Series of Preferred Stock.
In the first quarter of 1995, Northwest Natural sold
1.15 million shares of its Common Stock. The net proceeds of
$33.0 million received from the offering were added to the
general funds of the Company and used for corporate purposes,
primarily to fund, in part, Northwest Natural's construction
program, and to repay short-term debt incurred for such purpose.
The projected dilution of earnings per share resulting from this
sale is estimated at five percent.
Ratios of Earnings to Fixed Charges
-----------------------------------
For the years ended December 31, 1994, 1993, and 1992,
the Company's ratios of earnings to fixed charges, computed by
the Securities and Exchange Commission method, were 3.08, 3.22,
and 1.81, respectively. Earnings consist of net income to which
has been added taxes on income and fixed charges. Fixed charges
consist of interest on all indebtedness, amortization of debt
expense and discount or premium, and the estimated interest
portion of rentals charged to income.
<PAGE>
Environmental Matters
---------------------
In June 1992, the City of Salem, Oregon, requested
Northwest Natural's participation in its review of an
environmental assessment of riverfront property in Salem that is
the proposed site for a park and other public developments.
Within the property is a block previously owned by Northwest
Natural which was the site of a former manufactured gas plant.
Northwest Natural's corporate predecessor owned the plant for
less than four months in 1929. The City has determined that
there is environmental contamination on the site, and that a
remediation process involving Northwest Natural and at least two
other prior owners of the block will be required. To date
Northwest Natural has not obtained sufficient information to
determine the extent of its responsibility for any such
remediation.
Northwest Natural owns property in Linnton, Oregon,
that is the site of a former gas manufacturing plant that was
closed in 1956. Although limited testing for environmental
contamination has been undertaken by other parties on portions of
the site, no comprehensive studies have been performed.
Northwest Natural submitted a work plan for the site to the
Oregon Department of Environmental Quality (ODEQ) in 1987, but
further efforts were suspended at ODEQ's request while Northwest
Natural and other parties participated in a joint hydrogeologic
study of an area adjacent to the site. In September 1993,
pursuant to ODEQ procedures, Northwest Natural submitted a notice
of intent to participate in the ODEQ's Voluntary Cleanup Program
and, in April 1994, the site was listed on ODEQ's Confirmed
Release List and Inventory. It is anticipated that the site
investigation will commence during 1995.
In September 1993, Northwest Natural recorded an
expense of $0.5 million for the estimated costs of consultants'
fees, ODEQ oversight cost reimbursements, and legal fees in
connection with the voluntary investigation at the Linnton site.
To date, Northwest Natural has not obtained sufficient
information to determine whether any remediation will be required
at this site or, if so, the extent of its responsibility for any
such remediation. Northwest Natural expects that its costs of
investigation and any remediation for which it may be responsible
should be recoverable, in large part, from insurance or through
future rates.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS
-----------------
Page
----
1. Management's Responsibility for Financial Statements . . . . . 36
2. Independent Auditors' Report . . . . . . . . . . . . . . . . . 37
3. Consolidated Financial Statements:
Consolidated Statements of Income for the Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . 38
Consolidated Statements of Earnings Invested in the Business
for the Years Ended December 31, 1994, 1993 and 1992 . . . . 39
Consolidated Balance Sheets, December 31, 1994 and 1993. . . . 40
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . 42
Consolidated Statements of Capitalization, December 31,
1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . 43
Notes to Consolidated Financial Statements . . . . . . . . . . 44
4. Quarterly Financial Information (unaudited). . . . . . . . . . 71
Supplemental Schedules Omitted
All other schedules are omitted because of the absence of the conditions
under which they are required or because the required information is
included elsewhere in the financial statements.
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
----------------------------------------------------
The financial statements in this report were prepared
by management, which is responsible for their objectivity and
integrity. The statements have been prepared in conformity with
generally accepted accounting principles and, where appropriate,
reflect informed estimates based on judgments of management. The
responsibility of the Company's independent auditors is to render
an independent report on the financial statements.
The Company's system of internal accounting controls is
designed to provide reasonable assurance that assets are
safeguarded and transactions are executed in accordance with
management's authorizations, that transactions are recorded to
permit the preparation of financial statements in conformity with
orders of regulatory authorities and generally accepted
accounting principles and that accountability for assets is
maintained. The Company's system of internal controls has
provided such reasonable assurances during the periods reported
herein. The system includes written policies, procedures and
guidelines, an organization structure that segregates duties and
an established program for monitoring the system by internal
auditors. In addition, Northwest Natural Gas Company has
prepared and annually distributes to its management employees a
Code of Ethics covering its policies for conducting business
affairs in a lawful and ethical manner. Ongoing review programs
are carried out to ensure compliance with these policies.
The Board of Directors, through its Audit Committee,
oversees management's financial reporting responsibilities. The
committee meets regularly with management, the internal auditors,
and representatives of Deloitte & Touche LLP, the Company's
independent auditors. Both internal and external auditors have
free and independent access to the committee and the Board of
Directors. No member of the committee is an employee of the
Company. The committee reports the results of its activities to
the full Board of Directors. Annually, the Audit Committee
recommends the nomination of independent auditors to the Board of
Directors for shareholder approval.
/s/ Robert L. Ridgley
-------------------------------
Robert L. Ridgley
President and
Chief Executive Officer
/s/ Bruce R. DeBolt
-------------------------------
Bruce R. DeBolt
Senior Vice President, Finance,
and Chief Financial Officer
<PAGE>
DELOITTE & TOUCHE LLP
-----------------------------------------------------------------
3900 US Bancorp Tower Telephone: (503) 222-1341
111 SW Fifth Avenue Facsimile: (503) 224-2172
Portland, Oregon 97204-3698
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Shareholders
Northwest Natural Gas Company
Portland, Oregon
We have audited the accompanying consolidated financial
statements of Northwest Natural Gas Company and subsidiaries,
listed in the accompanying table of contents to financial
statements and financial statement schedules at Item 8. These
financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility
is to express an opinion on the financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the consolidated financial
position of Northwest Natural Gas Company and subsidiaries at
December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period
ended December 31, 1994 in conformity with generally accepted
accounting principles. Also, in our opinion, such financial
statement schedules, when considered in relation to basic
consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth
therein.
As discussed in Notes 7 and 9 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes and postretirement benefits in the year ended
December 31, 1993.
DELOITTE & TOUCHE LLP
February 22, 1995
<PAGE>
NORTHWEST NATURAL GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, Except Per Share Amounts)
Year Ended December 31 1994 1993 1992
------------------------------------------------------------------------
NET OPERATING REVENUES:
Operating revenues $368,261 $358,717 $274,366
Cost of sales 162,788 138,833 101,916
-------- -------- --------
Net operating revenues 205,473 219,884 172,450
-------- -------- --------
OPERATING EXPENSES:
Operations and maintenance 70,881 70,723 64,249
Taxes other than income taxes 24,263 25,561 20,865
Depreciation, depletion and
amortization 38,058 39,683 33,035
Loss on cogeneration facility - - 4,575
-------- -------- --------
Total operating expenses 133,202 135,967 122,724
-------- -------- --------
INCOME FROM OPERATIONS 72,271 83,917 49,726
-------- -------- --------
OTHER INCOME (EXPENSE) 8,582 933 (267)
-------- -------- --------
INTEREST CHARGES:
Interest on long-term debt 21,921 22,578 23,001
Other interest 2,473 1,906 3,223
Amortization of debt discount
and expense 850 775 511
-------- -------- --------
Total interest charges 25,244 25,259 26,735
Allowance for funds used during
construction (325) (152) (2)
-------- -------- --------
Total interest charges-net 24,919 25,107 26,733
-------- -------- --------
INCOME BEFORE INCOME TAXES 55,934 59,743 22,726
INCOME TAXES 20,473 22,096 6,951
-------- -------- --------
NET INCOME 35,461 37,647 15,775
Preferred and preference stock
dividend requirements 2,983 3,488 2,560
-------- -------- --------
EARNINGS APPLICABLE TO COMMON STOCK $ 32,478 $ 34,159 $ 13,215
======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING 13,295 13,074 11,909
EARNINGS PER SHARE OF COMMON STOCK $2.44 $2.61 $1.11
===== ===== =====
DIVIDENDS PER SHARE OF COMMON STOCK $1.76 $1.75 $1.72
==== ==== ====
-----------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
NORTHWEST NATURAL GAS COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS INVESTED IN THE BUSINESS
(Thousands of Dollars)
1994 1993 1992
-------------------------------------------------------------------------
BALANCE AT BEGINNING OF YEAR $88,497 $77,690 $86,361
Net Income 35,461 37,647 15,775
Cash dividends:
Preferred and
preference stock (3,041) (3,401) (2,525)
Common stock (23,365) (22,853) (20,406)
Capital stock expense and other (277) (586) (1,515)
------- ------- -------
BALANCE AT END OF YEAR $97,275 $88,497 $77,690
======= ======= =======
-----------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
NORTHWEST NATURAL GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands)
December 31 1994 1993
------------------------------------------------------------------------
ASSETS:
PLANT AND PROPERTY IN SERVICE:
Utility plant in service $908,238 $840,030
Less accumulated depreciation 279,112 255,282
-------- --------
Utility plant - net 629,126 584,748
Non-utility property 49,586 42,764
Less accumulated depreciation and depletion 24,456 20,646
-------- --------
Non-utility property - net 25,130 22,118
-------- --------
Total plant and property in service 654,256 606,866
-------- --------
INVESTMENTS AND OTHER:
Investments 34,183 32,818
Long-term notes receivable 2,914 1,756
-------- --------
Total investments and other 37,097 34,574
-------- --------
CURRENT ASSETS:
Cash and cash equivalents 8,068 4,198
Accounts receivable - customers 43,016 45,340
Allowance for uncollectible accounts (864) (1,368)
Accrued unbilled revenue 20,320 25,890
Inventories of gas, materials and supplies 14,958 16,838
Prepayments and other current assets 10,041 16,412
-------- --------
Total current assets 95,539 107,310
-------- --------
REGULATORY TAX ASSETS 60,430 62,130
-------- --------
DEFERRED DEBITS AND OTHER 41,982 38,156
-------- --------
TOTAL ASSETS $889,304 $849,036
======== ========
---------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements.<PAGE>
<PAGE>
NORTHWEST NATURAL GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands)
December 31 1994 1993
------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES:
CAPITALIZATION (See Consolidated Statements
of Capitalization):
Common stock $ 42,492 $ 41,728
Premium on common stock 134,641 128,340
Earnings invested in the business 97,275 88,497
-------- --------
Total common stock equity 274,408 258,565
Preference stock 26,252 26,633
Redeemable preferred stock 15,950 17,041
Long-term debt 291,076 272,931
-------- --------
Total capitalization 607,686 575,170
-------- --------
CURRENT LIABILITIES:
Notes payable 53,654 72,548
Accounts payable 48,517 44,318
Long-term debt due within one year 1,000 -
Taxes accrued 6,584 6,757
Interest accrued 4,570 4,438
Other current and accrued liabilities 11,757 10,180
-------- --------
Total current liabilities 126,082 138,241
-------- --------
DEFERRED INVESTMENT TAX CREDITS 13,530 14,567
-------- --------
DEFERRED INCOME TAXES 112,433 104,300
-------- --------
REGULATORY BALANCING ACCOUNTS AND OTHER 29,573 16,758
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 12) - -
-------- --------
TOTAL CAPITALIZATION AND LIABILITIES $889,304 $849,036
======== ========
-------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
NORTHWEST NATURAL GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
Year Ended December 31 1994 1993 1992
------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 35,461 $ 37,647 $ 15,775
Adjustments to reconcile net income
to net cash provided by (used for)
operations:
Depreciation, depletion and
amortization 38,058 39,683 33,035
Loss on cogeneration facility - - 4,575
Deferred income taxes and investment
tax credits 8,796 6,205 (1,115)
Equity in (earnings)losses of
investments (2,331) 302 1,506
Allowance for funds used during
construction (325) (152) (2)
Regulatory balancing accounts and
other - net 8,989 (10,754) (10,776)
------- ------- -------
Cash from operations before
working capital changes 88,648 72,931 42,998
Changes in operating assets and liabilities:
Accounts receivable 1,820 (10,964) (5,821)
Accrued unbilled revenue 5,570 (5,152) (2,603)
Inventories of gas, materials
and supplies 1,880 (1,041) 1,052
Accounts payable 4,199 4,036 (3,507)
Accrued interest and taxes (41) (387) 881
Other current assets and
liabilities 7,948 (1,899) 2,636
-------- -------- --------
CASH PROVIDED BY OPERATING
ACTIVITIES 110,024 57,524 35,636
-------- -------- --------
INVESTING ACTIVITIES:
Acquisition and construction of
utility plant assets (77,668) (70,404) (60,709)
Investment in non-utility plant (7,455) (955) (11,907)
Investments and other (192) (40) (8,697)
-------- -------- --------
CASH USED IN INVESTING ACTIVITIES (85,315) (71,399) (81,313)
-------- -------- --------
FINANCING ACTIVITIES:
Common stock issued 5,847 5,720 33,826
Preference stock issued - - 25,000
Preferred stock retired (1,091) (11,177) (930)
Long-term debt:
Issued 20,000 100,000 45,000
Retired (18) (82,606) (30,191)
Change in short-term debt (18,894) 25,439 (41,510)
Cash dividend payments:
Preferred and preference stock (3,041) (3,401) (2,525)
Common stock (23,365) (22,853) (20,406)
Capital stock expense and other (277) (586) (1,515)
-------- -------- --------
CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (20,839) 10,536 6,749
-------- -------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,870 (3,339) (38,928)
CASH AND CASH EQUIVALENTS - BEGINNING
OF YEAR 4,198 7,537 46,465
-------- -------- --------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 8,068 $ 4,198 $ 7,537
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 24,262 $ 26,838 $ 26,502
Income taxes $ 12,054 $ 11,103 $ 10,141
SUPPLEMENTAL DISCLOSURE OF NONCASH
FINANCING ACTIVITIES:
Conversion to common stock:
$2.375 Series of Convertible
Preference Stock $381 $133 $103
7-1/4 percent Series of Convertible
Debentures $837 $367 $131
-----------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
<PAGE>
NORTHWEST NATURAL GAS COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(Thousands, Except Share Amounts)
December 31 1994 1993
--------------------------------------------------------------------
COMMON STOCK EQUITY:
Common stock - par value $3-1/6 per
share; authorized - 1994,
60,000,000 shares; 1993,
30,000,000 shares: outstanding
- 1994, 13,418,685 shares;
1993, 13,177,256 shares $ 42,492 $ 41,728
Premium on common stock 134,641 128,340
Earnings invested in business 97,275 88,497
-------- --------
Total common stock equity 274,408 45% 258,565 45%
-------- ---- -------- ----
PREFERENCE STOCK, authorized
2,000,000 shares:
$2.375 Series, convertible,
stated value $25 per share;
outstanding - 1994, 50,079
shares; 1993, 65,323 shares 1,252 1,633
$6.95 Series, stated value $100
per share; outstanding -
1994, 250,000 shares; 1993,
250,000 shares 25,000 25,000
-------- --------
Total preference stock 26,252 4% 26,633 5%
-------- ---- -------- ----
REDEEMABLE PREFERRED STOCK,
authorized 1,500,000 shares,
all outstanding series have a
stated value of $100 per share:
$4.68 Series, outstanding - 1994,
7,319 shares; 1993, 9,301 shares 732 930
$4.75 Series, outstanding - 1994,
9,685 shares; 1993, 11,105 shares 968 1,111
$7.125 Series, outstanding -
1994, 142,500 shares; 1993,
150,000 shares 14,250 15,000
-------- --------
Total redeemable preferred
stock 15,950 3% 17,041 3%
-------- ---- -------- ----
LONG-TERM DEBT:
First Mortgage Bonds
--------------------
9-3/4% Series due 2015 50,000 50,000
9-1/8% Series due 2019 25,000 25,000
Medium-Term Notes
-----------------
First Mortgage Bonds:
4.80% Series A due 1996 5,000 5,000
7.38% Series A due 1997 20,000 20,000
7.69% Series A due 1999 10,000 10,000
5.96% Series B due 2000 5,000 5,000
5.98% Series B due 2000 5,000 5,000
8.05% Series A due 2002 10,000 10,000
6.40% Series B due 2003 20,000 20,000
6.34% Series B due 2005 5,000 5,000
6.38% Series B due 2005 5,000 5,000
6.45% Series B due 2005 5,000 5,000
6.50% Series B due 2008 5,000 5,000
8.26% Series B due 2014 10,000 -
8.31% Series B due 2019 10,000 -
9.05% Series A due 2021 10,000 10,000
7.25% Series B due 2023 20,000 20,000
7.50% Series B due 2023 4,000 4,000
7.52% Series B due 2023 11,000 11,000
Unsecured:
4.90% Series A due 1996 10,000 10,000
8.69% Series A due 1996 5,000 5,000
7.40% Series A due 1997 5,000 5,000
8.93% Series A due 1998 5,000 5,000
8.95% Series A due 1998 10,000 10,000
8.47% Series A due 2001 10,000 10,000
Convertible Debentures
----------------------
7-1/4% Series due 2012 12,076 12,931
-------- --------
292,076 272,931
Less long-term debt due within
one-year 1,000 -
-------- --------
Total long-term debt 291,076 48% 272,931 47%
-------- ---- -------- ----
TOTAL CAPITALIZATION $607,686 100% $575,170 100%
======= === ======= ===
-------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------------
Organization and Principles of Consolidation
---------------------------------------------
The consolidated financial statements include:
Regulated utility:
--Northwest Natural Gas Company (Northwest Natural)
Non-regulated wholly-owned businesses:
--Oregon Natural Gas Development Corporation (Oregon
Natural)
--NNG Financial Corporation (Financial Corporation)
--Pacific Square Corporation (Pacific Square)
--NNG Energy Systems, Inc. (Energy Systems)
Together these businesses are referred to herein as the
"Company." Intercompany accounts and transactions have been
eliminated.
Investments in corporate joint ventures and partnerships in
which the Company's ownership is 50 percent or less are
accounted for by the equity method or the cost method (see
Note 10).
Certain amounts from prior years have been reclassified to
conform with the 1994 presentation.
Industry Regulation
-------------------
The Company's principal business is the distribution of
natural gas which is regulated by the Oregon Public Utility
Commission (OPUC) and the Washington Utilities and
Transportation Commission (WUTC). Accounting records and
practices conform to the requirements and uniform system of
accounts prescribed by these regulatory authorities.
<PAGE>
Utility Plant
-------------
Utility plant for Northwest Natural is stated at original
cost (see table in Note 10). When a depreciable unit of
property is retired, the cost is credited to utility plant
and debited to the accumulated provision for depreciation
together with the cost of removal, less any salvage. No
gain or loss is recognized upon normal retirement.
Northwest Natural's provision for depreciation of utility
property, which is computed under the straight-line,
age-life method in accordance with independent engineering
studies and as approved by regulatory authorities,
approximated 4.1 percent of average depreciable plant in
1994 and 1993, and 4.0 percent for 1992.
Allowance for Funds Used During Construction (AFUDC), a non-
cash item, is calculated using actual commercial paper
interest rates. If commercial paper balances are
insufficient to finance the amount of work in progress, a
composite of interest costs of debt, shown as a reduction to
interest charges, and a return on equity funds, shown as
other income, is used to compute AFUDC. This amount is
added to utility plant which is a component of rate base.
While cash is not realized currently from AFUDC, it is
realized in the ratemaking process over the service life of
the related property through increased revenues resulting
from higher rate base and higher depreciation expense. The
Company's weighted average AFUDC rates were 3.4 percent for
1994, 3.5 percent for 1993, and 4.5 percent for 1992.
Regulatory Balancing Accounts
-----------------------------
Regulatory balancing accounts are established pursuant to
orders of the state utility regulatory commissions, in
general rate proceedings or expense deferral proceedings, in
order to provide for recovery of revenues or expenses from,
or refunds to, Northwest Natural's utility customers.
<PAGE>
Cash and Cash Equivalents
-------------------------
For purposes of reporting cash flows, cash and cash
equivalents include cash on hand and highly liquid temporary
investments with original maturity dates of three months or
less.
Unbilled Revenue
----------------
Northwest Natural accrues for gas deliveries not billed to
customers from the meter reading dates to month end.
Inventories
-----------
Northwest Natural's inventories of gas in storage and
materials and supplies are stated at the lower of average
cost or net realizable value.
Foreign Currency Fluctuation Hedges
-----------------------------------
Northwest Natural uses foreign currency hedge transactions
to reduce its exposure to currency fluctuations on firm
Canadian gas purchase commitments by entering into foreign
currency forward contracts with concurrent maturities.
Northwest Natural does not engage in currency speculation.
The forward contracts generally have terms ranging from one
to 12 months. All contracts are specifically purchased for
firm commitments and are physically delivered to satisfy
those commitments. Changes in market values of foreign
currency contracts are deferred and recognized as
adjustments to gas purchase costs upon concurrent settlement
of these contracts (see Note 11).
<PAGE>
Income Taxes
------------
The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," on
January 1, 1993. SFAS No. 109, among other things,
(i) requires the liability method be used in computing
deferred taxes on all temporary differences between book and
tax basis of assets and liabilities; (ii) requires that
deferred tax liabilities and assets be adjusted for an
enacted change in tax laws or rates; and (iii) prohibits
net-of-tax accounting and reporting. Regulated enterprises
are required to recognize such adjustments as regulatory
assets or liabilities if it is probable that such amounts
will be recovered from or returned to customers in future
rates. As of December 31, 1994, the Company had regulatory
assets of $60.4 million, an amount which is primarily
derived from differences between the book and tax basis of
the utility plant in service and the accumulated reserve for
depreciation.
The Company provides deferred federal income tax for the
timing differences between book depreciation and tax
depreciation under the Accelerated Cost Recovery System
(ACRS) for 1981 - 1985 property additions and Modified
Accelerated Cost Recovery System (MACRS) for post-1985
property additions. Consistent with rate and accounting
instructions of regulatory authorities, deferred income
taxes are not currently collected for those income tax
temporary differences where the prescribed regulatory
accounting methods do not provide for current recovery in
rates.
Investment tax credits on utility property additions which
reduce income taxes payable are deferred for financial
statement purposes and are amortized over the life of the
related property. Investment and energy tax credits
generated by non-regulated subsidiaries are amortized over a
period of two to five years.
<PAGE>
Earnings Per Share
------------------
Primary earnings per share are computed based on the
weighted average number of common shares outstanding each
year. Outstanding stock options are common stock
equivalents but are excluded from primary earnings per share
computations due to immateriality. The Company reports
fully-diluted earnings per share when dilution is three
percent or greater. This calculation reflects the potential
effects of the conversion of the $2.375 Series of
Convertible Preference Stock and the 7-1/4 percent Series of
Convertible Debentures and the exercise of stock options.
2. CONSOLIDATED SUBSIDIARY OPERATIONS:
----------------------------------------
Oregon Natural Gas Development Corporation
------------------------------------------
Oregon Natural is a natural gas exploration and production
subsidiary of the Company. Approximately $22.5 million of
Oregon Natural's total assets of $40.7 million at year-end
1994 are invested in its wholly-owned subsidiary, Canor
Energy Ltd., which manages and develops natural gas and oil
properties in Canada.
Oregon Natural accounts for its exploration costs under the
successful-efforts method. Costs to acquire and develop oil
and gas properties are capitalized until the volume of
proved gas reserves is determined. If there are inadequate
gas reserves, the related deferred costs are expensed.
Capitalized costs associated with properties under
development were $4.4 million at December 31, 1994 and
$1.4 million at December 31, 1993.
NNG Financial Corporation
-------------------------
Financial Corporation provides short-term financing for
Oregon Natural and Energy Systems and has several financial
investments, including investments as a limited partner in
<PAGE>
four solar electric generating systems, four windpower
electric generating projects, a hydroelectric facility and a
low-income housing project (see Note 10).
Pacific Square Corporation
--------------------------
Pacific Square was a real estate management subsidiary of
the Company. During 1994, Pacific Square sold its
partnership interests in two commercial office buildings,
including the Company's headquarters building. As a result
of the sale of these investments, Pacific Square no longer
has any operating activities.
NNG Energy Systems, Inc.
------------------------
Energy Systems was formed to design, construct, own and
operate cogeneration facilities. Agrico Cogeneration
Corporation (Agrico) is a wholly-owned subsidiary of Energy
Systems. In December 1991, Agrico filed with the United
States Bankruptcy Court for the Eastern District of
California a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. The U. S.
Bankruptcy Court confirmed Agrico's reorganization plan in
January 1994. The sale of Agrico's assets closed in
February 1994. Based upon the estimated costs to the
Company under related settlements, the estimated net
proceeds to be received from the sale of Agrico's assets,
and other elements of a Chapter 11 reorganization plan, the
Company recorded a charge of $4.6 million in 1992, resulting
in an after-tax charge of $2.8 million, equivalent to 24
cents per share.
<PAGE>
<TABLE>
Summarized financial information for the consolidated subsidiaries
follows:
<CAPTION>
Thousands 1994 1993 1992
------------------------------------------------------------------------
<S> <C> <C> <C>
Statements of Income for the year ended
December 31:
Net Operating Revenues $ 11,773 $ 10,865 $ 8,000
Operating Expenses 11,253 14,168 13,635
-------- -------- --------
Income (Loss) from Operations 520 (3,303) (5,635)
Income (Loss) from Financial Investments 2,115 (388) (28)
Other Income (Expense) and Interest
Charges 4,092 14 (1,642)
-------- -------- --------
Income (Loss) Before Income Taxes 6,727 (3,677) (7,305)
Income Tax Expense (Benefit) 1,986 (2,188) (3,682)
-------- -------- --------
Net Income (Loss) $ 4,741 $ (1,489) $ (3,623)
======== ======== ========
Balance Sheets as of December 31:
Assets:
Non-utility property - net $ 24,212 $ 21,040 $ 27,911
Investments and other 41,419 34,731 39,781
Current assets 27,541 34,028 16,001
-------- -------- --------
Total Assets $ 93,172 $ 89,799 $ 83,693
======== ======== ========
Capitalization and Liabilities:
Capitalization $ 26,562 $ 21,843 $ 24,189
Current liabilities 42,164 42,538 33,940
Other liabilities 24,446 25,418 25,564
-------- -------- --------
Total Capitalization and
Liabilities $ 93,172 $ 89,799 $ 83,693
======== ======== ========
---------------------------------------------------------------------
</TABLE>
3. CAPITAL STOCK:
--------------------
Common Stock
------------
At December 31, 1994, Northwest Natural had reserved
87,864 shares of common stock for issuance under the
Employee Stock Purchase Plan, 449,209 shares under its
<PAGE>
Dividend Reinvestment and Stock Purchase Plan, 147,504
shares under its 1985 Stock Option Plan (see Note 4),
82,719 shares for future conversions of its convertible
preference stock and 444,396 shares for future conversions
of its 7-1/4 percent Convertible Debentures.
In the first quarter of 1995, Northwest Natural sold 1.15
million shares of its Common Stock. The net proceeds of
$33.0 million will be used for corporate purposes,
primarily to fund, in part, Northwest Natural's
construction program, and to repay short-term debt
incurred for such purpose. The projected dilution of
earnings per share resulting from this sale is estimated
at five percent.
Preference Stock
----------------
The $2.375 Series of Convertible Preference Stock is
convertible into shares of common stock at a conversion
rate of 1.6502 shares of common stock for each share of
preference stock. Subject to certain restrictions, it is
callable at stipulated prices, plus accrued dividends.
The $6.95 Series of Preference Stock is not redeemable
prior to December 31, 2002, but is subject to mandatory
redemption on that date.
Redeemable Preferred Stock
--------------------------
The mandatory preferred stock redemption requirements
aggregate $1.1 million in 1995, 1996, 1997 and 1998 and
$1.0 million in 1999. These requirements are
noncumulative. At any time Northwest Natural is in
default on any of its obligations to make the prescribed
sinking fund payments, it may not pay cash dividends on
common stock or preference stock. Upon involuntary
liquidation, all series of redeemable preferred stock are
entitled to their stated value.
The redeemable preferred stock is callable at stipulated
prices, plus accrued dividends. At December 31, 1994,
redemption prices were $100 per share for the $4.68 and
$4.75 Series. Shares of the $7.125 Series are redeemable
<PAGE>
on or after May 1, 1998 at a price of $104.75 per share
decreasing each year thereafter to $100 per share on or
after May 1, 2008.
The following table shows the changes in the number of
shares of Northwest Natural's capital stock and the
premium on common stock for the years 1994, 1993 and 1992:
<PAGE>
<TABLE>
<CAPTION>
----------Shares-------------Premium
Redeem- on Common
Prefer- able Stock
Common ence Preferred (Thous-
Stock Stock Stock ands)
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1991 11,785,177 74,771 465,454 $ 92,599
Sales to the public 990,000 250,000 -- 25,327
Sales to employees 9,350 -- -- 222
Sales to stockholders 157,046 -- -- 4,228
Exercise of stock options
- net 19,918 -- -- 183
Conversion of preference
stock to common 6,846 (4,150) -- 82
Conversion of convertible
debentures to common 4,388 -- -- 117
Sinking fund purchases -- -- (23,859) --
Other -- -- -- 10
---------- ------- ------- --------
Balance, December 31, 1992 12,972,725 320,621 441,595 122,768
Sales to employees 9,542 -- -- 249
Sales to stockholders 154,850 -- 150,000 4,724
Exercise of stock options
- net 19,110 -- -- 172
Conversion of preference
stock to common 8,740 (5,298) -- 105
Conversion of convertible
debentures to common 12,289 -- -- 328
Redemptions -- -- (416,873) --
Sinking fund purchases -- -- (4,316) --
Other -- -- -- (6)
---------- ------- ------- --------
Balance, December 31, 1993 13,177,256 315,323 170,406 128,340
Sales to employees 10,856 -- -- 290
Sales to stockholders 173,994 -- -- 4,958
Exercise of stock options
- net 3,401 -- -- 2
Conversion of preference
stock to common 25,147 (15,244) -- 301
Conversion of convertible
debentures to common 28,031 -- -- 748
Sinking fund purchases -- -- (10,902) --
Other -- -- -- 2
---------- ------- ------- --------
Balance, December 31, 1994 13,418,685 300,079 159,504 $134,641
========== ======= ======= ========
---------------------------------------------------------------------
</TABLE>
<PAGE>
4. STOCK OPTION AND PURCHASE PLANS:
-------------------------------------
Northwest Natural's 1985 Stock Option Plan (Plan) authorizes an
aggregate of 300,000 shares of common stock for issuance as
incentive or non-statutory stock options. These options may be
granted only to officers and key employees of the Company
designated by its Board of Directors.
All options granted are at an option price not less than market
value at the date of grant and may be exercised for a period
not exceeding 10 years from the date of grant. Option holders
may exchange shares owned by them for at least one year, at the
current market price, to purchase shares at the option price.
During 1985, 1990 and 1994, 150,000, 86,500 and 75,182 options
were granted under the Plan at option prices of $17.625,
$24.875 and $36.00, respectively. Since inception of the Plan,
20,182 options have expired.
<PAGE>
<TABLE>
Information regarding the Plan is summarized below:
<CAPTION>
Options
----------------------------
1994 1993 1992
------------------------------------------------------------
<S> <C> <C> <C>
Outstanding, beginning of year 71,303 101,326 138,408
$17.625 Options:
Exchanged by holders (3,080) (6,184) (7,673)
Exercised (3,401) (9,334) (13,440)
$24.875 Options:
Exchanged by holders - (4,729) (6,017)
Exercised - (9,776) (6,652)
$36.00 Options:
Granted 75,182 - -
Exchanged by holders - - -
Exercised - - -
Expired (1,000) - (3,300)
------- ------- -------
Outstanding, end of year 139,004 71,303 101,326
======= ======= =======
Available for grant, end of year 8,500 82,682 82,682
======= ======= =======
--------------------------------------------------------------
</TABLE>
Northwest Natural has an employee stock purchase plan
whereby employees may purchase common stock at 92 percent
of average bid and ask market price on the subscription
date. The subscription date is set annually, and each
employee may purchase up to 600 shares payable through
payroll deduction over a six to 12 month period.
5. LONG TERM DEBT:
--------------------
The issuance of first mortgage bonds under the Mortgage and
Deed of Trust is limited by property, earnings and other
provisions of the mortgage. Northwest Natural's Mortgage
<PAGE>
and Deed of Trust constitutes a first mortgage lien on
substantially all of its utility property.
The 7-1/4 percent Series of Convertible Debentures may be
converted at any time for 33-1/2 shares of common stock for
each $1,000 face value ($29.85 per share).
The sinking fund requirements and maturities for the five
years ending December 31, 1999, on the long-term debt
outstanding at December 31, 1994, amount to: $1.0 million
in 1995; $21.0 million in 1996; $26.0 million in 1997;
$16.0 million in 1998; and $11.0 million in 1999.
6. NOTES PAYABLE AND LINES OF CREDIT:
---------------------------------------
Northwest Natural has available through September 30, 1995,
committed lines of credit totalling $80 million consisting
of a primary fixed amount of $40 million plus an excess
amount of up to $40 million available as needed, at
Northwest Natural's option, on a monthly basis. Financial
Corporation has available through September 30, 1995,
committed lines of credit with two commercial banks
totalling $20 million, consisting of a primary fixed amount
of $15 million plus an excess amount of up to $5 million
available as needed, at Financial Corporation's option, on a
monthly basis. Financial Corporation's lines are supported
by the guaranty of Northwest Natural.
Under the terms of these lines of credit, Northwest Natural
and Financial Corporation pay commitment fees but are not
required to maintain compensating bank balances. The
interest rates on borrowings under these lines of credit are
based on current market rates as negotiated. There were no
outstanding balances on either the Northwest Natural or
Financial Corporation lines of credit as of December 31,
1994 or December 31, 1993.
Northwest Natural and Financial Corporation issue domestic
commercial paper, which is supported by the committed bank
lines, under agency agreements with a commercial bank.
Additionally, Financial Corporation's commercial paper is
supported by the guaranty of Northwest Natural. The amounts
<PAGE>
and average interest rates of commercial paper outstanding
were as follows at December 31:
<TABLE>
<CAPTION>
1994 1993
----------------- ----------------
Average Average
Thousands Amount Rate Amount Rate
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Northwest Natural $35,393 5.8% $53,446 3.4%
Financial Corporation 18,261 6.0% 19,102 3.4%
------- -------
Total $53,654 $72,548
======= =======
------------------------------------------------------------
</TABLE>
<PAGE>
7. INCOME TAXES:
-----------------
The Company adopted SFAS No. 109, "Accounting for Income
Taxes," effective January 1, 1993. The adoption of the new
standard resulted in an increase in net deferred tax
liabilities of $62.1 million to reflect deferred taxes on
differences previously flowed-through and to adjust existing
deferred taxes to the level required at the current
statutory rate. An offsetting regulatory asset of
$62.1 million was also recorded. This regulatory tax asset
has decreased to $60.4 million at December 31, 1994. The
regulatory asset is primarily based upon differences between
the book and tax basis of utility plant in service and the
accumulated provision for depreciation. It is expected that
the regulatory asset will be recovered in future rates. The
implementation of SFAS No. 109 did not significantly impact
results of operations.
A reconciliation between income taxes calculated at the
statutory federal tax rate and the tax provision reflected
in the financial statements is as follows:
<PAGE>
<TABLE>
<CAPTION>
Thousands 1994 1993 1992
--------------------------------------------------------------------
<S> <C> <C> <C>
Computed income taxes based on
statutory federal income tax
rate (1994 and 1993-35%; 1992-34%) $19,577 $20,910 $ 7,727
Increase (reduction) in taxes
resulting from:
Differences between book and tax
depreciation 1,575 1,561 1,233
Current state income tax, net
of federal tax benefit 2,189 2,525 711
Federal income tax credits (338) (348) -
Restoration of investment tax
credit (1,077) (1,064) (1,124)
Elimination of amounts previously
provided (588) (1,059) (1,229)
Real and personal property taxes (123) 113 -
Removal costs (556) (320) (335)
Unconsolidated foreign subsidiary
income (172) (496) -
Other - net (14) 274 (32)
------- ------- -------
Total provision for income taxes $20,473 $22,096 $ 6,951
======= ======= =======
--------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
The provision for income taxes consists of the following:
<CAPTION>
Thousands 1994 1993 1992
---------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes currently payable:
Federal $10,441 $13,368 $7,577
State 2,375 2,166 375
Foreign 21 30 13
------- ------- ------
Total 12,837 15,564 7,965
------- ------- ------
Deferred taxes - net:
Federal 7,720 5,896 (676)
State 993 1,718 616
------- ------- ------
Total 8,713 7,614 (60)
------- ------- ------
Investment and energy tax credits restored:
From utility operations (800) (800) (800)
From subsidiary operations (277) (282) (154)
------- ------- ------
Total (1,077) (1,082) (954)
------- ------- ------
Total provision for income taxes $20,473 $22,096 $6,951
======= ======= ======
Percentage of pretax income 36.60% 36.99% 30.59%
======= ======= ======
--------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
The annual provision for deferred income taxes is comprised of the
following:
<CAPTION>
Thousands 1994 1993 1992
--------------------------------------------------------------------
<S> <C> <C> <C>
ACRS and MACRS deductions in excess
of related book depreciation $ 6,086 $ 5,925 $ 8,661
Revenues and costs deferred for tax
purposes (5,885) 1,528 2,600
Sale of Pacific Square investments (2,395) - -
Agrico book loss 6,999 - (1,374)
Real and personal property taxes - 2,329 (2,328)
Alternative minimum tax credits 4,000 - (6,866)
Elimination of amounts previously
provided 336 (2,216) (1,025)
Other (428) 48 272
-------- -------- --------
Total $ 8,713 $ 7,614 $ (60)
======== ======== ========
</TABLE>
-------------------------------------------------------------------
8. EMPLOYEE RETIREMENT PLANS:
-------------------------------
The Company has two non-contributory defined benefit
retirement plans covering all regular, full-time employees
with more than one year of service. The benefits under the
plans are based upon years of service and the employee's
average compensation during the final years of service. The
Company's funding policy is to make the annual contribution
required by applicable regulations and recommended by its
actuary. Plan assets consist primarily of marketable
securities, corporate obligations, U.S. government
obligations, real estate and cash equivalents.
