PUGET ENERGY, INC. PUGET SOUND ENERGY, INC. SECOND AMENDMENT TO AGREEMENT
EXHIBIT
10.2
PUGET
ENERGY, INC.
PUGET
SOUND ENERGY, INC.
SECOND
AMENDMENT TO AGREEMENT
SECOND
AMENDMENT TO AGREEMENT (this "Amendment"), effective as of February 9, 2006,
amends the agreement (the "Agreement"), dated as of January 1, 2002 and amended
as of May 10, 2005, between Puget Sound Energy, Inc. ("PSE") and Puget Energy,
Inc. ("Puget Energy"), both Washington corporations (PSE and Puget Energy,
collectively, the "Company"), and Xxxxxxx X. Xxxxxxxx
("Executive").
WHEREAS,
the Company and Executive wish to conform the definition of Change in Control
in
the Agreement to the definition on Change of Control in the PSE amended and
restated form of Change of Control Agreement for PSE executive officers and
in
the PE amended 2005 Long-Term Incentive Plan by changing the definition of
Change of Control in the Agreement to include (i) the acquisition of 30% rather
than 20% of PE common stock or voting power and (ii) consummation rather than
shareholder approval of a Business Combination, with a carve out for continuing
ownership of 60% rather than 66-2/3%; and
WHEREAS,
the Company and Executive also wish to amend the Agreement in certain respects
to reflect the provisions of Section 409A of the Internal Revenue Code, as
amended, and any regulations and other guidance issued thereunder;
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, and for other good and valuable consideration, the Company and Executive
agree as follows:
1. |
The
second paragraph of Section 7, which begins "Executive may, by giving
written notice to the Company..." shall be deleted in its
entirety
|
2. |
Section
7(e)(i) shall be replaced in its entirety by the following:
|
(i) The
acquisition by any individual, entity or group of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of
30%
or more of either (A) the outstanding Puget Energy common stock or (B) the
outstanding Puget Energy voting securities; provided, however, that the
following acquisitions shall not constitute a Change of Control: (x) any
acquisition of securities by Puget Energy, (y) any acquisition of securities
by
any employee benefit plan (or related trust) sponsored or maintained by Puget
Energy or any corporation controlled by Puget Energy, or (z) any acquisition
by
any corporation pursuant to a business combination, if, following such business
combination, the conditions described in clauses (1), (2) and (3) of subsection
(iii) of this Section 7(e) are satisfied; or
3. Section
7(e)(iii) of the Agreement shall be replaced in its entirety by the following:
(iii) Consummation
of a Business Combination (which means (A) a reorganization, exchange of
securities, merger, consolidation or other business combination involving Puget
Energy or (B) the sale or other disposition of all or substantially all the
assets of Puget Energy or PSE) unless after giving effect to such Business
Combination and any equity financing completed or contemplated in connection
with or as a result of such Business Combination, (1) more than 60% of,
respectively, the then outstanding shares of common stock of the corporation
resulting from or effecting such Business Combination and the combined voting
power of the then outstanding voting securities of such corporation entitled
to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all the individuals and entities who
were
the beneficial owners, respectively, of the outstanding Puget Energy common
stock and outstanding Puget Energy voting securities immediately prior to such
Business Combination in substantially the same proportion as their ownership,
immediately prior to such Business Combination, of the outstanding Puget Energy
common stock and outstanding Puget Energy voting securities, as the case may
be,
(2) no Person (excluding Puget Energy and any employee benefit plan (or related
trust) of Puget Energy or its affiliates) beneficially owns, directly or
indirectly, 30% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from or effecting such Business Combination
or the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors, and (3)
at
least a majority of the members of the board of directors of the corporation
resulting from or effecting such Business Combination were Incumbent Directors
at the time of the execution of the initial agreement or action of the Board
providing for such Business Combination.
4. The
first
sentence of the first paragraph of Section 12, shall be replaced in its entirety
by the following:
The
amounts specified in this Agreement, other than any payments which Executive
has
elected to receive in the form of a monthly annuity or has elected to defer
under a deferred compensation plan, shall be paid by the Company no more than
30
days after the date of termination or, in the case of payments due under Section
7(e)(A), Change in Control.
5. The
following new Section 23 shall be added to the Agreement:
Section
409A
Notwithstanding
anything to the contrary in this Agreement, any cash payments otherwise due
to
Executive under this Agreement on or within the six-month period following
Executive’s termination will accrue during such six-month period and will become
payable in a lump sum payment on the date six (6) months and one (1) day
following the date of Executive’s termination, provided, however, that such cash
severance payments will be paid earlier, at the times and on the terms set
forth
in the applicable provisions of this Agreement, if the Company reasonably
determines that the imposition of additional tax under Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code"), will not apply to an
earlier payment of such cash severance payments. In addition, this Agreement
(and any stock options granted pursuant hereto) will be deemed amended to the
extent necessary to avoid the imposition of any additional tax on (or income
recognition prior to payment to or, in the case of stock options, exercise
by)
Executive under Code Section 409A, including any temporary or final
Treasury Regulations and guidance promulgated thereunder, and the parties agree
to cooperate with each other and to take reasonably necessary steps in this
regard.
6. COUNTERPARTS.
This Amendment may be executed in counterparts, each of which shall be deemed
to
be an original.
IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date first
written above.
PUGET
SOUND ENERGY, INC.
By:
/s/
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Title:
Chair,
Compensation and Leadership
Development
Committee, Puget Sound Energy, Inc. Board of Directors
PUGET
ENERGY, INC.
By:
:
/s/
Xxxxxxx X. Xxxxx
Xxxxxxx
X. Xxxxx
Title:
Chair, Compensation and Leadership
Development Committee, Puget Energy, Inc. Board of Directors
EXECUTIVE
/s/
Xxxxxxx X. Xxxxxxxx
Xxxxxxx
X.
Xxxxxxxx