<PAGE>
<TABLE>
The following table sets forth the amounts recognized in the
Company's financial statements and the combined funded
status of the retirement plans:
<CAPTION>
Thousands 1994 1993 1992
---------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 2,952 $ 2,587 $ 2,528
Interest cost 6,264 6,024 5,688
Return on assets 4,056 (17,762) (8,797)
Net amortization and deferral (12,804) 9,526 1,215
-------- -------- --------
Annual pension cost (benefit) $ 468 $ 375 $ 634
======== ======== ========
-----------------------------------------------------------------
Vested benefit obligation $ 68,628 $ 69,859 $ 62,152
Total accumulated benefit
obligation $ 70,186 $ 70,618 $ 62,971
-----------------------------------------------------------------
Funded status as of December 31:
Plan assets at fair value $100,077 $108,579 $ 94,595
Projected benefit obligation
for service rendered to date 85,206 86,814 77,278
-------- -------- --------
Funded status 14,871 21,765 17,317
Unrecognized net gain (15,992) (21,417) (15,895)
Unrecognized net asset at
transition (1,914) (2,310) (2,706)
Unrecognized prior service costs 5,028 4,413 3,531
-------- -------- --------
Prepaid pension cost $ 1,993 $ 2,451 $ 2,247
======== ======== ========
Total cash contribution $ 10 $ 579 $ 1,496
======== ======== ========
-----------------------------------------------------------------
Discount rate:
Funded status 8.00% 7.50% 8.00%
======== ======== ========
Pension cost 7.50% 8.00% 8.00%
======== ======== ========
Expected long-term rate
of return on plan assets 9.00% 9.00% 9.00%
======== ======== ========
Rate for compensation increases 5.00% 5.13% 5.13%
======== ======== ========
----------------------------------------------------------------
</TABLE>
<PAGE>
Effective January 1, 1995, the Company changed the assumed
discount rate used in determining the funded status of the
plans from 7.50 percent to 8.00 percent. The new discount
rate was used in determining the funded status of the plans
at year-end 1994 and will be used to determine annual
pension cost in 1995.
The Company has a qualified "Retirement K Savings Plan"
under Internal Revenue Code Section 401(k) and a non-
qualified "Executive Deferred Compensation Plan," for
eligible employees. These plans are designed to enhance the
existing retirement program of employees and to assist them
in strengthening their financial security by providing an
incentive to save and invest regularly. Contributions to
these plans in 1994, 1993 and 1992 were $0.7 million, $0.5
million and $0.3 million, respectively.
The Company has a non-qualified supplemental retirement plan
for eligible executive officers which it is funding with
trust-owned life insurance. The amount of coverage is
designed to provide sufficient returns to recover all costs
of the plan if assumptions made as to mortality experience,
policy earnings, and other factors are realized. Expenses
related to the plan were $1.0 million in 1994, $0.8 million
in 1993 and $0.9 million in 1992.
9. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS:
------------------------------------------------------------
The Company provides continued health care and life
insurance coverage after retirement for exempt employees.
These benefits and similar benefits for active employees are
provided by insurance companies and related premiums are
based on the amount of benefits paid during the year.
Effective January 1, 1993, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other
than Pensions." The Company elected to recognize the
cumulative effect of approximately $11.3 million over a
period of 20 years.
The incremental costs of approximately $1.1 million per year
(pre-tax) relating to SFAS No. 106 are not included in
Northwest Natural's rates. The staff of the OPUC has
<PAGE>
recommended that Northwest Natural's portion of these costs
allocated to Oregon (approximately 87 percent) be authorized
for recovery in rates only pursuant to a general rate case
filing, and has recommended against the use of deferred
accounting treatment for their recovery. Northwest Natural
is charging the Oregon portion of these costs to expense.
The WUTC has approved deferred accounting treatment for the
portion of these costs allocated to Washington
(approximately five percent), pending final approval for
recovery in a general rate case filing. Northwest Natural
monitors its need for general rate cases covering these and
other expenses but has no present plans to file a general
rate case in Oregon or Washington.
<TABLE>
The following table sets forth the postretirement health
care and life insurance plan's status at December 31:
<CAPTION>
Thousands
----------------------------------------------------------
1994 1993
---- ----
<S> <C> <C>
Retirees $ 5,768 $ 6,675
Fully eligible active plan participants 834 260
Other active plan participants 3,792 4,815
-------- --------
Total accumulated postretirement
benefit obligation 10,394 11,750
Fair value of plan assets - -
-------- --------
Accumulated postretirement benefit
obligation in excess of plan assets 10,394 11,750
Unrecognized transition obligation (10,152) (10,716)
Unrecognized gain 1,942 76
-------- --------
Accrued postretirement benefit
cost $ 2,184 $ 1,110
======== ========
<PAGE>
Service cost - benefits earned during
the period $ 314 $ 255
Return on plan assets (if any) - -
Interest cost on accumulated
postretirement benefit obligation 859 932
Amortization of transition obligation 564 564
------- -------
Net postretirement benefit cost $ 1,737 $ 1,751
======= =======
------------------------------------------------------------
</TABLE>
The assumed health care cost trend rate used in measuring
the accumulated postretirement benefit obligation for pre-
Medicare eligibility is nine percent for 1995 and 1996;
eight percent for 1997; then decreasing over the next seven
years to 4.5 percent. The assumed rate for HMO plan and
post-Medicare eligibility is eight percent for 1995 and
1996, then decreasing over the next seven years to
4.5 percent. A one-percentage-point change in the assumed
health care cost trend rate for each year would adjust the
accumulated postretirement benefit obligation as of
December 31, 1994 and net postretirement health care cost by
approximately 13.5 percent. The assumed discount rate used
in determining the accumulated postretirement benefit
obligation was 8.5 percent at December 31, 1994 and
7.5 percent at December 31, 1993.
<PAGE>
10. PROPERTY AND INVESTMENTS:
------------------------------
<TABLE>
The following table sets forth the major classifications of
Northwest Natural's utility plant and accumulated provision
for depreciation at December 31:
<CAPTION>
1994 1993
--------------------- -------------------
Average Average
Depreciation Depreciation
Thousands Amount Rate Amount Rate
-------------------- ------- ------------ ------ -----------
<S> <C> <C> <C> <C>
Transmission and
distribution $758,093 3.8% $704,195 3.8%
Storage 58,971 3.9% 58,120 3.9%
General 60,675 6.4% 53,888 7.0%
Intangible and other 10,313 13.6% 10,537 14.2%
-------- --------
Utility plant in
service 888,052 4.1% 826,740 4.1%
Gas stored long-term 6,738 5,027
Work in progress 13,448 8,263
-------- --------
Total utility plant 908,238 840,030
Less accumulated
provision for
depreciation 279,112 255,282
-------- --------
Utility plant-net $629,126 $584,748
======== ========
--------------------------------------------------------------------
</TABLE>
<TABLE>
The following table summarizes the Company's investments in
affiliated entities accounted for under the equity and cost
methods, and its investment in a leveraged lease at December
31:
<PAGE>
<CAPTION>
Thousands 1994 1993
------------------------------------------------------------
<S> <C> <C>
Electric generation (solar and
wind-power) $21,622 $21,043
Aircraft leveraged lease 9,171 9,079
Gas pipeline and other 3,390 2,696
------- -------
Total investments and other $34,183 $32,818
======= =======
-----------------------------------------------------------
</TABLE>
Financial Corporation has invested in four solar electric
generation plants located near Barstow, California. Power
generated by these stations is sold to Southern California
Edison Company under long-term contracts. Financial
Corporation's ownership interests in these projects range
from 4.0 percent to 5.3 percent.
Financial Corporation also has invested in four U. S.
Windpower Partners electric generating projects, with
facilities located near Livermore and Palm Springs,
California. The wind-generated power is sold to Pacific Gas
and Electric Company and Southern California Edison Company
under long-term contracts. Financial Corporation's
ownership interests in these projects range from 8.5 percent
to 41 percent.
In 1987, Oregon Natural purchased a Boeing 737-300 aircraft
which was leased to Continental Airlines for 20 years under
a leveraged lease agreement.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS:
-----------------------------------------
The estimated fair values of Northwest Natural's financial
instruments have been determined using available market
information and appropriate valuation methodologies. The
following is a list of financial instruments whose carrying
values are sensitive to market conditions:
<PAGE>
<TABLE>
<CAPTION>
December 31, 1994 December 31, 1993
-------------------- -------------------
Carrying Estimated Carrying Estimated
Thousands Amount Fair Value Amount Fair Value
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Preference stock $ 26,252 $ 22,841 $ 26,633 $ 26,698
Redeemable preferred
stock $ 15,950 $ 15,417 $ 17,041 $ 16,573
Long-term debt
including amount due
within one year $292,076 $283,732 $272,931 $301,358
----------------------------------------------------------------
</TABLE>
Fair value of preference stock and redeemable preferred
stock was estimated using quoted market prices. Interest
rates that are currently available to the Company for
issuance of debt with similar terms and remaining maturities
were used to estimate fair value for debt issues.
In connection with its Canadian gas purchase commitments,
Northwest Natural uses foreign currency forward contracts to
hedge against currency fluctuation. At December 31, 1994,
these contracts totalled $13.6 million, with a market value
of $13.4 million.
12. COMMITMENTS AND CONTINGENCIES:
-----------------------------------
Lease Commitments
-----------------
Future lease commitments are: $4.9 million in 1995;
$4.2 million in 1996; $4.0 million in 1997; and $1.8 million
in 1998 and 1999. Thereafter, total commitments amount to
$10.2 million. These commitments principally relate to the
lease of the Company's office headquarters and computer
systems.
Total rental expense for 1994, 1993, and 1992 was
$5.1 million, $5.2 million and $4.4 million, respectively.
<PAGE>
Purchase Commitments
--------------------
Northwest Natural has signed agreements providing for the
availability of firm pipeline capacity. Under these
agreements, Northwest Natural must make fixed monthly
payments for contracted capacity. The pricing component of
the monthly payment is established, subject to change, by
U.S. or Canadian regulatory bodies. In addition, Northwest
Natural has entered into long-term agreements which release
capacity. The aggregate amounts of these agreements were as
follows at December 31, 1994:
<TABLE>
<CAPTION>
Thousands
------------------------------------------------------------
Capacity Capacity
Purchase Release
Agreements Agreements
---------- ----------
<S> <C> <C>
1995 $ 65,894 $ 3,984
1996 80,335 8,039
1997 77,692 8,039
1998 77,467 8,039
1999 77,467 8,039
Thereafter 736,528 87,085
---------- --------
Total 1,115,383 123,225
Less: Amount representing
interest 480,735 54,543
---------- --------
Total at present value $ 634,648 $ 68,682
========== ========
------------------------------------------------------------
</TABLE>
Northwest Natural's total payments of fixed charges under
capacity purchase agreements in 1994, 1993 and 1992 were
$50.0 million, $46.7 million and $34.7 million,
respectively. Included in the amounts for 1994 and 1993
were reductions for capacity release sales totalling
$3.7 million and $1.7 million, respectively. In addition,
Northwest Natural is required to pay per-unit charges based
on the actual quantities shipped under the agreements. In
certain of Northwest Natural's take-or-pay purchase
<PAGE>
commitments, annual deficiencies may be offset by
prepayments subject to recovery over a longer term if future
purchases exceed the minimum annual requirements.
Northwest Natural has contracted with an external vendor for
the development of a customer information system with
remaining commitments of $0.8 million in 1995 and
$3.8 million in 1996.
Environmental Matters
---------------------
In June 1992, the City of Salem, Oregon, requested Northwest
Natural's participation in its review of an environmental
assessment of riverfront property in Salem that is the
proposed site for a park and other public developments.
Within the property is a block previously owned by Northwest
Natural which was the site of a former manufactured gas
plant. Northwest Natural's corporate predecessor owned
the plant for less than four months in 1929. The City has
determined that there is environmental contamination on the
site, and that a remediation process involving Northwest
Natural and at least two other prior owners of the block
will be required. To date Northwest Natural has not
obtained sufficient information to determine the extent of
its responsibility for any such remediation.
Northwest Natural owns property in Linnton, Oregon, that is
the site of a former gas manufacturing plant that was closed
in 1956. Although limited testing for environmental
contamination has been undertaken by other parties on
portions of the site, no comprehensive studies have been
performed. Northwest Natural submitted a work plan for the
site to the Oregon Department of Environmental Quality
(ODEQ) in 1987, but further efforts were suspended at ODEQ's
request while Northwest Natural and other parties
participated in a joint hydrogeologic study of an area
adjacent to the site. In September 1993, pursuant to ODEQ
procedures, Northwest Natural submitted a notice of intent
to participate in the ODEQ's Voluntary Cleanup Program and,
in April 1994, the site was listed on ODEQ's Confirmed
Release List and Inventory. It is anticipated that the site
investigation will commence during 1995.
<PAGE>
In September 1993, Northwest Natural recorded an expense of
$0.5 million for the estimated costs of consultants' fees,
ODEQ oversight cost reimbursements, and legal fees in
connection with the voluntary investigation at the Linnton
site. To date, Northwest Natural has not obtained
sufficient information to determine whether any remediation
will be required at this site or, if so, the extent of its
responsibility for any such remediation. Northwest Natural
expects that its costs of investigation and any remediation
for which it may be responsible should be recoverable, in
large part, from insurance or through future rates.
Litigation
----------
The Company is party to certain legal actions in which
claimants seek material amounts. Although it is impossible
to predict the outcome with certainty, based upon the
opinions of legal counsel, management does not expect
disposition of these matters to have a materially adverse
effect on the Company's financial position or results of
operations.
<PAGE>
NORTHWEST NATURAL GAS COMPANY
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
-----------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
----------Quarter Ended----------
Dollars (Thousands Mar. June Sept. Dec.
Except Per Share Amounts) 31, 30, 30, 31, Total
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Operating revenues 128,534 66,505 48,474 124,748 368,261
Net operating revenues 72,325 37,219 26,922 69,007 205,473
Net income (loss) 18,780 2,465 (3,774) 17,990 35,461
Earnings (loss) per
share 1.37 0.13 (0.34) 1.29 2.44*
1993
Operating revenues 128,714 61,789 47,451 120,763 358,717
Net operating revenues 82,116 40,141 30,805 66,822 219,884
Net income (loss) 24,653 2,767 (4,423) 14,650 37,647
Earnings (loss) per
share 1.82 0.15 (0.40) 1.05 2.61*
------------------------------------------------------------------------
</TABLE>
*Quarterly earnings per share are based upon the average number of
common shares outstanding during each quarter. Because the average
number of shares outstanding has increased in each quarter shown,
the sum of quarterly earnings does not equal earnings per share for
the year.
Variations in earnings between quarterly periods are due primarily
to the seasonal nature of the Company's business.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
(Item 10. Directors and Executive Officers of the
Registrant; Item 11. Executive Compensation; Item 12.
Security Ownership of Certain Beneficial Owners and
Management; and Item 13. Certain Relationships and
Related Transactions.)
Information called for by Part III (Items 10., 11.,
12. and 13.) is incorporated herein by reference to portions of
the Company's definitive proxy statement. See the Additional Item
included in Part I for information concerning executive officers
of the Company.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a) The following documents are filed as part of this
report:
1. A list of all Financial Statements and
Supplementary Schedules is incorporated by
reference to Item 8.
2. List of Exhibits filed:
(3a.) Restated Articles of Incorporation,
as filed and effective June 24, 1988
and amended December 8, 1992,
December 1, 1993 and May 27, 1994.
(3b.) Bylaws as amended effective
February 24, 1995.
*(4a.) Copy of Mortgage and Deed of Trust,
dated as of July 1, 1946, to Bankers
Trust and R. G. Page (to whom Stanley
Burg is now successor), Trustees
(incorporated herein by reference to
Exhibit 7(j) in File No. 2-6494); and
copies of Supplemental Indentures
Nos. 1 through 14 to the Mortgage and
Deed of Trust, dated respectively, as
of June 1, 1949, March 1, 1954,
April 1, 1956, February 1, 1959,
July 1, 1961, January 1, 1964,
March 1, 1966, December 1, 1969,
April 1, 1971, January 1, 1975,
December 1, 1975, July 1, 1981,
June 1, 1985 and November 1, 1985
(incorporated herein by reference to
Exhibit 4(d) in File No. 33-1929);
Supplemental Indenture No. 15 to the
Mortgage and Deed of Trust, dated as
of July 1, 1986 (filed as Exhibit
(4)(c) in File No. 33-24168);
Supplemental Indentures Nos. 16, 17
and 18 to the Mortgage and Deed of
Trust, dated, respectively, as of
November 1, 1988, October 1, 1989 and
July 1, 1990 (incorporated herein by
reference to Exhibit (4)(c) in File
No. 33-40482); Supplemental
Indenture No. 19 to the Mortgage and
Deed of Trust (incorporated herein by
reference to Exhibit 4(c) in File No.
33-64014); and Supplemental Indenture
No. 20 to the Mortgage and Deed of
Trust, dated as of June 1, 1993
(incorporated herein by reference to
Exhibit 4(c) in File No. 33-53795).
*(4d.) Copy of Indenture, dated as of
June 1, 1991, between the Company and
Bankers Trust Company, Trustee,
relating to the Company's Unsecured
Medium-Term Notes (incorporated
herein by reference to Exhibit 4(e)
in File No. 33-64014).
*(4e.) Officers' Certificate dated June 12,
1991 creating Series A of the
Company's Unsecured Medium-Term Notes
(incorporated herein by reference to
Exhibit (4e.) to Form 10-K for 1993,
File No. 0-994).
*(4f.) Officers' Certificate dated June 18,
1993 creating Series B of the
Company's Unsecured Medium-Term Notes
(incorporated herein by reference to
Exhibit (4f.) to Form 10-K for 1993,
File No. 0-994).
*(10j.) Transportation Agreement, dated
June 29, 1990, between the Company
and Northwest Pipeline Corporation
(incorporated herein by reference to
Exhibit (10j.) to Form 10-K for 1993,
File No. 0-994).
*(10j.(1)) Replacement Firm Transportation
Agreement, dated July 31, 1991,
between the Company and Northwest
Pipeline Corporation (incorporated
herein by reference to Exhibit
(10j.(2)) to Form 10-K for 1992, File
No. 0-994).
*(10j.(2)) Firm Transportation Service
Agreement, dated November 10, 1993,
between the Company and Pacific Gas
Transmission Company (incorporated
herein by reference to Exhibit
(10j.(2)) to Form 10-K for 1993, File
No. 0-994).
(10j.(3)) Service Agreement, dated June 17,
1993, between Northwest Pipeline
Corporation and the Company.
(10j.(4)) Firm Transportation Service
Agreement, dated October 22, 1993,
between Pacific Gas Transmission
Company and the Company.
(10j.(5)) Letter Agreement, dated May 11, 1994,
between Pacific Gas and Electric
Company and the Company.
(10j.(6)) Service Agreement, dated January 20,
1995 between Nova Corporation and the
Company.
(10j.(7)) Service Agreement, dated June 12,
1991, between Alberta Natural Gas
Company Ltd. and the Company.
(10j.(8)) Service Agreement, dated November 9,
1994, applicable to firm
transportation service under Rate
Schedule FS-1 between Alberta Natural
Gas Company Ltd. and the Company.
(11) Statement re computation of fully-
diluted per share earnings.
(12) Statement re computation of ratios.
(23) Independent Auditors' Consent.
(27) Financial Data Schedule.
Executive Compensation Plans and Arrangements:
----------------------------------------------
*(10a.) Employment agreement, dated
October 27, 1983, between the Company
and an executive officer
(incorporated herein by reference to
Exhibit (10a.) to Form 10-K for 1989,
File No. 0-994).
(10b.) Executive Supplemental Retirement
Income Plan, 1995 Restatement.
(10c.) 1985 Stock Option Plan, as amended
effective February 23, 1995.
*(10e.) Executive Deferred Compensation Plan,
1990 Restatement, effective
January 1, 1990 (incorporated herein
by reference to Exhibit (10e.) to
Form 10-K for 1990, File No. 0-994).
*(10e.-1) Amendment No. 1 to Executive Deferred
Compensation Plan (incorporated by
reference to Exhibit (10e.-1) to Form
10-K for 1991, File No. 0-994).
(10e.-2) Amendment No. 2 to Executive Deferred
Compensation Plan.
*(10f.) Directors Deferred Compensation Plan,
1988 Restatement, effective
January 1, 1988 (incorporated herein
by reference to Exhibit (10g.) to
Form 10-K for 1987, File No. 0-994).
(10f.-1) Amendment No. 1 to Directors Deferred
Compensation Plan.
*(10g.) Form of Indemnity Agreement as
entered into between the Company and
each director and executive officer
(incorporated herein by reference to
Exhibit (10g.) to Form 10-K for 1988,
File No. 0-994).
*(10i.) Non-Employee Directors Stock
Compensation Plan, as amended effective
July 1, 1991 (incorporated herein by
reference to Exhibit (10i.) to Form 10-K
for 1991, File No. 0-994).
*(10k.) Executive Annual Incentive Plan,
effective March 1, 1990, as amended
effective January 1, 1992 (incorporated
herein by reference to Exhibit (10k.) to
Form 10-K for 1991, File No. 0-994).
*(10l.) Employment agreement dated November 27,
1989, between the Company and an
executive officer (incorporated herein
by reference to Exhibit (10l.) to
Form 10-K for 1991, File No. 0-994).
(10m.) Agreement dated September 22, 1994,
between the Company and an executive
officer.
The Company agrees to furnish the Commission, upon
request, a copy of certain instruments defining
rights of holders of long-term debt of the Company
or its consolidated subsidiaries which authorize
securities thereunder in amounts which do not
exceed 10% of the total assets of the Company.
(b) Reports on Form 8-K.
No Current Reports on Form 8-K were filed during the
quarter ended December 31, 1994.
___________________________________
*Incorporated herein by reference as indicated.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NORTHWEST NATURAL GAS COMPANY
Date: March 23, 1995 By /s/ Robert L. Ridgley
------------------ -----------------------------
Robert L. Ridgley, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Robert L. Ridgley Principal Executive
------------------------- Officer and Director March 23, 1995
Robert L. Ridgley
President and Chief Executive Officer
/s/ Bruce R. DeBolt Principal Financial
------------------------- Officer March 23, 1995
Bruce R. DeBolt
Senior Vice President, Finance,
and Chief Financial Officer
/s/ D. James Wilson Principal Accounting
------------------------ Officer March 23, 1995
D. James Wilson
Treasurer and Controller
/s/ Mary Arnstad Director )
------------------------ )
Mary Arnstad )
)
/s/ Thomas E. Dewey, Jr. Director )
------------------------ )
Thomas E. Dewey, Jr. )
)
Director )
------------------------ )
Tod R. Hamachek )
)
/s/ Richard B. Keller Director )
------------------------ )
Richard B. Keller )
)
/s/ Wayne D. Kuni Director )
------------------------ )
Wayne D. Kuni )
)
/s/ Dwight A. Sangrey Director ) March 23, 1995
------------------------ )
Dwight A. Sangrey )
)
/s/ Melody C. Teppola Director )
------------------------ )
Melody C. Teppola )
)
/s/ Russell F. Tromley Director )
------------------------ )
Russell F. Tromley )
)
/s/ Benjamin R. Whiteley Director )
------------------------ )
Benjamin R. Whiteley )
)
Director )
------------------------ )
William R. Wiley )
)
/s/ Carlton Woodard Director )
------------------------ )
Carlton Woodard )
<PAGE>
NORTHWEST NATURAL GAS COMPANY
EXHIBIT INDEX
To
Annual Report on Form 10-K
For Fiscal Year Ended
December 31, 1994
Exhibit
Document Number
-------- ------
Restated Articles of Incorporation, as filed
June 24, 1988 and amended December 8, 1992,
December 1, 1993 and May 27, 1994 (3a.)
Bylaws as amended effective February 24, 1995 (3b.)
* Mortgage and Deed of Trust, dated as of July 1,
1946, as supplemented by Supplemental Indenture
Nos. 1 through 20 (4a.)
* Indenture, dated as of July 1, 1991, between
the Company and Bankers Trust Company (4d.)
* Officers' Certificate dated June 12, 1991
creating Unsecured Medium-Term Notes Series A (4e.)
* Officers' Certificate dated June 18, 1993
creating Unsecured Medium-Term Notes Series B (4f.)
* Transportation Agreement, dated June 29, 1990,
between the Company and Northwest Pipeline
Corporation (10j.)
* Replacement Firm Transportation Agreement,
dated July 31, 1991, between the Company and
Northwest Pipeline Corporation (10j.(1))
* Firm Transportation Service Agreement dated
November 10, 1993, between the Company and
Pacific Gas Transmission Company (10j.(2))
Service Agreement, dated June 17, 1993, between
Northwest Pipeline Corporation and the Company (10j.(3))
Firm Transportation Service Agreement, dated
October 22, 1993, between Pacific Gas
Transmission Company and the Company (10j.(4))
Letter Agreement, dated May 11, 1994, between
Pacific Gas and Electric Company and the Company (10j.(5))
Service Agreement, dated January 20, 1995 between
Nova Corporation and the Company (10j.(6))
Service Agreement, dated June 12, 1991, between
Alberta Natural Gas Company Ltd. and the Company (10j.(7))
Service Agreement, dated November 9, 1994,
applicable to firm transportation service under
Rate Schedule FS-1 between Alberta Natural Gas
Company Ltd. and the Company (10j.(8))
Statement re computation of fully-diluted
per share earnings (11)
Statement re computation of ratios (12)
Independent Auditors' Consent (23)
Financial Data Schedule (27)
Executive Compensation Plans and Arrangements
---------------------------------------------
* Employment Agreement, dated October 27, 1983,
between the Company and an executive officer (10a.)
Executive Supplemental Retirement Income Plan,
1995 Restatement (10b.)
1985 Stock Option Plan as amended effective
February 23, 1995 (10c.)
* Executive Deferred Compensation Plan, 1990
Restatement, effective January 1, 1990 (10e.)
* Amendment No. 1 to Executive Deferred
Compensation Plan (10e.-1)
Amendment No. 2 to Executive Deferred
Compensation Plan (10e.-2)
* Directors Deferred Compensation Plan, 1988
Restatement, effective January 1, 1988 (10f.)
Amendment No. 1 to Directors Deferred
Compensation Plan (10f.-1)
* Form of Indemnity Agreement entered into
between the Company and each director and
executive officer (10g.)
* Non-Employee Directors Stock Compensation Plan,
as amended effective July 1, 1991 (10i.)
* Executive Annual Incentive Plan, effective
March 1, 1990, as amended effective
January 1, 1992 (10k.)
* Employment agreement dated November 27, 1989
between the Company and an executive officer (10l.)
Agreement dated September 22, 1994 between
the Company and an executive officer (10m.)
--------------------------
* Incorporated by reference
ex-index
Exhibit (3a.)
RESTATED ARTICLES OF INCORPORATION
of
NORTHWEST NATURAL GAS COMPANY
as Filed and Effective June 24, 1988<PAGE>
<PAGE>
STATE OF OREGON
CORPORATION DIVISION
158 12th Street N.E.
Salem, OR 97310
Registry Number:
014302-14
RESTATED ARTICLES OF INCORPORATION
Business Corporation
1. The name of the corporation is Northwest Natural Gas
Company.
2. A copy of the Restated Articles of Incorporation is
attached.
3. The Restated Articles of Incorporation do not contain
amendments which require shareholder approval. These
Restated Articles were duly adopted by the Board of
Directors.
Execution: Robert L. Ridgley Robert L. Ridgley President
Signature Printed Name Title
Person to contact
about this filing: C. J. Rue (503) 220-2411
Name Daytime Phone
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
NORTHWEST NATURAL GAS COMPANY
(These Restated Articles of Incorporation of Northwest Natural
Gas Company supersede its theretofore existing Restated Articles
of Incorporation and all amendments thereto.)
ARTICLE I
A. The name of this corporation is NORTHWEST NATURAL GAS
COMPANY, and its duration shall be perpetual.
ARTICLE II
A. The purposes of the corporation are to engage in any lawful
activity for which corporations may be organized under the
Oregon Business Corporation Act.
ARTICLE III
A. The aggregate number of shares of capital stock which the
corporation shall have authority to issue is 33,500,000
shares, divided into 1,500,000 shares of Preferred Stock
without par value, issuable in series as hereinafter
provided, 2,000,000 shares of Preference Stock without par
value, issuable in series as hereinafter provided, and
30,000,000 shares of Common Stock of the par value of $3-1/6
per share.
B. Each certificate for shares of Common Stock of a par value
other than $3-1/6 per share, so long as it remains
outstanding, shall evidence and represent an equal number of
shares of Common Stock of $3-1/6 par value. Each
certificate for shares of the 4.68% Series, 4.75% Series,
6.875% Series or 8% Series of the Preferred Stock of the par
value of $100 per share, so long as it remains outstanding,
shall evidence and represent, respectively, an equal number
of shares of the $4.68 Series, $4.75 Series, $6.875 Series
or $8 Series of the Preferred Stock, without par value.
C. A statement of the preferences, limitations and relative
rights of each class of capital stock of the corporation,
namely, the Preferred Stock, the Preference Stock and the
Common Stock, of the variations in the relative rights and
preferences as between series of the Preferred Stock and as
between series of the Preference Stock, insofar as the same
are fixed by these Restated Articles of Incorporation, and
of the authority vested in the board of directors of the
corporation to establish series of Preferred Stock and
series of Preference Stock and to fix and determine the
variations in the relative rights and preferences as between
series insofar as the same are not fixed by these Restated
Articles of Incorporation, is as follows:
Preferred Stock
1. The shares of the Preferred Stock may be divided into
and issued in series. Each series shall be so
designated as to distinguish the shares thereof from
the shares of all other series of the Preferred Stock
and all other classes of capital stock of the
corporation. To the extent that these Restated
Articles of Incorporation shall not have established
series of the Preferred Stock and fixed and determined
the variations in the relative rights and preferences
as between series, the board of directors shall have
authority, and is hereby expressly vested with
authority, to divide the Preferred Stock into series
and, within the limitations set forth in these Restated
Articles of Incorporation and such limitations as may
be provided by law, to fix and determine the relative
rights and preferences of any series of the Preferred
Stock so established. Such action by the board of
directors shall be expressed in a resolution or
resolutions adopted by it prior to the issuance of
shares of each series, which resolution or resolutions
shall also set forth the distinguishing designation of
the particular series of the Preferred Stock
- 1 -
established thereby. Without limiting the generality
of the foregoing, authority is hereby expressly vested
in the board of directors so to fix and determine with
respect to any series of the Preferred Stock:
(a) The rate of dividend;
(b) The price at which and the terms and conditions on
which shares may be redeemed;
(c) The amount payable upon shares in the event of
voluntary and involuntary liquidation;
(d) Sinking fund provisions, if any, for the
redemption or purchase of shares; and
(e) The terms and conditions, if any, on which shares
may be converted if the shares of any series are
issued with the privilege of conversion.
All shares of the Preferred Stock of the same series
shall be identical except that shares of the same
series issued at different times may vary as to the
dates from which dividends thereon shall be cumulative;
and all shares of the Preferred Stock, irrespective of
series, shall constitute one and the same class of
stock, shall be of equal rank, and shall be identical
except as to the designation thereof, the date or dates
from which dividends on shares thereof shall be
cumulative, and the relative rights and preferences set
forth above in clauses (a) through (e) of this
subdivision, as to which there may be variations
between different series. Except as otherwise may be
provided by law, by subdivision III.C.7., or by the
resolutions establishing any series of Preferred Stock
in accordance with the foregoing provisions of this
subdivision, whenever the written consent, affirmative
vote, or other action on the part of the holders of the
Preferred Stock may be required for any purpose, such
consent, vote or other action shall be taken by the
holders of the Preferred Stock as a single class
irrespective of series and not by different series.
2. The holders of shares of the Preferred Stock of each
series shall be entitled to receive dividends, when and
as declared by the board of directors, out of any funds
legally available for the payment of dividends, at the
annual rate fixed and determined with respect to each
series either by these Restated Articles of
Incorporation or in accordance with subdivision
III.C.1., and no more, payable quarterly on the 15th
day of February, May, August and November in each year
or on such other date or dates as the board of
directors shall determine in the resolutions
establishing such series. Such dividends shall be
cumulative in the case of shares of each series either
from the date of issuance of shares of such series or
from the first day of the current dividend period
within which shares of such series shall be issued, as
the board of directors shall determine, so that if
dividends on all outstanding shares of each particular
series of the Preferred Stock, at the annual dividend
rates fixed and determined by the board of directors
for the respective series, shall not have been paid or
declared and set apart for payment for all past
dividend periods and for the then current dividend
periods, the deficiency shall be fully paid or
dividends equal thereto declared and set apart for
payment at said rates before any dividends on the
Preference Stock or the Common Stock shall be paid or
declared and set apart for payment. In the event more
than one series of the Preferred Stock shall be
outstanding, the corporation, in making any dividend
payment on the Preferred Stock, shall make payments
ratably upon all outstanding shares of the Preferred
Stock in proportion to the amount of dividends
accumulated thereon to the date of such dividend
payment. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend
payment or payments which may be in arrears.
3. In the event of any dissolution, liquidation or winding
up of the corporation, before any distribution or
payment shall be made to the holders of the Preference
Stock or the Common Stock, the holders of the Preferred
Stock of each series then outstanding shall be entitled
to be paid out of the net assets of the corporation
available for distribution to its shareholders the
respective amounts per share fixed and determined with
respect to each series either by these Restated
Articles of Incorporation or in accordance with
subdivision III.C.1., and no more. If upon
dissolution, liquidation or winding up of the
- 2 -
corporation, whether voluntary or involuntary, the net
assets of the corporation available for distribution to
its shareholders shall be insufficient to pay the
holders of all outstanding shares of Preferred Stock of
all series the full amounts to which they shall be
respectively entitled as aforesaid, the entire net
assets of the corporation available for distribution
shall be distributed ratably to the holders of all
outstanding shares of Preferred Stock of all series in
proportion to the amounts to which they shall be
respectively so entitled. For the purposes of this
subdivision, any dissolution, liquidation or winding up
which may arise out of or result from the condemnation
or purchase of all or a major portion of the properties
of the corporation by (i) the United States Government
or any authority, agency or instrumentality thereof,
(ii) a State of the United States or any political
subdivision, authority, agency or instrumentality
thereof, or (iii) a district, cooperative or other
association or entity not organized for profit, shall
be deemed to be an involuntary dissolution, liquidation
or winding up; and a consolidation, merger or
amalgamation of the corporation with or into any other
corporation or corporations shall not be deemed to be a
dissolution, liquidation or winding up of the
corporation, whether voluntary or involuntary.
4. (a) Subject to the limitations set forth in
subdivision III.C.9. or fixed and determined in
accordance with subdivision III.C.1., the
Preferred Stock of all series, or of any series
thereof, or any part of any series thereof, at any
time outstanding, may be redeemed by the
corporation, at its election expressed by
resolution of the board of directors, at any time
or from time to time, at the then applicable
redemption price fixed and determined with respect
to each series either by these Restated Articles
of Incorporation or in accordance with subdivision
III.C.1. If less than all of the shares of any
series are to be redeemed, the redemption shall be
made either pro rata or by lot in such manner as
the board of directors shall determine.
(b) In the event the corporation shall so elect to
redeem shares of the Preferred Stock, notice of
the intention of the corporation to do so and of
the date and place fixed for redemption shall be
mailed not less than thirty days before the date
fixed for redemption to each holder of shares of
the Preferred Stock to be redeemed at his address
at it shall appear on the books of the
corporation, and on and after the date fixed for
redemption and specified in such notice (unless
the corporation shall default in making payment of
the redemption price), such holders shall cease to
be shareholders of the corporation with respect to
such shares and shall have no interest in or claim
against the corporation with respect to such
shares, excepting only the right to receive the
redemption price therefor from the corporation on
the date fixed for redemption, without interest,
upon endorsement, if required, and surrender of
their certificates for such shares.
(c) Contemporaneously with the mailing of notice of
redemption of any shares of the Preferred Stock as
aforesaid or at any time thereafter on or before
the date fixed for redemption, the corporation
may, if it so elects, deposit the aggregate
redemption price of the shares to be redeemed with
any bank or trust company doing business in The
City of New York, New York, or Portland, Oregon,
having a capital and surplus of at least
$25,000,000, named in such notice, payable on the
date fixed for redemption in the proper amounts to
the respective holders of the shares to be
redeemed, upon endorsement, if required, and
surrender of their certificates for such shares,
and on and after the making of such deposit such
holders shall cease to be shareholders of the
corporation with respect to such shares and shall
have no interest in or claim against the
corporation with respect to such shares, excepting
only the right to exercise such redemption,
conversion or exchange rights, if any, on or
before the date fixed for redemption as may have
been provided with respect to such shares or the
right to receive the redemption price of their
shares from such bank or trust company on the date
fixed for redemption, without interest, upon
endorsement, if required, and surrender of their
certificates for such shares.
(d) If the corporation shall have elected to deposit
the redemption moneys with a bank or trust company
as permitted by subdivision (c) above, any moneys
so deposited which shall remain unclaimed at the
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end of six years after the redemption date shall
be repaid to the corporation, and upon such
repayment holders of Preferred Stock who shall not
have made claim against such moneys prior to such
repayment shall be deemed to be unsecured
creditors of the corporation for an amount,
without interest, equal to the amount they would
theretofore have been entitled to receive from
such bank or trust company. Any redemption moneys
so deposited which shall not be required for such
redemption because of the exercise, after the date
of such deposit, of any right of redemption,
conversion or exchange or otherwise, shall be
returned to the corporation forthwith. The
corporation shall be entitled to receive any
interest allowed by any bank or trust company on
any moneys deposited with such bank or trust
company as herein provided, and the holders of any
shares called for redemption shall have no claim
against any such interest.
(e) Nothing herein contained shall limit any legal
right of the corporation to purchase or otherwise
acquire any shares of the Preferred Stock.
5. The holders of shares of the Preferred Stock shall have
no right to vote in the election of directors or for
any other purpose, except as may be otherwise provided
by law or by subdivisions III.C.6, 7 and 8. Holders of
Preferred Stock shall be entitled to notice of each
meeting of shareholders at which they shall have any
right to vote, but shall not be entitled to notice of
any other meeting of shareholders.
6. (a) If at any time dividends payable on any share or
shares of Preferred Stock shall be in arrears in
an amount equal to four full quarterly dividends
or more per share, a default in preferred
dividends for the purpose of this subdivision
shall be deemed to have occurred, and having so
occurred, such default shall be deemed to exist
thereafter until, but only until, all unpaid
accumulated dividends on all shares of Preferred
Stock shall have been paid to the last preceding
dividend period. If and whenever a default in
preferred dividends shall occur, a special meeting
of shareholders of the corporation shall be held
for the purpose of electing directors upon the
written request of the holders of at least 10% of
the total number of shares of Preferred Stock then
outstanding. Such meeting shall be called by the
secretary of the corporation upon such written
request and shall be held at the earliest
practicable date upon like notice as that required
for the annual meeting of shareholders of the
corporation and at the place for the holding of
such annual meeting. If notice of such special
meeting shall not be mailed by the secretary
within thirty days after personal service of such
written request upon the secretary of the
corporation or within thirty days of mailing the
same in the United States of America by registered
mail addressed to the secretary at the principal
office of the corporation, then the holders of at
least 10% of the total number of shares of
Preferred Stock then outstanding may designate in
writing one of their number to call such meeting
and the person so designated may call such meeting
upon like notice as that required for the annual
meeting of shareholders and to be held at the
place for the holding of such annual meeting. Any
holder of Preferred Stock so designated shall have
access to the stock books of the corporation for
the purpose of causing a meeting of shareholders
to be called pursuant to the foregoing provisions
of this subdivision.
(b) At any such special meeting, or at the next annual
meeting of shareholders of the corporation for the
election of directors and at each other meeting,
annual or special, for the election of directors
held thereafter (unless at the time of any such
meeting such default in preferred dividends shall
no longer exist), the holders of the outstanding
shares of Preferred Stock, voting separately as a
class irrespective of series, shall have the right
to elect the smallest number of directors which
shall constitute at least one-fourth of the total
number of directors of the corporation, or two
directors, whichever shall be the greater, and the
holders of the outstanding shares of Common Stock,
voting as a class, shall have the right to elect
all other members of the board of directors,
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anything herein or in the bylaws of the
corporation to the contrary notwithstanding. The
terms of office, as directors, of all persons who
may be directors of the corporation at any time
when such special right to elect directors shall
become vested in the holders of the Preferred
Stock shall terminate upon the election of any new
directors to succeed them as aforesaid.
(c) At any meeting, annual or special, of the
corporation, at which the holders of Preferred
Stock shall have the special right to elect
directors as aforesaid, the presence in person or
by proxy of the holders of a majority of the total
number of shares of Preferred Stock then
outstanding shall be required to constitute a
quorum of such class for the election of
directors, and the presence in person or by proxy
of the holders of a majority of the total number
of shares of Common Stock then outstanding shall
be required to constitute a quorum of such class
for the election of directors; provided, however,
that the absence of a quorum of the holders of
shares of any such class shall not prevent the
election at any such meeting or adjournment
thereof of directors by the other class, if the
necessary quorum of the holders of such other
class shall be present at such meeting or any
adjournment thereof; and provided further, that in
the absence of a quorum of holders of shares of
any class, a majority of the holders of the shares
of such class who are present in person or by
proxy shall have power to adjourn the election of
the directors to be elected by such class from
time to time, without notice other than
announcement at the meeting, until the requisite
quorum of holders of such class shall be present
in person or by proxy, but no such adjournment
shall be made to a date beyond the date for the
mailing of the notice of the next annual meeting
of shareholders of the corporation or special
meeting in lieu thereof.
(d) So long as a default in preferred dividends shall
exist, any vacancy in the office of a director
elected by the holders of the Preferred Stock may
be filled at any meeting of shareholders, annual
or special, for the election of directors held
thereafter, and a special meeting of shareholders,
or of the holders of shares of the Preferred
Stock, may be called for the purpose of filling
any such vacancy. So long as a default in
preferred dividends shall exist, any vacancy in
the office of a director elected by the holders of
the Common Stock may be filled by a majority vote
of the remaining directors elected by the holders
of Common Stock.
(e) If and when the default in preferred dividends
which permitted the election of directors by the
holders of the Preferred Stock shall cease to
exist, the holders of the Preferred Stock shall
be divested of any special right with respect to
the election of directors, and the voting power of
the holders of the Preferred Stock and of the
holders of the Common Stock shall revert to the
status existing before the first dividend payment
date on which dividends on the Preferred Stock
were not paid in full, subject to revesting in the
event of each and every subsequent like default in
preferred dividends. Upon the termination of any
such special right, the terms of office of all
persons who may have been elected directors by
vote of the holders of the Preferred Stock
pursuant to such special right shall forthwith
terminate, and the resulting vacancies shall be
filled by the majority vote of the remaining
directors.
7. So long as any shares of the Preferred Stock shall be
outstanding, the corporation shall not, without the
written consent or affirmative vote of the holders of
at least two-thirds of the total number of shares of
the Preferred Stock then outstanding, (i) create or
authorize any new class of stock ranking prior to the
Preferred Stock as to dividends or upon dissolution,
liquidation or winding up, or (ii) amend, alter or
repeal any of the express terms of the Preferred Stock
then outstanding in a manner substantially prejudicial
to the holders thereof. Notwithstanding the foregoing
provisions of this subdivision, if any proposed
amendment, alteration or repeal of any of the express
terms of any outstanding shares of the Preferred Stock
would be substantially prejudicial to the holders of
shares of one or more, but not all, of the series of
the Preferred Stock, only the written consent or
affirmative vote of the holders of at least two-thirds
of the total number of outstanding shares
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of all series so affected shall be required. Any
affirmative vote of the holders of the Preferred Stock,
or of any one or more series thereof, which may be
required in accordance with the foregoing provisions of
this subdivision, upon a proposal to create or
authorize any class of stock ranking prior to the
Preferred Stock or to amend, alter or repeal the
express terms of outstanding shares of the Preferred
Stock or of any one or more series thereof in a manner
substantially prejudicial to the holders thereof may be
taken at a special meeting of the holders of the
Preferred Stock or of the holders of one or more series
thereof called for the purpose, notice of the time,
place and purposes of which shall have been given to
the holders of the shares of the Preferred Stock
entitled to vote upon any such proposal, or at any
meeting, annual or special, of the shareholders of the
corporation, notice of the time, place and purposes of
which shall have been given to holders of shares of the
Preferred Stock entitled to vote on such a proposal.
8. So long as any shares of the Preferred Stock shall be
outstanding, the corporation shall not, without the
written consent or affirmative vote of the holders of
at least a majority of the total number of shares of
Preferred Stock then outstanding:
(a) issue any shares of the Preferred Stock, or of any
other class of stock ranking prior to or on a
parity with the Preferred Stock as to dividends or
upon dissolution, liquidation or winding up,
unless (i) the net income of the corporation
available for the payment of dividends for a
period of twelve consecutive calendar months
within the fifteen calendar months immediately
preceding the issuance of such shares (including,
in any case in which such shares are to be issued
in connection with the acquisition of new
property, the net income of the property so to be
acquired, computed on the same basis as the net
income of the corporation) is at least equal to
two times the annual dividend requirements on all
shares of the Preferred Stock, and on all shares
of all other classes of stock ranking prior to or
on a parity with the Preferred Stock as to
dividends or upon dissolution, liquidation or
winding up, which will be outstanding immediately
after the issuance of such shares, including the
shares proposed to be issued, and (ii) the gross
income of the corporation available for the
payment of interest for a period of twelve
consecutive calendar months within the fifteen
calendar months immediately preceding the issuance
of such shares (including, in any case in which
such shares are to be issued in connection with
the acquisition of new property, the gross income
of the property so to be acquired, computed on the
same basis as the gross income of the corporation)
is at least equal to one and one-half times the
aggregate of the annual interest requirements on
all securities evidencing indebtedness of the
corporation, and the annual dividend requirements
on all shares of the Preferred Stock and on all
shares of all other classes of stock ranking prior
to or on a parity with the Preferred Stock as to
dividends or upon dissolution, liquidation or
winding up, which will be outstanding immediately
after the issuance of such shares, including the
shares proposed to be issued; or
(b) issue any shares of the Preferred Stock, or of any
other class of stock ranking prior to or on a
parity with the Preferred Stock as to dividends or
upon dissolution, liquidation or winding up,
unless the aggregate of the capital of the
corporation applicable to the Common Stock and the
surplus of the corporation (paid-in, earned or
other, if any) shall be not less than the
aggregate amount payable on the involuntary
dissolution, liquidation or winding up of the
corporation on all shares of the Preferred Stock,
and on all shares of all other classes of stock
ranking prior to or on a parity with the Preferred
Stock as to dividends or upon dissolution,
liquidation or winding up, which will be
outstanding immediately after the issuance of such
shares, including the shares proposed to be
issued; provided, however, that if, for the
purposes of meeting the requirements of this
subdivision, it shall become necessary to take
into consideration any surplus of the corporation
the corporation shall not thereafter pay any
dividends on shares of the Preference Stock or the
Common Stock which would result in reducing the
aggregate of the capital of the corporation
applicable to the Common Stock and the surplus of
the corporation to an amount less than the
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aggregate amount payable, on involuntary
dissolution, liquidation or winding up of the
corporation, on all shares of the Preferred Stock
and of any stock ranking prior to or on a parity
with the Preferred Stock, as to dividends or upon
dissolution, liquidation or winding up, at the
time outstanding.
In any case where it would be appropriate, under
generally accepted accounting principles, to combine or
consolidate the financial statements of any predecessor
or subsidiary of the corporation with those of the
corporation, the foregoing computations may be made on
the basis of such combined or consolidated financial
statements. Any affirmative vote of the holders of the
Preferred Stock, which may be required in accordance
with the foregoing provisions of this subdivision, may
be taken at a special meeting of the holders of the
Preferred Stock called for the purpose, notice of the
time, place and purposes of which shall have been given
to the holders of the outstanding shares of the
Preferred Stock, or at any meeting, regular or special,
of the shareholders of the corporation, notice of the
time, place and purposes of which shall have been given
to the holders of the outstanding shares of the
Preferred Stock.
9. The series of Preferred Stock heretofore established
and outstanding on the date of the adoption of these
Restated Articles of Incorporation, together with a
statement of the rights and preferences of each series,
are as follows:
$4.68 Series
(a) The Preferred Stock $4.68 Series, of which 18,600
shares were outstanding at the time of the
adoption of these Restated Articles of
Incorporation, shall have the following rights and
preferences:
(i) the rate of dividend of shares of said Series
shall be $4.68 per annum; the dividend payment
dates shall be the 15th days of February, May,
August and November in each year except that the
date of payment of the first dividend shall be
November 15, 1963; and dividends shall be
cumulative from the date of issue;
(ii) the price at which shares of said Series may
be redeemed shall be $105 per share if the date of
redemption is on or prior to July 31, 1968; $103
per share if the date of redemption is after July
31, 1968 and on or prior to July 31, 1971; $101
per share if the date of redemption is after July
31, 1971 and on or prior to July 31, 1974; and
$100 per share if the date of redemption is after
July 31, 1974; in each case plus unpaid
accumulated dividends, if any, to the date of
redemption; provided, however, that no shares of
said Series may be redeemed on or prior to July
31, 1968, in whole or in part by the use, directly
or indirectly, of the proceeds from the issuance
of any class or series of Preferred Stock of the
corporation bearing an effective dividend rate
(calculated in accordance with acceptable
financial practice) that is less than $4.68 per
annum;
(iii) the amount payable upon shares of said
Series in the event of involuntary liquidation
shall be $100 per share and in the event of
voluntary liquidation shall be an amount equal to
the then applicable redemption price of shares of
said Series plus unpaid accumulated dividends, if
any, to the date of payment;
(iv) shares of said Series shall not be, by their
terms, convertible;
(v) shares of said Series shall be entitled to
the benefits of a purchase fund as follows:
(1) The corporation (unless such action, in
the opinion of counsel for the corporation,
would be contrary to any applicable law or to
any rule or regulation of any governmental
authority having jurisdiction in the
premises) will each year, beginning in 1966,
so long as any shares of said Series are
outstanding, make an offer, in the manner
hereinafter specified, to the holders of
shares of said Series, to purchase on June 15
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in each such year, 1,800 shares of said
Series at $100 per share and accumulated
dividends up to such June 15 (hereinafter
called "$4.68 Series Purchase Offer");
provided, however, that (i) if in any year
the net income of the corporation for the
preceding calendar year (which net income
shall be determined in accordance with the
requirements of the regulatory authority of
the State of Oregon having jurisdiction of
the corporation and after deducting from such
net income one year's dividend requirement on
any Preferred Stock of the corporation
outstanding at the end of such preceding
calendar year whether or not declared or
paid) shall be less than half the sum of
$180,000 plus the maximum obligation,
expressed in dollars, due during the year in
which such $4.68 Series Purchase Offer is to
be made, for sinking funds, purchase funds,
or other analogous devices, if any, for the
retirement of any other Preferred Stock of
the corporation, then the corporation's
obligation, expressed in dollars, to offer to
purchase shares of said Series in such year
shall be limited to such amount as it shall
in its sole discretion determine; and (ii) if
in any year the amount of such net income of
the corporation for the preceding calendar
year (after deducting from such net income
one year's dividend requirement on any
Preferred Stock of the corporation
outstanding at the end of such preceding
calendar year whether or not declared or
paid) shall be not less than half, and not
equal to, the sum of $180,000 plus the
maximum obligation, expressed in dollars, due
during the year in which such $4.68 Series
Purchase Offer is to be made, for sinking
funds, purchase funds, or other analogous
devices, if any, for the retirement of any
other Preferred Stock of the corporation,
then the corporation's obligation, expressed
in dollars, to offer to purchase shares of
said Series in such year shall be the
proportion of said amount so determined which
$180,000 bears to the maximum aggregate of
all sinking funds, purchase funds, or other
analogous devices, if any, for the retirement
of any Preferred Stock of the corporation.
The total number of shares to be purchased
and the number of shares to be purchased from
any holder shall be adjusted to the nearest
full share so that fractional shares need not
be purchased. The obligation of the
corporation to make annually the $4.68 Series
Purchase Offer and to purchase shares of said
Series tendered for sale in accordance with
the terms thereof, hereinafter is referred to
as the "$4.68 Series Purchase Fund
Obligation" and is subject to the terms and
conditions hereinafter set forth.
(2) Beginning on or prior to April 30, 1966,
and on or prior to April 30 in each year
thereafter, the corporation shall deliver to
the Transfer Agent for said Series a
certificate signed by the president or a vice
president or the treasurer or an assistant
treasurer of the corporation stating (i)(a)
whether or not the corporation's obligation,
expressed in dollars, to offer to purchase
shares of said Series is limited by reason of
subdivision (1)(ii) above, and if so, the
amount of such obligation as so limited, and
(b) the number of shares of said Series for
which a $4.68 Series Purchase Offer is to be
made by the corporation in such year, or
(ii) that the net income of the corporation
for the preceding calendar year was such that
the corporation has no $4.68 Series Purchase
Fund Obligation in the current year, or (iii)
that the making of a $4.68 Series Purchase
Offer by the corporation, in the opinion of
counsel for the corporation accompanying such
certificate, would be contrary to an
applicable law or to a rule or regulation of
a governmental authority having jurisdiction
in the premises; provided, however, that if,
on April 1 of any year, there are not funds
legally available, in the opinions of the
signer of such certificate and of counsel for
the corporation accompanying such
certificate, for the payment of the current
$4.68 Series Purchase Fund Obligation, the
corporation may presume for the purposes
hereof that the making of a $4.68 Series
Purchase Offer would be contrary to an
applicable law.
(3) If the certificate filed in any such year
shall state that a $4.68 Series Purchase
Offer is to be made in such year, the
Transfer Agent for said Series with whom such
certificate is filed shall, on or prior to
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May 15 of such year, cause to be mailed to
the holders of record of the shares of said
Series at the close of business on the May 1
preceding such mailing (or, if the board of
directors of the corporation has declared a
dividend on the shares of said Series,
payable on May 15, to the holders receiving
such dividend payment at the time of mailing
such dividend payment checks), a notice, in
the name of the corporation, that the
corporation will on June 15 of such year
accept tenders of shares required to satisfy
the $4.68 Series Purchase Fund Obligation
then due at $100 per share and accumulated
dividends to such June 15; provided, however,
that such tender must be received by the
Transfer Agent not later than the close of
business on the fifth full business day
preceding such June 15 and that such tender
must be irrevocable until the close of
business on June 16 of such year. Tenders
may be accepted regardless of whether the
holder so tendering held shares of said
Series at the time notice was given. The
corporation may require, and in such event
said notice shall specify, that each offer to
sell shares of said Series shall be
accompanied by the certificate or
certificates for the shares so offered, the
signature of the holder thereof to be
guaranteed by a bank or trust company (not a
savings bank) or by a firm having membership
in the New York Stock Exchange, together with
evidence satisfactory to the Transfer Agent
of the right of the holder of such shares to
so sell the same to the corporation. The
decision of counsel for the corporation as to
the right of the holder of such shares to
sell the same to the corporation shall
control and be conclusive. Any offer to sell
shall be subject to acceptance in whole or in
part.
(4) In any year in which a $4.68 Series
Purchase Offer is made, the Transfer Agent
for said Series shall on June 15 of such
year, on behalf of the corporation, accept
tenders to sell shares of said Series
received by it up to the full number of
shares covered by the $4.68 Series Purchase
Offer subject to the limitations on
expenditures set forth in the certificate
delivered to the Transfer Agent. If more
shares are properly tendered pursuant to any
annual $4.68 Series Purchase Offer than are
to be purchased, the Transfer Agent shall
accept the tender of such number of shares of
each tendering shareholder as will bear the
same ratio to the total number of shares to
be purchased, as the number of shares of said
Series held of record by such tendering
shareholder bears to the aggregate number of
shares of said Series held of record by all
tendering shareholders. If one or more
holders tender less than their proportionate
share so that any of the number of shares to
be purchased remain unallocated after
apportionment among tendering shareholders on
the foregoing basis the shares then remaining
unallocated shall be again apportioned on the
same basis among any excess tenders and such
process shall be repeated until tenders have
been accepted for the full number of shares
to be purchased.
(5) On or prior to June 15 in each year in
which a $4.68 Series Purchase Offer shall
have been made, the corporation shall deposit
with the Transfer Agent for said Series cash
sufficient to purchase those shares of said
Series, if any, accepted for purchase
pursuant to the $4.68 Series Purchase Offer
made in such year. The Transfer Agent shall,
on or before the next succeeding June 20,
return to the corporation any funds deposited
with it and not used or required to purchase
shares of said Series, pursuant to the $4.68
Series Purchase Offer for such year. The
$4.68 Series Purchase Fund Obligation in any
year shall be deemed to be fully satisfied if
the corporation shall have complied with
these provisions notwithstanding that the
total number of shares purchased by it shall
be less than the total number of shares
covered by the $4.68 Series Purchase Offer
for that year because insufficient offers to
sell were received by it. The $4.68 Series
Purchase Fund Obligation shall not be
cumulative.
(6) Shares of said Series, purchased pursuant
to any $4.68 Series Purchase Offer, shall be
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cancelled, shall not be reissued as shares of
said Series, and shall be restored to the
status of authorized but unissued shares of
the Preferred Stock of the corporation.
(7) Unless otherwise provided by law,
nothing herein contained shall prevent or in
any manner restrict the board of directors or
the corporation from authorizing and issuing
any other series of Preferred Stock entitled
to a purchase fund, sinking fund or other
analogous device for the benefit of the
holders of such other series of Preferred
Stock of the corporation, whether or not the
provisions therefor shall correspond with the
provisions for said Series; provided that the
dates on which such other fund or device
shall operate in any particular year shall
correspond with the dates applicable to said
Series and in the event there is a deficiency
in funds legally available to meet the total
obligation due on any date for said Series
and any other series of Preferred Stock of
the corporation, the funds actually
available, if any, or the total number of
shares of said Series which the corporation
may offer to purchase, shall be prorated
between said Series and such other series of
Preferred Stock so that the percentage
allocated to any particular preferred stock
shall correspond with its portion of the
total amount due.
(8) After June 15, 1966, so long as any
shares of said Series shall be outstanding,
no dividends on the Preference Stock or the
Common Stock of the corporation shall,
without the written consent or affirmative
vote of the holders of at least a majority of
the total number of shares of Preferred Stock
then outstanding, be declared and set apart
for payment unless the $4.68 Series Purchase
Fund Obligation applicable to the June 15
immediately preceding the declaration of such
dividend shall have been fully met, in that
the corporation has offered to purchase 1,800
shares of said Series and has purchased or
has available funds to purchase, pursuant to
such $4.68 Series Purchase Offer, such 1,800
shares at $100 per share plus accumulated
dividends to such June 15.
(9) Whenever any of the dates mentioned with
respect to the $4.68 Series Purchase Offer or
$4.68 Series Purchase Fund Obligation shall
not be a full business day in the City of
Portland, Oregon, then any action to be taken
on said date may be taken on the next
succeeding full business day.
$4.75 Series
(b) The Preferred Stock $4.75 Series, of which 20,485
shares were outstanding at the time of the
adoption of these Restated Articles of
Incorporation, shall have the following rights and
preferences:
(i) the rate of dividend of shares of said Series
shall be $4.75 per annum of the par value thereof;
the dividend payment dates shall be the 15th days
of February, May, August and November in each year
except that the date of payment of the first
dividend shall be May 15, 1964; and dividends
shall be cumulative from the date of issue;
(ii) the price at which shares of said Series may
be redeemed shall be $105 per share if the date of
redemption is on or prior to January 31, 1969;
$103 per share if the date of redemption is after
January 31, 1969 and on or prior to January 31,
1972; $101 per share if the date of redemption is
after January 31, 1972 and on or prior to January
31, 1975; and $100 per share if the date of
redemption is after January 31, 1975; in each case
plus unpaid accumulated dividends, if any, to the
date of redemption; provided, however, that no
shares of said Series may be redeemed on or prior
to January 31, 1969; in whole or in part by the
use, directly or indirectly, of the proceeds from
the issuance of any class or series of Preferred
Stock of the corporation bearing an effective
dividend rate (calculated in accordance with
acceptable financial practice) that is less than
$4.75 per annum;
- 10 -
(iii) the amount payable upon shares of said
Series in the event of involuntary liquidation
shall be $100 per share and in the event of
voluntary liquidation shall be an amount equal to
the then applicable redemption price of shares of
said Series plus unpaid accumulated dividends, if
any, to the date of payment;
(iv) shares of said Series shall not be, by their
terms, convertible;
(v) shares of said Series shall be entitled to
the benefits of a purchase fund as follows:
(1) The corporation (unless such action, in
the opinion of counsel for the corporation,
would be contrary to any applicable law or to
any rule or regulation of any governmental
authority having jurisdiction in the
premises) will each year, beginning in 1967,
so long as any shares of said Series are
outstanding, make an offer, in the manner
hereinafter specified, to the holders of
shares of said Series, to purchase on June 15
in each such year, 1,800 shares (less that
number of shares, if any, surrendered in
accordance with the provisions of the
following subdivision) of said Series at
prices up to but not exceeding $100 per share
and accumulated dividends up to such June 15
(hereinafter called "$4.75 Series Purchase
Offer"); provided, however, that (i) if in
any year the net income of the corporation
for the preceding calendar year (which net
income shall be determined in accordance with
the requirements of the regulatory authority
of the State of Oregon having jurisdiction of
the corporation and after deducting from such
net income one year's dividend requirement on
any Preferred Stock of the corporation
outstanding at the end of such preceding
calendar year whether or not declared or
paid) shall be less than half the sum of
$180,000 plus the maximum obligation,
expressed in dollars, due during the year in
which such $4.75 Series Purchase Offer is to
be made, for sinking funds, purchase funds,
or other analogous devices, if any, for the
retirement of any other Preferred Stock of
the corporation, then the corporation's
obligation, expressed in dollars, to offer to
purchase shares of said Series in such year
shall be limited to such amount as it shall
in its sole discretion determine; and (ii) if
in any year the amount of such net income of
the corporation for the preceding calendar
year (after deducting from such net income
one year's dividend requirement on any
Preferred Stock of the corporation
outstanding at the end of such preceding
calendar year whether or not declared or
paid) shall be not less than half, and not
equal to, the sum of $180,000 plus the
maximum obligation, expressed in dollars, due
during the year in which such $4.75 Series
Purchase Offer is to be made, for sinking
funds, purchase funds, or other analogous
devices, if any, for the retirement of any
other Preferred Stock of the corporation,
then the corporation's obligation, expressed
in dollars, to offer to purchase shares of
said Series in such year shall be the
proportion of said amount so determined which
$180,000 bears to the maximum aggregate of
all sinking funds, purchase funds, or other
analogous devices, if any, for the retirement
of any Preferred Stock of the corporation.
The total number of shares to be purchased
and the number of shares to be purchased from
any holder shall be adjusted to the nearest
full share so that fractional shares need not
be purchased. The obligation of the
corporation to make annually the $4.75 Series
Purchase Offer and to purchase shares of said
Series tendered for sale in accordance with
the terms thereof, is hereinafter referred to
as the "$4.75 Series Purchase Fund
Obligation" and is subject to the terms and
conditions hereinafter set forth.
(2) In addition to or in lieu of making a
$4.75 Series Purchase Offer, the $4.75 Series
Purchase Fund Obligation may also be
satisfied in whole or in part by the
surrender by the corporation for cancellation
to the Transfer Agent for said Series, on or
before June 15 of the year as to which the
$4.75 Series Purchase Fund Obligation being
met with such surrender is applicable, of
shares of said Series theretofore acquired by
the corporation; shares so surrendered in
excess of 1,800 shares shall be
- 11 -
credited to the $4.75 Series Purchase Fund
Obligation of the next succeeding year or
years. Such surrender, however, shall not
reduce the corporation's obligation expressed
in dollars to offer to purchase said Series
pursuant to subdivision (1)(ii) above, but
the number of shares of said Series which the
corporation shall offer to purchase shall be
reduced to the difference between 1,800
shares and the number of shares so
surrendered.
(3) Beginning on or prior to April 30, 1967,
and on or prior to April 30 in each year
thereafter, the corporation shall deliver to
the Transfer Agent for said Series a
certificate signed by the president or a vice
president or the treasurer or an assistant
treasurer of the corporation stating (i)(a)
whether or not the corporation's obligation,
expressed in dollars, to offer to purchase
shares of said Series is limited by reason of
subdivision (1)(ii) above, and if so, the
amount of such obligation as so limited, (b)
the number of shares of said Series, if any,
to be surrendered by the corporation for
cancellation on or prior to June 15 in such
year, and (c) the number of shares of said
Series for which a $4.75 Series Purchase
Offer is to be made by the corporation in
such year, or (ii) that the net income of the
corporation for the preceding calendar year
was such that the corporation has no $4.75
Series Purchase Fund Obligation in the
current year, or (iii) that the making of a
$4.75 Series Purchase Offer by the
corporation, in the opinion of counsel for
the corporation accompanying such
certificate, would be contrary to an
applicable law or to a rule or regulation of
a government authority having jurisdiction in
the premises; provided, however, that if, on
April 1 of any year, there are not funds
legally available, in the opinions of the
signer of such certificate and of counsel for
the corporation accompanying such
certificate, for the payment of the current
$4.75 Series Purchase Fund Obligation, the
corporation may presume for the purposes
hereof that the making of a $4.75 Series
Purchase Offer would be contrary to an
applicable law.
(4) If the certificate filed in any such
year shall state that a $4.75 Series Purchase
Offer is to be made in such year, the
Transfer Agent for said Series with whom such
certificate is filed shall, on or prior to
May 15 of such year, cause to be mailed to
the holders of record of the shares of said
Series at the close of business on the May 1
preceding such mailing (or, if the board of
directors of the corporation has declared a
dividend on the shares of said Series,
payable on May 15, to the holders receiving
such dividend payment at the time of mailing
such dividend payment checks), a notice, in
the name of the corporation, that the
corporation will on June 15 of such year
accept tenders of shares required to satisfy
the $4.75 Series Purchase Fund Obligation
then due at prices not exceeding $100 per
share and accumulated dividends to such
June 15; provided, however, that such tender
must be received by the Transfer Agent not
later than the close of business on the fifth
full business day preceding such June 15 and
that such tender must be irrevocable until
the close of business on June 16 of such
year. Tenders may be accepted regardless of
whether the holder so tendering held shares
of said Series at the time notice was given.
The corporation may require, and in such
event said notice shall specify, that each
offer to sell shares of said Series shall be
accompanied by the certificate or
certificates for the shares so offered, the
signature of the holder thereof to be
guaranteed by a bank or trust company ( not a
savings bank) or by a firm having membership
in the New York Stock Exchange, together with
evidence satisfactory to the Transfer Agent
of the right of the holder of such shares to
so sell the same to the corporation. The
decision of counsel for the corporation as to
the right of the holder of such shares to
sell the same to the corporation shall
control and be conclusive. Any offer to sell
shall be subject to acceptance in whole or in
part.
(5) In any year in which a $4.75 Series
Purchase Offer is made, the Transfer Agent
for said Series shall on June 15 of such
year, on behalf of the corporation, accept
tenders to sell shares of said Series
received by it up to the full number of
shares covered by the $4.75 Series Purchase
- 12 -
Offer subject to the limitations on
expenditures set forth in the certificate
delivered to the Transfer Agent upon such
basis as will result in the lowest aggregate
cost to the corporation. The Transfer Agent
shall to the extent necessary select among
tenders made at the same price by lot in such
manner as it may determine.
(6) On or prior to June 15 in each year in
which a $4.75 Series Purchase Offer shall
have been made, the corporation shall
surrender to the Transfer Agent for said
Series, for cancellation, certificates for
the number of shares of said Series, if any,
specified in the certificate for such year to
be surrendered by the corporation to the
Transfer Agent and deposit with the Transfer
Agent cash sufficient to purchase shares of
said Series, if any, accepted for purchase
pursuant to the $4.75 Series Purchase Offer
made in such year. The Transfer Agent shall,
on or before the next succeeding June 20,
return to the corporation any funds deposited
with it and not used or required to purchase
shares of said Series, pursuant to the $4.75
Series Purchase Offer for such year. The
$4.75 Series Purchase Fund Obligation in any
year shall be deemed to be fully satisfied if
the corporation shall have complied with
these provisions notwithstanding that the
total number of shares purchased by it shall
be less than the total number of shares
covered by the $4.75 Series Purchase Offer
for that year because insufficient offers to
sell were received by it. The $4.75 Series
Purchase Fund Obligation shall not be
cumulative.
(7) Shares of said Series, purchased
pursuant to any $4.75 Series Purchase Offer,
or surrendered in whole or partial
satisfaction of the $4.75 Series Purchase
Fund Obligation in any year, shall be
cancelled, shall not be reissued as shares of
said Series, and shall be restored to the
status of authorized but unissued shares of
the Preferred Stock of the corporation.
(8) Unless otherwise provided by law,
nothing herein contained shall prevent or in
any manner restrict the board of directors or
the corporation from authorizing and issuing
any other series of Preferred Stock entitled
to a purchase fund, sinking fund or other
analogous device for the benefit of the
holders of such other series of Preferred
Stock of the corporation, whether or not the
provisions therefor shall correspond with the
provisions for said Series; provided that the
dates on which such other fund or device
shall operate in any particular year shall
correspond with the dates applicable to said
Series and in the event there is a deficiency
in funds legally available to meet the total
obligation due on any date for said Series
and any other series of Preferred Stock of
the corporation, the funds actually
available, if any, or the total number of
shares of said Series which the corporation
may offer to purchase, shall be prorated
between said Series and such other series of
Preferred Stock so that the percentage
allocated to any particular Preferred Stock
shall correspond with its portion of the
total amount due.
(9) After June 15, 1967, so long as any
shares of said Series shall be outstanding,
no dividends on the Preference Stock or the
Common Stock of the corporation shall,
without the written consent or affirmative
vote of the holders of at least a majority of
the total number of shares of Preferred Stock
then outstanding, be declared and set apart
for payment unless the $4.75 Series Purchase
Fund Obligation applicable to the June 15
immediately preceding the declaration of such
dividend shall have been fully met by one of
the following: (a) the surrender by the
corporation to the Transfer Agent for
cancellation of 1,800 shares of said Series
therefore acquired by it, or (b) the
corporation has offered to purchase 1,800
shares of said Series and has purchased or
has available funds to purchase, pursuant to
such $4.75 Series Purchase Offer, such 1,800
shares at prices not exceeding $100 per share
plus accumulated dividends to such June 15,
or (c) the corporation offered to purchase
that number of shares of said Series and has
- 13 -
purchased or has funds available for the
purchase thereof pursuant to such $4.75
Series Purchase Offer at $100 per share plus
accumulated dividends to such June 15 which
when added to the number of shares of said
Series, if any, theretofore acquired by and
surrendered for cancellation to the Transfer
Agent by the corporation shall aggregate
1,800 shares of said Series.
(10) Whenever any of the dates mentioned
with respect to the $4.75 Series Purchase
Offer or $4.75 Series Purchase Fund
Obligation shall not be a full business day
in the City of Portland, Oregon, then any
action to be taken on said date may be taken
on the next succeeding full business day.
$6.875 Series
(c) The Preferred Stock $6.875 Series, of which 28,000
shares were outstanding at the time of the
adoption of these Restated Articles of
Incorporation, shall have the following rights and
preferences:
(i) the rate of dividend of shares of said Series
shall be $6.875 per annum of the par value
thereof; the dividend payment dates shall be the
15th days of February, May, August and November in
each year; and dividends shall be cumulative from
the date of original issue;
(ii) the price at which shares of said Series may
be redeemed shall be $110 per share if the date of
redemption is on or prior to December 31, 1977;
$106 per share if the date of redemption is after
December 31, 1977 and on or prior to December 31,
1980; $103 per share if the date of redemption is
after December 31, 1980 and on or prior to
December 31, 1983; and $100 per share if the date
of redemption is after December 31, 1983; in each
case plus unpaid accumulated dividends, if any, to
the date of redemption, provided, however, that no
shares of said Series may be redeemed (otherwise
than by operation of the sinking fund provided for
in subdivision (v) below) prior to December 31,
1974, directly or indirectly from the proceeds of
or in anticipation of any refunding operation
involving the incurring of indebtedness, or the
issuance of stock, the holder of which will have a
preference to the holders of the Common Stock with
respect to the payment of dividends, having an
effective interest rate, dividend rate or cost
(calculated in accordance with acceptable
financial practice) of less than the annual
dividend rate borne by the shares of said Series;
(iii) the amount payable upon shares of said
Series in the event of involuntary liquidation
shall be $100 per share and in the event in
voluntary liquidation shall be an amount equal to
the then applicable redemption price of shares of
said Series plus unpaid accumulated dividends, if
any, to the date of payment;
(iv) shares of said Series shall not be, by their
terms, convertible;
(v) shares of said Series shall be entitled to
the benefits of a sinking fund as follows:
(1) The corporation (unless such action, in
the opinion of counsel for the corporation,
would be contrary to any applicable law or to
any rule or regulation of any governmental
authority having jurisdiction in the
premises) shall, as a sinking fund for the
retirement of shares of said Series, redeem,
in the manner herein provided, 2,100 shares
of said Series on June 15, 1969 and 2,100
shares of said Series on the 15th day of June
of each year thereafter so long as any shares
of said Series shall remain outstanding, in
each case at the par value thereof per share
plus accrued dividends to the date fixed for
redemption; provided, however, that (i) if in
any year the net income of the corporation
for the preceding calendar year (which net
income shall be determined in accordance with
the requirements of the regulatory authority
of the State of Oregon having jurisdiction of
the corporation and after deducting from such
net income one year's dividend requirement on
any Preferred Stock of the corporation
outstanding at the end of such preceding
- 14 -
calendar year whether or not declared or
paid) shall be less than half the sum of
$210,000 plus the maximum obligation,
expressed in dollars, due during the year in
which said Series sinking fund redemption is
to be made, for sinking funds, purchase
funds, or other analogous devices, if any,
for the retirement of any other Preferred
Stock of the corporation, then the
corporation's obligation, expressed in
dollars, to redeem shares of said Series for
sinking fund purposes in such year shall be
limited to such amount, if any, as it shall
in its sole discretion determine; and (ii) if
in any year the amount of such net income of
the corporation for the preceding calendar
year (determined as aforesaid and after
deducting from such net income one year's
dividend requirement on any Preferred Stock
of the corporation outstanding at the end of
such preceding calendar year whether or not
declared or paid) shall be not less than
half, and not equal to, the sum of $210,000
plus the maximum obligation, expressed in
dollars, due during the year in which said
Series sinking fund redemption is to be made,
for sinking funds, purchase funds or other
analogous devices, if any, for the retirement
of any other Preferred Stock of the
corporation, then the corporation's
obligation, expressed in dollars, to redeem
shares of said Series for sinking fund
purposes in such year shall be the proportion
of said amount so determined which $210,000
bears to the maximum aggregate of all sinking
funds, purchase funds, or other analogous
devices, if any, for the retirement of any
Preferred Stock of the corporation in such
year. The total number of shares to be
redeemed and the number of shares to be
redeemed from any holder shall be adjusted to
the nearest full share so that fractional
shares need not be redeemed. The corporation
may, on any redemption date as above provided
and at its option, credit against its sinking
fund obligation such number of shares of said
Series theretofore redeemed by the
corporation otherwise than for the account of
its sinking fund obligation or such number of
shares of said Series theretofore purchased
by the corporation at a price per share not
in excess of $100 plus accrued dividends and
in either case not theretofore applied as a
credit on its sinking fund obligation. The
sinking fund for said Series shall not be
cumulative. Notice of redemption for each
sinking fund shall be given, and deposit of
the aggregate redemption price may be made,
subject to the general terms and provisions
for redemption of the Preferred Stock set
forth in subdivision III.C.4.
(2) Shares of said Series redeemed pursuant
to the provisions of the sinking fund or
credited thereto shall be cancelled, shall
not be reissued as shares of said Series, and
shall be restored to the status of authorized
but unissued shares of the Preferred Stock of
the corporation.
(3) Unless otherwise provided by law,
nothing herein contained shall prevent or in
any manner restrict the board of directors of
the corporation from authorizing and issuing
any other series of Preferred Stock entitled
to a purchase fund, sinking fund or other
analogous device for the benefit of the
holders of such other series of Preferred
Stock of the corporation, whether or not the
provisions therefor shall correspond with the
provisions for said Series; provided that the
dates on which such other fund or device
shall operate in any particular year shall
correspond with the dates applicable to said
Series and in the event there is a deficiency
in the funds available in any particular year
for the fulfillment of the maximum
requirements of the purchase funds, sinking
funds or other analogous devices of all
outstanding series of Preferred Stock of the
corporation in accordance with the terms
thereof, such funds as are available in
accordance with such terms for such purpose
shall be prorated among all such series so
that the percentage allocated to any
particular Preferred Stock shall correspond
with its portion of the total amount due.
(4) After June 15, 1969, so long as any
shares of said Series shall be outstanding,
no dividends on the Preference Stock or the
Common Stock of the corporation shall,
without the written consent or affirmative
vote of the holders of at least a majority of
the total number of shares of Preferred Stock
then outstanding, be declared and set apart
- 15 -
for payment unless the corporation, on the
June 15th immediately preceding the
declaration of such dividend, shall have
redeemed 2,100 shares of said Series at $100
per share plus accumulated dividends to such
June 15th or in accordance with the terms
hereof shall have taken credits against the
shares of said Series sinking fund which,
with shares redeemed pursuant to such fund
obligation, aggregate 2,100 shares of said
Series.
(5) Whenever any of the dates mentioned with
respect to said Series shall not be a full
business day in the City of Portland, Oregon,
then any action to be taken on said date may
be taken on the next succeeding full business
day.
$8.00 Series
(d) The Preferred Stock $8.00 Series, of which 36,296
shares were outstanding at the time of the
adoption of these Restated Articles of
Incorporation, shall have the following rights and
preferences:
(i) the rate of dividend of shares of said Series
shall be $8.00 per annum; the dividend payment
dates shall be the 15th days of February, May,
August and November in each year; provided,
however, that the initial dividend payment date
shall be August 15, 1971; and dividends shall be
cumulative from the date of original issue;
(ii) the price at which shares of said Series may
be redeemed shall be $110 per share if the date of
redemption is on or prior to April 30, 1981; $106
per share if the date of redemption is after April
30, 1981 and on or prior to April 30, 1984; $103
per share if the date of redemption is after April
30, 1984 and on or prior to April 30, 1987; and
$100 per share if the date of redemption is after
April 30, 1987; in each case plus unpaid
accumulated dividends, if any, to the date of
redemption; provided, however, that no shares of
said Series may be redeemed (otherwise than by
operation of the sinking fund provided for in
subdivision (v) below) prior to April 30, 1981,
directly or indirectly from the proceeds of or in
anticipation of any refunding operation involving
the incurring of indebtedness, or the issuance of
stock, the holder of which will have a preference
to the holders of the Common Stock with respect to
the payment of dividends, having an effective
interest rate, dividend rate or cost (calculated
in accordance with acceptable financial practice)
of less than the annual dividend rate borne by the
shares of said Series;
(iii) the amount payable upon shares of said
Series in the event of involuntary liquidation
shall be $100 per share and in the event of
voluntary liquidation shall be an amount equal to
the then applicable redemption price of shares of
said Series plus unpaid accumulated dividends, if
any, to the date of payment;
(iv) shares of said Series shall not be, by their
terms, convertible;
(v) shares of said Series shall be entitled to
the benefits of a sinking fund as follows:
(1) The corporation (unless such action, in
the opinion of counsel for the corporation,
would be contrary to any applicable law or to
any rule or regulation of any governmental
authority having jurisdiction in the
premises) shall, as a sinking fund for the
retirement of shares of said Series, redeem,
in the manner herein provided, 2,100 shares
of said Series on June 15, 1974 and 2,100
shares of said Series on the 15th day of June
of each year thereafter so long as any shares
of said Series shall remain outstanding, in
each case at the par value thereof per share
plus accrued dividends to the date fixed for
redemption; provided, however, that (i) if in
any year the net income of the corporation
for the preceding calendar year (which net
income shall be determined in accordance with
the requirements of the regulatory authority
of the State of Oregon having jurisdiction of
the corporation and after deducting from such
net income one year's dividend requirement
- 16 -
on any Preferred Stock of the corporation
outstanding at the end of such preceding
calendar year whether or not declared or
paid) shall be less than half the sum of
$210,000 plus the maximum obligation,
expressed in dollars, due during the year in
which said Series sinking fund redemption is
to be made, for sinking funds, purchase
funds, or other analogous devices, if any,
for the retirement of any other Preferred
Stock of the corporation, then the
corporation's obligation, expressed in
dollars, to redeem shares of said Series for
sinking fund purposes in such year shall be
limited to such amount, if any, as it shall
in its sole discretion determine; and (ii) if
in any year the amount of such net income of
the corporation for the preceding calendar
year (determined as aforesaid and after
deducting from such net income one year's
dividend requirement on any Preferred Stock
of the corporation outstanding at the end of
such preceding calendar year whether or not
declared or paid) shall be not less than
half, and not equal to, the sum of $210,000
plus the maximum obligation, expressed in
dollars, due during the year in which said
Series sinking fund redemption is to be made,
for sinking funds, purchase funds, or other
analogous devices, if any, for the retirement
of any other Preferred Stock of the
corporation, then the corporation's
obligation, expressed in dollars, to redeem
shares of said Series for sinking fund
purposes in such year shall be the proportion
of said amount so determined which $210,000
bears to the maximum aggregate of all sinking
funds, purchase funds, or other analogous
devices, if any, for the retirement of any
Preferred Stock of the corporation in such
year. The total number of shares to be
redeemed and the number of shares to be
redeemed from any holder shall be adjusted to
the nearest full share so that fractional
shares need not be redeemed. The corporation
may, on any redemption date as above provided
and at its option, credit against its sinking
fund obligation such number of shares of said
Series theretofore redeemed by the
corporation otherwise than for the account of
its sinking fund obligation or such number of
shares of said Series theretofore purchased
by the corporation at a price per share not
in excess of $100 plus accrued dividends and
in either case not theretofore applied as a
credit on its sinking fund obligation. The
sinking fund for said Series shall not be
cumulative. Notice of redemption for each
sinking fund shall be given, and deposit of
the aggregate redemption price may be made,
subject to the general terms and provisions
for redemption of the Preferred Stock set
forth in subdivision III.C.4.
(2) Shares of said Series redeemed pursuant
to the provisions of the sinking fund or
credited thereto shall be cancelled, shall
not be reissued as shares of said Series, and
shall be restored to the status of authorized
but unissued shares of the Preferred Stock of
the corporation.
(3) Unless otherwise provided by law,
nothing herein contained shall prevent or in
any manner restrict the board of directors of
the corporation from authorizing and issuing
any other series of Preferred Stock entitled
to a purchase fund, sinking fund or other
analogous device for the benefit of the
holders of such other series of Preferred
Stock of the corporation, whether or not the
provisions therefor shall correspond with the
provisions for said Series; provided that the
dates on which such other fund or device
shall operate in any particular year shall
correspond with the dates applicable to said
Series and in the event there is a deficiency
in the funds available in any particular year
for the fulfillment of the maximum
requirements of the purchase funds, sinking
funds or other analogous devices of all
outstanding series of Preferred Stock of the
corporation in accordance with the terms
thereof, such funds as are available in
accordance with such terms for such purpose
shall be prorated among all such series so
that the percentage allocated to any
particular Preferred Stock shall correspond
with its portion of the total amount due.
(4) After June 15, 1974, so long as any
shares of said Series shall be outstanding,
no dividends on the Preference Stock or the
Common Stock of the corporation shall,
- 17 -
without the written consent or affirmative
vote of the holders of at least a majority of
the total number of shares of Preferred Stock
then outstanding, be declared and set apart
for payment unless the corporation, on the
June 15th immediately preceding the
declaration of such dividend, shall have
redeemed 2,100 shares of said Series at $100
per share plus accumulated dividends to such
June 15th or in accordance with the terms
hereof shall have taken credits against the
shares of said Series sinking fund which,
with shares redeemed pursuant to such fund
obligation, aggregate 2,100 shares of said
Series.
(5) Whenever any of the dates mentioned with
respect to said Series shall not be a full
business day in the City of Portland, Oregon,
then any action to be taken on said date may
be taken on the next succeeding full business
day.
$2.42 Series
(e) The Preferred Stock $2.42 Series, of which 300,000
shares were outstanding at the time of adoption of
these Restated Articles of Incorporation, shall
have the following rights and preferences:
(i) the rate of dividend of shares of said Series
shall be $2.42 per annum; the dividend payment
dates shall be the 15th days of February, May,
August and November in each year; provided,
however, that the initial dividend payment date
shall be May 15, 1978; and dividends shall be
cumulative from the date of original issue;
(ii) the price at which shares of said Series may
be redeemed shall be $29.10 per share if the date
of redemption is prior to January 1, 1988; $28.30
per share if the date of redemption is after
December 31, 1987 and prior to January 1, 1993;
and $27.50 per share if the date of redemption is
after December 31, 1992; in each case plus unpaid
accumulated dividends, if any, to the date of
redemption; provided, however, that no shares of
said Series may be redeemed prior to January 1,
1983;
(iii) the amount payable upon shares of said
Series in the event of involuntary liquidation
shall be $25 per share and in the event of
voluntary liquidation shall be an amount equal to
the then applicable redemption price of shares of
said Series plus unpaid accumulated dividends, if
any, to the date of payment;
(iv) shares of said Series shall not be, by their
terms, convertible;
(v) shares of said Series shall be entitled to
the benefits of a sinking fund as follows:
(1) The corporation (unless such action, in
the opinion of counsel for the corporation,
would be contrary to any applicable law or to
any rule or regulation of any governmental
authority having jurisdiction in the
premises) as a sinking fund for the
retirement of shares of said Series, (a)
shall redeem, in the manner herein provided,
20,000 shares of said Series on June 15, 1984
and 20,000 shares of said Series on the 15th
day of June of each year thereafter so long
as any shares of said Series shall remain
outstanding, and (b) at its option, may
redeem, in the manner herein provided, not to
exceed 20,000 additional shares of said
Series on June 15, 1984 and not to exceed
20,000 additional shares of said Series on
the 15th day of June of each year thereafter
so long as any shares of said Series shall
remain outstanding, in each case at $27.50
per share plus accrued dividends to the date
fixed for redemption; provided, however, that
(i) if in any year the net income of the
corporation for the preceding calendar year
(which net income shall be determined in
accordance with the requirements of the
regulatory authority of the State of Oregon
having jurisdiction of the corporation and
after deducting from such net income one
year's dividend requirement on any Preferred
Stock of the corporation outstanding at the
end of such preceding calendar year whether
or not declared or paid) shall be less than
half the sum
- 18 -
of $550,000 plus the maximum obligation,
expressed in dollars, due during the year in
which said Series sinking fund redemption is
to be made, for sinking funds, purchase
funds, or other analogous devices, if any,
for the retirement of any other Preferred
Stock of the corporation, then the
corporation's obligation, expressed in
dollars, to redeem shares of said Series for
sinking fund purposes in such year shall be
limited to such amount, if any, as it shall
in its sole discretion determine; and (ii) if
in any year the amount of such net income of
the corporation for the preceding calendar
year (determined as aforesaid and after
deducting from such net income one year's
dividend requirement on any Preferred Stock
of the corporation outstanding at the end of
such preceding calendar year whether or not
declared or paid) shall be not less than
half, and not equal to, the sum of $550,000
plus the maximum obligation, expressed in
dollars, due during the year in which said
Series sinking fund redemption is to be made,
for sinking funds, purchase funds, or other
analogous devices, if any, for the retirement
of any other Preferred Stock of the
corporation, then the corporation's
obligation, expressed in dollars, to redeem
shares of said Series for sinking fund
purposes in such year shall be the proportion
of said amount so determined which $550,000
bears to the maximum aggregate of all sinking
funds, purchase funds, or other analogous
devices, if any, for the retirement of any
preferred stock of the corporation in such
year. The total number of shares to be
redeemed and the number of shares to be
redeemed from any holder shall be adjusted to
the nearest full share so that fractional
shares need not be redeemed. The corporation
may, on any redemption date as above provided
and at its option, credit against its sinking
fund obligation such number of shares of said
Series theretofore redeemed by the
corporation, otherwise than for the account
of its sinking fund obligation or optional
right, or such number of shares of said
Series theretofore purchased by the
corporation at a price per share not in
excess of $27.50 plus accrued dividends, and
in either case not theretofore applied as a
credit on its sinking fund obligation. The
sinking fund for said Series shall not be
cumulative. Notice of redemption for each
sinking fund shall be given, and deposit of
the aggregate redemption price may be made,
subject to the general terms and provisions
for redemption of the Preferred Stock set
forth in subdivision III.C.4.
(2) Shares of said Series redeemed pursuant
to the provisions of the sinking fund or
credited thereto shall be cancelled, shall
not be reissued as shares of said Series, and
shall be restored to the status of authorized
but unissued shares of the Preferred Stock of
the corporation.
(3) Unless otherwise provided by law,
nothing herein contained shall prevent or in
any manner restrict the Board of Directors of
the corporation from authorizing and issuing
any other series of Preferred Stock entitled
to a purchase fund, sinking fund or other
analogous device for the benefit of the
holders of such other series of Preferred
Stock of the corporation, whether or not the
provisions therefor shall correspond with the
provisions for said Series; provided that the
dates on which such other fund or device
shall operate in any particular year shall
correspond with the dates applicable to said
Series and in the event there is a deficiency
in the funds available in any particular year
for the fulfillment of the maximum
requirements of the purchase funds, sinking
funds or other analogous devices of all
outstanding series of Preferred Stock of the
corporation in accordance with the terms
thereof, such funds as are available in
accordance with such terms for such purpose
shall be prorated among all such series so
that the percentage allocated to any
particular series of Preferred Stock shall
correspond with its portion of the total
amount due.
(4) After June 15, 1984, so long as any
shares of said Series shall be outstanding,
no dividends on the Preference Stock or the
Common Stock of the corporation shall,
without the written consent or affirmative
vote of the holders of at least a majority of
the total number of shares of Preferred Stock
then outstanding, be declared and set apart
- 19 -
for payment unless the corporation, on the
June 15th immediately preceding the
declaration of such dividend, shall have
redeemed 20,000 shares of said Series at
$27.50 per share plus accumulated dividends
to such June 15th or in accordance with the
terms hereof shall have taken credits against
the shares of said Series sinking fund which,
with shares redeemed pursuant to such fund
obligation, aggregate 20,000 shares of said
Series.
(vi) Whenever any of the dates mentioned with
respect to said Series shall not be a full
business day in the City of Portland, Oregon, then
any action to be taken on said date may be taken
on the next succeeding full business day.
$8.75 Series
(f) The Preferred Stock $8.75 Series, of which 150,000
shares were outstanding at the time of the
adoption of these Restated Articles of
Incorporation, shall have the following rights and
preferences:
(i) (1) the rate of dividend of shares of said
Series shall be $8.75 per annum plus that amount,
if any, which will maintain each holder's after
Federal income tax dividend yield on each dividend
with respect to which any legislative enactment,
administrative action, judicial decision or other
change in law shall reduce or eliminate the
dividends received deduction of 70% provided by
Section 243(a)(1) of the Internal Revenue Code of
1986, as amended, as in effect on April 1, 1988
(the "Dividends Received Deduction"), at the level
at which such yield would have been if such
dividend had been paid to such holder on April 1,
1988 (each holder's after Federal income tax
dividend yield on April 1, 1988 being calculated
on the bases of (i) a cost per share of $100, (ii)
the Dividends Received Deduction, and (iii) an
assumed Federal income tax rate of 34%; and,
thereafter, such holder's after Federal income tax
dividend yield being calculated on the bases of
(i) and (iii) and any reduced dividends received
deduction at the time then in effect); provided,
however, that any such increased dividend shall be
payable only (A) on shares of said Series in
respect of which the holder shall have delivered
to the corporation no later than 360 days after
the effective date of any such reduction or
elimination of the Dividends Received Deduction a
written notice (I) stating that such holder is
entitled to an increased dividend as a result of
such reduction or elimination, (II) specifying the
amount per share of such increase, and (III)
specifying the total number of shares of said
Series held by such holder, and (B) in respect of
dividends payable after the date of receipt of
such notice by the corporation; (2) the dividend
payment dates shall be the 15th days of February,
May, August and November in each year, commencing
on August 15, 1988; and (3) dividends shall be
cumulative from the date of original issue;
(ii) (1) other than as provided in subdivision (2)
below, shares of said Series shall not be
redeemable at the election of the corporation
prior to May 1, 1993. On and after May 1, 1993,
the shares of said Series may be redeemed, at the
election of the corporation, at the following
redemption prices:
<TABLE>
<CAPTION>
If Redeemed If Redeemed
During 12 Months Redemption During 12 Months Redemption
Period Ending Price Period Ending Price
April 30 Per Share April 30 Per Share
-------------- ---------- -------------- -----------
<S> <C> <C> <C>
1994 $108.75 2001 $104.69
1995 $108.17 2002 $104.11
1996 $107.59 2003 $103.53
1997 $107.01 2004 $102.95
1998 $106.43 2005 $102.37
1999 $105.85 2006 $101.79
2000 $105.27 2007 $101.21
2008 $100.63
</TABLE>
- 20 -
and thereafter $100 per share, plus an amount in
each case equal to accrued unpaid dividends, if
any, to the date of redemption; and (2) all but
not less than all of the shares of said Series
held by any holder which shall have given notice
that such holder will be entitled to an increased
dividend in accordance with subdivision (i)(1)
above may be redeemed, at the election of the
corporation, at the redemption price of $100 per
share, plus an amount equal to accrued unpaid
dividends to the date of redemption, within the
period of 360 days commencing on the date of
receipt by the corporation of such notice.
(iii) the amount payable upon shares of said
Series in the event of involuntary liquidation
shall be $100 per share and in the event of
voluntary liquidation occurring prior to May 1,
1994, shall be $108.75, and occurring on or after
May 1, 1994, shall be an amount equal to the then
applicable redemption price of shares of said
Series, plus in each case accrued unpaid
dividends, if any, to the date of payment;
(iv) shares of said Series shall not be, by their
terms, convertible;
(v) shares of said Series shall be entitled to
the benefits of a sinking fund as follows:
(1) The corporation (unless such action, in
the opinion of counsel for the corporation,
would be contrary to any applicable law or to
any rule or regulation of any governmental
authority having jurisdiction in the
premises) as a sinking fund for the
retirement of shares of said Series, shall
redeem, in the manner herein provided, 7,500
shares of said Series on June 15, 1994 and
7,500 shares of said Series on the 15th day
of June of each year thereafter so long as
any shares of said Series shall remain
outstanding, at $100.00 per share plus
accrued unpaid dividends to the date fixed
for redemption. The total number of shares
to be redeemed and the number of shares to be
redeemed from any holder shall be adjusted to
the nearest full share so that fractional
shares need not be redeemed. The corporation
may, on any redemption date as above provided
and at its option, credit against its sinking
fund obligation such number of shares of said
Series theretofore redeemed by the
corporation, otherwise than for the account
of its sinking fund obligation, or such
number of shares of said Series theretofore
purchased by the corporation at a price per
share not in excess of $100.00 plus accrued
dividends, and in either case not theretofore
applied as a credit on its sinking fund
obligation. The sinking fund for said Series
shall not be cumulative. Notice of
redemption for each sinking fund shall be
given, and deposit of the aggregate
redemption price may be made, subject to the
general terms and provisions for redemption
of the Preferred Stock set forth in
subdivision III.C.4 of these Restated
Articles of Incorporation.
(2) Shares of said Series redeemed pursuant
to the provisions of the sinking fund or
credited thereto shall be cancelled, shall
not be reissued as shares of said Series, and
shall be restored to the status of authorized
but unissued shares of the Preferred Stock of
the corporation.
(3) Unless otherwise provided by law,
nothing herein contained shall prevent or in
any manner restrict the Board of Directors of
the corporation from authorizing and issuing
any other series of preferred stock entitled
to a purchase fund, sinking fund or other
analogous device for the benefit of the
holders of such other series of preferred
stock of the corporation, whether or not the
provisions therefor shall correspond with the
provisions for said Series; provided that the
dates on which such other fund or device
shall operate in any particular year shall
correspond with the date applicable to said
Series and in the event there is a deficiency
in the funds available in any particular year
for the fulfillment of the maximum
requirements of the purchase funds, sinking
funds or other analogous devices of all
- 21 -
outstanding series of preferred stock of the
corporation in accordance with the terms
thereof, such funds as are available in
accordance with such terms for such purpose
shall be prorated among all such series so
that the percentage allocated to any
particular series of preferred stock shall
correspond with its portion of the total
amount due.
(4) After June 15, 1994, so long as any
shares of said Series shall be outstanding,
no dividends on the Common Stock or the
Preference Stock of the corporation shall,
without the written consent or affirmative
vote of the holders of at least a majority of
the total number of shares of said Series of
Preferred Stock then outstanding, be declared
and set apart for payment unless the
corporation, on the June 15th immediately
preceding the declaration of such dividend,
shall have redeemed 7,500 shares of said
Series at $100.00 per share plus accrued
unpaid dividends to such June 15th or in
accordance with the terms hereof shall have
taken credits against the shares of said
Series sinking fund which, with shares
redeemed pursuant to such fund obligation,
aggregate 7,500 shares of said Series.
(vi) whenever any of the dates mentioned with
respect to said Series shall not be a full
business day in the City of Portland, Oregon, then
any action to be taken on said date may be taken
on the next succeeding full business day.
Preference Stock
10. The shares of the Preference Stock may be divided into
and issued in series. Each series shall be so
designated as to distinguish the shares thereof from
the shares of all other series of the Preference Stock
and all other classes of capital stock of the
corporation. To the extent that these Restated
Articles of Incorporation shall not have established
series of the Preference Stock and fixed and determined
the variations in the relative rights and preferences
as between series, the board of directors shall have
authority, and is hereby expressly vested with
authority, to divide the Preference Stock into series
and, within the limitations set forth in these Restated
Articles of Incorporation and such limitations as may
be provided by law, to fix and determine the relative
rights and preferences of any series of the Preference
Stock so established. Such action by the board of
directors shall be expressed in a resolution or
resolutions adopted by it prior to the issuance of
shares of each series, which resolution or resolutions
shall also set forth the distinguishing designation of
the particular series of the Preference Stock
established thereby. Without limiting the generality
of the foregoing, authority is hereby expressly vested
in the board of directors so to fix and determine with
respect to any series of the Preference Stock:
(a) The rate of dividend;
(b) The price at which and the terms and conditions on
which shares may be redeemed;
(c) The amount payable upon shares in the event of
voluntary and involuntary liquidation;
(d) Sinking fund provisions, if any, for the
redemption or purchase of shares;
(e) The terms and conditions, if any, on which shares
may be converted if the shares of any series are
issued with the privilege of conversion; and
(f) Any other relative right or preference as
permitted by law.
All shares of the Preference Stock of the same series
shall be identical except that shares of the same
series issued at different times may vary as to the
dates from which dividends thereon shall be cumulative;
and all shares of the Preference Stock, irrespective of
series, shall constitute one and the same class of
stock, shall be of equal rank, and shall be identical
except as to the designation thereof, the date or dates
from which dividends on shares thereof shall be
cumulative, and the relative rights and preferences set
forth above in clauses (a) through (f) of this
subdivision, as to which there may be variations
between different series. Except as otherwise
may be provided by law or by the resolutions
- 22 -
establishing any series of Preference Stock in
accordance with the foregoing provisions of this
subdivision, whenever the written consent, affirmative
vote, or other action on the part of the holders of the
Preference Stock may be required for any purpose, such
consent, vote or other action shall be taken by the
holders of the Preference Stock as a single class
irrespective of series and not by different series.
11. The payment of dividends on the shares of the
Preference Stock shall be subordinate to the dividend
and other distributive rights of the holders of the
Preferred Stock. No dividend shall be paid on the
Preference Stock, unless (i) dividends on all
outstanding shares of each particular series of the
Preferred Stock, at the annual dividend rates fixed and
determined either by these Restated Articles of
Incorporation or in accordance with subdivision
III.C.1., shall have been paid or declared and set
apart for payment for all past dividend periods and for
the then current dividend periods, and (ii) all amounts
due and payable to the holders of the Preferred Stock,
by virtue of purchase funds, sinking funds, or other
analogous devices for the retirement of the Preferred
Stock, or by virtue of dissolution, liquidation or
winding up of the corporation, shall have been paid or
funds for the payment thereof shall have been set apart
for payment. Subject to the foregoing, the holders of
shares of the Preference Stock of each series shall be
entitled to receive dividends, when and as declared by
the board of directors, out of any funds legally
available for the payment of dividends, at the annual
rate fixed and determined with respect to each series
either by these Restated Articles of Incorporation or
in accordance with subdivision III.C.10., and no more,
payable quarterly on the 15th day of February, May,
August and November in each year or on such other date
or dates as the board of directors shall determine in
the resolutions establishing such series. Such
dividends shall be cumulative in the case of shares of
each series either from the date of issuance of shares
of such series or from the first day of the current
dividend period within which shares of such series
shall be issued, as the board of directors shall
determine, so that if dividends on all outstanding
shares of each particular series of the Preference
Stock, at the annual dividend rates fixed and
determined either by these Restated Articles of
Incorporation or in accordance with subdivision
III.C.10., shall not have been paid or declared and set
apart for payment for all past dividend periods and for
the then current dividend periods, the deficiency shall
be fully paid or dividends equal thereto declared and
set apart for payment at said rates before any
dividends on the Common Stock shall be paid or declared
and set apart for payment. In the event more than one
series of the Preference Stock shall be outstanding,
the corporation, in making any dividend payment on the
Preference Stock, shall make payments ratably upon all
outstanding shares of the Preference Stock in
proportion to the amount of dividends accumulated
thereon to the date of such dividend payment. No
interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments
which may be in arrears.
12. Distribution or payment upon dissolution, liquidation
or winding up of the corporation to the holders of the
Preference Stock shall be subordinate to the dividend
and other distributive rights of the holders of the
Preferred Stock. No such distribution or payment shall
be made on the Preference Stock, unless all amounts due
by virtue of the dissolution, liquidation or winding up
of the corporation to the holders of all outstanding
shares of the Preferred Stock of all series shall have
been paid or funds for the payment thereof set apart
for payment. Subject to the foregoing, in the event of
any dissolution, liquidation or winding up of the
corporation, before any distribution or payment shall
be made to the holders of the Common Stock, the holders
of the Preference Stock of each series then outstanding
shall be entitled to be paid out of the net assets of
the corporation available for distribution to its
shareholders the respective amounts per share fixed and
determined with respect to each series either by these
Restated Articles of Incorporation or in accordance
with subdivision III.C.10., and no more. If upon
dissolution, liquidation or winding up of the
corporation, whether voluntary or involuntary, the net
assets of the corporation available for distribution to
- 23 -
its shareholders (after all amounts due by virtue of
the dissolution, liquidation or winding up of the
corporation to the holders of all outstanding shares of
the Preferred Stock of all series shall have been paid
or funds for the payment thereof set apart for payment)
shall be insufficient to pay the holders of all
outstanding shares of Preference Stock of all series
the full amounts to which they shall be respectively
entitled as aforesaid, the net assets of the
corporation so available for distribution shall be
distributed ratably to the holders of all outstanding
shares of Preference Stock of all series in proportion
to the amounts to which they shall be respectively so
entitled. For the purposes of this subdivision, any
dissolution, liquidation or winding up which may arise
out of or result from the condemnation or purchase of
all or a major portion of the properties of the
corporation by (i) the United States Government or any
authority, agency or instrumentality thereof (ii) a
State of the United States or any political
subdivision, authority, agency or instrumentality
thereof, or (iii) a district, cooperative or other
association or entity not organized for profit, shall
be deemed to be an involuntary dissolution, liquidation
or winding up; and a consolidation, merger or
amalgamation of the corporation with or into any other
corporation or corporations shall not be deemed to be a
dissolution, liquidation or winding up of the
corporation, whether voluntary or involuntary.
13. (a) Subject to the limitations set forth in
subdivision III.C.15., or fixed and determined in
accordance with subdivision III.C.10., the
Preference Stock of all series, or of any series
thereof, or any part of any series thereof, at any
time outstanding, may be redeemed by the
corporation, at its election expressed by
resolution of the board of directors, at any time
or from time to time, at the then applicable
redemption price fixed and determined with respect
to each series either by these Restated Articles
of Incorporation or in accordance with subdivision
III.C.10. If less than all of the shares of any
series are to be redeemed, the redemption shall be
made either pro rata or by lot in such manner as
the board of directors shall determine.
(b) In the event the corporation shall so elect to
redeem shares of the Preference Stock, notice of
the intention of the corporation to do so and of
the date and place fixed for redemption shall be
mailed not less than thirty days before the date
fixed for redemption to each holder of shares of
the Preference Stock to be redeemed at his address
as it shall appear on the books of the
corporation, and on and after the date fixed for
redemption and specified in such notice (unless
the corporation shall default in making payment of
the redemption price), such holders shall cease to
be shareholders of the corporation with respect to
such shares and shall have no interest in or claim
against the corporation with respect to such
shares, excepting only the right to receive the
redemption price therefor from the corporation on
the date fixed for redemption, without interest,
upon endorsement, if required, and surrender of
their certificates for such shares.
(c) Contemporaneously with the mailing of notice of
redemption of any shares of the Preference Stock
as aforesaid or at any time thereafter on or
before the date fixed for redemption, the
corporation may, if it so elects, deposit the
aggregate redemption price of the shares to be
redeemed with any bank or trust company doing
business in The City of New York, New York, or
Portland, Oregon, having a capital and surplus of
at least $25,000,000, named in such notice,
payable on the date fixed for redemption in the
proper amounts to the respective holders of the
shares to be redeemed, upon endorsement, if
required, and surrender of their certificates for
such shares, and on and after the making of such
deposit such holders shall cease to be
shareholders of the corporation with respect to
such shares and shall have no interest in or claim
against the corporation with respect to such
shares, excepting only the right to exercise such
redemption, conversion or exchange rights, if any,
on or before the date fixed for redemption as may
have been provided with respect to such shares or
the right to receive the redemption price of their
shares from such bank or trust company on the date
fixed for redemption, without interest, upon
endorsement, if required, and surrender of their
certificates for such shares.
- 24 -
(d) If the corporation shall have elected to deposit
the redemption moneys with a bank or trust company
as permitted by subdivision (c) above, any moneys
so deposited which shall remain unclaimed at the
end of six years after the redemption date shall
be repaid to the corporation, and upon such
repayment holders of Preference Stock who shall
not have made claim against such moneys prior to
such repayment shall be deemed to be unsecured
creditors of the corporation for an amount,
without interest, equal to the amount they would
theretofore have been entitled to receive from
such bank or trust company. Any redemption moneys
so deposited which shall not be required for such
redemption because of the exercise, after the date
of such deposit, of any right of redemption,
conversion or exchange or otherwise, shall be
returned to the corporation forthwith. The
corporation shall be entitled to receive any
interest allowed by any bank or trust company on
any moneys deposited with such bank or trust
company as herein provided, and the holders of any
shares called for redemption shall have no claim
against any such interest.
(e) Nothing herein contained shall limit any legal
right of the corporation to purchase or otherwise
acquire any shares of the Preference Stock.
14. The holders of shares of the Preference Stock shall
have no right to vote in the election of directors or
for any other purpose, except as may be otherwise
provided by law or by resolutions establishing any
series of Preference Stock in accordance with
subdivision III.C.10. Holders of Preference Stock
shall be entitled to notice of each meeting of
shareholders at which they shall have any right to
vote, but shall not be entitled to notice of any other
meeting of shareholders.
15. The series of Preference Stock heretofore established
and outstanding on the date of the adoption of these
Restated Articles of Incorporation, together with a
statement of the rights and preferences of each series,
are as follows:
$2.375 Series
(a) The Convertible Preference Stock $2.375 Series, of
which 126,397 shares were outstanding at the time of
the adoption of these Restated Articles of
Incorporation, shall have the following rights and
preferences:
(i) the rate of dividend of shares of said Series
shall be $2.375 per annum; the dividend payment dates
shall be the 15th days of February, May, August and
November in each year; provided, however, that the
initial dividend payment date shall be November 15,
1980; and dividends shall be cumulative from the date
of original issue;
<TABLE>
(ii) the prices at which shares of said Series
may be redeemed shall be as follows:
<CAPTION>
12 Month 12 Month
period ending Redemption period ending Redemption
June 30, price June 30, price
------------- ---------- ----------- -----------
<S> <C> <C> <C>
1981 $27.38 1986 $26.19
1982 27.14 1987 25.95
1983 26.90 1988 25.71
1984 26.66 1989 25.48
1985 26.43 1990 25.24
</TABLE>
and thereafter $25, in each case, plus unpaid
accumulated dividends, if any, to the date of
redemption;
(iii) the amount payable upon shares of said
Series in the event of involuntary liquidation shall be
$25 per share and in the event of voluntary liquidation
shall be an amount equal to the then applicable
redemption price of shares of said Series, in each
case, plus unpaid accumulated dividends, if any, to the
date of payment;
- 25 -
(iv) shares of said Series shall be convertible
as follows:
(1) Subject to the provisions for adjustment
hereinafter set forth, each share of said Series shall
be convertible, at the option of the holder thereof,
upon surrender to any Transfer Agent for said Series,
or to the corporation if no such Transfer Agent shall
exist, of the certificate for the share to be
converted, into shares of the common stock at the rate
of 1.6502 shares of the common stock for each share of
said Series. The right to convert shares of said
Series called for redemption shall terminate at the
close of business on the 15th day preceding the date
fixed for redemption, unless the corporation shall
default in the payment of the redemption price. Upon
conversion of any shares of said Series, no allowance
or adjustment shall be made for dividends on either
class of shares, but conversion shall not relieve the
corporation from its obligation to pay any dividends
which shall have been declared and shall be payable to
holders of shares of said Series of record as of a date
prior to the date of such conversion even though the
payment date for such dividend is subsequent to the
date of conversion.
(2) The number of shares of the common stock into
which each share of said Series shall be convertible
shall be subject to adjustment from time to time as
follows:
(A) Upon the (i) payment of a dividend on
the common stock in shares of the common stock, (ii)
subdivision of the outstanding common stock, (iii)
combination of the outstanding common stock into a
smaller number of shares, or (iv) issuance by
reclassification of the common stock (whether pursuant
to a merger or consolidation or otherwise) of any
shares of the corporation, each holder of shares of
said Series shall be entitled to receive, for each
share converted after the record date for any of these
events, the number of shares of the corporation which
he would have held after the happening of such event
had such share been converted on the record date
therefor. The conversion rate shall be adjusted
whenever any of these events shall occur, effective as
of the date following the record date therefor.
(B) Upon the issuance of rights or warrants
to the holders of the common stock, as such, entitling
them to subscribe for or purchase shares of the common
stock at a price per share less than the Market Price
(as defined in subdivision (D) below) on the record
date for the determination of shareholders entitled to
receive such rights or warrants, the number of shares
of the common stock into which each share of said
Series shall be convertible shall be adjusted,
effective as of the date following such record date, by
multiplying the number of shares of the common stock
into which such share would have been convertible on
such record date by a fraction, of which the numerator
shall be the number of shares of the common stock
outstanding on such record date plus the number of
additional shares of the common stock offered for
subscription or purchase, and of which the denominator
shall be the number of shares of the common stock
outstanding on such record date plus the number of
shares of the common stock which the aggregate offering
price of the shares of the common stock so offered
would have purchased at such Market Price. For the
purpose of this subdivision (B), (i) the issuance of
rights or warrants to subscribe for or purchase shares
or securities convertible into shares of the common
stock shall be deemed to be the issuance of rights or
warrants to subscribe for or purchase shares of the
common stock; (ii) the sum of the aggregate offering
price of such shares or securities plus the minimum
aggregate amount, if any, payable upon conversion of
such shares or securities into shares of the common
stock divided by the total number of shares of the
common stock into which such shares or securities could
be converted at their earliest conversion date shall be
deemed to be the price per share at which the shares of
the common stock may be subscribed for or purchased;
- 26 -
(iii) the minimum number of shares of the common stock
into which such shares or securities could be converted
at their earliest conversion date shall be deemed to be
the number of additional shares of the common stock
offered for subscription or purchase; (iv) the number
of shares of the common stock which the aggregate
offering price of such shares or securities plus the
minimum aggregate amount, if any, payable upon
conversion of such shares or securities into shares of
the common stock would have purchased at the Market
Price on the record date for the determination of
shareholders entitled to receive such rights or
warrants shall be deemed to be the number of shares of
the common stock which the aggregate offering price of
the shares so offered would have purchased at such
Market Price; and (v) the right of the holders of the
common stock to invest in additional shares of the
common stock pursuant to the Company's Dividend
Reinvestment and Stock Purchase Plan, as it may be
amended from time to time, shall not be deemed to be a
right or warrant.
(C) Upon the distribution to the holders of
the common stock, as such (whether pursuant to a merger
or consolidation or otherwise), of evidences of its
indebtedness, investments in subsidiaries, or other
assets (excluding distributions after December 31,
1979, not exceeding in net value as reflected on the
books of the corporation the aggregate net income
available for common stock of the corporation after
such date plus $12,000,000, all determined in
accordance with generally accepted accounting
principles) or rights to subscribe to the same
(excluding those referred to in subdivision (B) above),
the number of shares of the common stock into which
each share of said Series shall be convertible shall be
adjusted, effective as of the date following the record
date for the determination of shareholders entitled to
receive such distribution or rights, by multiplying the
number of shares of the common stock into which such
share would have been convertible on such record date
by a fraction, of which the numerator shall be the
Market Price of the common stock (as defined in
subdivision (D) below) on such record date, and of
which the denominator shall be such Market Price less
such net value of the portion of the evidences of
indebtedness, investments in subsidiaries, or other
assets or rights so distributed allocable to such share
of the common stock.
(D) For the purposes of any computation
under subdivisions (B) and (C) above, the Market Price
of the common stock on any date shall be deemed to be
the average of the daily closing prices for the 30
consecutive full business days commencing 45 full
business days before the day in question. The closing
price for each day shall be the average of the closing
bid and asked prices, regular way, (i) as officially
quoted by the National Association of Securities
Dealers, Inc., or (ii) as quoted on the principal
United States stock exchange or market for the common
stock as determined by the board of directors of the
corporation, or (iii) if in the reasonable judgment of
the board of directors of the corporation, there exists
no principal United States stock exchange or market for
the common stock, as reasonably determined by the board
of directors of the corporation.
(E) No adjustment in the conversion rate
shall be required unless such adjustment, plus any
adjustments not previously made by reason of this
subdivision (E), would require an increase or decrease
of at least 1% in the number of shares of common stock
into which each share of said Series then shall be
convertible; provided, however, that any adjustments
which by reason of this subdivision (E) are not
required to be made shall be carried forward and taken
into account in any subsequent adjustment. All
calculations under this subdivision (E) shall be made
to the nearest ten thousandth of a share.
(F) Whenever any adjustment is required in
the rate at which each share of said Series shall be
convertible, the corporation shall (i) file with each
- 27 -
Transfer Agent for the shares of said Series a
statement setting forth the adjusted rate of
conversion, describing the adjustment and the method of
calculation used, and stating the effective date of the
adjustment, and (ii) cause a copy of such statement to
be mailed to the holders of record of the shares of
said Series.
(3) No fractional shares or scrip
representing fractional shares shall be issued
upon the conversion of shares of said Series. If
any such conversion would otherwise require the
issuance of a fractional share, an amount equal to
such fraction multiplied by the Market Price of
the common stock (determined as provided in
subdivision (D) above) on the day of conversion
shall be paid to the holder in cash by the
corporation.
(4) Shares of said Series shall be deemed to
have been converted and the holder converting the
same to have become the holder of record of shares
of the common stock for all purposes whatever as
of the date on which the certificate or
certificates for such shares shall have been
surrendered as aforesaid. The corporation shall
not be required to make any conversion, and no
surrender of the certificate or certificates for
shares of said Series shall be effective for such
purpose, while the transfer books for the shares
of either said Series or the common stock shall be
closed for any purpose, but the surrender of a
certificate or certificates for shares of said
Series for conversion during any period in which
either transfer book shall be closed shall become
effective for all purposes of conversion
immediately upon the reopening of such books.
(5) The corporation shall reserve for the
conversion of said Series that number of shares of
its authorized but unissued common stock into
which all shares of said Series from time to time
outstanding may be converted.
(v) All shares of said Series redeemed by the
corporation or surrendered to it for conversion into
shares of the common stock shall be cancelled and
thereupon restored to the status of authorized but
unissued Preference Stock of the corporation,
undesignated as to series.
(vi) Whenever any of the dates mentioned with
respect to said Series shall not be a full business day
in the City of Portland, Oregon, any action to be taken
on such date may be taken on the next succeeding full
business day.
Common Stock
16. Subject to the limitations set forth in subdivisions
III.C.2. and 11. (and subject to the rights of any class of
stock hereafter authorized), dividends may be paid upon the
Common Stock when and as declared by the board of directors
of the corporation out of any funds legally available for
the payment of dividends.
17. Subject to the limitations set forth in subdivisions
III.C.3. and 12. (and subject to the rights of any other
class of stock hereafter authorized), upon any dissolution,
liquidation or winding up of the corporation, whether
voluntary or involuntary, the net assets of the corporation
shall be distributed ratably to the holders of the Common
Stock.
18. Subject to the limitations set forth in subdivisions
III.C.6, 7, 8, 9 and 15. (and subject to the rights of any
class of stock hereafter created), and except as may be
otherwise provided by law or by the resolutions establishing
any series of Preference Stock in accordance with
subdivision III.C.10., the holders of the Common Stock shall
have the exclusive right to vote for the election of
directors and for all other purposes. In the election of
directors of the corporation, every holder of record of any
share or shares of the Common Stock of the corporation shall
have the right to cast as many votes for one candidate as
shall equal the number of such shares multiplied by the
number of directors to be elected, or to distribute such
number of votes among any two or more candidates for such
election.
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19. Upon the issuance for money or other consideration of any
shares of capital stock of the corporation, or of any
security convertible into capital stock of the corporation,
no holder of shares of the capital stock, irrespective of
the class or kind thereof, shall have any preemptive or
other right to subscribe for, purchase or receive any
proportionate or other amount of such shares of capital
stock, or such security convertible into capital stock,
proposed to be issued; and the board of directors may cause
the corporation to dispose of all or any of such shares of
capital stock, or of any such security convertible into
capital stock, as and when said board may determine, free of
any such right, either by offering the same to the
corporation's then shareholders or by otherwise selling or
disposing of such shares of other securities, as the board
of directors may deem advisable.
ARTICLE IV
A. The business and affairs of the corporation shall be managed
by a board of directors. Except as provided in subdivision
B. below, the number of members of the board, their
classifications and terms of office, and the manner of their
election and removal shall be as follows:
1. The number of directors shall be that number, not less
than nine or more than thirteen, determined from time
to time by resolution adopted by affirmative vote of a
majority of the entire board of directors. The
directors shall be divided into three classes,
designated Class I, Class II, and Class III. Each
class shall consist, as nearly as possible, of one-
third of the total number of directors. At the 1984
annual meeting of shareholders, Class I directors shall
be elected for a one-year term, Class II directors for
a two-year term, and Class III directors for a three-
year term. At each succeeding annual meeting of
shareholders, successors to directors whose terms
expire at that annual meeting shall be of the same
class as the directors they succeed, and shall be
elected for three-year terms. If the number of
directors should be changed by resolution of the board
of directors, any increase or decrease shall be
apportioned among the classes so as to maintain the
number of directors in each class as nearly equal as
possible, but in no case shall a decrease in the number
of directors shorten the term of any incumbent
director.
2. A director shall hold office until the annual meeting
for the year in which his or her term shall expire and
until his or her successor shall have been elected and
qualified, subject, however, to prior death,
resignation, retirement or removal from office. Any
newly created directorship resulting from an increase
in the number of directors and any other vacancy on the
board of directors, however caused, may be filled by
the affirmative vote of a majority of the directors
then in office, although less than a quorum, or by a
sole remaining director. The term of a director
elected to fill a newly created directorship or any
other vacancy shall expire at the same time as the
terms of the other directors of the class in which that
vacancy occurred.
3. One or more of the directors may be removed with or
without cause by the affirmative vote of the holders of
not less than two-thirds of the shares entitled to vote
thereon at a meeting of the shareholders called
expressly for that purpose; provided, however, that for
as long as the corporation shall have cumulative
voting, if fewer than all the directors should be
candidates for removal, no one of them shall be removed
if the votes cast against his or her removal would be
sufficient to elect him or her if then cumulatively
voted at an election of the class of directors of which
he or she shall be a part.
4. No person, except those persons nominated by the board,
shall be eligible for election as a director at any
annual or special meeting of shareholders unless a
written request that his or her name be placed in
nomination shall be received from a shareholder of
record entitled to vote at such election by the
secretary of the corporation not later than the latter
of (a) the thirtieth day prior to the date fixed for
the meeting, or (b) the tenth day after the mailing of
notice of that meeting, together with the written
consent of the nominee to serve as a director.
- 29 -
B. Notwithstanding the provisions of subdivision A. above,
whenever the holders of any one or more classes of the
capital stock of the corporation shall have the right,
voting separately as a class or classes, to elect directors
at an annual or special meeting of shareholders, the
election, term of office, filling of vacancies and other
features of such directorships shall be governed by the
provisions of these Restated Articles of Incorporation
applicable thereto. Directors so elected shall not be
divided into classes unless expressly provided by such
provisions, and during their prescribed terms of office, the
board of directors shall consist of such directors in
addition to the directors determined as provided in
subdivision A. above.
C. This Article IV may not be repealed or amended in any
respect unless such action shall be approved by the
affirmative vote of the holders of not less than two-thirds
of the shares entitled to vote at an election of directors
determined as provided in subdivision A. above, at a meeting
of the shareholders called expressly for that purpose.
ARTICLE V
A. For purposes of this Article V:
1. The term "Affiliate", as used to indicate a
relationship with a specified "Person" (as hereinafter
defined), shall mean a Person that directly or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the Person specified.
2. The term "Associate", as used to indicate a
relationship with a specified Person, shall mean (a)
any Person (other than the corporation) of which such
specified Person is a director, officer, partner,
trustee, guardian, fiduciary or official or is,
directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities or any
beneficial interest, (b) any Person who is a director,
officer, partner, trustee, guardian, fiduciary or
official or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities
or any beneficial interest of or in such specified
Person (other than the corporation), and (c) any
relative or spouse of such specified Person, or any
relative of such spouse who has the same home as such
specified Person.
3. The term "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934
as in effect on April 9, 1984; provided, however, that,
notwithstanding the provisions of such Rule, a Person
shall be deemed to be the Beneficial Owner of any share
of the capital stock of the corporation that such
Person shall have the right to acquire at any time
pursuant to any agreement, contract, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise, and any such share
of capital stock shall be deemed to be outstanding for
purposes of subdivision V.A.9.
4. The term "Business Transaction" shall include, without
limitation, (a) any merger, consolidation or plan of
exchange of the corporation, or any Person controlled
by or under common control with the corporation, with
or into any "Related Person" (as hereinafter defined),
(b) any merger, consolidation or plan of exchange of a
Related Person with or into the corporation or any
Person controlled by or under common control with the
corporation, (c) any sale, lease, exchange, transfer or
other disposition (in one transaction or a series of
transactions) including without limitation a mortgage
or any other security device, of all or any
"Substantial Part" (as hereinafter defined) of the
property and assets of the corporation, or any Person
controlled by or under common control with the
corporation, to or with a Related Person, (d) any
purchase, lease, exchange, transfer or other
acquisition (in one transaction or a series of
transactions), including without limitation a mortgage
or any other security device, of all or any
- 30 -
Substantial Part of the property and assets of a
Related Person, by or with the corporation or any
Person controlled by or under common control with the
corporation, (e) any recapitalization of the
corporation that would have the effect of increasing
the voting power of a Related Person, (f) the issuance,
sale, exchange or other disposition of any securities
of the corporation, or of any Person controlled by or
under common control with the corporation, by the
corporation or by any Person controlled by or under
common control with the corporation, (g) any
liquidation, spinoff, splitoff, splitup or dissolution
of the corporation, and (h) any agreement, contract or
other arrangement providing for any of the transactions
described in this subdivision.
5. The term "Continuing Director" shall mean a director
who was a director of the corporation on April 9, 1984
and a director who shall become a director subsequent
thereto whose election, or whose nomination for
election by the shareholders, shall have been approved
by a vote of a majority of the then Continuing
Directors.
6. The term "Highest Purchase Price" shall mean, with
respect to the shares of any class or series of the
capital stock of the corporation, the highest amount of
consideration paid by a Related Person for a share of
the same class and series at any time regardless of
whether the share was acquired before or after such
Related Person became a Related Person; provided,
however, that the Highest Purchase Price shall be
appropriately adjusted to reflect the occurrence of any
reclassification, recapitalization, stock split,
reverse stock split or other readjustment in the number
of outstanding shares of that class or series, or the
declaration of a stock dividend thereon. The Highest
Purchase Price shall include any brokerage commissions,
transfer taxes and soliciting dealers' fees paid by
such Related Person with respect to any shares of the
capital stock acquired by such Related Person.
7. The term "Other Consideration" shall include, without
limitation, capital stock to be retained by the
shareholders of the corporation in a Business
Transaction in which the corporation shall be the
survivor.
8. The term "Person" shall mean any natural person,
corporation, partnership, trust, firm, association,
government , governmental agency or any other entity
whether acting in an individual, fiduciary or other
capacity.
9. The term "Related Person" shall mean (a) any Person
which, together with its Affiliates and Associates,
shall be the Beneficial Owner in the aggregate of 10
percent or more of the capital stock of the
corporation, and (b) any Affiliate or Associate (other
than the corporation or a wholly owned subsidiary of
the corporation) of any such Person. Two or more
Persons acting in concert for the purpose of acquiring,
holding or disposing of the capital stock of the
corporation shall be deemed to be a "Related Person".
A Related Person shall be deemed to have acquired a
share of capital stock at the time when such Related
Person became the Beneficial Owner thereof. With
respect to the shares of the capital stock of the
corporation owned by any Related Person, if the price
paid for such shares cannot be determined by a majority
of the Continuing Directors, the price so paid shall be
deemed to be the market price of the shares in question
at the time when such Related Person became the
Beneficial Owner thereof.
10. The term "Substantial Part" shall mean 10% or more of
the fair market value of the total assets of a Person,
as reflected on the most recent balance sheet of such
Person available to the Continuing Directors on the
date of mailing of the notice of the meeting of
shareholders called for the purpose of voting with
respect to a Business Transaction involving the assets
constituting any such Substantial Part.
B. The corporation shall not enter into any Business
Transaction with a Related Person or in which a Related
Person shall have an interest (except proportionately as a
shareholder of the corporation) without first obtaining both
(1) the affirmative vote of the holders of not less than
two-thirds of the outstanding shares of the capital stock of
the corporation not held by such Related Person, and (2) the
- 31 -
determination of a majority of the Continuing Directors that
the cash or fair market value of the property, securities or
Other Consideration to be received per share by the holders,
other than such Related Person, of the shares of each class
or series of the capital stock of the corporation in such
Business Transaction shall not be less than the Highest
Purchase Price paid by such Related Person in acquiring any
of its holdings of shares of the same class or series,
unless the Continuing Directors by a majority vote shall
either (a) have expressly approved the acquisition of the
shares of the capital stock of the corporation that caused
such Related Person to become a Related Person, or (b) have
expressly approved such Business Transaction.
C. For the purposes of this Article V, a majority of the
Continuing Directors shall have the power to make a good
faith determination, on the basis of information known to
them, of: (1) the number of shares of capital stock of the
corporation of which any Person shall be the Beneficial
Owner, (2) whether a Person is an Affiliate or Associate of
another Person, (3) whether a Person has an agreement,
contract, arrangement or understanding with another Person
as to the matters referred to in subdivision V.A.3. or
clause (h) of subdivision V.A.4., (4) the Highest Purchase
Price paid by a Related Person for shares of any class or
series of the capital stock, (5) whether the assets subject
to any Business Transaction constitute a Substantial Part,
(6) whether any Business Transaction is one in which a
Related Person has an interest (except proportionately as a
shareholder of the corporation), and (7) such other matters
with respect to which a determination may be required under
this Article V.
D. In determining whether to give their approval as provided in
subdivision V.B., the Continuing Directors shall give due
consideration to all relevant factors involved, including,
without limitation, (1) the value of the corporation in a
freely negotiated transaction and its future value as an
independent entity, (2) the recognition of gain or loss to
the corporation for tax purposes or the postponement of such
recognition in a tax-free transaction, (3) the anticipated
developments of the business of the corporation not yet
reflected in the price of its shares, and (4) the impact on
employees, customers, suppliers and the public generally
within the geographical area it serves.
E. This Article V may not be repealed or amended in any respect
unless such action shall be approved by the affirmative vote
of the holders of not less than two-thirds of the capital
stock of the corporation not held by a Related Person at a
meeting of the shareholders called expressly for that
purpose.
ARTICLE VI
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for conduct
as a director; provided that this Article VI shall not eliminate
the liability of a director for any act or omission for which
such elimination of liability is not permitted under the Oregon
Business Corporation Act. No amendment to the Oregon Business
Corporation Act that further limits the acts or omissions for
which elimination of liability is permitted shall affect the
liability of a director for any act or omission which occurs
prior to the effective date of such amendment.
ARTICLE VII
The corporation shall indemnify to the fullest extent then
permitted by law any person who is made, or threatened to be
made, a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise (including an action, suit or
proceeding by or in the right of the corporation) by reason of
the fact that the person is or was a director or officer of the
corporation or is or was serving at the request of the
corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against all
judgments, amounts paid in settlement, fines and such expenses
- 32 -
(including attorneys' fees), actually and reasonably incurred in
connection therewith. This Article shall not be deemed exclusive
of any other provisions for indemnification of directors and
officers that may be included in any statute, bylaw, agreement,
vote of shareholders or directors or otherwise, both as to action
in any official capacity and as to action in another capacity
while holding an office.
ARTICLE VIII
A. The amount of the corporation's stated capital at the time
of the adoption of these Restated Articles of Incorporation
is $69,376,264.89.
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ARTICLES OF AMENDMENT
(PREFERENCE STOCK $6.95 SERIES DESIGNATION CERTIFICATE)
of
NORTHWEST NATURAL GAS COMPANY
1. The name of the corporation is NORTHWEST NATURAL GAS
COMPANY.
2. The following resolution was duly adopted by the Board
of Directors of the corporation on December 8, 1992 as an
Amendment to the Restated Articles of Incorporation and does not
require shareholder action:
RESOLVED, that, pursuant to authority expressly vested in
the Board of Directors by the Restated Articles of
Incorporation of the corporation, there hereby is
established a series of the Preference Stock of the
corporation, consisting of 250,000 shares, designated as
"Preference Stock $6.95 Series", the shares of which shall
be identical with the shares of all other series of the
Preference Stock, except for the preferences, limitations
and relative rights fixed and determined hereafter:
(i) The rate of dividend of shares of
said Series shall be $6.95 per annum; the
dividend payment dates shall be the 15th days
of February, May, August and November in each
year, commencing on February 15, 1993; and
dividends shall be cumulative from the date
of original issue;
(ii) The shares of said Series shall not
be redeemable prior to December 31, 2002; and
on such date, all of the outstanding shares
of said Series shall be subject to mandatory
redemption (unless such action, in the
opinion of counsel for the corporation, would
be contrary to any applicable law or to any
rule or regulation of any governmental
authority having jurisdiction in the
premises) at the mandatory redemption price
of $100 per share, plus unpaid accumulated
dividends; provided, however, that the
payment of such mandatory redemption price
shall be subordinate to the dividend and
other distributive rights of the Preferred
Stock, so that such redemption price shall
not be paid and the shares of said Series
shall not be redeemed unless (i) dividends on
all outstanding shares of each particular
series of the Preferred Stock, at the annual
dividend rates fixed and determined either by
these Restated Articles of Incorporation or
in accordance with subdivision III.C.1
thereof, shall have been paid or declared and
set apart for payment for all past dividend
periods and for the then current dividend
periods, and (ii) all amounts due and payable
to the holders of Preferred Stock, by virtue
of purchase funds, sinking funds, or other
analogous devices for the retirement of the
Preferred Stock, or by virtue of dissolution,
liquidation or winding up of the corporation,
shall have been paid or funds for the payment
thereof shall have been set apart for
payment;
(iii) The amount payable upon shares of
said Series in the event of either
involuntary or voluntary liquidation shall be
$100 per share, plus unpaid accumulated
dividends, if any, to the date of payment;
(iv) All shares of said Series redeemed by
the corporation shall be cancelled and
thereupon restored to the status of
authorized but unissued Preference Stock of
the corporation, undesignated as to series;
and
(v) Whenever any of the dates mentioned
with respect to said Series shall not be a
full business day in the City of Portland,
Oregon, then any action to be taken on said
date may be taken on the next succeeding full
business day.
Dated: December 8, 1992
NORTHWEST NATURAL GAS COMPANY
(Corporate Seal) By Bruce R. DeBolt
Its Senior Vice President
<PAGE>
ARTICLES OF AMENDMENT
(PREFERRED STOCK $7.125 SERIES DESIGNATION CERTIFICATE)
of
NORTHWEST NATURAL GAS COMPANY
1. The name of the corporation is NORTHWEST NATURAL
GAS COMPANY.
2. The following resolution was duly adopted by the
Board of Directors of the corporation on November 18, 1993 as an
Amendment to the Restated Articles of Incorporation and does not
require shareholder action:
RESOLVED, that pursuant to authority expressly
vested in the Board of Directors by the Restated
Articles of Incorporation, as amended, of the
corporation there hereby is established a series of the
Preferred Stock of the corporation, consisting of
150,000 shares, designated as "Preferred Stock $7.125
Series", the shares of which shall be identical with
the shares of all other series of the Preferred Stock
except for the preferences, limitations and relative
rights fixed and determined hereafter:
(i)(1) the rate of dividend of shares of
said Series shall be $7.125 per annum plus that
amount, if any, which will maintain each holder's
after Federal income tax dividend yield on each
dividend with respect to which any legislative
enactment, administrative action, judicial
decision or other change in law shall reduce or
eliminate the dividends received deduction of 70%
provided by Section 243(a)(1) of the Internal
Revenue Code of 1986, as amended, as in effect on
April 1, 1988 (the "Dividends Received
Deduction"), at the level at which such yield
would have been if such dividend had been paid to
such holder on April 1, 1988 (each holder's after
Federal income tax dividend yield on April 1, 1988
being calculated on the bases of (i) a cost per
share of $100, (ii) the Dividends Received
Deduction, and (iii) an assumed Federal income tax
rate of 34%; and, thereafter, such holder's after
Federal income tax dividend yield being calculated
on the bases of (i) and (iii) and any reduced
dividends received deduction at the time then in
effect); provided, however, that any such
increased dividend shall be payable only (A) on
shares of said Series in respect of which the
holder shall have delivered to the corporation no
later than 360 days after the effective date of
any such reduction or elimination of the Dividends
Received Deduction a written notice (I)
stating that such holder is entitled to an
increased dividend as a result of such
reduction or elimination, (II) specifying the
amount per share of such increase, and (III)
specifying the total number of shares of said
Series held by such holder, and (B) in
respect of dividends payable after the date
of receipt of such notice by the corporation;
(2) the dividend payment dates shall be the
15th days of February, May, August and
November in each year, commencing on February
15, 1994; and (3) dividends shall be
cumulative from December 1, 1993;
(ii)(1) Other than as provided in
subdivision (2) below, shares of said Series shall
not be redeemable at the election of the
corporation prior to May 1, 1998. On and after
May 1, 1998, the shares of said Series may be
redeemed, at the election of the corporation, at
the following redemption prices:
<TABLE>
<CAPTION>
If Redeemed If Redeemed
During 12-Months Redemption During 12-Months Redemption
Period Ending Price Period Ending Price
April 30 Per Share April 30 Per Share
------------------ ---------- --------------- ---------
<S> <C> <C> <C>
1999 . . . . . . . $104.750 2004. . . . . . . .$102.375
2000 . . . . . . . $104.275 2005. . . . . . . .$101.900
2001 . . . . . . . $103.800 2006. . . . . . . .$101.425
2002 . . . . . . . $103.325 2007. . . . . . . .$100.950
2003 . . . . . . . $102.850 2008. . . . . . . .$100.475
</TABLE>
and thereafter $100 per share, plus an amount in
each case equal to accrued unpaid dividends, if
any, to the date of redemption; and (2) all but
not less than all of the shares of said Series
held by any holder which shall have given notice
that such holder will be entitled to an increased
dividend in accordance with subdivision (i)(l)
above may be redeemed, at the election of the
corporation, at the redemption price of $100 per
share, plus an amount equal to accrued unpaid
dividends, if any, to the date of redemption,
within the period of 360 days commencing on
the date of receipt by the corporation of
such notice;
(iii) the amount payable upon shares of said Series
in the event of involuntary liquidation shall be $100
per share and in the event of voluntary liquidation (1)
occurring prior to May 1, 1994, shall be $107.125 per
share, (2) occurring during the 12-months periods
ending April 30, 1995, 1996, 1997 and 1998, shall be,
respectively, $106.650, $106.175, $105.700 and $105.225
per share and (3) occurring on or after May 1, 1998,
shall be an amount equal to the then applicable
redemption price of shares of said Series, plus in each
case, an amount equal to accrued unpaid dividends, if
any, to the date of payment;
(iv) shares of said Series shall not be, by
their terms, convertible;
(v) shares of said Series shall be entitled
to the benefits of a sinking fund as follows:
(1) The corporation (unless such
action, in the opinion of counsel for the
corporation, would be contrary to any applicable
law or to any rule or regulation of any
governmental authority having jurisdiction in the
premises) as a sinking fund for the retirement of
shares of said Series, shall redeem, in the manner
herein provided, 7,500 shares of said Series on
June 15, 1994 and 7,500 shares of said Series on
the 15th day of June of each year thereafter so
long as any shares of said Series shall remain
outstanding, at $100.00 per share plus accrued
unpaid dividends to the date fixed for redemption.
The total number of shares to be redeemed and the
number of shares to be redeemed from any holder
shall be adjusted to the nearest full share so
that fractional shares need not be redeemed. The
corporation may, on any redemption date as above
provided and at its option, credit against its
sinking fund obligation such number of shares of
said Series theretofore redeemed by the
corporation, otherwise than for the account of its
sinking fund obligation, or such number of shares
of said Series theretofore purchased by the
corporation at a price per share not in
excess of $100.00 plus accrued unpaid
dividends, and in either case not theretofore
applied as a credit on its sinking fund
obligation. The sinking fund for said Series
shall not be cumulative. Notice of redemption
for each sinking fund shall be given, and
deposit of the aggregate redemption price may
be made, subject to the general terms and
provisions for redemption of the Preferred
Stock set forth in subdivision III.C.4 of the
Restated Articles of Incorporation;
(2) Shares of said Series redeemed
pursuant to the provisions of the sinking fund or
credited thereto shall be cancelled, shall not be
reissued as shares of said Series, and shall be
restored to the status of authorized but unissued
shares of the Preferred Stock of the corporation;
(3) Unless otherwise provided by law,
nothing herein contained shall prevent or in any
manner restrict the Board of Directors of the
corporation from authorizing and issuing any other
series of Preferred Stock entitled to a purchase
fund, sinking fund or other analogous device for
the benefit of the holders of such other series of
Preferred Stock of the corporation, whether or not
the provisions therefor shall correspond with the
provisions for said Series; provided that the
dates on which such other fund or device shall
operate in any particular year shall correspond
with the date applicable to said Series and in the
event there is a deficiency in the funds available
in any particular year for the fulfillment of the
maximum requirements of the purchase funds,
sinking funds or other analogous devices of all
outstanding series of Preferred Stock of the
corporation in accordance with the terms thereof,
such funds as are available in accordance with
such terms for such purpose shall be prorated
among all such series so that the percentage
allocated to any particular series of Preferred
Stock shall correspond with its portion of the
total amount due; and
(4) After June 15, 1994, so long as any
shares of said Series shall be outstanding, no
dividends on the Common Stock or the Preference
Stock of the corporation shall, without the
written consent or affirmative vote of the holders
of at least a majority of the total number of
shares of said Series then outstanding, be
declared and set apart for payment, unless the
corporation, on the June 15th immediately
preceding the declaration of such dividend, shall
have redeemed 7,500 shares of said Series at
$100.00 per share plus accrued unpaid dividends to
such June 15th or in accordance with the terms
hereof shall have taken credits against the shares
of said Series sinking fund which, with shares
redeemed pursuant to such fund obligation,
aggregate 7,500 shares of said Series; and
(vi) Whenever any of the dates mentioned with
respect to said Series shall not be a full
business day in the City of Portland, Oregon, then
any action to be taken on said date may be taken
on the next succeeding full business day.
Dated: December 1, 1993
NORTHWEST NATURAL GAS COMPANY
By Dwayne L. Foley
-------------------------
Its Senior Vice President
(Corporate Seal)
<PAGE>
ARTICLES OF AMENDMENT
TO
RESTATED ARTICLES OF INCORPORATION
OF
NORTHWEST NATURAL GAS COMPANY
1. The name of the corporation is Northwest Natural Gas
Company.
2. Subdivision A of Article III of the Restated Articles of
Incorporation is amended to read as follows:
"The aggregate number of shares of capital stock which
the corporation shall have authority to issue is
63,500,000 shares, divided into 1,500,000 shares of
Preferred Stock without par value, issuable in series
as hereinafter provided, 2,000,000 shares of Preference
Stock without par value, issuable in series as
hereinafter provided, and 60,000,000 shares of Common
Stock of the par value of $3-1/6 per share."
3. The amendment was adopted by the shareholders of the
corporation on May 26, 1994.
4. 13,244,529 shares of Common Stock were outstanding and
entitled to vote on the amendment.
5. 9,981,213 shares of Common Stock were voted for the
amendment and 1,060,991 shares of Common Stock were voted
against the amendment.
DATED: May 27, 1994
NORTHWEST NATURAL GAS COMPANY
BY /s/ Bruce R. DeBolt
------------------------
Bruce R. DeBolt
Senior Vice President
SAK|EX3A
EXHIBIT (3b.)
BYLAWS
of
NORTHWEST
NATURAL
GAS
COMPANY
As Adopted by the Board of Directors
July 17, 1975
Amended
April 19, 1979
December 18, 1980
October 15, 1981
February 16, 1984
May 17, 1984
October 18, 1984
December 20, 1984, effective January 1, 1985
May 23, 1985
May 26, 1988
February 22, 1990
May 23, 1991
November 21, 1991
January 28, 1993, effective January 1, 1993
February 25, 1993
March 25, 1993
December 16, 1993
February 23, 1995, effective February 24, 1995
<PAGE>
CONTENTS
ARTICLE I.
OFFICES: Page
Section 1. Office . . . . . . . . . . . . . . . . . . . 1
Section 2. Registered Office. . . . . . . . . . . . . . 1
ARTICLE II.
MEETINGS OF SHAREHOLDERS:
Section 1. Annual Meeting . . . . . . . . . . . . . . . 1
Section 2. Special Meetings . . . . . . . . . . . . . . 1
Section 3. Notice . . . . . . . . . . . . . . . . . . . 1
Section 4. Fixing Record Date . . . . . . . . . . . . . 1
Section 5. Record of Shareholders . . . . . . . . . . . 2
Section 6. Quorum . . . . . . . . . . . . . . . . . . . 2
Section 7. Voting . . . . . . . . . . . . . . . . . . . 2
Section 8. Conduct of Meetings . . . . . . . . . . . . 2
ARTICLE III.
BOARD OF DIRECTORS:
Section 1. Directors . . . . . . . . . . . . . . . . . 2
Section 2. Chairman of the Board . . . . . . . . . . . 2
Section 3. Lead Director. . . . . . . . . . . . . . . . 3
Section 4. Retired Directors . . . . . . . . . . . . . 3
Section 5. Compensation . . . . . . . . . . . . . . . . 3
ARTICLE IV.
MEETINGS OF THE BOARD OF DIRECTORS:
Section 1. Regular Meetings . . . . . . . . . . . . . . 3
Section 2. Special Meetings . . . . . . . . . . . . . . 3
Section 3. Waiver of Notice . . . . . . . . . . . . . . 3
Section 4. Quorum . . . . . . . . . . . . . . . . . . . 3
Section 5. Manner of Acting . . . . . . . . . . . . . . 3
Section 6. Action Without a Meeting . . . . . . . . . . 4
ARTICLE V.
COMMITTEES OF THE BOARD:
Section 1. Executive Committee. . . . . . . . . . . . . 4
Section 2. Audit Committee. . . . . . . . . . . . . . . 4
Section 3. Retirement Committee . . . . . . . . . . . . 4
Section 4. Pension Committee. . . . . . . . . . . . . . 4
Section 5. Organization and Executive Compensation . .
Committee . . . . . . . . . . . . . . . . . 4
Section 6. Nominating Committee . . . . . . . . . . . . 4
Section 7. Environmental Policy Committee . . . . . . . 4
Section 8. Finance Committee. . . . . . . . . . . . . . 5
Section 9. Other Committees . . . . . . . . . . . . . . 5
Section 10. Changes of Size and Function . . . . . . . . 5
Section 11. Conduct of Meetings. . . . . . . . . . . . . 5
Section 12. Compensation . . . . . . . . . . . . . . . . 5
ARTICLE VI.
NOTICES: Page
Section 1. Form and Manner . . . . . . . . . . . . . . 5
Section 2. Waiver . . . . . . . . . . . . . . . . . . . 5
ARTICLE VII.
OFFICERS:
Section 1. Election . . . . . . . . . . . . . . . . . . 6
Section 2. Compensation . . . . . . . . . . . . . . . . 6
Section 3. Term . . . . . . . . . . . . . . . . . . . . 6
Section 4. Removal. . . . . . . . . . . . . . . . . . . 6
Section 5. President. . . . . . . . . . . . . . . . . . 6
Section 6. Vice Presidents. . . . . . . . . . . . . . . 6
Section 7. Secretary. . . . . . . . . . . . . . . . . . 6
Section 8. Treasurer. . . . . . . . . . . . . . . . . . 6
ARTICLE VIII.
CONTRACTS, LOANS, CHECKS AND DEPOSITS:
Section 1. Contracts. . . . . . . . . . . . . . . . . . 7
Section 2. Loans. . . . . . . . . . . . . . . . . . . . 7
Section 3. Checks and Drafts. . . . . . . . . . . . . . 7
Section 4. Deposits . . . . . . . . . . . . . . . . . . 7
ARTICLE IX.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. . . . . . . . . . . 7
Section 2. Transfer . . . . . . . . . . . . . . . . . . 7
Section 3. Owner of Record. . . . . . . . . . . . . . . 7
ARTICLE X.
INDEMNIFICATION AND INSURANCE:
Section 1. Indemnification. . . . . . . . . . . . . . . 8
Section 2. Insurance. . . . . . . . . . . . . . . . . . 8
ARTICLE XI.
SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE XII.
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 8
The following Bylaws were adopted by Northwest Natural Gas
Company on July 17, 1975 superseding amended Bylaws originally
adopted in conformity with an order of the District Court of the
United States for the District of Oregon enforcing a plan for
rearrangement of the Company's capital structure effective
December 31, 1951, and subsequently amended by the stockholders
on May 17, 1954, May 20, 1957, May 21, 1973, and May 20, 1974.
<PAGE>
BYLAWS
OF
NORTHWEST NATURAL GAS COMPANY
ARTICLE I.
OFFICES
SECTION 1. OFFICE. The principal office of the company
shall be located in the City of Portland, Oregon. The company
also may have offices at such other places both within and
without the State of Oregon as the board of directors from time
to time may determine.
SECTION 2. REGISTERED OFFICE. The registered office of the
company required by law to be maintained in the state shall be at
the same location as the principal office unless otherwise
designated by resolution of the board of directors.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of
shareholders of the company for the election of directors and for
the transaction of other business shall be held at the company's
office in the City of Portland, Oregon, or such other place in
that City as shall be determined by the board of directors, on
the fourth Thursday of May in each year, unless such day shall be
a legal holiday, in which event such meeting shall be held on the
next business day. If such meeting shall not be held on such day
in any year, it shall be held within 60 days thereafter on such
day as shall be fixed by the board of directors and be specified
in the notice of the meeting. Every such meeting shall be held
at the hour of two o'clock p.m., or at such other hour as shall
be fixed by the board and specified in such notice.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders of the company may be called by the board of
directors or the holders of not less than one-tenth of all shares
entitled to vote at the meeting. Each special meeting shall be
held for such purposes, at such place in the City of Portland,
Oregon, and at such time as shall be specified in the notice
thereof.
SECTION 3. NOTICE. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called,
shall be delivered not less than 10 nor more than 50 days before
the date of the meeting, either personally or by mail, by or at
the direction of the board of directors or the persons calling
the meeting, to each shareholder of record entitled to vote at
such meeting.
SECTION 4. FIXING RECORD DATE. For the purpose of
determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or any adjournment thereof, or entitled
to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the
board of directors may fix in advance a date as the record date
for any such determination of shareholders, such date in any case
to be not more than 50 days and, in the case of a meeting of
shareholders, not less than 10 days prior to the date on which
the particular action requiring such determination of
shareholders is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at
a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the board declaring
such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
SECTION 5. RECORD OF SHAREHOLDERS. The officer or agent
having charge of the transfer books for shares of the company
shall make, at least 10 days before each meeting of shareholders,
a complete record of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical
order with the address of and the number of shares held by each,
which record, for a period of 10 days prior to such meeting,
shall be kept on file at the registered office of the company and
shall be subject to inspection by any shareholder at any time
during usual business hours. Such record also shall be produced
and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole
time of the meeting. The original transfer books for shares
shall be prima facie evidence as to who are the shareholders
entitled to examine such record or transfer books or to vote at
any meeting of the shareholders.
SECTION 6. QUORUM. A majority of the shares of the company
entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of shareholders. If a quorum
is present, in person or by proxy, the affirmative vote of a
majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders,
unless the vote of a greater number, or voting by classes, is
required by law or the Restated Articles of Incorporation.
If a quorum shall not be represented at any meeting of
shareholders, the shareholders represented may adjourn the
meeting from time to time without further notice. At such
adjourned meeting, at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The
shareholders represented at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a
quorum.
SECTION 7. VOTING. Each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to
a vote at a meeting of shareholders, except to the extent that
the voting rights of the shares of any class or classes are
limited or denied by law or the Restated Articles of
Incorporation. At each election of directors holders of shares
of common stock have the right to cumulative voting as provided
for in the Restated Articles of Incorporation. A shareholder may
vote either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact. Such
proxy shall be filed with the secretary of the company before or
at the time of the meeting.
SECTION 8. CONDUCT OF MEETINGS. Every meeting of
shareholders shall be presided over by the chairman of the board,
in his absence by the president, in their absence by a vice
president or, if none be present, by a chairman appointed by the
shareholders present at the meeting. The minutes of such meeting
shall be recorded by the secretary or an assistant secretary but,
if neither be present, by a secretary appointed for that purpose
by the chairman of the meeting.
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. DIRECTORS. The business and affairs of the
Company shall be managed by its board of directors. The number
of members of the board, their classification and terms of
office, and the manner of their election and removal shall be
determined as provided by the Restated Articles of Incorporation.
Directors need not be residents of the State of Oregon or
shareholders of the Company. No person who has reached the age
of 72 years shall be eligible to be elected a director, but a
director may serve until the next annual meeting of shareholders
after reaching that age.
SECTION 2. CHAIRMAN OF THE BOARD. The board of directors
may elect one of its members as chairman of the board. The
chairman of the board, if that position be filled, shall preside
at all meetings of the shareholders and the board of directors
and shall have such other duties and responsibilities as may be
prescribed by the board of directors. If there shall be no
chairman of the board, or in his absence or disability, the
president also shall exercise the duties and responsibilities of
that position.
SECTION 3. LEAD DIRECTOR. The board of directors shall
elect one of its members as lead director. The lead director
shall, in the absence of the chairman of the board, preside at
meetings of the board of directors and shall preside at all
meetings of the executive committee. The lead director shall
have such other duties and responsibilities as may be prescribed
by the board of directors.
SECTION 4. RETIRED DIRECTORS. Any person who, upon
retirement as a director after reaching age 72, shall have served
as a director of the company for ten or more years shall be
appointed a retired director of the company for life. Any other
person who shall have served as a director of the company may be
elected by the board as a retired director of the company for one
or more terms of one year or less. A retired director may attend
meetings of the board but shall not have the right to vote at
such meetings.
SECTION 5. COMPENSATION. Directors shall receive such
reasonable compensation for their services as may be fixed from
time to time by resolution of the board of directors, and shall
be reimbursed for their expenses properly incurred in the
performance of their duties as directors. No such payment shall
preclude any director from serving the company in any other
capacity and receiving such reasonable compensation for such
services as may be fixed by resolution of the board.
Retired directors shall receive such compensation as
from time to time may be fixed by resolution of the board of
directors as the annual retainer for members of the board of
directors.
ARTICLE IV.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 1. REGULAR MEETINGS. Regular meetings of the board
of directors shall be held on the fourth Thursday of February,
April, May, July and September, and on the second Thursday of
November and the third Thursday of December, at such hour and
place as shall be specified in the notice of meeting. The date,
time and place for holding regular meetings of the board of
directors may be changed upon the giving of notice to all
directors by or at the request of the chairman of the board or
the president. The board may provide by resolution the time and
place either within or without the State of Oregon for holding of
meetings or may omit the holding of any meeting without other
notice than such resolution.
SECTION 2. SPECIAL MEETINGS. Special meetings of the board
of directors may be called by or at the request of the chairman
of the board, the lead director, the president or any two
directors. The person or persons authorized to call special
meetings of the board may fix any place, either within or without
the State of Oregon, as the place for holding any special meeting
of the board called by them. Notice of the time and place of
special meetings shall be given to each director at least one day
in advance by the secretary or other officer performing his
duties.
SECTION 3. WAIVER OF NOTICE. Any director may waive notice
of any meeting. The attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, except where
a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not
lawfully called or convened. Except as otherwise provided by law
or the Restated Articles of Incorporation, neither the business
to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice
or waiver of notice of such meeting.
SECTION 4. QUORUM. A majority of the number of directors
at any time fixed by resolution adopted by the affirmative vote
of a majority of the entire board of directors shall constitute a
quorum for the transaction of business. If a quorum shall not be
present at any meeting of directors, the directors present may
adjourn the meeting from time to time without further notice
until a quorum shall be present.
SECTION 5. MANNER OF ACTING. Except as otherwise provided
by law or the Restated Articles of Incorporation, the act of the
majority of the directors present at a meeting at which a quorum
is present shall be the act of the board of directors.
SECTION 6. ACTION WITHOUT A MEETING. Any action required
or permitted to be taken at a meeting of the board of directors
may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter
thereof.
ARTICLE V.
COMMITTEES OF THE BOARD
SECTION 1. EXECUTIVE COMMITTEE. The board of directors at
any time, by resolution adopted by a majority of the board of
directors, may appoint an executive committee composed of the
chairman of the board, the lead director, and such other number
of directors as the board may from time to time determine. The
lead director, or in his absence, the chairman of the board,
shall act as chairman. The committee shall have and may exercise
all of the authority of the board of directors in the management
of the company, except with respect to matters upon which by law
only the board of directors may act.
SECTION 2. AUDIT COMMITTEE. The board of directors at any
time, by resolution adopted by a majority of the board of
directors, may appoint an audit committee composed of three or
more directors, none of whom shall be an officer of the company.
The board shall designate one member of the committee as
chairman. The duties of the committee shall be to discuss and
review with the company's independent auditors the annual audit
of the company, including the scope of the audit, and report the
results of this review to the board; to meet with the independent
auditors at such other times as the committee shall deem to be
advisable; and to perform such other functions as the board by
resolution from time to time may direct.
SECTION 3. RETIREMENT COMMITTEE. The board of directors at
any time, by resolution adopted by a majority of the board of
directors, shall appoint a retirement committee composed of three
or more directors, none of whom shall be members under the
company's Non-Bargaining Unit Employees Retirement Plan
established by the board. The duties of the committee shall be
to monitor the general administration of the company's Non-
Bargaining Unit Employees Retirement Plan and the committee shall
be responsible for monitoring the carrying out of its provisions
as more fully set forth under the terms of the Plan.
SECTION 4. PENSION COMMITTEE. The board of directors at
any time, by resolution adopted by a majority of the board of
directors, shall appoint three or more directors to serve on the
pension committee provided for in the company's Bargaining Unit
Employees Retirement Plan established by the board. The duties
of the committee shall be to monitor the general administration
of the Bargaining Unit Employees Retirement Plan and the
committee shall be responsible for monitoring the carrying out of
its provisions as more fully set forth under the terms of the
Plan.
SECTION 5. ORGANIZATION AND EXECUTIVE COMPENSATION
COMMITTEE. The board of directors at any time, by resolution
adopted by a majority of the board of directors, may appoint an
organization and executive compensation committee composed of
three or more directors, none of whom shall be an officer of the
company. The board shall designate one member of the committee
as chairman. The duties of the committee shall be to discuss and
review the management of the affairs of the company relating to
its organization and to executive personnel and their
compensation, and to perform such other functions as the board by
resolution from time to time may direct.
SECTION 6. NOMINATING COMMITTEE. The board of directors at
any time, by resolution adopted by a majority of the board of
directors, may appoint a nominating committee composed of three
or more directors, none of whom shall be an officer of the
company. The board shall designate one member of the committee
as chairman. The duties of the committee shall be to recommend
to the board nominees for election as a director and to perform
such other functions as the board by resolution from time to time
may direct.
SECTION 7. ENVIRONMENTAL POLICY COMMITTEE. The board of
directors at any time, by resolution adopted by a majority of the
board of directors, may appoint an environmental policy committee
composed of three or more directors, none of whom shall be an
officer of the company. The board shall designate one member of
the committee as chairman. The duties of the committee shall be
to develop and recommend to the board appropriate environmental
policies and to perform such other functions as the board by
resolution from time to time may direct.
SECTION 8. FINANCE COMMITTEE. The board of directors at
any time, by resolution adopted by a majority of the board of
directors, may appoint a finance committee composed of three or
more directors, none of whom shall be an officer of the Company.
The board shall designate one member of the committee as
chairman. The duties of the committee shall be to discuss and
review the management of the affairs of the company relating to
financing, including the development of long-range financial
planning goals and financial policy, and to perform such other
functions as the board by resolution from time to time may
direct.
SECTION 9. OTHER COMMITTEES. The board of directors at any
time, by resolution adopted by a majority of the board of
directors, may appoint from among its members such other
committees and the chairmen thereof as it may deem to be
advisable. Each such committee shall have such powers and
authority as are set forth in the resolutions pertaining thereto
from time to time adopted by the board.
SECTION 10. CHANGES OF SIZE AND FUNCTION. Subject to the
provisions of law, the board of directors shall have the power at
any time to increase or decrease the number of members of any
committee, to fill vacancies thereon, to change any members
thereof and to change the functions and terminate the existence
thereof.
SECTION 11. CONDUCT OF MEETINGS. Each committee shall
conduct its meetings in accordance with the applicable provisions
of these bylaws relating to the conduct of meetings of the board
of directors. Each committee shall adopt such further rules and
regulations regarding its conduct, keep such minutes and other
records and appoint such subcommittees and assistants as it shall
deem to be appropriate.
SECTION 12. COMPENSATION. Persons serving on any committee
shall receive such reasonable compensation for their services on
such committee as may be fixed by resolution of the board of
directors, provided that no person shall receive compensation for
his services on any committee while serving as an officer of the
company.
ARTICLE VI.
NOTICES
SECTION 1. FORM AND MANNER. Whenever, under the provisions
of law or the Restated Articles of Incorporation, notice is
required to be given to any director or shareholder, unless
otherwise specified, it shall be given in writing by mail
addressed to such director or shareholder at his or her address
as it appears on the stock transfer books or other records of the
company, with postage thereon prepaid, and such notice shall be
deemed to be delivered when deposited in the United States Mail.
Notice to directors also may be given by telephone or in any
other manner which is reasonably calculated to give adequate
notice.
SECTION 2. WAIVER. Whenever any notice whatever is
required to be given under the provisions of law, the Restated
Articles of Incorporation or these bylaws, a waiver thereof in
writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE VII.
OFFICERS
SECTION 1. ELECTION. The board of directors, at its first
meeting following the annual meeting of shareholders each year,
shall elect one of its members as president and shall elect a
secretary. At such meeting, or at any other time it shall deem
appropriate, the board may elect one or more vice presidents and
a treasurer. The board also may elect or appoint such other
officers and agents as it may deem necessary. Any two or more
offices may be held by the same person, except the offices of
president and secretary.
SECTION 2. COMPENSATION. The officers of the company shall
receive such reasonable compensation for their services as from
time to time may be fixed by resolution of the board of
directors.
SECTION 3. TERM. The term of office of all officers shall
commence upon their election or appointment and shall continue
until the first meeting of the board of directors following the
annual meeting of shareholders and thereafter until their
successors shall be elected or until their resignation or
removal. A vacancy occurring in any office of the company for
whatever reason may be filled by the board.
SECTION 4. REMOVAL. Any officer or agent elected or
appointed by the board of directors may be removed by the board
whenever in its judgment the best interests of the company will
be served thereby but such removal shall be without prejudice to
the contract rights, if any, of the officer or agent so removed.
SECTION 5. PRESIDENT. The president shall be the chief
executive officer of the company and, subject to the control of
the board of directors, shall be responsible for the general
administration and operation of the company. He shall have such
other duties and responsibilities as may pertain to such office
or be prescribed by the board of directors. In the absence or
disability of the president, an officer designated by the board
shall exercise the duties and responsibilities of the president.
SECTION 6. VICE PRESIDENTS. Each vice president shall have
such duties and responsibilities as may be prescribed by the
board of directors and the president. The board or the president
may confer a special title upon a vice president.
SECTION 7. SECRETARY. The secretary shall record and keep
the minutes of the shareholders in one or more books provided for
that purpose; see that all notices are duly given in accordance
with the provisions of these bylaws or as required by law; and
perform such other duties as may be prescribed by the board or
the president. The secretary shall have custody of the corporate
seal of the company and shall affix the seal to any instrument
requiring it and attest the same by his signature.
The assistant secretaries shall have such duties as may be
prescribed from time to time by the board, the president or the
secretary. In the absence or disability of the secretary, his
duties shall be performed by an assistant secretary.
SECTION 8. TREASURER. The treasurer shall have charge and
custody and be responsible for all funds and securities of the
company; deposit all moneys and other valuable effects in the
name and to the credit of the company in such depositories as may
be designated by the board of directors; and disburse the funds
of the company as may be authorized by the board and take proper
vouchers for such disbursements. The treasurer shall have such
other duties as may be prescribed from time to time by the board
or the president. In the absence or disability of the treasurer,
his duties shall be performed by an assistant treasurer.
ARTICLE VIII.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The board of directors by resolution
may authorize any officer or officers, agent or agents, to enter
into any contract or execute and deliver any instrument in the
name of and on behalf of the company, and such authority may be
general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf
of the company and no evidences of indebtedness shall be issued
in its name unless authorized by a resolution of the board of
directors. Such authority may be general or confined to specific
instances.
SECTION 3. CHECKS AND DRAFTS. All checks, drafts or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the company shall be signed by
such officer or officers, agent or agents of the company and in
such manner as shall from time to time be determined by
resolution of the board of directors.
SECTION 4. DEPOSITS. All funds of the company not
otherwise employed shall be deposited from time to time to the
credit of the company in such banks, trust companies or other
depositories as the board of directors or officers of the company
designated by the board may select, or be invested as authorized
by the board.
ARTICLE IX.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates
representing shares of the company shall be issued only for whole
numbers of shares and shall be in such form as the board of
directors may, from time to time, prescribe in accordance with
the laws of the State of Oregon. Such certificates shall be
signed by the president or a vice president and by the secretary
or an assistant secretary and sealed with the corporate seal or a
facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles thereof. In case of a lost,
destroyed or mutilated certificate a new one may be issued
therefor upon such terms and indemnity to the company as the
board may authorize.
SECTION 2. TRANSFER. Shares of stock of the company shall
be transferable on the books of the company by the holder of
record thereof, or by his legal representative who shall furnish
proper evidence of authority to transfer, or by his attorney
thereunto authorized by duly executed power of attorney, and on
surrender for cancellation of the certificates for such shares.
The board of directors may appoint one or more transfer agents
and registrars of stock of the company.
SECTION 3. OWNER OF RECORD. The company shall be entitled
to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends and to vote as
such owner and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
ARTICLE X.
INDEMNIFICATION AND INSURANCE
SECTION 1. INDEMNIFICATION. The company shall indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was director,
officer, employee or agent of the company, or is or was serving
at the request of the company as a director, officer, employee,
agent or fiduciary of another corporation, partnership, joint
venture, trust or other enterprise or any employee benefit plan,
against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred
by him in connection with the defense or settlement of such
action, suit or proceeding to the fullest extent permissible
under the Oregon Business Corporation Act or the indemnification
provisions of any successor Act. The foregoing rights of
indemnification shall not be exclusive of any other rights to
which any such person so indemnified may be entitled, under any
agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office; shall
continue as to a person who has ceased to be a director, officer,
employee or agent; and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 2. INSURANCE. The company may purchase and
maintain insurance (and pay the entire premium therefor) on
behalf of any person who is or was a director, officer, employee
or agent of the company, or is or was serving at the request of
the company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the company would have the power to
indemnify him against such liability under the provisions of the
Oregon Business Corporation Act or any successor Act; and on
behalf of any person who is or was a fiduciary under the Employee
Retirement Income Security Act of 1974 with regard to an employee
benefit plan of the company against any liability asserted
against him and incurred by him in his fiduciary capacity.
ARTICLE XI.
SEAL
The corporate seal of the company shall be circular in
form and shall bear an inscription containing the name of the
company, the year of its organization, the state of its
incorporation and the words "Corporate Seal."
ARTICLE XII.
AMENDMENTS
These bylaws, or any of them, may be altered, amended
or repealed, or new bylaws adopted, by resolution of a majority
of the board of directors, subject to repeal or change by action
of the shareholders.
Exhibit (10j.(3))
SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 17th day of
June, 1993, by and between NORTHWEST PIPELINE CORPORATION,
hereinafter referred to as "Transporter", and NORTHWEST NATURAL
GAS COMPANY, hereinafter referred to as "Shipper".
RECITALS:
A. Whereas, Shipper is a local distributor of natural gas.
B. Whereas, Shipper owns certain supplies of natural gas
which it desires Transporter to transport for Shipper's account
pursuant to Part 284 of the regulations of the Federal Energy
Regulatory Commission ("FERC").
C. Whereas, Shipper requested an expansion of
Transporter's pipeline system for firm transportation service.
D. Whereas, Shipper and Transporter agreed to such
expansion under that certain Letter Agreement dated April 7,
1993 for the transportation service described herein.
E. Whereas, Transporter has committed to file and support
an application with the FERC requesting certificate authority to
construct and operate the facilities necessary to provide the
transportation service under this Agreement (the "Facilities") as
soon as practicable after execution of this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties agree as follows:
ARTICLE I - GAS DELIVERIES AND REDELIVERIES
1.1 Subject to the terms, conditions and limitations
hereof, Transporter agrees to receive from Shipper at the Receipt
Point(s) specified in Exhibit A herein, transport and deliver to
Shipper at the Delivery Point(s) specified in Exhibit B herein,
the following quantities of natural gas, known as Transportation
Contract Demand:
Up to 102,000 MMBtu's/day, provided that Transporter's
receipt of gas at any receipt point for Shipper's account
hereunder on any day shall not exceed the maximum daily quantity
set forth for such receipt point on Exhibit "A" hereto, and
provided that Transporter's daily obligation to deliver gas to
Shipper at any delivery point under this Agreement shall not
exceed the Maximum Daily Delivery Obligation ("MDDO") set forth
for such delivery point in Exhibit "B" of this Agreement.
1.2 Pursuant to the General Terms and Conditions of
Transporter's FERC Gas Tariff applicable to this Agreement per
Section 2.2 herein, Shipper shall furnish fuel and lost or
unaccounted for gas volumes in-kind. Transporter may receive
volumes of gas in excess of the maximum daily quantity set forth
in Section 1.1 when necessary to cover such fuel gas
reimbursement while making full delivery of such Maximum Daily
Quantity or to cover certain balancing receipts agreed to by the
parties.
1.3 Such transportation shall be on a firm basis as defined
in the TF-l Rate Schedule of Transporter's FERC Gas Tariff, First
Revised Volume No. l-A, or any superseding Rate Schedule.
ARTICLE II - TRANSPORTATION RATES AND CHARGES
2.1 (a) Shipper agrees to pay Transporter for all natural
gas transportation service rendered under the
terms of this Agreement in accordance with
Transporter's Rate Schedule TF-l, as filed with
the FERC, and as such rate schedule may be amended
or superseded from time to time or any other rate
schedule the FERC may deem applicable to the
subject transportation service.
(b) Payment of applicable reservation charges under
this Agreement will commence the date that
Transporter has in place the facilities necessary
to provide the transportation service but no
sooner than November 1 ,1995. Transporter shall
provide Shipper written notice fifteen (15) days
prior to commencement of said reservation charges.
(c) Shipper will have a continuing option to terminate
any portion of the Contract Demand attributable to
this Agreement, if the Facilities are consolidated
for rate treatment with: (i) Transporter's
Expansion II application to the FERC for a
certificate of public convenience and necessity
to construct expansion facilities; or (ii)
Transporter's Expansion I facilities and services
if treated on an incremental basis. If, as
determined by Transporter, any FERC order
indicates that rate treatment for the Facilities
to be installed pursuant to this Agreement will be
consolidated with Transporter's Expansion I or
Expansion II Project, Transporter will provide
notice to Shipper within 15 days following the
issuance of such order or rule of the right to
exercise a option to terminate any portion of the
Contract Demand attributable to this Agreement,
and shall specify the costs for which Shipper will
be responsible as discussed in this subsection.
Shipper may exercise this option no later than
fifteen (15) days from the date of Transporter's
notice to Shipper. This option to terminate will
be extinguished upon Transporter's commencement of
the construction of the Facilities needed to
accommodate the services described in this
Agreement.
In the event that Shipper elects to exercise the
termination rights provided for above, Shipper
will be responsible to Transporter for any
expansion design costs, environmental impact study
expenses, engineering costs, right of way expenses
or other similar costs spent prior to the notice
date to the extent that such studies or design
work cannot be utilized for the Expansion II
Project.
(d) In the event that Shipper does not elect to
exercise the termination rights outlined in (c)
above prior to Transporter commencing construction
of the Facilities, Shipper will have no subsequent
right to terminate this Agreement regardless of
the rate treatment ultimately approved by the FERC
except as provided for in Section 4.2 below.
2.2. This Agreement shall be subject to the provisions of
Transporter's TF-l Rate Schedule or any applicable superseding
Rate Schedule and the General Terms and Conditions applicable
thereto and effective from time to time, which by this reference
are incorporated herein and made a part hereof.
ARTICLE I II - GOVERNMENTAL REQUIREMENTS
3.1 Shipper shall reimburse Transporter for any and all
filing fees incurred by Transporter in seeking governmental
authorization for the initiation, extension or termination of
service under this Agreement.
3.2 The transportation service contemplated herein shall
be provided by Transporter pursuant to Section 284.223 of the
FERC's regulations.
3.3 Upon termination, this Agreement shall cease to have
any force or effect, save as to any unsatisfied obligations or
liabilities of either party arising hereunder prior to the date
of such termination, or arising thereafter as a result of such
termination; provided, however, that this provision shall not
supersede any abandonment authorization which may be required.
3.4 (This Section 3.4 shall be applicable only for the
transportation of imported natural gas.) Shipper hereby
acknowledges and agrees that either it or its buyer or seller is
the "importer of record" and it will comply with all requirements
for reporting and submitting payment of duties, fees, and taxes
to the United States or agencies thereof to be made on imported
natural gas and for making the declaration of entry pursuant to
19 CFR Section 141.19. Shipper agrees to indemnify and hold Transporter
harmless from any and all claims of damage or violation of any
applicable laws, ordinances and statutes which pertain to the
importation of the gas transported hereunder and which require
reporting and/or filing of fees in connection with said import.
ARTICLE IV - TERM
4.1 This Agreement becomes effective on the date hereof and
shall remain in full force and effect for a period of fifteen
(15) years commencing on the date Transporter places in service
the Facilities necessary to provide the transportation service,
and year to year thereafter at Shipper's sole option. Shipper
may terminate all or any portion of service under this Agreement
either at the expiration of the primary term, or upon any
anniversary thereafter, by giving written notice to Transporter
so stating at least twelve (12) months in advance. Shipper also
shall have the sole option to enter into a new Agreement
containing the same provisions as this Agreement, for all or any
portion of the service under this Agreement at or after the end
of the primary term of this Agreement. It is Transporter's and
Shipper's intent that this term provision provide Shipper with a
"contractual right to continue such service" and to provide
Transporter with concurrent pregranted abandonment of any volume
that Shipper terminates within the meaning of 18 CFR Section
284.221(d)(2)(i) as promulgated by Order No. 636 on May 8, 1992.
4.2 In the event Shipper desires to terminate this
Agreement at any time prior to or after the in-service date of
the Facilities and there is a party identified by Transporter who
is willing to contract for comparable capacity under terms and
conditions acceptable to Transporter, Transporter will allow
Shipper to terminate this Agreement upon execution of a service
agreement with the new party.
ARTICLE V - WARRANTY OF ELIGIBILITY FOR TRANSPORTATION
Shipper, pursuant to the Rate Schedule specified in
Section 2.1(a) herein warrants for itself, its successors and
assigns, that all gas delivered to Transporter for transportation
hereunder shall be eligible for transportation in interstate
commerce under applicable rules, regulations or orders of the
FERC. Shipper will indemnify Transporter and save it harmless
from all suits, actions, damages, costs, losses, expenses
(including reasonable attorney fees) and regulatory proceedings,
arising from breach of this warranty.
ARTIC LE VI - NOTICES
Unless herein provided to the contrary, any notice
called for in this Agreement shall be in writing and shall be
considered as having been given if delivered personally, or by
mail or telegraph with all postage and charges prepaid to either
Shipper or Transporter at the place designated below. Routine
communications shall be considered as duly delivered when mailed
by ordinary mail. Normal operating instructions can be made by
telephone. Unless changed, the addresses of the parties are as
follows:
NORTHWEST PIPELINE CORPORATION
P. O. BOX 58900
SALT LAKE CITY, UTAH 84158-0900
Statements: Attention: T&E Accounting
(MS-10496)
Payments: Attention: Cash Control (MS-10491)
Contractual Notices: Attention: Transportation
(MS-10336)
Other Notices: Attention: Nominations (MS-10322)
Notices & Statements: Northwest Natural Gas Company
220 N.W. Second Avenue
Portland, Oregon 97209
Attention: Gas Supply
ARTICLE VII - OTHER OPERATING PROVISIONS
Pursuant to Section 5.3 of the General Terms and
Conditions of Transporter's FERC Gas Tariff, First Revised Volume
No. l-A, or relevant superseding tariff provision, Shipper shall
make payments to Transporter hereunder by wire transfer of
immediately available funds by the due date set forth therein.
Such funds shall be wire transferred to the First Interstate Bank
of Utah located in Salt Lake City, Utah for Transporter's Account
No. 02-07358-3.
<PAGE>
ARTICLE VIII - ADJUSTMENTS TO GENERAL TERMS AND CONDITIONS
Certain of the General Terms and Conditions are to be
adjusted for the purpose of this Agreement, as specified below:
None.
ARTICLE IX - CANCELLATION OF PRIOR AGREEMENT(S)
When this Agreement takes effect, it supersedes,
cancels and terminates the following agreements(s):
None.
ARTICLE X - SUCCESSORS AND ASSIGNS
10.1 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. No assignment or transfer by either party hereunder
shall be made without written approval of the other party. Such
approval shall not be unreasonably withheld. As between the
parties hereto, such assignment shall become effective on the
first day of the month following written notice that such
assignment has been effectuated.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above set forth.
NORTHWEST NATURAL GAS COMPANY NORTHWEST PIPELINE CORPORATION
(Shipper) (Transporter)
By: /s/ Dwayne L. Foley By: /s/ Matt J. Gillis
Name: Dwayne L. Foley Name: Matt J. Gillis
Title: Senior Vice President Title: Vice President
Marketing
Attest: Attest:
<PAGE>
EXHIBIT "A"
to the
SERVICE AGREEMENT
DATED June 17, 1993
between
NORTHWEST PIPELINE CORPORATION
and
NORTHWEST NATURAL GAS COMPANY
RECEIPT POINTS
Receipt Point Maximum Daily Quantity
For Each Receipt Point
(MMBtus)
Stanfield 102,000
TOTAL MDQ MUST EQUAL TOTAL TRANSPORTATION CONTRACT DEMAND
<PAGE>
EXHIBIT "B"
to the
SERVICE AGREEMENT
DATED June 17, 1993
between
NORTHWEST PIPELINE CORPORATION
and
NORTHWEST NATURAL GAS COMPANY
Maximum Daily Delivery
Obligation ("MDDO") Delivery
Delivery Point For Each Delivery Point Pressure
(MMBtus) (psig)
--------------- ----------------------- --------
Molalla 46,500 575
Albany 10,000 400
Portland SE 10,100 400
Portland NE 6,200 400
Johnson Creek 4,000 400
Oregon City 400 150
Monitor 200 150
Turner 4,000 400
Jefferson/Scio 600 400
Brownsville/Halsey 8,900 400
South Eugene 5,000 400
North Eugene 5,000 400
Creswell 300 150
Cottage Grove 800 400
TOTAL MDDO MUST EQUAL TOTAL TRANSPORTATION CONTRACT DEMAND
Exhibit (10j.(4))
FIRM TRANSPORTATION SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 22nd day of October,
1993, by and between
PACIFIC GAS TRANSMISSION COMPANY, a California corporation
(hereinafter referred to as "PGT"),
and
NORTHWEST NATURAL GAS COMPANY, a corporation existing under
the laws of the State of Oregon (hereinafter referred to as
"Shipper").
WHEREAS, PGT owns and operates a natural gas interstate
pipeline transmission system which extends from a point of
interconnection with the pipeline facilities of Alberta Natural
Gas Company Ltd. (ANG) at the International Boundary near
Kingsgate, British Columbia, through the states of Idaho,
Washington and Oregon to a point of interconnection with Pacific
Gas and Electric Company at the Oregon-California border near
Malin, Oregon; and
WHEREAS, Shipper desires PGT, on a firm basis, to transport
certain quantities of natural gas from the International Boundary
in the vicinity of Kingsgate, British Columbia and/or from
Stanfield, Oregon (receipt points) to various delivery points as
specified in Exhibit A of this Agreement; and
WHEREAS, since July 15, 1981, PGT has provided firm
transportation service to the Northwest Pipeline Corporation
("Northwest") under the terms and conditions of a firm
transportation service agreement between PGT and Northwest and
PGT's Rate Schedule T-1; and
WHEREAS, the Federal Energy Regulatory Commission ("FERC")
has authorized Northwest in Docket No. CP92-79 to, among other
things, convert its gas sales service to Shipper on Northwest's
interstate pipeline transmission system to firm transportation
service; and
WHEREAS, the FERC has authorized PGT in Docket No. G-17350-
012 to assign to Shipper a portion of Northwest's firm
transportation service on PGT formerly provided under Rate
Schedule T-1 and to provide such service to Shipper under Part
284 of the FERC's regulations; and
WHEREAS, Shipper desires to accept said assignment of
Northwest firm transportation services on PGT; and
WHEREAS, PGT is willing to transport certain quantities of
natural gas for Shipper, on a firm basis, utilizing its pipeline
facilities,
NOW, THEREFORE, the parties agree as follows:
I. GOVERNMENTAL AUTHORITY
1.1 This Firm Transportation Service Agreement
("Agreement") is made pursuant to the regulations of the Federal
Energy Regulatory Commission (FERC) contained in 18 CFR Part 284,
as amended from time to time.
1.2 This Agreement is subject to all valid legislation with
respect to the subject matters hereof, either state or federal,
and to all valid present and future decisions, orders, rules,
regulations and ordinances of all duly constituted governmental
authorities having jurisdiction.
II. QUANTITY OF GAS
2.1 The Maximum Daily Quantity of gas, as defined in
Paragraph 1 of the Transportation General Terms and Conditions of
PGT's FERC Gas Tariff First Revised Volume No. 1-A, which is the
maximum quantity of gas that PGT is required to deliver for
Shipper's account to Shipper's point(s) of delivery is set forth
in Exhibit A, attached hereto and made a part hereof.
2.2 The maximum quantity of gas which Shipper has a right
to deliver to PGT at Shipper's point(s) of receipt, as identified
in Exhibit A, equals the Maximum Daily Quantity plus an amount
for fuel and line losses as set forth in PGT's Rate Schedule FTS-
1 of PGT's FERC Gas Tariff First Revised Volume No. 1-A.
2.3 PGT's obligation to deliver Shipper's gas from the
Shipper's point(s) of receipt to the Shipper's point(s) of
delivery is limited to the actual quantity of gas received by PGT
for Shipper's account at Shipper's point(s) of receipt less
Shipper's requirement to provide fuel and line losses, as set
forth in PGT's Rate Schedule FTS-1, up to Shipper's Maximum Daily
Quantity.
III. TERMS OF AGREEMENT
3.1 This Agreement shall become effective on November 1,
1993 (Effective Date) and shall continue in full force and
effect until thirty (30) years from the Effective Date (Initial
Term). Thereafter, this Agreement shall continue in effect from
year to year (Subsequent Term), or a longer term if agreed to by
PGT, unless Shipper gives PGT twelve (12) months prior written
notice of Shipper's desire to terminate this Agreement.
3.2 Neither party may terminate this Agreement during the
Initial Term.
IV. POINTS OF RECEIPT AND DELIVERY
4.1 The point(s) of receipt of gas deliveries to PGT
is/are as designated in Exhibit A, attached hereto.
4.2 The point(s) of delivery of gas is/are as designated
in Exhibit A, attached hereto.
4.3 The delivery pressure, actual average atmospheric
pressure, and other pertinent factors applicable to the points of
receipt and delivery are also set forth in Exhibit A.
V. OPERATING PROCEDURES
5.1 Shipper shall conform to all of the operating
procedures set forth in the Transportation General Terms and
Conditions of PGT's FERC Gas Tariff First Revised Volume No.
l-A.
5.2 Shipper shall furnish gas for compressor fuel and line
loss as set forth in PGT's Rate Schedule FTS-l.
VI. RATES(S)
6.1 Shipper shall pay PGT each month all rates applicable
to services rendered pursuant to this Agreement in accordance
with PGT's Rate Schedule FTS-l, or superseding rate schedule(s),
and PGT's current Statement of Effective Rates and Charges in
PGT's FERC Gas Tariff First Revised Volume No. l-A, on file with
and subject to the jurisdiction of the FERC. This Agreement in
all respects shall be and remains subject to the applicable
provisions of PGT's Rate Schedule FTS-1, or superseding rate
schedule(s), and of the Transportation General Terms
and Conditions of PGT's FERC Gas Tariff First Revised Volume No.
l-A on file with the FERC, all of which are by this reference
made a part hereof.
6.2 PGT shall have the right from time to time to propose,
file and cause to be made effective with the FERC such changes in
the rates and charges or service obligations applicable to
transportation services pursuant to this Agreement, the rate
schedule under which this service is hereunder provided, or any
provisions of PGT's Transportation General Terms and Conditions
applicable to such services. Shipper shall have the right to
protest any such changes proposed by PGT and to exercise any
other rights that Shipper may have with respect thereto.
VII. MISCELLANEOUS
7.1 This Agreement shall be interpreted according to the
laws of the state of California.
7.2 Unless herein provided to the contrary, any notice
called for in this Agreement and/or PGT's Transportation General
Terms and Conditions shall be in writing and shall be considered
as having been given if delivered by facsimile or registered
mail, with all postage or charges prepaid, to either PGT or
Shipper at the place designated below. Routine communications,
including monthly statements and payment, shall be considered as
duly delivered when received by ordinary mail or facsimile.
Shipper's daily nominations shall be considered as duly delivered
when received by electronic data interchange. Unless changed, the
addresses of the parties are as follows:
"PGT" PACIFIC GAS TRANSMISSION COMPANY
160 Spear Street
Room 1900
San Francisco, California 94105-1570
Attention: President & CEO
"SHIPPER" NORTHWEST NATURAL GAS COMPANY
220 N.W. Second Avenue
Portland, Oregon 97209
Attention: Senior Vice President,
Operations
7.3 Prior to initiation of service, Shipper shall provide
PGT with any information required by the FERC, as well as all
information identified in PGT's Transportation General Terms and
Conditions applicable to service under PGT's Rate Schedule FTS-1
and this Agreement.
7.4 A waiver by either party of any one or more defaults
by the other hereunder shall not operate as a waiver of any
future default or defaults, whether of a like or of a different
character.
7.5 Nothing in this Agreement shall be deemed to create
any rights or obligations between the parties hereto after the
expiration of the Initial or Subsequent Term(s) set forth herein,
except that expiration of this Agreement shall not relieve either
party of the obligation to correct any quantity imbalances or
Shipper of the obligation to pay any amounts due to PGT to the
date of expiration.
7.6 Shipper warrants for itself, its successors and
assigns, that it will have at the time of delivery of the gas to
PGT hereunder good title to such gas and that all gas delivered
to PGT for transportation hereunder is eligible for all requested
transportation in interstate commerce under applicable rules,
regulations or orders of the FERC, or other agency having
jurisdiction. Shipper will indemnify PGT and save and hold it
harmless from all suits, action, damages (including reasonable
attorneys' fees) and costs connected with regulatory or legal
proceedings, arising from the breach of this warranty.
VII. MISCELLANEOUS
7.7 This Agreement constitutes the full agreement between
Shipper and PGT and any subsequent changes to this Agreement must
be made in writing by an amendment to this Agreement. This
Agreement may only be amended by an instrument in writing
executed by both parties hereto.
IN WITNESS WHEREOF the parties hereto have caused
this Agreement to be executed as of the day and year first above
written.
PACIFIC TRANSMISSION COMPANY
By: /s/ Stephen P. Reynolds
Name: Stephen P. Reynolds
Title: President & CEO
NORTHWEST NATURAL GAS COMPANY
By: /s/ Dwayne L. Foley
Name: Dwayne L. Foley
Title: Senior Vice President,
Operations
<PAGE>
EXHIBIT A
To the
FIRM TRANSPORTATION SERVICE AGREEMENT
Dated Between
PACIFIC GAS TRANSMISSION COMPANY
And
NORTHWEST NATURAL GAS COMPANY
RECEIPT
Receipt Maximum Received Quantity
Point(s) (2) (MMBtu/d) (1)
Interconnection of PGT's system with 3,616
the system of Alberta Natural Gas
Company Ltd. at the International
Boundary in the vicinity of
Kingsgate, British Columbia
DELIVERY
Delivery Maximum Daily Quantity
Points(s) (MMBtu/D)
Spokane NPC, WA 3,616
TOTAL 3,616
[FN]
(1) The total quantity of gas received by PGT from Shipper at
receipt points shall not exceed 3,616 MMBtu per day plus the
quantities of gas to be furnished by Shipper for fuel and
line loss in accordance with PGT's Rate Schedule FTS-1 and
the Statement of Effective Rates and Charges of PGT's FERC
Gas Tariff First Revised Volume 1-A for service under Rate
Schedule FTS-1.
(2) Pursuant to Paragraph 29 of PGT's Transportation General
Terms and Conditions of its FERC Gas Tariff First Revised
Volume No. 1-A, Shipper may designate other receipt points
as "secondary receipt points" such as Stanfield, Oregon, the
interconnection of PGT's system with the system of Northwest
Pipeline Corporation.
EXHIBIT (10j.(5))
Pacific Gas and Electric Company
444 Market Street, Sixth Floor
Mail Code T6B
P. O. Box 770000
San Francisco CA 94177
415/973-6262
Jack F. Jenkins-Stark
Senior Vice President and General Manager
Gas Supply Business Unit
May 11, 1994
Mr. Dwayne L. Foley
Senior Vice President
Operations and Information Services
Northwest Natural Gas Company
220 N. W. Second Avenue
Portland OR 97209
Dear Mr. Foley:
This letter reflects discussions between Northwest Natural Gas
Company (NNG) and Pacific Gas and Electric Company (PG&E)
subsequent to PG&E's May 6, 1994 counter offer for a pre-arranged
release of capacity on the PGT system by PG&E for acquisition by
NNG or its designee.
OFFER
PG&E hereby offers to release the firm transportation rights on
the PGT system described herein for acquisition by NNG, as a
prearranged release under the capacity release provisions of the
FERC Gas Tariff, Volume No. 1-A, of Pacific Gas Transmission
Company (PGT). This release shall be packaged with corresponding
upstream capacity assigned to NNG by A&S.
1. The PGT capacity to be released is held currently by
PG&E under a Firm Transportation Service Agreement
(FTSA) with PGT, and service is provided pursuant to
PGT's Rate Schedule FTS-1. Such service agreement is
incorporated herein by reference.
2. The Maximum Daily Quantity (MDQ, which is a defined
term in the applicable PGT tariff) offered for release
is 56,000 MMBtu/day.
3. PG&E will release, as a permanent release, this 56,000
MMBtu/day of capacity from Kingsgate, B. C. to Malin,
Oregon (the full distance of PG&E's current PGT
capacity). This permanent release will be effective
November 1, 1995 and remain in effect through
October 31, 2005.
4. The rate for the capacity permanently released shall be
one hundred percent of the applicable as-billed rate
for service under Rate Schedule FTS-1 Reservation
Charge. NNG shall be responsible for all volumetric
charges.
5. The points of receipt and delivery for this released
capacity shall be:
Primary Receipt Point Kingsgate, B. C.
Primary Delivery Point Malin, Oregon
Conditions: This offer and NNG's acceptance of same are subject
to the following conditions being satisfied by the relevant party
or waived by the party for whose benefit the condition is
included on or before May 23, 1994. The sole remedy available to
the parties if one or more of the following conditions is not
satisfied shall be termination of this offer.
The receipt by PG&E and NNG of all regulatory approvals
deemed necessary by each, on terms acceptable to both PG&E
and NNG.
NNG meeting the creditworthiness standards of ANG, NOVA and
PGT.
The release procedures specified in PGT's FERC Gas Tariff.
NNG's receipt of the necessary release from PGT, ANG, and
NOVA for 1995 Expansion capacity.
Confirmation from NOVA, ANG and PGT as to NNG's evergreen
rights beyond the end of the primary term on their
respective systems. For PGT, this also means continuation
for the segmented Kingsgate-to-Stanfield portion of the FTSA
with Stanfield as the primary delivery point for NNG.
NNG obtaining from A&S, as a permanent assignment,
corresponding upstream capacity on the Alberta Natural Gas
and NOVA Pipeline Systems for the remaining terms of the
service held by A&S -- through October 31, 2001 on the NOVA
system, and through October 31, 2005 on the ANG system -- at
one hundred percent of the applicable as-billed rates. The
NOVA assignment shall be for delivery capacity at the
Alberta/British Columbia border, and the ANG capacity shall
cover the entire length of its system.
The approval of NNG's management.
The approval of PG&E's management.
Indemnity: PG&E shall indemnify and hold harmless NNG from all
Gas Supply Restructuring (GSR) direct bills that may be invoiced
by PGT to NNG by virtue of NNG accepting assignment of PGT
capacity formerly held by PG&E. Such indemnification shall be
limited to the GSR direct bills recovered by PGT pursuant to the
Transition Cost Recovery Mechanism ("TCRM") approved by the FERC
in PGT's Order No. 636 restructuring proceeding in Docket No.
RS92-46. Customer shall be responsible for, and there shall be
no indemnity or any payment of or responsibility or liability on
PG&E for volumetric surcharges on such capacity arising from Gas
Supply Restructuring costs.
Recall and Reassignment Rights: Upon 12 months notice, PG&E will
have the right to recall up to the total 56,000 MMBtu/day of
assigned capacity from Stanfield, Oregon to Malin, Oregon (the
Stanfield-to-Malin segment). Any capacity so recalled by PG&E
shall remain with PG&E or its assignees) until midnight on
October 31, 2005. Such recall may be exercised by PG&E without
posting of the capacity, applicable regulations and tariff
provisions permitting. The rate PG&E will pay for this recalled
capacity shall be 100% of the as-billed rate applicable to this
capacity segment under Rate Schedule FTS-1. PG&E's rights to and
obligations relating to any recalled capacity shall terminate at
midnight on October 31, 2005, and PG&E shall have no liability or
responsibility for such capacity thereafter.
At any time prior to October 31, 2005, NNG will have the right,
at such time as PGT's rate design makes the total cost of holding
"vintage capacity" (i.e., capacity on "original" PGT facilities)
from Kingsgate to Malin more expensive than holding expansion
capacity on the Kingsgate-to-Stanfield segment, to reassign up to
the total MDQ (56,000 MMBtu/day) of capacity on the Stanfield-to-
Malin segment to PG&E for the remaining term of the permanent
release described above. PG&E's rights to and obligations
relating to any capacity so reassigned by NNG shall terminate at
midnight on October 31, 2005, and PG&E shall have no liability or
responsibility for such capacity thereafter. PG&E shall accept
this reassignment at the 100% of then-current as-billed rate.
Short-Term Release: For the period from the effective date of
this agreement until November 1, 1995, PG&E shall post a pre-
arranged capacity release with NNG with the following terms:
56,000 MMBtu/day of FTS-1 vintage capacity from Kingsgate to
Malin.
100% of the applicable as-billed rate for service under Rate
Schedule FTS-1 Reservation Charge, the variable component
thereof, and any applicable surcharges, to be paid on a
volumetric basis.
No minimum flow requirements.
A right to PG&E to an unlimited number of recalls from and
reassignments to NNG of this released capacity or any
portion thereof; provided that, PG&E's recall rights are
limited to the extent the above capacity was not nominated
by NNG on the preceding day and may be made only with notice
to NNG at least 2 hours prior to PGT's normal nomination
deadline. To the extent PGT capacity is unutilized by PG&E,
it shall be reassigned to NNG with notice at least 2 hours
prior to PGT's normal nomination deadline, up to 56,000
MMBtu/day of capacity referenced above.
ACCEPTANCE
If NNG is in agreement with the business terms of this offer,
please execute this letter where provided below and return it to
the undersigned by the close of business May 20, 1994. PG&E will
then prepare a complete formal agreement for the Release. Any
contract arising out of this offer becomes binding only upon its
execution by both PG&E and NNG.
Sincerely,
/s/ Jack Jenkins-Stark
JACK JENKINS-STARK
Senior Vice President and General Manager
Gas Supply Business Unit
JKH:pdl
cc: Randy Friedman
For Northwest Natural Gas Co. By: /s/ Dwayne L. Foley
Legal Department Name: Dwayne L. Foley
Approved As To Form
This Date /s/ SKA Date: 5/18/94
By 5/18/94
Contact designation for offeree for purposes of questions and
notices:
Name: Jann Huie King Gerry Malin
Title: Associate Area Director Vice President, Gas
Company: Pacific Gas and Electric Co. Services
2950341 Canada Ltd.
[AltaGas Services, Inc.]
(Agent for Alberta &
Southern Gas Co., Ltd.)
Address: Mail Code T4B 2700, 240 - 4th Avenue,
P. O. Box 770000 S. W.
San Francisco, CA 94177 Calgary, Alberta CANADA
T2P 4L7
Phone: (415) 973-3739 (403) 691-7518
Facsimile: (415) 973-0881 (403) 691-7576
Exhibit (10j.(6))
SERVICE AGREEMENT
RATE SCHEDULE FS
BETWEEN:
NOVA Gas Transmission Ltd., a body corporate having an
office in the City of Calgary, in the Province of
Alberta (hereinafter referred to as "Company")
-and-
Northwest Natural Gas Company, a body corporate having
an office in the City of Portland, in the State of
Oregon (hereinafter referred to as "Customer")
IN CONSIDERATION of the premises and the covenants and agreements
herein contained, the parties hereto covenant and agree as
follows:
1. Customer acknowledges receipt of a current copy of Company's
Gas Transportation Tariff (the "Tariff").
2. The terms used herein shall have the same meanings as are
ascribed to corresponding terms in the General Terms and
Conditions contained in the Tariff, unless otherwise defined
herein.
3. Customer hereby requests, and Company agrees to provide,
Service pursuant to Rate Schedule FS in accordance with the
attached Schedules of Service, such Service to commence on
the Billing Commencement Date and to terminate, subject to
the provisions hereof, on the Service Termination Date.
Company shall include on Customer's Index of Service for
Rate Schedule FS the Service to be provided hereunder and
Customer agrees to acknowledge such Index of Service from
time to time at Company's request.
4. Customer agrees to pay to Company each Billing Month, for
all Service rendered under this Service Agreement, an amount
equal to the aggregate charge for Service described in
paragraph 4.5 of Rate Schedule FS.
5. Customer shall:
(a) provide such assurances and information as Company may
reasonably require respecting any Service to be
provided pursuant to this Rate Schedule FS including,
without limiting the generality of the foregoing, an
assurance that necessary arrangements have been made
among Customer, producers of gas for Customer,
purchasers of gas from Customer and any other Person
relating to such Service, including all gas purchase,
gas sale, operating, processing and common stream
arrangements; and
(b) at Company's request provide Company with an assurance
that Customer has provided the Person operating
facilities upstream of any Receipt Point in respect of
which Customer has the right to receive Service with
all authorizations necessary to enable such Person to
provide Company with all data and information
reasonably requested by Company for the purpose of
allocating volumes of gas delivered to Company among
Company's Customers and to bind Customer in respect of
all such data and information provided.
If Customer fails to provide such assurances and information
forthwith following request by Company, from time to time,
Company may at its option, to be exercised by notice to
Customer, suspend the Service to which such assurances and
information relate until such time as Customer provides the
assurances and information requested, provided however that
any such suspension of Service shall not relieve Customer
from any obligation to pay any rate, toll, charge or other
amount payable to Company.
6. Customer acknowledges that the Facilities have been designed
to provide for the transportation of the aggregate gas
supply that is forecast to be received at Receipt Points on
the NOVA system, as described each year in NOVA's Annual
Plan, and that interruption and curtailment of Service may
occur if the aggregate gas supply actually received at such
Receipt Points is greater than forecast.
<PAGE>
7. Every notice, request, demand, statement or bill provided
for in Rate Schedule FS, this Service Agreement and the
General Terms and Conditions, or any notice which either
Company or Customer may desire to give to the other, shall
be in writing and each of them and every payment provided
for shall be directed to the Person to whom given, made or
delivered at such Person's address as follows:
Customer:
Northwest Natural Gas Company
220 N.W. Second Avenue
Portland, Oregon
U.S.A.
97209
Attention: Mr. Randolph S. Friedman, Manager Gas
Supply
or
Attention: (as above)
Fax: (503) 721-2475
Company:
NOVA Gas Transmission Ltd.
P.O. Box 2535, Station "M"
801 Seventh Avenue S.W.
Calgary, Alberta
T2P 2N6
Attention: Vice President for Customer
Fax: (403) 290-6370
<PAGE>
Any notice may be given by personal delivery or by mailing
the same, postage pre-paid, in an envelope properly
addressed to the Person to whom the notice is to be given
and shall be deemed to be given four (4) business days after
the mailing thereof, Saturdays, Sundays and statutory
holiday excepted. Any notice may also be given by pre-paid
telegram, fax, or other telecommunication addressed to the
Person to whom such notice is to be given at such Person's
address for notice as set forth above, and any notice so
given shall be deemed to have been given twenty-four (24)
hours after transmission of same, Saturdays, Sundays and
statutory holidays excepted. Any notice may also be given
by telephone followed immediately by letter, fax, telegram
or other telecommunication and any notice so given shall be
deemed to have been given as of the date and time of the
telephone notice. In the event of disruption of regular
mail every payment shall be personally delivered and every
notice, request, demand, statement or bill shall be given by
one of the alternative means set out herein.
8. The terms and conditions of Rate Schedule FS and the General
Terms and Conditions are by this reference incorporated into
and made a part of this Service Agreement. Notwithstanding
anything contained herein, the terms and conditions hereof
shall be subject to the terms and conditions contained in
Rate Schedule FS and the provisions of the General Terms and
Conditions.
IN WITNESS WHEREOF the parties hereto have executed this Service
Agreement by their proper signing officers duly authorized in
that behalf all as of the 20th day of January, 1995.
Northwest Natural Gas Company NOVA Gas Transmission Ltd.
Per: Per:
Dwayne L. Foley, Sr. VP
Per:
<PAGE>
SCHEDULE OF SERVICE
RATE SCHEDULE FS
TRANSPORTATION SERVICES
ORIGINATED 3/11/94
SCHEDULE NO: 93-21379-0
CUSTOMER:
Northwest Natural Gas Company
220 N.W. Second Avenue
Portland, Oregon
U.S.A. 97209
PLANT LOCATION: n/a
PLANT CAPACITY: n/a 103m3/d
COMMON STREAM OPERATOR: n/a
RECEIPT STATION NAME: n/a
RECEIPT STATION NO: n/a
RECEIPT STATION LOCATION: n/a
MAXIMUM DAILY RECEIPT VOLUME: n/a 103m3/d
MAXIMUM RECEIPT PRESSURE: n/a kPa
DELIVERY STATION NAME: Alberta B.C. border
DELIVERY STATION NO: 2001
DELIVERY STATION LOCATION: NW 11-008-05 W5M
MAXIMUM DAILY DELIVERY VOLUME: 1611.8 103m3/d
MAXIMUM DELIVERY PRESSURE: n/a kPa
SURCHARGE: n/a
SERVICE TERMINATION DATE: This Schedule of Service shall
terminate and be of no further force or effect on the day that is
fifteen years from the Billing Commencement Date for the Service
described herein.
ADDITIONAL CONDITIONS: The terms and conditions in Appendix "A"
attached hereto are incorporated into and made part of this
Schedule of Service.
THIS SCHEDULE FORMS PART OF THE SERVICE AGREEMENT DATED November
1, 1993 AND SHALL BE DEEMED TO BE ATTACHED THERETO.
Northwest Natural Gas Company NOVA Corporation of Alberta
Per: Per:
Dwayne L. Foley, Sr. VP
Per: Legal Dept. approved to Per:
form as of March 18, 1994
by SKA
<PAGE>
APPENDIX "A"
ADDITIONAL CONDITIONS TO SCHEDULES OF SERVICE
1. This Schedule becomes a binding obligation on Company only
upon and not prior to Company delivering notice to Customer
of the Billing Commencement Date for the Service described
herein.
2. Notwithstanding anything contained in any other agreement
between Customer and Company, Customer acknowledges and
agrees that this Schedule of Service becomes a binding
obligation on Company only upon and not prior to Company
delivering notice to Customer of the Billing Commencement
Date for the Service described herein. In addition, Company
has the right to cancel this Schedule upon final regulatory
approval of all NOVA and related downstream facilities
applications.
ex-10.6
Exhibit (10j.(7))
SERVICE AGREEMENT
APPLICABLE TO FIRM TRANSPORTATION SERVICE
UNDER RATE SCHEDULE FS-1
THIS AGREEMENT is made and entered into this 12th day of June,
1991, by and between:
ALBERTA NATURAL GAS COMPANY LTD, a body corporate, having an
office and carrying on business in the City of Calgary, in
the Province of Alberta, (hereinafter referred to as
"Company"),
-and-
NORTHWEST NATURAL GAS COMPANY, a body corporate, having an
office and carrying on business in the City of Portland, in
the State of Oregon (hereinafter referred to as "Shipper")
WHEREAS, Company's Facilities extend from a point of
interconnection with the pipeline facilities of NOVA Corporation
of Alberta at the Alberta-British Columbia border near Coleman,
Alberta, through southeast British Columbia to a point of
interconnection with the pipeline facilities of Pacific Gas
Transmission Company at the international border near Kingsgate,
British Columbia;
AND WHEREAS Company and Foothills Pipe Lines (South B.C.) Ltd.
have entered into an agreement respecting an expansion of their
respective systems ("Expansion") whereby the Company will build,
design and operate the Expansion and own the compression
facilities associated therewith and Foothills Pipe Lines (South
B.C.) Ltd. will own the pipeline sections associated with the
Expansion;
AND WHEREAS to enable the Company to move natural gas through the
Expansion, Company must contract for service with Foothills Pipe
Lines Ltd. and Foothills Pipe Lines Ltd. must in turn contract
for service with Company;
AND WHEREAS, Shipper desires Company, on a firm basis, to
transport certain volumes of natural gas through Company's
Facilities from the Alberta/British Columbia border near Coleman,
Alberta to the British Columbia/U.S. international border near
Kingsgate, British Columbia;
AND WHEREAS, Company is willing to transport certain volumes of
natural gas for Shipper, on a firm basis;
NOW, THEREFORE, the parties agree as follows:
1. This agreement is subject to all valid legislation with
respect to the subject matters hereof, either provincial or
federal, and to all valid present and future decisions, orders,
rules, and regulations of all duly constituted governmental
authorities having jurisdiction.
2. Shipper acknowledges receipt of a current copy of
Company's Gas Transportation Service Documents and Company agrees
to provide Shipper with any amendments thereto.
3. The terms used herein shall have the same meanings as
are ascribed to corresponding terms in the General Terms and
Conditions contained in the Gas Transportation Service Documents.
4. Shipper hereby requests, and Company agrees to provide
Service pursuant to Service Schedule FS-1 in accordance with the
attached Schedule A which is incorporated into and forms part of
this Agreement, such Service to commence on the Service
Availability Date and to terminate, subject to the provisions
hereof, on the Service Termination Date.
5. Shipper agrees to make gas available for Shipper's
share of Company Use Gas, or pay for such gas, pursuant to
Article V of the General Terms and Conditions.
6. Company undertakes to redeliver to Shipper, and Shipper
agrees to accept, at the Delivery Point, a volume of gas
equivalent in heat content to the volume received by Company from
Shipper, at the Receipt Point, after deducting gas volumes, if
any, provided by Shipper for Company Use Gas.
7. In providing service to its existing or new Shippers,
Company will use the priority of service specified in Article XI
of Company's General Terms and Conditions.
8. Prior to the Service Availability Date, Shipper shall
provide Company with all information identified in Company's
Request for Transportation Form.
9. Shipper agrees to pay, during the period commencing
from the Service Availability Date, and in accordance with
Schedule FS-1, the General Terms and Conditions, the Statement of
Effective Rates and Charges and Schedule "A" attached hereto (all
as may be amended from time to time), the rates, tolls and
charges fixed by Company from time to time, in respect of each
month, and portion thereof that this Service Agreement and any
renewal thereof is in effect.
In the event that the Service Availability Date occurs on
any day other than the first day of a month, then the demand
charge payable for such month under section 3.1 of Service
Schedule FS-1 shall be the product resulting from multiplying the
demand charge otherwise payable for such month by a fraction, the
numerator of which shall be the number of days in such month
subsequent to and including the Service Availability Date and the
denominator of which is the total number of days in such month.
10. Shipper covenants that it will make timely arrangements
for upstream and downstream transportation, gas supply and
markets and all necessary governmental authorizations and that it
will advise the upstream and downstream transporters of the
receipt and delivery points under this Agreement.
Shipper acknowledges and agrees with Company that Company is
relying upon the covenant contained in this clause and agrees
that if any such arrangements or authorizations are not in place
prior to the Service Availability Date, such will not affect the
Shipper's obligation to pay any demand charge, surcharge, or any
other amount payable to Company.
11. If Shipper elects to exercise its option to terminate
this Service Agreement as provided for in Clause 9. of Service
Schedule FS-1, it shall execute and serve upon Company a
termination notice not less than twelve months prior to the
Service Termination Date as such date may be extended from time
to time.
12. Shipper agrees not to make demand or bring action
against Company for Company's refusal to transport as hereunder
in the event that any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this agreement provided
that such failure was not directly caused by the negligence of
Company.
13. Every notice, request, demand, statement or bill
provided for by the Service Schedules, the Service Agreements and
the General Terms and Conditions, or any notice which either
Shipper or Company may wish to give to the other, shall be in
writing and shall be directed as follows:
Shipper: Northwest Natural Gas Company
220 N.W. Second Avenue
Portland, Oregon
97209
Attention: Vice President, Operations
Company: ALBERTA NATURAL GAS COMPANY LTD
2400, 425 - First Street S.W.
Calgary, Alberta, Canada
T2P 3L8
Attention: Mr. Ken Peake
Any notice may be given by personal delivery, by telecopier or by
mail and shall be deemed to be given on the day of delivery, if
by personal delivery or by telecopier, and four (4) business days
after mailing if by mail. Any notice may also be given by
telephone followed immediately by telecopier, or other
telecommunication agreed to by both parties, and any notice so
given shall be deemed to be given as of the date of the
confirming telecommunication.
14. The terms and conditions of Service Schedule FS-1 and
the General Terms and Conditions are by this reference
incorporated into and made part of this Service Agreement.
15. A waiver by either party of one or more defaults by the
other hereunder shall not operate as a waiver of any future
default or defaults, whether of a like or different character.
16. This agreement may be amended only by an instrument in
writing executed by both parties hereto.
17. Nothing in this agreement shall be deemed to create any
rights or obligations between the parties hereto after the
expiration of the terms hereof as same may be extended from time
to time except that termination of this agreement shall not
relieve either party of the obligation to correct any gas volume
imbalances or of the obligation to pay any amounts due hereunder.
IN WITNESS WHEREOF the parties hereto have caused this
agreement to be executed as of the day and year first written
above.
ALBERTA NATURAL GAS COMPANY LTD
By: /s/ David Sharp
Name: David Sharp
Title: Sr. Vice President
Shipper: NORTHWEST NATURAL GAS COMPANY
BY: /s/ Michael S. McCoy
Name: Michael S. McCoy
Title: Vice President, Operations
Legal Department approved as to
form 5/10/91 by SKA.
<PAGE>
SCHEDULE A
to the Firm Service Agreement
Dated June 12, 1991, between
ALBERTA NATURAL GAS COMPANY LTD
AND
NORTHWEST NATURAL GAS COMPANY (Shipper)
1. Receipt Point: Alberta/British Columbia border near
Coleman, Alberta
Minimum Pressure Available 4200 kPa
2. Delivery Point: British Columbia/U.S. international
border near Kingsgate, B.C.
Maximum Pressure Available 5500 kPa
3. Shipper's Haul Distance - Pipeline 170.7 Km
4. Shipper's Haul Distance - Compressor 170.7 Km
5. Maximum Day Delivery Quantity (Winter) 1.3153 106m3/d
(Summer) 0.8477 106m3/d
6. Service Availability Date November 1, 1993
7. Service Terminate Date October 31, 2008
8. Surcharge Amount:
For Special Facilities n/a Dollars/Month
For Other n/a Dollars/Month
Total Surcharge n/a Dollars/Month
SHIPPER COMPANY
NORTHWEST NATURAL GAS COMPANY ALBERTA NATURAL GAS COMPANY LTD
Michael S. McCoy David Sharp
Vice President, Operations Sr. Vice President
Legal Department approved
as to form 5/10/91 by SKA
ex-10.7
Exhibit (10j.(8))
SERVICE AGREEMENT
APPLICABLE TO FIRM TRANSPORTATION SERVICE
UNDER RATE SCHEDULE FS-1
THIS AGREEMENT is made and entered into this 9th day of
November 1994,by and between:
ALBERTA NATURAL GAS COMPANY LTD, a body corporate,
having an office and carrying on business in the
City of Calgary, in the Province of Alberta,
(hereinafter referred to as "Company"),
- and -
NORTHWEST NATURAL GAS COMPANY, a body corporate
having an office in the City of Portland, in the
State of Oregon, (hereinafter referred to as
"Shipper")
WHEREAS, Company's Facilities extend from a point of
interconnection with the pipeline facilities of NOVA Corporation
of Alberta at the Alberta-British Columbia border near Coleman,
Alberta, through southeast British Columbia to a point of
interconnection with the pipeline facilities of Pacific Gas
Transmission Company at the international border near Kingsgate,
British Columbia; and
WHEREAS, Shipper desires Company, on a firm basis, to transport
certain volumes of natural gas through Company's Facilities from
Alberta/British Columbia border near Coleman, Alberta to British
Columbia/U.S. international border near Kingsgate, B.C.; and
WHEREAS, Company is willing to transport certain volumes of
natural gas for Shipper, on a firm basis;
NOW, THEREFORE, the parties agree as follows:
1. This Agreement is subject to all valid legislation with
respect to the subject matters hereof, either provincial or
federal, and to all valid present and future decisions, orders,
rules, and regulations of all duly constituted governmental
authorities having jurisdiction.
2. Shipper acknowledges receipt of a current copy of
Company's Gas Transportation Service Documents and Company agrees
to provide Shipper with any amendments thereto.
3. The terms used herein shall have the same meanings as
are ascribed to corresponding terms in the General Terms and
Conditions contained in the Gas Transportation Service Documents.
4. Shipper hereby requests, and Company agrees to provide
Service pursuant to Service Schedule FS-1 in accordance with the
attached Schedule A which is incorporated into and forms part of
this Agreement, such Service to commence on the Service
Availability Date and to terminate, subject to the provisions
hereof, on the Service Termination Date.
5. Shipper agrees to make gas available for Shipper's share
of Company Use Gas, or pay for such gas, pursuant to Article V of
the General Terms and Conditions.
6. Company undertakes to redeliver to Shipper, and Shipper
agrees to accept, at the Delivery Point, a volume of gas
equivalent in heat content to the volume received by Company from
Shipper, at the Receipt Point, after deducting gas volumes, if
any, provided by Shipper for Company Use Gas.
7. In providing service to its existing or new Shippers,
Company will use the priority of service specified in Article Xl
of Company's General Terms and Conditions.
8. Prior to the Service Availability Date, Shipper shall
provide Company with all information identified in Company's
Request for Transportation Form.
9. Shipper agrees to pay, during the period commencing from
the Service Availability Date, and in accordance with Schedule
FS-1, the General Terms and Conditions, the Statement of
Effective Rates and Charges and Schedule "A" attached hereto (all
as may be amended from time to time), the rates, tolls and
charges fixed by Company from time to time, in respect of each
month, and portion thereof that this Service Agreement and any
renewal thereof is in effect.
In the event that the Service Availability Date occurs on
any day other than the first day of a month, then the demand
charge payable for such month under section 3.1 of Service
Schedule FS-1 shall be the product resulting from multiplying the
demand charge otherwise payable for such month by a fraction, the
numerator of which shall be the number of days in such month
subsequent to and including the Service Availability Date and the
denominator of which is the total number of days in such month.
10. Shipper covenants that it will make timely
arrangements for upstream and downstream transportation, gas
supply and markets and all necessary governmental authorizations
and that it will advise the upstream and downstream transporters
of the receipt and delivery points under this Agreement.
Shipper acknowledges and agrees with Company that Company
is relying upon the covenant contained in this clause and agrees
that if any such arrangements or authorizations are not in place
prior to the Service Availability Date, such will not affect the
Shipper's obligation to pay any demand charge, surcharge, or any
other amount payable to Company.
11. If Shipper elects to exercise its option to terminate
this Service Agreement as provided for in Clause 9. of Service
Schedule FS-1, it shall execute and serve upon Company a
termination notice not less than twelve months prior to the
Service Termination Date as such date may be extended from time
to time.
12. Shipper agrees not to make demand or bring action
against Company for Company's refusal to transport gas hereunder
in the event that any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this agreement provided
that such failure was not directly caused by the negligence of
Company.
13. Every notice, request, demand, statement or bill
provided for by the Service Schedules, the Service Agreements and
the General Terms and Conditions, or any notice which either
Shipper or Company may wish to give to the other, shall be in
writing and shall be directed as follows:
Shipper: NORTHWEST NATURAL GAS COMPANY
220 N.W. Second Avenue
Portland, Oregon 97209
Attention: Sr. Vice President, Operations and
Information Services
Company: ALBERTA NATURAL GAS COMPANY LTD
2900, 240 - Fourth Avenue S.W.
Calgary, Alberta, Canada
T2P 4L7
Attention: Manager, Customer Services
Any notice may be given by personal delivery, by telecopier or by
mail and shall be deemed to be given on the day of delivery, if
by personal delivery or by telecopier, and four (4) business days
after mailing if by mail. Any notice may also be given
bytelephone followed immediately by telecopier, or other
telecommunication agreed to by both parties, and any notice so
given shall be deemed to be given as of the date of the
confirming telecommunication.
14. The terms and conditions of Service Schedule FS-1 and
the General Terms and Conditions are by this reference
incorporated into and made part of this Service Agreement.
15. A waiver by either party of one or more defaults by
the other hereunder shall not operate as a waiver of any future
default or defaults, whether of a like or different character.
16. This agreement may be amended only by an instrument
in writing executed by both parties hereto.
17. Nothing in this agreement shall be deemed to create
any rights or obligations between the parties hereto after the
expiration of the term hereof as same may be extended from time
to time except that termination of this agreement shall not
relieve either party of the obligation to correct any gas volume
imbalances or of the obligation to pay any amounts due hereunder.
IN WITNESS WHEREOF the parties hereto have caused this
agreement to be executed as of the day and year first written
above.
ALBERTA NATURAL GAS COMPANY LTD
BY: /s/ Jerry Smith
Name: Jerry Smith
Title: Vice President Operations
By: /s/ B. A. Stevenson
Name: B. A. Stevenson
Title: Corporate Secretary
NORTHWEST NATURAL GAS COMPANY
By: /s/ Dwayne L. Foley
Name: Dwayne L. Foley
Title: Senior Vice President
By:
Name:
Title:
Legal Department
Approved As To Form
This Date 10/10/94
By: SKA
SCHEDULE A
to the Flrm Service Agreement
Dated November 9, 1994 Between
ALBERTA NATURAL GAS COMPANY LTD
AND
NORTHWEST NATURAL GAS COMPANY (Shipper)
1. Receipt Point: Alberta/British Columbia Border near
Coleman, Alberta Minimum Pressure Available
4200 kPa
2. Delivery Point: British Columbia/U.S. international border
near Kingsgate, B.C.
Maximum Pressure Available 5500 kPa
3. Shipper's Haul Distance 170.7 Km
4. Shipper's Compression Utilization 170.7 Km
5. Maximum Day Delivery Quantity (Winter) 1586.4 103m3/d
(Summer) 1586.4 103m3/d
6. Service Availability Date November 1, 1995
7. Service Termination Date October 31, 2005
8. Surcharge Amount:
For Special Facilities N/A Dollars/Month
For Other N/A Dollars/Month
Total Surcharge N/A Dollars/Month
SHIPPER COMPANY
NORTHWEST NATURAL GAS COMPANY ALBERTA NATURAL GAS COMPANY LTD
(By) /s/ Dwayne L. Foley (By) /s/ Jerry Smith
Dwayne L. Foley, Senior Vice Jerry Smith, Vice President
President, Operations Operations
(By) (By) /s/ B. A. Stevenson
B. A. Stevenson, Corp. Secty.
(Name/Title) (Name/Title)
Legal Department Approved As to Form This Date 10/10/94 By SKA
ex-10.8
EXHIBIT (10b.)
NORTHWEST NATURAL GAS COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
(1995 Restatement)
This January 1, 1995, Republication continues and republishes
the currently effective provisions of the Plan as it has
evolved from the following:
January 1, 1981 Initial Plan
October 18, 1984 Amendment (2.4(a))
January 1, 1985 Republication
March 26, 1987 Amendment (1.5, 5.2)
April 1, 1987 Republication
September 17, 1987 Amendment (1.5, 2.1)
November 19, 1987 Amendment (1.5, 2.1, 2.2)
November 17, 1988 Amendment (3.1, 3.2)
January 1, 1989 Republication
September 21, 1994 Amendments (1.2, 1.5, 2.7(c), 2.8
3.1(b), 3.1(c), 1994 Appendix)
Lane Powell Spears Lubersky
520 SW Yamhill Street, Suite 800
Portland, Oregon 97204-1383
Telephone: (503) 226-6151
Facsimile: (503) 224-0388
<PAGE>
NORTHWEST NATURAL GAS COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
(1995 RESTATEMENT)
TABLE OF CONTENTS
-----------------
PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 "Board of Directors" . . . . . . . . . . . . . . . . . . . . . 1
1.02 "Committee". . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04 "Effective date" . . . . . . . . . . . . . . . . . . . . . . . 1
1.05 "Final annual compensation". . . . . . . . . . . . . . . . . . 1
1.06 "Lump sum" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 "Normal retirement date" . . . . . . . . . . . . . . . . . . . 2
1.08 "Participant". . . . . . . . . . . . . . . . . . . . . . . . . 2
1.09 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Retirement Plan". . . . . . . . . . . . . . . . . . . . . . . 2
1.11 "Service". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Surviving beneficiary". . . . . . . . . . . . . . . . . . . . 2
1.13 "Total and permanent disability" . . . . . . . . . . . . . . . 2
ARTICLE II. RIGHT TO RECEIVE BENEFITS . . . . . . . . . . . . . . . . . 3
2.01 Normal Retirement Supplemental Income. . . . . . . . . . . . . 3
2.02 Early Retirement Supplemental Income . . . . . . . . . . . . . 4
2.03 Disability Retirement Supplemental Income. . . . . . . . . . . 4
2.04 Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . 5
2.05 Vested Benefits. . . . . . . . . . . . . . . . . . . . . . . . 6
2.06 Post-Retirement Change in Retirement Plan
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.07 Forfeiture or Suspension of Benefits . . . . . . . . . . . . . 6
2.08 1995 Special Benefit Increase. . . . . . . . . . . . . . . . . 7
ARTICLE III. PAYMENT OF BENEFITS. . . . . . . . . . . . . . . . . . . . 7
3.01 Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.02 Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.03 Key Man Insurance. . . . . . . . . . . . . . . . . . . . . . . 8
3.04 Physical Examination . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV. ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . 9
4.01 Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.02 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
i
<PAGE>
ARTICLE V. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 9
5.01 No Effect on Employment. . . . . . . . . . . . . . . . . . . . 9
5.02 Legally Binding. . . . . . . . . . . . . . . . . . . . . . . . 9
5.03 No Transfer of Benefits. . . . . . . . . . . . . . . . . . . . 10
5.04 Disclosure to Participants . . . . . . . . . . . . . . . . . . 10
5.05 Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1994 APPENDIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ii
<PAGE>
NORTHWEST NATURAL GAS COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
(1995 RESTATEMENT)
PURPOSE
-------
This Executive Supplemental Retirement Income Plan is
established effective January 1, 1981, and as later amended, to
promote the best interests of the Company by enabling the Company
(a) to attract to its key management positions persons of
outstanding ability, and (b) to retain in its employ those
persons of outstanding competence who occupy key executive
positions and who in the past contributed and who continue in the
future to contribute materially to the success of the business by
their ability, ingenuity and industry.
ARTICLE I. DEFINITIONS
-----------
The following words and phrases as used herein shall,
for the purpose of this Plan and any subsequent amendment
thereof, have the following meanings, unless a different meaning
is plainly required by the content:
1.01 "Board of Directors" means the Board of Directors
of the Company as constituted from time to time.
1.02 "Committee" means the Organization and Executive
Compensation Committee of the Board of Directors.
1.03 "Company" means Northwest Natural Gas Company and
its subsidiaries.
1.04 "Effective date" means January 1, 1981, subject to
any later effective date of any specific section provided in any
amendment hereto.
1.05 "Final annual compensation" means:
1.05-1 The annual salary of the Participant
last approved by the Committee and being paid by the Company at
the date of retirement under this Plan;
1.05-2 Plus (effective on or after January 1,
1987) the following credit reflecting the Participant's yearly
compensation award (if any) based on performance which is paid to
the Participant during the period prior to retirement specified
below:
(a) For retirements starting before March 1,
1988, the credit shall be the performance award (if any)
paid on the March 1, 1987, award payment date;
- 1 -
(b) For retirements starting from March 1,
1988, to February 29, 1989, the credit shall be the annual
average award determined by taking the sum of the awards (if
any) paid on the March 1, 1987, and March 1, 1988, award
payment dates divided by two (2);
(c) For retirements starting on or after
March 1, 1989, the credit shall be the annual average award
determined by taking the sum of the awards (if any) paid on
the three (3) consecutive March 1 award payment dates which
immediately precede the second day of retirement (thereby
including a March 1 award if retirement starts on that day)
divided by three (3);
1.05-3 Without reduction under 1.05-1 or 1.05-2
for any such amounts which are subject to a payment deferral
election under the Company's Executive Deferred Compensation Plan
(effective January 1, 1987) or Retirement K Savings Plan.
1.06 "Lump sum" means a single payment representing all
unpaid installments discounted to the present value at eight
percent (8%) per annum.
1.07 "Normal retirement date" means the first day of
the month next following the Participant's 65th birthday.
1.08 "Participant" means an employee specifically
designated by the Committee to be covered under this Plan and who
continues to fulfill all requirements for participation. The
initial designation of Participants shall be all executive
officers of the corporation elected by the Board of Directors
(not including "assistant" officer positions).
1.09 "Plan" means the Executive Supplemental Retirement
Income Plan herein set forth, as amended from time to time.
1.10 "Retirement Plan" means the Company's Retirement
Plan for Non-Bargaining Unit Employees, as amended from time to
time.
1.11 "Service" means all accredited years of service
with the Company credited under the Retirement Plan.
1.12 "Surviving beneficiary" means the beneficiary or
beneficiaries designated by the Participant on the form provided
by the Company. Such beneficiary designation may be changed by
the Participant at any time by written notice to the Committee.
1.13 "Total and permanent disability" means that the
Participant is eligible to receive disability benefits under the
Retirement Plan.
- 2 -
ARTICLE II. RIGHT TO RECEIVE BENEFITS
-------------------------
Each qualified Participant or his beneficiary shall
have the right to receive, and the Company shall pay,
supplemental benefits as provided in this Article II, in the form
provided in Article III:
2.01 NORMAL RETIREMENT SUPPLEMENTAL INCOME. Upon
normal retirement at or after completing at least fifteen (15)
years of service and at or after his normal retirement date, a
retired Participant shall receive during his lifetime monthly
supplemental retirement payments determined as follows:
2.01-1 NORMAL RETIREMENT INCOME TARGET. First,
the total of his annual retirement pay from the Retirement Plan
plus his total annual pay from Social Security (as defined in
2.01-2(b)(2)) plus the annual supplemental retirement benefit (if
any) payable under the Executive Deferred Compensation Plan plus
the annual retirement pay from this Plan (all calculated as a
single life annuity starting at his normal retirement date) shall
be:
(a) Seventy percent (70%) of his final
annual compensation if he has completed at least twenty-five
(25) years of service; or
(b) Sixty-five percent (65%) of his final
annual compensation if he has completed at least fifteen
(15) but less than twenty-five (25) years of service.
2.01-2 SUPPLEMENT UNDER THIS PLAN. Second, the
monthly supplemental payment under this Plan shall be determined
as follows:
(a) The total monthly retirement pay, which
is one-twelfth of the annual amount determined under 2.01-1
above;
MINUS
(b) The sum of (1) plus (2) plus (3):
(1) One-twelfth of his normal
retirement allowance under the Retirement Plan;
PLUS
(2) One-twelfth of his annual primary
Social Security benefit determined in the same manner
and based on the same earnings as are used to compute
the actual Social Security benefit (including, if
appropriate, all compensation deferred by the executive
under any plan as though it had been "paid" to or
"received" by the executive in the year when the
deferral was made).
PLUS
- 3 -
(3) One-twelfth of his annual
supplemental retirement benefit under the Executive
Deferred Compensation Plan determined as a supplement
to the normal annual retirement allowance under
2.01-2(b)(1).
2.01-3 DEFERRED RETIREMENT. Payment shall be
deferred to actual retirement if the Participant works for the
Company after his normal retirement date. The supplemental
benefit shall be based on his final annual compensation at date
of actual retirement.
2.02 EARLY RETIREMENT SUPPLEMENTAL INCOME. Upon
retirement at or after age fifty-five (55) with at least fifteen
(15) years of service which qualifies for early retirement
benefits under the Retirement Plan, a retired Participant shall
receive reduced monthly supplemental retirement payments
determined as follows:
2.02-1 First, the total annual retirement pay
at normal retirement date shall be determined under 2.01-1 using
the Participant's final annual compensation and service at the
time employment by the Company ends.
2.02-2 Second, the monthly supplemental payment
under this Plan starting at normal retirement date shall be
determined under 2.01-2 using the Participant's early annual
retirement allowance payable at his normal retirement date (under
Retirement Plan 7.02-1) and projected annual primary Social
Security benefit under the Retirement Plan.
2.02-3 Third, if supplemental payments start
before the Participant's normal retirement date, to achieve the
necessary reduction of the target benefit under 2.01-1 and
2.02-1, the monthly amount under 2.02-2 shall be reduced to the
same percentage applicable to an early retirement benefit under
the Retirement Plan starting on the same date. The reduction
percentages are set forth in the attached Appendix.
2.03 DISABILITY RETIREMENT SUPPLEMENTAL INCOME. Upon
total and permanent disability after at least fifteen (15) years
of service which qualifies for disability retirement benefits
under the Retirement Plan, a retired disabled Participant shall
receive monthly supplemental retirement payments determined as
follows:
2.03-1 First, the total annual retirement pay
at normal retirement date shall be determined under 2.01-1 using
the Participant's final annual compensation and service at date
of disability.
2.03-2 Second, the monthly supplemental payment
under this Plan starting at normal retirement date shall be
determined under 2.01-2 using the Participant's disability annual
retirement allowance and projected primary Social Security
benefit under the Retirement Plan, and that monthly supplemental
amount shall be further reduced by subtracting the monthly value
of any disability benefits payable after the Participant's 65th
birthday under any other Company sponsored disability income plan
or under any workers' compensation law.
- 4 -
2.03-3 Third, if supplemental payments start
before the Participant's normal retirement date, the monthly
amount under 2.03-2 shall be reduced to the same percentage
applicable to a disability retirement benefit under the
Retirement Plan starting on the same date (see attached
Appendix), and that monthly supplemental amount shall be further
reduced by subtracting the monthly value of any payments received
by the Participant to his 65th birthday under any other Company
sponsored disability income plan or under any workers'
compensation law.
2.04 DEATH BENEFITS. A death benefit shall be paid if
an eligible Participant should die during employment or before
the first one hundred twenty (120) monthly payments have been
made under this Plan on account of such Participant, as follows:
2.04-1 ENTITLEMENT. To qualify:
(a) For regular death benefit payments
determined under 2.01, 2.02, 2.03 or 2.05, as applicable,
the death of the Participant must occur after the
Participant has, during active employment of at least
fifteen (15) years by the Company, satisfied the age and
service requirements to receive normal, early or disability
retirement payments under the Retirement Plan (whether the
Participant was working or retired at date of death) and
prior to the 120th monthly payment.
(b) For special death benefit payments where
2.04-1(a) does not apply, the death of the Participant can
occur at any age while actively employed by the Company on
or after October 18, 1984. The amount of such special death
benefit shall be one hundred twenty (120) monthly payments
equal to 1/12th of twenty-five percent (25%) (or 2.08333%)
of the Participant's final annual compensation, payable to
the Participant's designated beneficiary.
(c) Under no circumstances shall any
supplemental payment be made after the later of the 120th
monthly payment or the Participant's death.
2.04-2 RECIPIENT. The recipient of death
benefits shall be Participant's designated death beneficiary or
estate, as determined under the following (a), (b) or (c):
(a) On the death of the Participant before
the 120th monthly payment, his surviving designated
beneficiary(ies) shall receive the balance of the one
hundred twenty (120) payments, in monthly or annual payments
or in a single lump sum payment, as determined by the
Committee in its discretion.
(b) If no designated beneficiary survives
the Participant, the unpaid balance of the one hundred
twenty (120) payments shall be paid lump sum to the
Participant's estate.
- 5 -
(c) If the last surviving designated
beneficiary should die before the last of the one hundred
twenty (120) payments, the unpaid balance shall be paid lump
sum to the estate of such last survivor.
2.04-3 OTHER DEATH BENEFITS. This supplemental
death benefit shall be in addition to any death benefit provided
by any other Company sponsored plan or insurance program.
2.05 VESTED BENEFITS. A Participant shall have a
vested and nonforfeitable right to receive supplemental benefits
under this Plan if his employment with the Company should
terminate before retirement, disability or death, provided that,
at such date of termination, he is age fifty-five (55) or older,
has completed at least fifteen (15) years of service, and is
eligible for early retirement under the Retirement Plan, subject
to the following:
2.05-1 The Committee shall have discretion to
start the supplemental payments at any time up to the later of
the Participant's 65th birthday or the date the Participant
starts to receive retirement benefits under the Retirement Plan.
2.05-2 The amount of the supplemental payment
shall be determined under the form of benefit applicable to the
Participant under 2.01, 2.02, 2.03 or 2.04.
2.05-3 The Committee may, in its discretion,
waive the minimum service requirement for a specified Participant
and make any appropriate adjustment of the benefit payment under
this Plan.
2.06 POST-RETIREMENT CHANGE IN RETIREMENT PLAN
BENEFITS.
2.06-1 CHANGE IN BENEFIT FORMULA. If, after
supplemental payments start under this Plan, the benefit payable
to a retired Participant should be increased under the Retirement
Plan by a change in the Retirement Plan benefit formula or its
components, the supplemental payment under this Plan shall be
reduced to reflect such increase, effective for and after the
first month when such increase is paid. The supplemental benefit
shall be recalculated under the benefit formula (2.01, 2.02,
2.03, 2.04 or 2.05) applicable to the retiree using such
increased Retirement Plan benefit, with all other components of
the formula to remain unchanged.
2.06-2 COLA SUPPLEMENT. However, supplemental
payments shall not be changed for any post-retirement addition
which might be made to the Retirement Plan benefit (without
change of the formula or components), such as a cost of living
supplement for retirees.
2.07 FORFEITURE OR SUSPENSION OF BENEFITS.
Notwithstanding any other provision of this Plan to the contrary,
supplemental benefits shall be forfeited or suspended as follows:
- 6 -
2.07-1 DISCHARGE FOR CAUSE. No supplemental
benefits shall be paid if the Participant is discharged from the
Company for cause involving illegal or fraudulent acts.
2.07-2 SUICIDE. No supplemental benefits shall
be paid if the Participant commits suicide, while sane or insane,
within one (1) year from the date he is enrolled under the Plan.
2.07-3 SUSPENDED PAYMENT. Supplemental benefit
payments shall be suspended during any period of reemployment by
the Company or other period when payments under the Retirement
Plan are suspended. If a rehired retiree elects to stop
receiving Retirement Plan payments during reemployment under
Retirement Plan 6.11, upon later re-retirement the supplemental
benefits under this Plan will be recalculated to take into
account any applicable change under Plan 2.01-2.06.
2.07-4 AGREEMENT NOT TO COMPETE. Supplemental
benefits shall be withheld pending receipt by the Company of
Participant's written agreement not to compete with the Company
or its subsidiaries during the period of supplemental payments,
and shall be suspended or forfeited, as the Committee shall
decide, for any breach of such agreement not to compete.
2.08 1995 SPECIAL BENEFIT INCREASE. For all retirees
and beneficiaries entitled to receive benefits on January 1,
1995, based on a retirement date which occurred on or before
January 1, 1985, the monthly amount payable on and after
January 1, 1995, shall be determined as follows:
2.08-1 The sum of the benefit amounts payable
on December 1, 1994, under this Plan and the Retirement Plan,
multiplied by one hundred five percent (105%);
2.08-2 Less the benefit amount payable under
the Retirement Plan on January 1, 1995, including the amount of
the 1995 special benefit increase provided under the Retirement
Plan.
ARTICLE III. PAYMENT OF BENEFITS
-------------------
3.01 FORM. Payments to a Participant shall be made
monthly in one of the forms under 3.01-1, 3.01-2 or 3.01-3:
3.01-1 LIFE ANNUITY WITH ONE HUNDRED TWENTY
(120) GUARANTEED PAYMENTS. If the Participant is not married at
retirement, or, if married, either (1) the Participant and his
spouse reject the surviving spouse joint and survivor annuity
forms under the Retirement Plan or (2) the Participant, with
notarized consent of his spouse, does not elect the benefit form
under 3.01-2 or 3.01-3, the payments shall be made for the
Participant's lifetime. If the Participant should die before
receiving one hundred twenty (120) monthly payments, the balance
of the one hundred twenty (120) payments shall be made monthly to
the beneficiary
- 7 -
designated by the Participant, unless the Committee decides to
pay annual or lump sum amounts to the beneficiary.
3.01-2 HALF (50%) JOINT AND SURVIVOR ANNUITY.
If the Participant is married at retirement, and is to receive
either the half (50%) or full (100%) joint and survivor annuity
form under the Retirement Plan, the Participant may, without
spouse consent, elect to receive payment in the form of a half
(50%) joint and survivor annuity. Such annuity shall be the
actuarial equivalent (as determined by the Plan's actuary) of the
benefit under 3.01-1 and shall pay a reduced amount to the
Participant for his life and, if such spouse survives his death,
fifty percent (50%) of such reduced amount to such spouse for the
life of the spouse. The monthly Plan benefit shall be
recalculated as a single life annuity following the death of
Participant's spouse if the "pop-up" annuity is in effect under
the Retirement Plan.
3.01-3 FULL (100%) JOINT AND SURVIVOR ANNUITY.
If the Participant is married at retirement, and is to receive
the full (100%) joint and survivor annuity form under the
Retirement Plan, the Participant may, without spouse consent,
elect to receive payment in the form of a full (100%) joint and
survivor annuity. Such annuity shall be the actuarial equivalent
(as determined by the Plan's actuary) of the benefit under 3.01-1
and shall pay a reduced amount to the Participant for his life
and, if such spouse survives his death, the same amount to such
spouse for the life of the spouse. The monthly Plan benefit
shall be recalculated as a single life annuity following the
death of Participant's spouse if the "pop-up" annuity is in
effect under the Retirement Plan.
3.02 SOURCE. The commitment of the Company to pay
supplemental retirement benefits under this Plan is an unsecured
promise of the Company to make the payments. There is no asset
or trust fund set aside for payment of benefits hereunder, except
to the extent held under the Company's Umbrella Trust, which is
subject to the claims of the Company's creditors under conditions
specified therein.
3.03 KEY MAN INSURANCE. The Company shall purchase and
own such key man life insurance as it chooses on the life of any
Participant. No Participant, nor his beneficiaries, heirs,
assigns, personal representative or estate, shall have any right
to or interest in any such policy or the proceeds payable
thereunder on his death. On death of the Participant, the
proceeds shall be paid to the Company. It is contemplated that
the Company will purchase such insurance in amounts sufficient to
cover all essential costs of the Plan (including imputed interest
on corporate funds advanced to meet such costs).
3.04 PHYSICAL EXAMINATION. As a condition of becoming
covered under this Plan, each Participant, as requested by the
Company, shall take a physical examination by a physician
approved by the insurance carrier. The cost of the examination
shall not be borne by the Participant. The report of such
examination shall be transmitted directly from the physician to
the insurance carrier designated by the Company to establish
certain costs associated with providing benefits under this Plan.
Such examination shall remain confidential among the Participant,
the physician, the insurance carrier and the Company.
- 8 -
ARTICLE IV. ADMINISTRATION
--------------
4.01 COMMITTEE. The Committee shall have full power
and authority to interpret, construe and administer this Plan, to
adopt appropriate procedures, and to make all decisions necessary
or proper to carry out the terms of the Plan. The Committee's
interpretation and construction hereof, and actions hereunder,
including any determination of benefit amount or designation of
the person to receive supplemental payments, shall be binding and
conclusive on all persons for all purposes. The timetable and
procedure for notice of denial of benefit claims and for hearing
on review of such denial shall be as set forth in Article XII of
the Retirement Plan, and the Committee shall make such final
review and decision. The Company's corporate secretary shall act
as the Committee's agent in administering this Plan. Neither the
Company, nor its officers, employees, directors or Committee, nor
any member thereof, shall be liable to any person for any action
taken or omitted in connection with the interpretation and
administration of this Plan.
4.02 COMPANY. The Company, by action of the Board of
Directors, reserves the exclusive right to amend, modify, or
terminate this Plan in whole or in part without notice to any
Participant. Any such termination, modification or amendment
shall not terminate nor diminish any rights or benefits accrued
by any Participant or surviving beneficiary prior thereto.
ARTICLE V. GENERAL PROVISIONS
------------------
5.01 NO EFFECT ON EMPLOYMENT. This Plan shall not be
deemed to give any Participant or other person in the employ of
the Company any right to be retained in the employment of the
Company, or to interfere with the right of the Company to
terminate any Participant or such other person at any time and to
treat him without regard to the effect which such treatment might
have upon him as a Participant in the Plan.
5.02 LEGALLY BINDING. The rights, privileges, benefits
and obligations under this Plan are intended to be legal
obligations of the Company and binding upon the Company, its
successors and assigns. The Company agrees it will not be a
party to any merger, consolidation or reorganization, unless and
until its obligations hereunder shall be expressly assumed by its
successor or successors. Notwithstanding any of the provisions
of the Plan to the contrary, upon a change of control each
Participant shall be entitled to receive any Plan benefits, as
determined in accordance with the terms and conditions of payment
set forth in Articles II and III. For purposes of this 5.02, a
"change of control" shall mean a change of control of the Board
of Directors or a change in the power to effect such a change of
control as a result of: (a) a contest for the control of the
Company, (b) the consolidation of the Company with, or merger of
the Company into, another company, without the consent of the
Board, (c) the acquisition of the Company, a controlling interest
in the Company or all or substantially all of the assets of the
Company by another company without the consent of the Board, or
(d) the cessation of the corporate existence of the Company or
failure to continue such existence in full force and effect as a
result of any circumstances or event.
- 9 -
5.03 NO TRANSFER OF BENEFITS. The interest of any
Participant or beneficiary under this Plan shall not be
transferred or transferrable, voluntarily or by operation of law,
by assignment, anticipation, hypothecation, pledge or other
encumbrance, or by garnishment, attachment, levy, seizure or
other execution, or by insolvency, receivership, bankruptcy or
other debtor proceeding.
5.04 DISCLOSURE TO PARTICIPANTS. Each Participant
shall receive a copy of this Plan, a copy of any written
procedures for administering the Plan, any amendments to the Plan
or procedures, and an annual statement of benefits over the
signature of the president.
5.05 ADOPTION. This Plan was approved by resolution of
the Board of Directors at a regular meeting on April 16, 1981, to
be effective as of January 1, 1981. Amendments shall take effect
as specified in the implementing Board resolution.
- 10 -
1994 APPENDIX
TO
NORTHWEST NATURAL GAS COMPANY
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME PLAN
(Effective January 1, 1981)*
*As Republished: January 1, 1994
1. EARLY RETIREMENT REDUCTION PERCENTAGE. The
reduction percentage for early retirement supplemental payments
under Plan 2.02-3 shall be:
Percentage of Normal Retirement
Supplement Payable
--------------------------------------------
(a) (b)
1986 Schedule 1994 Schedule
----------------- ------------------
For termination of For termination of
Age When Early employment from employment on or
Payments Start 1/1/86 to 12/30/93 after 12/31/93
-------------- ------------------ ------------------
55 52% 67%
56 60% 72%
57 68% 77%
58 76% 82%
59 84% 87%
60 90% 92%
61 96% 96%
62-64 100% 100%
2. DISABILITY RETIREMENT REDUCTION PERCENTAGE. For
disability retirement supplemental payments starting from age
fifty-five (55) to sixty-four (64), the reduction shall be the
percentage for the applicable starting age under the early
retirement table in 1 above.
For disability retirement supplemental payments
starting before age fifty-five (55), the reduction shall be:
(a) the percentage determined by reducing the
percent at age fifty-five (55) by eight percent (8%) for each
year of age less than fifty-five (55), until the percentage for
the starting age is derived; or
(b) the percentage used to determine the
actuarial equivalent of the early retirement allowance under the
Retirement Plan if the Retirement Plan benefit is calculated by
that method under Retirement Plan 8.03-2.
3. FUTURE CHANGES IN RETIREMENT PLAN 7.02-2 OR 8.03.
The foregoing is based on Retirement Plan 7.02-2 and 8.03 as in
effect on January 1, 1994, including deletion from
- 11 -
7.02-2 of the prior "Born After 1954" provisional schedule (b)
(which never has been used) retroactive to January 1, 1989. If
the reduction factors for either section of the Retirement Plan
should be changed, this Plan shall be deemed amended to
incorporate by reference the changed reduction factors under the
Retirement Plan, without further amendment to this Plan.
- 12 -
sak|ex-10b.wpd
EXHIBIT (10c.)
NORTHWEST NATURAL GAS COMPANY
1985 STOCK OPTION PLAN
(as amended as of February 23, 1995)
1. PURPOSE. The purpose of this 1985 Stock Option Plan
(the "Plan") is to enable Northwest Natural Gas Company (the
"Company") to attract and retain experienced and able employees
and to provide additional incentive to these employees to exert
their best efforts for the Company and its shareholders.
2. SHARES SUBJECT TO THE PLAN. Except as provided in
paragraph 15, the total number of shares of the Company's
Common Stock, $3-1/6 par value per share ("Common Stock"),
covered by all options granted under the Plan shall not exceed
300,000 authorized but unissued or reacquired shares. If any
option under the Plan expires or is cancelled or terminated and
is unexercised in whole or in part, the shares allocable to the
unexercised portion shall again become available for options
under the Plan.
3. DURATION OF THE PLAN. The Plan shall continue until
options have been granted and exercised with respect to all of
the shares available for the Plan under paragraph 2 (subject to
any adjustments under paragraph 15), provided, however, that
unless sooner terminated by action of the Board of Directors,
the Plan shall terminate on, and no option shall be granted
under the Plan after, March 27, 1995. The Board of Directors
has the right to suspend or terminate the Plan at any time
except with respect to then outstanding options.
4. ADMINISTRATION.
4.1 The Plan shall be administered by the Board of
Directors, which shall determine and designate from time to
time the employees to whom options shall be granted and the
number of shares, option price, the period of each option, and
the time or times at which options may be exercised. Subject
to the provisions of the Plan, the Board of Directors may from
time to time adopt rules and regulations relating to
administration of the Plan, and the interpretation and
construction of the provisions of the Plan by the Board of
Directors shall be final and conclusive. No director who holds
or is eligible to hold an option under the Plan may vote on any
action taken by the Board of Directors involving such matter,
and such action may only be taken if both a majority of the
Board of Directors and a majority of directors voting on the
action are not eligible and have not at any time within one
year prior thereto been eligible to receive an option pursuant
to the Plan or any other stock plan of the Company or an
affiliate of the Company.
4.2 The Board of Directors may delegate to a
committee of the Board of Directors consisting of three or more
members (the "Committee") any or all authority for
administration of the Plan. No person may be appointed to the
Committee if within one year prior thereto he or she was
eligible to receive an option pursuant to the Plan or any other
stock plan of the Company or an affiliate of the Company.
Members of the Committee are not eligible to receive an option
pursuant to the Plan or any other stock plan of the Company or
an affiliate of the Company while on the Committee. If a
Committee is appointed, all references to the Board of
Directors in the Plan shall mean and relate to the Committee
unless the context requires otherwise.
5. ELIGIBILITY; GRANTS.
5.1 Options may be granted under the Plan only to
officers and other key employees of the Company (including
employees who are directors) who, in the judgment of the Board
of Directors, will perform services of special importance to
the Company in the management, operation, and development of
its business.
5.2 Options granted under the Plan may be Incentive
Stock Options as defined in Section 422 of the Internal Revenue Code
of 1986, as amended ("IRC"), or Non-Statutory Stock Options. A
Non-Statutory Stock Option means an option other than an
Incentive Stock Option. The Board of Directors has the sole
discretion to determine which options shall be Incentive Stock
Options and which options shall be Non-Statutory Stock Options,
and, at the time of grant, it shall specifically designate each
option granted under the Plan as an Incentive Stock Option or a
Non-Statutory Stock Option.
6. LIMITATION ON AMOUNT OF GRANTS. The aggregate fair
market value (determined for each Incentive Stock Option when
it is granted) of shares for which Incentive Stock Options are
exercisable for the first time by an optionee in any calendar
year under the Plan and under any other incentive stock option
plan (within the meaning of IRC Section 422) of the Company or any
parent or subsidiary of the Company shall not exceed $100,000.
7. OPTION PRICE. The option price per share under each
option granted under the Plan shall be determined by the Board
of Directors, but except as provided in paragraph 9, the option
price for an Incentive Stock Option and a Non-Statutory Stock
Option shall be not less than 100 percent of the fair market
value of the shares covered by the option on the date the
option is granted. Except as otherwise expressly provided, for
purposes of the Plan, the fair market value shall be deemed to
be the closing sales price for the Common Stock as reported by
the Nasdaq Stock Market and published in the Wall Street
Journal for the day preceding the date of grant, or such other
fair market value of the Common Stock as determined by the
Board of Directors of the Company.
8. DURATION OF OPTIONS. Subject to paragraphs 9 and 13,
each option granted under the Plan shall continue in effect for
the period fixed by the Board of Directors, except that no
Incentive Stock Option shall be exercisable after the
expiration of 10 years from the date it is granted and no
Non-Statutory Stock Option shall be exercisable after the
expiration of 10 years plus seven days from the date it is
granted.
9. LIMITATIONS ON GRANTS TO 10 PERCENT SHAREHOLDERS. An
Incentive Stock Option may be granted under the Plan to an
employee possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or of any
parent or subsidiary of the Company, only if the option price
is at least 110 percent of the fair market value of the stock
subject to the option on the date it is granted, as described
in paragraph 7, and the option by its terms is not exercisable
after the expiration of five years from the date it is granted.
10. EXERCISE OF OPTIONS. Except as provided in
paragraphs 13 and 15, no option when granted under the Plan may
by its terms be exercisable during the first year following the
date it is granted. Thereafter, options may be exercised over
the period stated in each option in amounts and at times
prescribed by the Board of Directors and stated in the option.
If the optionee does not exercise an option in any period with
respect to the full number of shares to which the optionee is
entitled in that period, the optionee's rights shall be
cumulative and the optionee may purchase those shares in any
subsequent period during the term of the option.
11. LIMITATIONS ON RIGHTS TO EXERCISE. Except as
provided in paragraph 13, no option granted under the Plan may
be exercised unless when exercised the optionee is employed by
the Company and shall have been so employed continuously since
the option was granted. Absence on leave or on account of
illness or disability under rules established by the Board of
Directors shall not, however, be deemed an interruption of
employment for this purpose.
12. NONASSIGNABILITY. Each option granted under the Plan
by its terms shall be 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 each option by its terms shall be
exercisable during the optionee's lifetime only by the
optionee.
13. TERMINATION OF EMPLOYMENT.
13.1 If employment of an optionee by the Company is
terminated by retirement or for any reason other than in the
circumstances specified in 13.2 below, any option held by the
optionee 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.
13.2 If an optionee's employment by the Company is
terminated because of death or physical disability (within the
meaning of IRC Section 22(e)(3)), any option held by the optionee may
be exercised for all remaining shares subject thereto, free of
any restriction on exercise of the option during the first year
after the date of grant or 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 one
year after the date of termination, whichever is the shorter
period. If an optionee's employment is terminated by death,
any option held by the optionee shall be exercisable only by
the person or persons to whom the optionee's rights under the
option 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.
13.3 To the extent an option held by any deceased
optionee or by any optionee whose employment is terminated 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.
14. PURCHASE OF SHARES. Shares may be purchased or
acquired pursuant to an option granted under the Plan only on
receipt by the Company of notice in writing from the optionee
of the optionee's intention to exercise, specifying the number
of shares the optionee desires to purchase and the date on
which the optionee desires to complete the transaction, which
may not be more than 30 days after receipt of the notice, and,
unless in the opinion of counsel for the Company such a
representation is not required to comply with the Securities
Act of 1933, containing a representation that it is the
optionee's intention to acquire the shares for investment and
not with a view to distribution. On or before the date
specified for completion of the purchase, the optionee must
have paid the Company the full purchase price in cash, in
shares of Common Stock previously acquired by the optionee and
held for at least one year, valued at fair market value as
defined in paragraph 7, or in any combination of cash and
shares of Common Stock. No shares shall be issued until full
payment therefor has been made, and an optionee shall have no
rights as a shareholder until a certificate for shares is
issued to the optionee. Each optionee who has exercised an
option shall, on notification of the amount due, if any, and
prior to or concurrently with delivery of the certificates
representing the shares for which the option was exercised, 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. If the
employee fails to pay the amount demanded, the Company shall
have the right to withhold that amount from other amounts
payable by the Company to the optionee, including salary,
subject to applicable law.
15. CHANGES IN CAPITAL STRUCTURE. If the outstanding
shares of Common Stock are increased or decreased or changed
into or exchanged for a different number or kind of shares or
other securities of the Company or of another corporation, by
reason of any reorganization, merger, consolidation, plan of
exchange, recapitalization, reclassification, stock split-up,
combination of shares, or dividend payable in shares,
appropriate adjustment shall be made by the Board of Directors
in the number and kind of shares for the purchase of which
options may be granted under the Plan. In addition, the Board
of Directors shall make appropriate adjustments in the number
and kind of shares as to which outstanding options, or portions
thereof then unexercised, shall be exercisable, to the end that
each optionee's proportionate interest shall be maintained as
before the occurrence of such event. Adjustments in
outstanding options shall be made without change in the total
price applicable to the unexercised portion of any option and
with a corresponding adjustment in the option price per share.
Any such adjustment made by the Board of Directors shall be
conclusive. In the event of dissolution or liquidation of the
Company or a merger, consolidation, or plan of exchange
affecting the Company, in lieu of providing for options as
provided above in this paragraph 15, the Board of Directors
may, in its sole discretion, provide a 30-day period prior to
such event during which optionees shall have the right to
exercise options in whole or in part without any limitation on
exercisability and upon the expiration of such 30-day period
all unexercised options shall immediately terminate.
16. AMENDMENT OF PLAN. The Board of Directors may at any
time and from time to time modify or amend the Plan in such
respects as it deems advisable because of changes in the law
while the Plan is in effect or for any other reason. After the
Plan has been approved by the shareholders and except as
provided in paragraph 15, however, no change in an option
already granted to an employee shall be made without the
written consent of such employee. Furthermore, unless approved
at an annual meeting or a special meeting by a vote of
shareholders in accordance with Oregon law, no amendment or
change shall be made in the Plan (a) increasing the total
number of shares which may be purchased under the Plan, (b)
changing the minimum purchase price specified in the Plan, (c)
increasing the maximum option period, or (d) materially
modifying the requirements for eligibility for participation in
the Plan.
17. APPROVALS. The obligations of the Company under the
Plan are subject to the approval of the Oregon Public Utility
Commission, the Washington Utilities and Transportation
Commission, and such other state and 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 granting of any option under the Plan, the issuance or
sale of any shares purchased on exercise of any option under
the Plan, or the listing of such shares on said exchange. The
foregoing notwithstanding, the Company shall not be obligated
to issue or deliver shares of Common Stock under the Plan 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 options under the Securities Act of 1933.
18. EMPLOYMENT RIGHTS. Nothing in the Plan or any option
granted pursuant to the Plan shall confer on any optionee any
right to be continued in the employment of the Company or to
interfere in any way with the right of the Company by whom such
optionee is employed to terminate such optionee's employment at
any time, with or without cause.
SAK|EX-10C
EXHIBIT (10e.-2)
AMENDMENT NO. 2
TO THE
NORTHWEST NATURAL GAS COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
1990 RESTATEMENT
This Amendment No. 2 to the Northwest Natural Gas Company
Executive Deferred Compensation Plan, 1990 Restatement (the
"Plan"), is effective as of February 23, 1995 and has been
executed as of this 27th day of February 1995.
The Plan is hereby amended as follows:
FIRST: Section 5.2(a) is amended to read as follows:
5.2 COMMENCEMENT OF PAYMENTS.
(a) Except in the event of a Change in Control,
payment of any Deferred Compensation Account benefits under
the Plan shall commence as of the earlier of:
(i) A date elected by the Executive as
specified in the applicable Participation Agreement
between the Corporation and the Executive; or
(ii) The first business day of January following
the year of the Executive's Retirement, total
Disability or other termination of employment.
In the event of a Change in Control, any lump sum
payment or the first annual payment, as elected by the
Executive in the Participation Agreement, shall be made
immediately, with early withdrawals paid as specified in the
Participation Agreement, and with any subsequent annual
payments to be made on an annual basis thereafter for the
duration elected by the Executive in the Participation
Agreement.
SECOND: Except as provided herein, all other Plan
provisions shall remain in full force and effect.
IN WITNESS WHEREOF, Northwest Natural Gas Company has caused
this Amendment No. 2 to be executed as of the date first written
above.
NORTHWEST NATURAL GAS COMPANY
By: /s/ Robert L. Ridgley
-----------------------
Robert L. Ridgley
Its: President and CEO
EXHIBIT (10f.-1)
AMENDMENT NO. 1
TO THE
NORTHWEST NATURAL GAS COMPANY
DIRECTORS DEFERRED COMPENSATION PLAN
EFFECTIVE JUNE 1, 1981
RESTATED AS OF JANUARY 1, 1988
This Amendment No. 1 to the Northwest Natural Gas Company
Directors Deferred Compensation Plan, effective June 1, 1981,
restated as of January 1, 1988 (the "Plan"), is effective as of
February 23, 1995 and has been executed as of this 27th day of
February 1995.
The Plan is hereby amended as follows:
FIRST: Section 8 is amended to read as follows:
8. CHANGE IN CONTROL. "Change in Control" means a change
in control of the Board of Directors or a change in the power to
effect such a change in control as a result of (i) a contest for
the control of the Corporation, (ii) the consolidation of the
Corporation with, or merger of the Corporation into, another
company, without the consent of the Board, (iii) the acquisition
of the Corporation, a controlling interest in the Corporation of
all or substantially all of the assets of the Corporation by
another company without the consent of the Board, or (iv) the
cessation of the corporation existence in full force and effect
as a result of any circumstances or event. In the event of a
Change in Control, any lump sum payment or the first annual
payment, as elected by the Director in Section 5(b) above, shall
be made immediately, with any subsequent annual payments to be
made on an annual basis thereafter for the duration elected by
the Director in the participation agreement.
SECOND: Except as provided herein, all other Plan
provisions shall remain in full force and effect.
IN WITNESS WHEREOF, Northwest Natural Gas Company has caused
this Amendment No. 1 to be executed as of the date first written
above.
NORTHWEST NATURAL GAS COMPANY
By: /s/ Robert L. Ridgley
------------------------
Its: President and CEO
EXHIBIT (10m.)
Northwest Natural Gas
INTEROFFICE MEMORANDUM
TO: Northwest Natural Gas Compensation Committee
FROM: Robert L. Ridgley
DATE: September 16, 1994
SUBJECT: Proposed Agreement as to Retirement of CEO
At your suggestion, this memorandum addresses those aspects of
the executive succession planning process which will impact me
personally as the Chief Executive Officer. You have suggested that I
make a specific proposal concerning my plans, so that there may be an
understanding between the Board of Directors and me as we proceed down
the road to the selection of a new CEO.
If acceptable to the Compensation Committee and the Board of
Directors, I would be delighted to look forward to the following
transition:
1) During an Executive Session of the Board, the Board of
Directors would elect a "Lead Director." This should be done at the
earliest agreed to date. Forthwith and to that end, Cart Woodard,
Chairman of the Board's Nominating Committee, has been asked to chair
a selection process at the pleasure of the Board.
2) The "Lead Director" would preside over all board meetings
when the Chairman is not present. At least twice per fiscal year, the
"Lead Director" should chair a meeting of only the Board's "outside"
directors to review the company's affairs and any other subject the
outside directors deem necessary. No "inside director" nor corporate
employee should be present at these meetings.
3) In addition to his or her formal duties, the Lead Director
will provide a constructive conduit for individual directors to
express views or requests for informal discussion between the Lead
Director and CEO.
4) It is my intention to retire as an employee and as President
and CEO during February, 1997, just prior to my 63rd birthday. At
that time, my tenure as CEO will have been twelve years.
5) With the support of all of the directors, I would be honored
and pleased to serve as Chairman of the Board of Directors for a
period of two (2) years, commencing on March 1, 1997. During my
tenure as Chairman, I would look forward to working closely with the
Lead Director and all other directors to insure that the Board of
Directors, its subsidiary boards and the Board committees provide a
coherent and effective governance structure for the company.
6) In addition to my duties on behalf of the Board of
Directors, I would be pleased to make myself available at the call of
the newly selected President and CEO. This would include consultation
on business issues on which the CEO deems my counsel to be
constructive and appropriate. It may also include acting as a liaison
for the Company with community organizations and trade associations
when such activity would be in the interest of the Company and is
requested by the CEO.
7) If during my two year tenure the Board of Directors wishes
to replace me with a new chairman, it shall retain that prerogative at
all times. However, should it elect to do so, my business consultancy
and consulting fee as outlined below in Item Number 9, would continue
for the agreed-to Two (2) year term commencing 1 March 1997 and
expiring 28 February, 1999. Further, in case of my disability or
death, this agreement will continue for my surviving spouse to the
termination of this agreement on 28 February, 1999.
8) At the conclusion of my term on February 28, 1999, I would
automatically step down as Chairman of the Board of Directors. The
Board may elect my successor as deems appropriate.
9) In consideration of the commitments which I shall undertake,
the Company shall pay me a consulting fee of $10,000 per month for
twenty-four months commencing with 1 March, 1997. During that period,
I would also have the continued use of my executive vehicle, in
accordance with company policy and would be reimbursed for reasonable
expenses necessarily incurred in the performance of my duties.
10) In addition to the aforementioned compensation, I will also
receive the customary retainer and meeting fees paid to nonmanagement
directors commencing with my relinquishment of the CEO title on
March 1, 1997.
11) Following my retirement as President and CEO in February,
1997, I shall vacate my personal office space, which shall be made
available to my successor. I would expect to have the continued use
of an office with secretarial support and receive reimbursement of
monthly dues and assessments (excluding all personal expenses) for the
Arlington Club and Waverley Country Club until age 72 or retirement
from the Board whichever occurs first.
If this proposal meets with the pleasure of the Compensation
Committee and the Board of Directors, I would very much appreciate a
resolution to that effect by the Board on September 22, 1994.
DATE: SEPTEMBER 22, 1994
AGREED TO IN BEHALF OF NORTHWEST NATURAL GAS COMPANY AND ROBERT L.
RIDGLEY, PURSUANT TO THE RESOLUTION OF THE BOARD OF DIRECTORS ADOPTED
ON SEPTEMBER 22, 1994:
NORTHWEST NATURAL GAS COMPANY ROBERT L. RIDGLEY
BY /S/ Tod R. Hamachek /S/ Robert L. Ridgley
-------------------------- ---------------------
TOD R. HAMACHEK, CHAIRMAN ROBERT L. RIDGLEY
COMPENSATION COMMITTEE
EXHIBIT 11
NORTHWEST NATURAL GAS COMPANY
Statement Re: Computation of Per Share Earnings
(Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
12 Months Ended December 31
---------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Earnings Applicable to Common Stock $32,478 $34,159 $13,215
Preference Stock Dividends 119 155 168
Debenture Interest Less Taxes 534 572 598
------- ------- -------
Net Income Available for Fully-Diluted
Common Stock $33,131 $34,886 $13,981
======= ======= =======
Average Common Shares Outstanding 13,295 13,074 11,909
Stock Options 18 24 25
Convertible Preference Stock 83 108 116
Convertible Debentures 405 433 446
------- ------ ------
Fully-Diluted Common Shares 13,801 13,639 12,496
======= ====== ======
Fully-Diluted Earnings Per Share
of Common Stock $2.40 $2.56 $1.12
===== ===== =====
</TABLE>
Note: Primary earnings per share are computed on the weighted daily
average number of common shares outstanding each year. Outstanding
stock options are common stock equivalents but are excluded from
primary earnings per share computations due to immateriality.
EXHIBIT 12
Northwest Natural Gas Company
Computation of Ratio of Earnings to Fixed Charges
January 1, 1990 - December 31, 1994
($000)
<TABLE>
<CAPTION>
------------Year Ended December 31----------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed Charges,
as defined:
Interest on
Long-Term Debt $22,244 $21,977 $23,001 $22,578 $21,921
Other Interest 2,853 4,266 3,223 1,906 2,473
Amortization of Debt
Discount and Expense 363 348 511 775 850
Interest Portion
of Rentals 1,546 1,485 1,439 1,701 1,697
------- ------- ------- ------- -------
Total Fixed
Charges, as
defined $27,006 $28,076 $28,174 $26,960 $26,941
======= ======= ======= ======= =======
Earnings, as defined:
Net Income $30,724 $14,377 $15,775 $37,647 $35,461
Taxes on Income 13,629 2,321 6,951 22,096 20,473
Fixed Charges,
as above 27,006 28,076 28,174 26,960 26,941
------- ------- ------- ------- -------
Total Earnings,
as defined $71,359 $44,774 $50,900 $86,703 $82,875
======= ======= ======= ======= =======
Ratio of Earnings
to Fixed Charges 2.64 1.59 1.81 3.22 3.08
==== ==== ==== ==== ====
</TABLE>
EXHIBIT 23
DELOITTE & TOUCHE LLP
-----------------------------------------------------------------
3900 US Bancorp Tower Telephone: (503) 222-1341
111 SW Fifth Avenue Facsimile: (503) 224-2172
Portland, Oregon 97204-3698
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in Registration
Statement No. 33-34724, Post-Effective Amendment No. 1 to
Registration Statement No. 2-76276, and Post-Effective Amendments
No. 2 to Registration Statement Nos. 2-77195 and 33-19354 on
Form S-8 and in Registration Statements No. 33-44827, 33-64014,
33-51271, and 33-53795, and Post-Effective Amendments No. 1 to
Registration Statements Nos. 33-1304 and 33-20384 on Form S-3 of
our report dated February 22, 1995 (which expresses an
unqualified opinion and includes an explanatory paragraph
relating to the change in the Company's method of accounting for
income taxes and postretirement benefits) appearing in this
Annual Report on Form 10-K of Northwest Natural Gas Company for
the year ended December 31, 1994.
DELOITTE & TOUCHE LLP
March 23, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SECTION OF THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 629,126
<OTHER-PROPERTY-AND-INVEST> 62,227
<TOTAL-CURRENT-ASSETS> 95,539
<TOTAL-DEFERRED-CHARGES> 41,982
<OTHER-ASSETS> 60,430
<TOTAL-ASSETS> 889,304
<COMMON> 42,492
<CAPITAL-SURPLUS-PAID-IN> 134,641
<RETAINED-EARNINGS> 97,275
<TOTAL-COMMON-STOCKHOLDERS-EQ> 274,408
39,888
1,252
<LONG-TERM-DEBT-NET> 291,076
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 53,654
<LONG-TERM-DEBT-CURRENT-PORT> 1,000
1,062
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 226,964
<TOT-CAPITALIZATION-AND-LIAB> 889,304
<GROSS-OPERATING-REVENUE> 368,261
<INCOME-TAX-EXPENSE> 20,473
<OTHER-OPERATING-EXPENSES> 295,990
<TOTAL-OPERATING-EXPENSES> 316,463
<OPERATING-INCOME-LOSS> 51,798
<OTHER-INCOME-NET> 8,582
<INCOME-BEFORE-INTEREST-EXPEN> 60,380
<TOTAL-INTEREST-EXPENSE> 24,919
<NET-INCOME> 35,461
2,983
<EARNINGS-AVAILABLE-FOR-COMM> 32,478
<COMMON-STOCK-DIVIDENDS> 23,365
<TOTAL-INTEREST-ON-BONDS> 17,549
<CASH-FLOW-OPERATIONS> 110,024
<EPS-PRIMARY> 2.44
<EPS-DILUTED> 2.40
</TABLE>
